Short answer
A loan that is genuinely interest-free is permitted: it is a qard hasan. Arrangement fees are accepted if they correspond to the actual cost of the service, without depending on the amount or the duration (International Islamic Fiqh Academy, resolutions 13 and 108). You need to check that the loan is not tied to another interest-bearing loan and that late payment does not trigger penalties added to the debt.
What the institutions say
Official positions, with their reference. The badge sums up the institution’s position, not an opinion of Assabile.
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International Islamic Fiqh Academy Organisation of Islamic Cooperation, JeddahUnder conditions
An interest-free loan is permitted; only the actual costs of the service may be charged, unrelated to the amount or the duration. The Academy cites the interest-free public loan among the lawful ways of financing a home.
Resolutions 13 (1/3), 50 (1/6) and 108 (2/12)
Positions are reported as they stand; other scholars may hold other views. Method and disclaimers
Depending on your country
- France
- The prêt à taux zéro (PTZ, state-backed zero-interest loan), Action Logement loans (employer-funded housing scheme) and some prêts d’honneur (interest-free personal loans) bear no interest; they are often combined with a conventional loan or with borrower insurance: check the whole package.
- Morocco
- Public housing assistance mainly takes the form of grants; participative banks offer home murabaha.
- Türkiye
- Banks’ “faizsiz kredi” (interest-free loan) campaigns are often promotional 0% offers over a short period: check the fees, the insurance and the rate after the promotional period.
What makes a loan lawful
The benevolent loan is repaid in the same amount. It remains lawful if:
- no interest is provided for, even at a low rate or under another name;
- the fees correspond to the actual cost of the service and do not vary with the amount or the duration (resolutions 13 (1/3) and 108 (2/12));
- no late-payment penalty is added to the debt (resolution 51 (2/6));
- it is not tied to another, compulsory interest-bearing loan.
Common pitfalls
- The top-up loan: in France, the PTZ finances only part of the purchase; the rest is often a conventional loan. The PTZ itself remains interest-free, but the overall package may not be.
- Borrower insurance: often compulsory; it is commercial insurance, which some scholars accept when it is imposed: see insurance.
- Promotional 0%: a zero rate for a few months, then interest, or fees calculated on the term.
In the Qur’an
The Qur’an asks that a debtor in difficulty be given extra time and says that writing off the debt is better still (al-Baqarah 2:280): the spirit of lending is to help, not to profit.
The verses
وَإِن كَانَ ذُو عُسْرَةٍ فَنَظِرَةٌ إِلَىٰ مَيْسَرَةٍ وَأَن تَصَدَّقُوا۟ خَيْرٌ لَّكُمْ إِن كُنتُمْ تَعْلَمُونَ ٢٨٠
And if someone is in hardship, then [let there be] postponement until [a time of] ease. But if you give [from your right as] charity, then it is better for you, if you only knew.
Frequently asked questions
Are the arrangement fees on a PTZ riba?
No, if they are a flat fee and correspond to the service provided, without depending on the sum or the duration.