~ What are the limits of loaning with interest, according to our portion? Why?
~ What types of loans is the text worried about?
~ Look in general in our reading for the treatment of those who owe something to someone else. What are the limitations set on the behavior of the creditor? Why?
(כד) אִם־כֶּ֣סֶף ׀ תַּלְוֶ֣ה אֶת־עַמִּ֗י אֶת־הֶֽעָנִי֙ עִמָּ֔ךְ לֹא־תִהְיֶ֥ה ל֖וֹ כְּנֹשֶׁ֑ה לֹֽא־תְשִׂימ֥וּן עָלָ֖יו נֶֽשֶׁךְ׃ (כה) אִם־חָבֹ֥ל תַּחְבֹּ֖ל שַׂלְמַ֣ת רֵעֶ֑ךָ עַד־בֹּ֥א הַשֶּׁ֖מֶשׁ תְּשִׁיבֶ֥נּוּ לֽוֹ׃ (כו) כִּ֣י הִ֤וא כְסוּתֹה֙ לְבַדָּ֔הּ הִ֥וא שִׂמְלָת֖וֹ לְעֹר֑וֹ בַּמֶּ֣ה יִשְׁכָּ֔ב וְהָיָה֙ כִּֽי־יִצְעַ֣ק אֵלַ֔י וְשָׁמַעְתִּ֖י כִּֽי־חַנּ֥וּן אָֽנִי׃ {ס}
~ What is wrong with behaving "like a creditor"?
~ What is wrong with "interest"?
~ Note the constant idea of sefer HaChinuch - following these mitzvot is about insisting in kindness within one's heart, and distancing from violence.
Rabbis will extend this prohibition of interest even to business loans. They will come up with the heter iska, that transforms the lender into a business partner, reframing interest as a contribution to the business. In Israel, a heter iska is signed as part of any loan in the banking system.
The heter iska can in theory be used in all loans, i.e., even humanitarian loans. But it is important not to lose sight of the Torah’s moral problems with charging interest to the poor and people in financial collapse; charging these people interest on loans is a moral problem that is as real today as it was three thousand years ago.
Payday loans are completely prohibited ~ even by the Hammurabi code! ~ all the more so in Jewish thought.
Cost of a payday loan
Many state laws set a maximum amount for payday loan fees ranging from $10 to $30 for every $100 borrowed. A typical two-week payday loan with a $15 per $100 fee equates to an annual percentage rate (APR) of almost 400 percent. By comparison, APRs on credit cards can range from about 12 percent to about 30 percent. In many states that permit payday lending, the cost of the loan, fees, and the maximum loan amount are capped.
source: https://www.consumerfinance.gov/ask-cfpb/what-is-a-payday-loan-en-1567/
Payday loans are forbidden in CT - which caps the interest at 12%, but payday lenders get away with a charge per amount of borrowed money, as above.
Jewish Free Loan societies are the best thing to do. Our Jewish Federation has just opened such a society, and it needs contributions so as to create a pool from which make personal loans that are interest free. Please take a handout and a book mark, and after Shabbat contribute to them.
https://www.kiva.org/ is also an excellent option to help people out of poverty.