It is forbidden to participate in any way in an interest-bearing loan made
by one Jew to another (160:1-3), but it is permitted to lend money to a
non-Jew at interest (159:1-3). On loans in which both Jews and non-Jews
are involved see 168-171;172:5;177:19. On loans involving close relatives,
scholars, religious purposes, communal funds, or money belonging to the
poor or to orphans see 160:8,17-20,22;168:17;172:1.
A borrower should not give gifts to a lender even in advance of the loan or
after its payment and especially not at the time of payment (160:4-6). A
lender should not accept unusual, involuntary, or conspicuous benefits,
favors, or courtesies from a borrower (160:7,10-12,23; 166:1-3). It is
permissible to give a person a gift in return for his lending someone else
money, but the borrower should not be the one to tell the lender about the
gift, and it is also forbidden to lend a person money in return for his
giving a gift to someone else (160:13-14, and see 15-16 on other situations
involving third parties). On exchanges of favors see 160:9.
If a borrower paid interest on a loan the court can force the lender to
repay it, but the court cannot force a lender to repay the value of other
benefits that he received in connection with a loan if the borrower did
not object to them, and the lender's estate is also not responsible for
repayment (161:1-6; on other laws connected with repayment of interest
see 161:7-10 and 177:11). The principal of an interest-bearing loan is
collectible by the lender only if the interest is itemized; see 161:11.
It is forbidden to pay interest even if (because of devaluation of the
currency) the value of the payment does not exceed the principal, and it is
rabbinically forbidden to repay the full amount of a loan if the currency
has increased in value (160:21). If the currency in which a loan was made
is replaced by new currency which differs in weight from the old currency
by less than 1/5, and the change has no effect on prices or the government
forbids using the old currency, it is permitted to repay the original amount
of the loan in the new currency; otherwise the amount paid must be reduced
to make it equal in value to the original amount (165:1).
Shulchan Aruch, Copyright (c) 2000 ProjectGenesis, Inc.