Ribis: A Halachic Anthology
Rabbi Joseph Stern
D. Installment Plans
One of the most popular forms of consumer credit is the installment plan. Monthly interest fees are charged. Rav Breish notes that such a credit arrangement poses more serious problems than ordinary terms of trade. Here, the Ribis is specified on a monthly basis, not merely implied. Whenever possible, a Heter Iska should be used. In emergency situations, it may be possible to invoke the Chavas Daas's suggestion mentioned previously (i.e. to include the interest charges in the item's initial price). Even if a lower price had been agreed upon, the vendor may cancel the deal upon being informed of the need for financing and then insist upon this new price).
E. Purchasing Securities from a Jewish Bank
Most transactions involving Ribis can be restructured as an investment deal,
.
However, according to the Chelkas Yaakov, one could argue that
purchase of securities from a Jewish bank may not even be suitable
for a 
. Ordinarily, a fixed
percentage of the stock's price is paid immediately to the bank,
while the rest is financed at market interest rates. This procedure is
similar to other Ribis contingencies with one important exception.
Unlike all other transactions where the borrowed funds are at least
in the debtor's temporary possession, here the borrower never
obtains access to the money. It is difficult to set up an investment
company without an investor.
On the other hand, many extenuating factors exist. Firstly,
purchases of stock are 
structured as a sale, not as an outright loan, and consequently are
Avak Ribis. Furthermore, as previously discussed, commodities
without a set market price are permitted to be sold at a small premium
(up to 1/6 for delayed payment). Beyond that, the exact halachic status
of a Jewish bank is not quite clear, as will be discussed. Rav Breish
concludes that while these extenuating factors are not sufficient to
permit stock purchases without a Heter Iska, they are potent
enough to allow an investment structure to be established.
F. Prepayment of Goods and Services
A very popular means of "beating inflation" (especially in countries with triple-digit inflation) is to prepay, a pay-now-buy-later scheme. This very innocous gambit may involve serious Ribis problems.
As a practical example of the above principles, Rabbi Shlomo
Englander, author of 
discusses the common practice of paying in advance for Tefillin. The
sofer (scribe) doesn't have the merchandise in possession and
can't even guess the market price at the time of the completion.
Without a Heter Iska it may not be feasible halachically to
pay in advance. Buying futures contracts at commodity exchanges may
pose similar problems.
Similarly, it is not permitted to pay workers in advance and
then obligate them to this (lower) pay scale later in the season
(when wages have risen). Rav Breish however suggests that this
restriction applies only to a day laborer
(
) who is not
contractually obligated to work. According to Jewish law, a laborer
may withdraw at any time. Thus any funds advanced to him can
not be construed as wages but merely as a loan and would be
subject to Ribis laws. However, it is permitted to prepay a
contractor (who according to halacha may not withdraw and is
contractually obligated to complete his job) in exchange for
submitting to a lower wage scale. In this case, any advance funds
are interpreted as a prepayment of wages, not as a loan and are
exempt from Ribis restriction. Rav Moshe Soloveitchik (of
Switzerland) in a counter responsum disagrees, arguing that no
distinction exists.
G. Rental Contract
It is permitted to rent utensils even though the renter is receiving consideration for the use of his property. Why is renting (
) different
than lending money (
)?
Two explanations are suggested. Firstly, the renter
(
) shares
responsibility with the vendor, whereas total responsibility for
reimbursement of a loan devolves on the debtor. For example, if
the funds were destroyed by fire the borrower would still be
obligated to pay back his debt. On the other hand, the renter
wouldn't be liable for any accident
(
) occurring to the goods.
Another approach views the rental fee as a form of reimbursement
for the depreciation of the renter's equipment. If neither of these
extenuating circumstances applies (i.e. rental of silver or gold
utensils, renting coins to a trade show) and if the renter bears full
responsibility for damages and no depreciation is likely, any
charges levied for renting would be Ribis.
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