Is This Forbidden Interest?

Question

  1. Boruch rented an apartment from Kalman. As is
    customary, Kalman asked Boruch for a security check equal to one month’s
    rent, to be returned at the end of the rental period. Boruch wishes to
    cash the check and use the money, but does not want to run into a
    problem of ribbis mukdemes (pre-loan interest). Is this
    permitted?

  2. The teachers of seventh grade in Eshes Chayil Girls
    School decided that they would purchase all textbooks together. The
    parents were asked to pay in advance, and were promised that the books
    would arrive within a week. In fact, it took two months, and the
    supplier did not offer the parents any discount. Does the fact that the
    supplier had a two months’ free loan in addition to payment present a
    problem of ribbis?

Answer

The Torah forbids lending money on interest. The
Rabbis extended the prohibition to giving a gift or doing a favor in order
to procure a loan (ribbis mukdemes) or on account of having
received a loan in the past (ribbis m’ucheres). The prohibition
only covers gifts or favors which the borrower would not otherwise have
given to or done for the lender. Indeed, any unusual gift or favor from
borrower to lender just before or just after the loan is forbidden for
this reason (Shach, Yoreh De’ah 160, Note 10). How much
time must there be between the loan and the gift so that this prohibition
should not apply? The Darkei Teshuvah (Ibid, Note 37, in the name
of Marbeh Torah) holds that as long as the gift is not given on the
same day as the loan is returned, there is no problem. However, Rav Shmuel
Wosner (Shevet HaLevi 3:68) disagrees. He requires a more
significant interval between loan and gift, unless the two parties have
had some other (non-loan) dealings between them. In such a case, an
unusual gift or favor is in order even the following day, since one can
say that the gift is on account of the other transaction.

In case (a), at first glance it would seem that a loan
equivalent to one month’s rent is being given in order to persuade the
landlord to rent out his apartment on monthly rental. Is this really ribbis
mukdemes?
The answer is that there is no problem. It is the usual
custom for a tenant to deposit a security check to the value of one month’s
rent at the beginning of the lease. Assuming that it is also the custom
for the landlord to use the security check in any way he wishes, one can
view this free loan as just an accepted additional rental payment. Since
this loan is a standard additional benefit, it does not constitute ribbis.
In some countries, this security check is not returned, but is rather used
as payment for the last month’s rent. Thus, it does not constitute a
loan but rather a standard pre-payment of the last month’s rent.

In the case of the school books (b), we can also view the pre-payment
as an additional payment for the goods. The supplier not only requires the
parents to pay cash for the books, but also expects the money up front as
a free loan. Since he does not give the parents a discount for
pre-payment, no problem of ribbis arises. Indeed, giving a discount
for pre-payment would be forbidden, since the discount is regarded as
payment for the loan (agar netar). Payment for goods is usually
made when they are supplied. To pay for goods which do not yet exist is
viewed as a loan. To give a discount for such advance payment is a form of
ribbis. Selling books at a pre-publication discount is therefore
problematic, though there could be room for leniency with Torah
publications. A competent halachic authority should always be consulted.