ISLAMIC LOAN WITHOUT INTEREST ISLAMIC LOAN WITH NO INTEREST RIBA FREE FINANCING
An Islamic loan with no interest is defined by a funding agreement provided through a Sharia compliant lender that provides with a cash facility without requiring from the Muslim borrower to pay any interest or Riba.
An interest free Islamic loan is adapted to a loan applicant who wish to comply with Islamic finance principles that don’t allow the use of haram fees which consist on Riba or usury and which are against any halal financial transaction.
Halal interest-free credit is one of the fundamental principles of Islamic Sharia law which prohibits the application of any form of interest in a borrowing transaction within a Muslim loan.
WHAT DOES A LOAN WITHOUT INTEREST IN ISLAMIC FINANCE MEAN?
An interest-free loan means that a borrower under an Islamic loan will pay a zero rate, however, the notion of 'interest free' in Islamic finance is confusing in the sense that even if the borrower does not pay interest, he will still have to pay a fee the bank that borrowed the funds from him.
In the context of a halal loan with no interest, the lender will make sure to request a profit margin for any financing granted which will be agreed with the borrower in advance for the entire duration of the loan.
Islamic lending without interest does not require the payment of interest, of course, but the borrower, whether an individual or an entrepreneur, will have to share the possible profits of any loan with the lender a part of a halal financing agreement.