In Islam, the issue of debt is taken very seriously. Muslims are warned and urged to avoid incurring debt as much as possible.
It was narrated that the Prophet (peace and blessings of Allah be upon him) used to say in his prayer: "O Allah, I seek refuge with You from sin and heavy debt)." Someone said to him: "How often you seek refuge from heavy debt!" He said: "When a man gets into debt, he speak and tells lies, and he makes a promise and breaks it."
- Narrated by al-Bukhaari (832) and Muslim (589)
Such stern warnings about debt mainly came about due to the negative consequences on both on an individual level and on a community level. On a personal level, debt is regarded as a disgrace because it preoccupies the mind by making one worried about paying it off, and also makes one feel humiliated before the lender when meeting him. On a community level, it is argued that heavy debts lead to many economic ills; one will realise the price of heavy debts when considering the current financial crisis that has engulfed the global financial system.
Nowadays, it is difficult to go through life without taking on some type of credit or debt. For example, it is rare to find someone who is able to afford to purchase a house upfront using his savings. Chances are, one will need to obtain a loan in order to buy the house. The same can be said about many other future plans, such as your children's education and retirement plans, to name a few. Financing is a tool for one to fulfill one's dreams and ambitions, but when it is not used properly, it can cause more harm than good. Thus, to keep one's finances in order, it is important to learn how to use credit, and when to take on debt.‹‹ Back