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post #16 of 64 (permalink) Old 12-09-2016, 02:44 PM
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Re: Interest Free Loans For Muslims

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Clearly you don't understand the premise. If devout Muslims need a loan, they cannot get it from a standard bank, given that they charge interest. If a bank wants to tap into the world of Muslim finance, they will need to come up with a situation that is suitable for a Muslim, who is devout, to be able to get a loan. Otherwise they won't receive the business. It's not like a Muslim is getting a loan and demanding that it be 0% interest for the life and it is the same value as any other loan. But you probably just responded without actually reading the links.

I was just making a comment, I understand your premise. Why would a bank want to make a loan they don't make anything on? So what if they don't tap the world of Muslim finance. If they don't make anything they don't give a damn.

I think you need to calm down Herschel


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post #17 of 64 (permalink) Old 12-09-2016, 03:02 PM
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Re: Interest Free Loans For Muslims

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I was just making a comment, I understand your premise. Why would a bank want to make a loan they don't make anything on? So what if they don't tap the world of Muslim finance. If they don't make anything they don't give a damn.
The bank does make money on the loan, but it's not structured as interest.

For example, you buy $100,000 house and get a mortgage from the bank. The bank owns the house. You pay the bank $1000/month for 15 years. Each month, part of the $1000 goes towards interest and part towards principal. Over the 15 years, you pay $180,000. At the end of 15 years, you own the house.

In the Muslim version, the bank owns the $100,000 house and sells it to the homeowner for a premium at $180,000. The bank breaks it up into equal payments so that the homeowner pays $1000/month for 15 years. At the end the homeowner has paid $180,000 just like in the traditional mortgage and the bank has made $80,000. But in this case, the $1000/month was all for principal.

It's essentially the same, but the second way can satisfy the religious requirement. You could argue that it's arbitrary and silly, but that can be said about almost all religious customs and requirements--meatless Fridays, disabling oven lights, avoiding interest, etc.

In fact, did you know that McDonald's added Filet-o-Fish to attract Catholic customers? They didn't want Friday sales to go down. I wonder what would happen today if they added a traditionally Muslim dish to their menu like a halal quarter pounder?
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post #18 of 64 (permalink) Old 12-09-2016, 03:29 PM
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Re: Interest Free Loans For Muslims

Here is my deal I have a credit card that has interest but no annual fee. I pay my balance every month. So I am using credit and paying NOTHING for it. And my bank is happy to continue this relationship.
I've always had an inkling that banks make more on fees than interest, so replacing interest with a fee seems pretty easy to me. I'm just hoping they don't decide they want me to pay for them to hold my money for me. That negative interest thing is just weird.
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post #19 of 64 (permalink) Old 12-09-2016, 04:27 PM
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Re: Interest Free Loans For Muslims

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I was just making a comment, I understand your premise. Why would a bank want to make a loan they don't make anything on? So what if they don't tap the world of Muslim finance. If they don't make anything they don't give a damn.

I think you need to calm down Herschel
I still don't think you have read or comprehended anything here. I am pretty calm. At Barnes and nobles with my boys. Chilling like a villain. Doesn't mean you get it though.
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post #20 of 64 (permalink) Old 12-09-2016, 06:08 PM
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Re: Interest Free Loans For Muslims

Organized religions have some wierd idiosyncracies. If paying a higher price while getting an interest free loan makes them feel closer to G-d then who the hell cares. Isn't this offered on cars all the time?

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post #21 of 64 (permalink) Old 12-09-2016, 06:24 PM
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Re: Interest Free Loans For Muslims

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I would think Allah or the supreme being one believes in knows whether they're gaming their faith.
We Jews aren't allowed to have bread (or flour products other than matzah) in our posession on Passover, so those who are observant sign purchase and sale agreements for their flour products. The agreements expire at the end of passover with no sale taking place and the food reverts to its original owner.

Heck, the RCC used to sell indulgences.

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post #22 of 64 (permalink) Old 12-10-2016, 01:04 AM
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Re: Interest Free Loans For Muslims

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Originally Posted by jb02157 View Post
I was just making a comment, I understand your premise. Why would a bank want to make a loan they don't make anything on? So what if they don't tap the world of Muslim finance. If they don't make anything they don't give a damn.

I think you need to calm down Herschel
The bank does make money on Sharia compliant loans.

The difference is really in the wording of the loan.

They just leave out the talk about interest in the Sharia compliant loans and call what is basically interest a fee. Same difference, different language.

Let's say I have a mortgage for a house valued at $180,000 and over 30 years I will pay $150,000 in interest.

The paperwork for a Sharia compliant load will not mention interest and it will say that the person has to pay $180,000 + $150,000 for the home, or $330,000. It will also say that if they sell the home before paying off the mortgage the remaining free will be excused based on some table that is basically an amortization table.
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post #23 of 64 (permalink) Old 12-10-2016, 01:09 AM
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Re: Interest Free Loans For Muslims

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Organized religions have some wierd idiosyncracies. If paying a higher price while getting an interest free loan makes them feel closer to G-d then who the hell cares. Isn't this offered on cars all the time?
There is actually was a good reason for not allowing interest. I believe that originally Jews were not allowed to charge other Jews interest. Muhammad brought this law into Islam. The reason for not allowing interest is that back in those days there were no laws regulating interest. There were money lenders who were a lot like loan sharks. That was the only way to get a loan... via a money-lender/loan-shark. The money lenders would charge whatever interest that they could get by intimidating people.
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post #24 of 64 (permalink) Old 12-10-2016, 01:11 AM
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Re: Interest Free Loans For Muslims

I see this as no different then supermarkets selling kosher foods, no one has a problem with this. There are many more nefarious things in Sharia law to be worried about, this is not the hill to die on.
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post #25 of 64 (permalink) Old 12-10-2016, 12:17 PM
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Re: Interest Free Loans For Muslims

Here's a bit more on how sharia compliant financing works.

http://www.shariahfinancewatch.org/b...liant-finance/


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post #26 of 64 (permalink) Old 12-10-2016, 02:02 PM
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Re: Interest Free Loans For Muslims

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The bank does make money on Sharia compliant loans.

The difference is really in the wording of the loan.

They just leave out the talk about interest in the Sharia compliant loans and call what is basically interest a fee. Same difference, different language.

Let's say I have a mortgage for a house valued at $180,000 and over 30 years I will pay $150,000 in interest.

The paperwork for a Sharia compliant load will not mention interest and it will say that the person has to pay $180,000 + $150,000 for the home, or $330,000. It will also say that if they sell the home before paying off the mortgage the remaining free will be excused based on some table that is basically an amortization table.
Actually it is even more than that ^^^^. If you read the entire portion quoted in the OP, it said that the financial institution also had to own that item at the time of the loan. IOW a bank would have had to pre-emptively acted by entering the market to purchase whatever they were financing with that loan.
I don't know if any of you have ever investigated rent to own companies. But this is the very model that they already follow. I didn't see any prohibition in the making of monthly payments in the contracts for the Sharia compliant loans.

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post #27 of 64 (permalink) Old 12-10-2016, 07:52 PM
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Re: Interest Free Loans For Muslims

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Actually it is even more than that ^^^^. If you read the entire portion quoted in the OP, it said that the financial institution also had to own that item at the time of the loan. IOW a bank would have had to pre-emptively acted by entering the market to purchase whatever they were financing with that loan.
I don't know if any of you have ever investigated rent to own companies. But this is the very model that they already follow. I didn't see any prohibition in the making of monthly payments in the contracts for the Sharia compliant loans.
If wants this type of home purchase, the find the home they want. The bank/finance co. then purchases the house. Once all those papers are signed and the institution owns the house, they then sell it to the Muslim buyers. All of this can be done in basically one steam lined sitting.


The institution does not need to carry an inventory of homes for sale.
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post #28 of 64 (permalink) Old 12-10-2016, 08:09 PM
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Re: Interest Free Loans For Muslims

Aren't they just charging the interest up front and avoiding calling it "interest" to satisfy a religious requirement? What's the problem?

As a general principle, if one adult wants to offer something to another adult, and no-one else is harmed, why is it our business? If the other adult wants to accept it, and no-one else is harmed, why is it our business?
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post #29 of 64 (permalink) Old 12-11-2016, 05:41 AM
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Re: Interest Free Loans For Muslims

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If wants this type of home purchase, the find the home they want. The bank/finance co. then purchases the house. Once all those papers are signed and the institution owns the house, they then sell it to the Muslim buyers. All of this can be done in basically one steam lined sitting.


The institution does not need to carry an inventory of homes for sale.
No one said the institution needed to carry an inventory of homes. But the institution having to own an item in order to sell it adds many more layers to the process. Real estate transactions can be extremely complex by themselves. It isn't just a matter of the bank just going out and buying a house to resell. Plus the program extends to all sorts of other products.
In addition to the added complexity of the transaction itself, the bank would need to establish a system or department to handle these purchases for resale, just like they have separate departments for every other aspect of the transaction.
Then you would have the accounting aspects of the program. How would delinquencies and defaults be handled. How is the loan carried on the books. At what point would the bank realize the interest. Would the bank be required to declare the profit at the time of the loan or over time?
No, a sharia compliant program would not just entail the bank purchase the home as part of the transaction, there would be much, much more involved.

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post #30 of 64 (permalink) Old 12-11-2016, 06:25 AM
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Re: Interest Free Loans For Muslims

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I don't see how banks could enforce this. Banks don't care what religion you are, you'll get charged interest whether you're Muslim or not.

The majority of bank revenue streams have nothing to do with interest but with fees and penalties.
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