Misvot #572-573: The Laws of Ribit (Interest)

The Torah commands in Parashat Ki-Teseh (Debarim 23:20), “Lo Tashich Le’ahicha,” establishing the prohibition against charging one’s fellow Jew interest on a loan, or paying a Jewish lender interest on the loan. It is forbidden not only for a lender to charge a fellow Jew interest, but also for a borrower to pay a fellow Jew interest. We would have naturally assumed that since people in need of a loan would happily agree to pay interest in exchange for the money they require at the present moment, such an arrangement should be permissible. However, the Torah forbids both charging interest and paying interest. The Torah refers to interest in this verse with the term “Neshech,” which literally means “bite.” Interest “bites” the debtor, as he suffers the incremental growth of the debt with time. In the next verse, the Torah introduces an additional command, instructing, “La’nochri Tashich” – that we are to lend to pagans on interest. Not only is it permissible to lend to pagans on interest, we are specifically required to lend them on interest, and not to extend to them interest-free loans. The Sefer Ha’hinuch explains that we are to show kindness in the form of granting interest-free loans to those who are devoted to Hashem, but not to those who betray Him. Therefore, the Torah forbids charging interest from fellow Jews, but requires lending to idolaters specifically on interest. If one has to choose between granting an interest-free loan to a Jew, or lending to a pagan on interest, he is required to forego the profit and lend to the Jew. If someone lent to a pagan on interest, and the borrower then converted to Judaism before repaying the debt, the lender collects the interest accrued until the time of the conversion. The convert is required to pay the accrued interest because people might otherwise question the sincerity of his conversion, and claim that he converted in order to have the interest waived. A Jew who borrows money from a gentile is allowed to pay interest. One may lend to pagans on occasion, as needed, but not as a regular practice, so as not to be influenced by their idolatrous beliefs and practices. However, a righteous Torah scholar may regularly lend to pagans, as there is no concern of him learning from and embracing their faith and lifestyle. One who grants a pagan an interest-free loan transgresses this prohibition. This command is binding upon both men and women, and applies in all times and places.