Ribit in Everyday Life: Can You Give a Lender a Discount?

Can you offer a special discount to someone who lent you money? What about paying them a little extra as a gesture of appreciation? Jewish law teaches that even ordinary business transactions can sometimes involve the prohibition of ribit (interest).

The guiding principle is straightforward: when someone receives a loan, they may not provide the lender with any special financial benefit because of that loan. On the other hand, if the lender voluntarily chooses to give something extra or forgive part of the debt, that is permitted.

1. Offering a Special Discount to the Lender Is Prohibited

If someone borrows money from a friend and later the lender comes to shop in the borrower's store, the borrower may not give the lender a special discount because of the loan.

Example: A clothing store owner borrows money from a friend. Later, the lender visits the store to purchase a new suit. The store owner may not reduce the price simply because that customer previously extended the loan.

Even prepaid discount programs can raise a halachic concern. For example, if a store advertises: "Customers who deposit 500 shekels at the beginning of the month will receive a 10% discount on all purchases throughout the month."

This arrangement may be prohibited because the advance payment is considered a loan to the store owner, making the subsequent discount a benefit given to the lender.

2. Paying the Lender More Than the Regular Price Is Also Prohibited

The reverse situation is equally problematic. If a borrower shops in the lender's store, the borrower may not intentionally pay more than the normal price in order to benefit the lender because of the loan.

Example: A grocery store owner lends money to a friend. When the borrower later buys a carton of milk from the grocery store, they may not pay more than the listed price out of gratitude for the loan.

3. When the Lender Gives More to the Borrower, It Is Permitted

The prohibition of ribit applies when the borrower provides an extra benefit to the lender because of the loan. However, if the lender voluntarily chooses to give the borrower an additional benefit or gift, this is permitted.

The same applies to forgiving part or all of a debt.

Example: Someone borrows an entire package of wafers from a friend. Later, the lender agrees to accept back only a partially used package. This is permitted because the lender has chosen to forgo part of what was owed.

Similarly, if someone borrowed 182 shekels and the lender says, "Just pay me back 180 shekels," this is permissible, as the lender is voluntarily waiving part of the debt.