Qard Hasan

A benevolent or interest-free loan. The borrower repays only the principal amount with no additional charges or markup. It is considered a charitable act (not a commercial transaction) and is the only type of loan fully permissible in Islam.

The lender cannot benefit financially from the arrangement. Some Islamic banks offer qard hasan for current (checking) accounts — the bank treats the deposit as a loan from the customer and may return the exact amount on demand, sometimes offering a voluntary gift (hibah) without any obligation.

Qard hasan is the benevolent loan — money lent with an obligation to repay exactly the principal, nothing more. It is the only loan Islam permits, because any contractual excess over principal is riba by definition (Qur'an 2:275-280, which also commands giving hard-pressed debtors time).

The Qur'an repeatedly describes lending to those in need as 'a beautiful loan to Allah' repaid multiplied (2:245, 57:11) — framing interest-free lending as worship, not merely finance. Classical rules: repayment terms may be documented and witnesses taken (2:282 encourages writing debts down), collateral may secure it (rahn), and a borrower may voluntarily repay extra as gratitude — but the lender cannot require, expect, or benchmark it.

Modern institutional uses: Islamic banks' non-remunerated current accounts are legally qard (the bank owes you the balance, guaranteed, and pays nothing); qard hasan funds operate at mosques and Islamic centers across the U.S. for emergencies, refugees, and students; Takaful models use qard from the operator to cover participant-fund deficits; and some halal fintechs structure payroll advances as qard with flat service fees — a design scholars scrutinize closely, since a 'fee' scaling with loan size or term is riba renamed. For personal finance, qard hasan is the Islamic alternative to consumer credit between family and community members: document it, set a realistic term, and treat forgiving an insolvent debtor as the Qur'an suggests — better still (2:280).