Online Loans in Islamic Jurisprudence (Fiqh Muamalah)
Society has entered the digital era due to rapid technological advancement. This has changed the way people purchase goods and carry out daily activities, which can now be done through various sophisticated applications. Technological progress has also influenced how people pay and borrow money. Because of advances in digital technology, online loans have grown rapidly in the contemporary financial world. (Sularno & Akbar, 2023).
The Financial Services Authority (OJK) defines information technology-based lending and borrowing services as online loans or fintech lending. This service connects lenders and borrowers directly through electronic systems and the internet. This means that the entire lending process is conducted online, from application and verification to fund disbursement. Besides ensuring that online loan services are safe, transparent, and legally compliant, these regulations aim to facilitate financial access for the public. (OJK, 2016).
According to the National Sharia Board of the Indonesian Ulema Council (DSN-MUI), Sharia-compliant information technology-based financing services are financial services that use the internet and electronic systems to bring together fund providers and those in need of financing based on Sharia principles. This means the financing process is carried out online through applications or digital platforms, but must still follow Islamic rules. In such services, there must be no riba (usury), fraud, gambling, or uncertainty in transactions. All activities must be conducted fairly, transparently, and in accordance with Sharia contracts. Examples include Sharia fintech platforms that provide business financing, goods purchases, or interest-free loans using contracts such as murabahah, mudharabah, or qardh. With this fatwa, the public can use digital financial services more safely and in accordance with Islamic law. (DSN-MUI, 2018).
Currently, many people use online loans as a quick way to solve their financial problems. However, excessively high interest rates cause many people to become trapped in debt and struggle to repay their loans. Online loans are considered a disruptive practice that contradicts the ethics of muamalah in Islam. The existence of quite high interest rates causes this problem. In Islam, receiving or giving interest is forbidden. (Sularno & Akbar, 2023).
According to Islam, practising riba, also known as usury, is strictly prohibited. One type of riba qardh that must be present in online lending agreements is riba. Riba usually arises through two main methods: fixed interest charged as an additional cost for the loan and penalties imposed for late payment, which increase the borrower’s debt.
Riba qardh is prohibited in Islamic law because it is considered unjust and harmful to the parties involved, contradicting the principles of justice and mutual assistance found in the Qur’an and the Hadith of the Prophet. In the Qur’an, Allah SWT says in Surah Al-Baqarah (2:275): “Those who consume interest cannot stand [on the Day of Resurrection] except as one stands who is being beaten by Satan into insanity. That is because they say, ‘Trade is [just] like interest.’ But Allah has permitted trade and has forbidden interest. So whoever has received an admonition from his Lord and desists may have what is past, and his affair rests with Allah. But whoever returns to [dealing in interest or usury] - those are the companions of the Fire; they will abide eternally therein.”
Allah SWT permits trade and forbids riba in this verse. Because riba is often considered similar to profit in trade, many people view it as normal in daily life. However, there is a clear difference between the two. Trade is conducted on the basis of mutual consent and a fair exchange of goods or services, whereas riba takes excessive profit and can burden the other party. Furthermore, this shows that the practice of riba has the potential to undermine the principle of justice in society. The wealthy will gain more profit, while those in need of help will be burdened by increasing costs. Consequently, Islam prohibits riba to create a more humane economic system where no one is harmed and everyone helps one another.
Therefore, the qardh hasan contract—a benevolent loan—can be used as an alternative to online loans in Islam. In Islam, qardh hasan is a loan given to another person without expecting anything except the pleasure of Allah. In this concept, the borrower is only responsible for returning the principal amount, without any interest. Qardh hasan is based on the principles of social care and mutual assistance (ta’awun), where the lender helps those in need without burdening them. If there is any additional amount upon repayment, it must be given voluntarily by the borrower and not stipulated from the beginning. Thus, qardh hasan embodies the principles of justice, sincerity, and solidarity in the Islamic economy.
Online loans have a complex impact, both positive and negative. The most common positive impact, however, is that online loans provide easy and quick access to funds for things like medical expenses, education, or daily needs. This service is also accessible to people who do not have access to formal financial institutions because the application process is easy and requires no collateral. This helps promote financial inclusion. However, behind this convenience, there are many negative consequences. Economically, high interest rates can cause debt to grow rapidly and force borrowers to take out new loans to cover previous ones.