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14 Effects of Loan on Your Life According to Islam

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Loan in terms of financial thing refers to the amount of money lended by one or more individuals or an entities to other individuals, certain people, organization or other recipient. The borrower (the one receiving loan) will have a liable to pay their debts periodically or directly with or without an amount of interest according to their agreement. The agreement will including the subject or assets (usually money), period of time, how to pay, and other rules between lender and the borrower.


The concept of loan itself have been developed since the past. But it became a common things nowadays with so many form of loan and with so many purpose. Maybe the familiar basic loan among society are personal loans, mortgage loan, and of course credit cards. There even a strict rules of using credit card in Islam. We’ve seen million or even billion people using credit card for their daily purchasing both online or offline.

Here we would like to discuss about the side effects of loan in Islam. What is the rule applied for muslims in terms of loan itself. Is it permissible or not? How could it effects people’s life.

1. An interest loan is forbidden in Islam

Yes it is clearly stated in Quran that an interest loan is prohibited to be commited by muslims. As mentioned in the following verse :

“O you who have believed, fear Allah and give up what remains (due to you) of interest, if you should be believers. And if you do not, then be informed of a war (againts you) from Allah and His Messenger. But if you repent, you may have your principal – (thus) you do no wrong, nor are you wronged.”

QS. Al-Baqarah : 278-279

Muslims should avoid an interest loan according to the verse above since it just as if we would like to declare a war towards Allah SWT and His Messenger. It’s clearly a great loss for us because eating usury or interest is the most destructive sins in Islam.

2. Loan who get an extra paid (interest or usury) is haram

As it is prohibited by Allah SWT to take any extra paid or interest in loan then the law for this matter is haram. Any aditional payment including gifts asked by the lender toward borrower is included as riba.

3. We will severe in a great loss in the Day of Resurrection

“Those who consume interest cannot stand (on the Day of Resurrection) except as one stands who is being beaten by Satan into insanity. That is because they say, ‘Trade is (just) like interest.’ But Allah has permitted trade and has forbidden interest. So whoever received an admonition from his Lord and desists may have what is past, and his affair rests with Allah. But whoever returns to (dealing in interest or usury) – those are the companions of the fire, they will abide externally therein.”

QS. Al-Baqarah : 275

The verse said that we will be severing in a great loss if take any interest loan in the Judgement Day. It won’t help us in the word indeed it will plunge us in the hellfire as the companion of satan.

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4. It make people get used to borrow from others and made them lazy

Loan is not fully forbidden in Islam, but we should carefully on taking any loan. Even it has no interest in it but loan made us getting used to it. Which is very dangerous if we did not manage it properly. Loan could made people to be lazy. Why? It may give people the easiness of gaining money without previously worked. Many people fall from one debt to another because this reason.

5. Turn people into a liar

A great sins that could infected by loan is made people to tell a lie. When they get used to gain loan from others and if we closely observed them they usually developing a bad act such as lie. For example if the due time arrived, they won’t pay the money back.

6. It can bring someone to break a promise

The agreement of lender and borrower is very fragile, especially if there is no written contract. It is very vulnerable for both party to break the commitment or promise. Since human are easily to forget something, while we know that breaking promise is a great sins in Islam.

7. All of our sins will not be forgiven if we did not pay our debt

The danger of loan is Allah SWT won’t forgive our sins unless we finished our debt in the world. A very great and pious person will not be forgiven of his sins if he still has debt in a world that has not been paid off. You might want to know also about law of not paying debt in Islam to confirm your view.

8. Loan is contagious

There are other things that might became the bad effecs of loan in Islam that loan is contagious. Maybe decades ago people are ashame of having loan, but now since almost every people have loan they became not shy anymore. It just usual while a person who enjoy the facility of loan will tell and share ther experience to other people. And it might inspire them also to having a loan or debt.

9. It can damage the financial or even the life of a person and its family

You will find one or even more stories of people who has a debt toward other people and sometimes institutions. If they can not manage their own debt, it will destroy their financial flow. And the worst part is when they could not afford to pay the debt.

Debt can dragging someone into bankruptcy and that’s an open secret. If they cannot pay it than it can be passed toward their family. Or maybe their family will get the effect. Like land and assets confiscated by the bank or lender. It is very common recently, you can saw the example on the auction site of bank and other institutions. Read about bad impact of debt in Islam as a warning.

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Besides the bad effects, there are also good effects of loan in Islam. What are they?

10. It helps other people

Loan is also form of helping other in needs. If someone facing a problem like they are lack of money or their financial condition is disrupted while there are an urgent need that must be met while loan might be a solution.

11. Given a reward from Allah SWT

If the main intention of giving loan is to help people in needs and did not involving interest than the loan may give a blessing for both party. For the lender it will give him reward as mentioned in the following verse,

“Indeed, the men who practice charity and the women who practice charity and (they who) have loaned Allah a goodly loan-it will be multiplied for them, and they will have a noble reward.

QS. Al-Hadid : 18

12. Allah SWT will multiple their sustenance

All muslims who perform charity will be overflowing with the amount of sustenance and it may greater than things they give to others.

13. Eliminate difficulty

People needs debt since they are facing difficulty. For example if one f their family sick and they did not have money to bring their family to the hospital therefore they needs debt. If we give help their financial problem of course we eliminate their difficulty. Read also about how to pay debts to people who died.

14. Loan can improve someone’s economy if used wisely

Currently you could find a Sharia loan that using the rules and law of Islami. The general use of this loan can be specific, and if we use it wisely it might be our capital to increase our businesses.

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Kategori : Economy, Islamic Law