Biblical Limits on Lending and Interest Rates in Scripture
Biblical law places specific restrictions on lending and the charging of interest, particularly concerning fellow Israelites and the poor. The Mosaic Law generally forbade charging interest (often referred to as "usury" in older translations, though this term simply meant interest of any kind, not necessarily excessive interest) to other Israelites [2, 4]. This prohibition is articulated in several passages, including Exodus 22:25, Leviticus 25:35-37, and Deuteronomy 23:19 [1, 3, 6, 7, 9].
The primary rationale behind these laws was to prevent the exploitation of the vulnerable. Loans to the poor were intended as acts of assistance, not opportunities for profit [12]. As Matthew Henry explains regarding Exodus 22:25, the law aimed to prevent extortion when lending to those in necessity [14]. John Gill notes that this law specifically applied to Israelites, particularly the poor among them, suggesting that loans should be freely given when beneficial to the borrower and not harmful to the lender [16].
While interest was forbidden when lending to fellow Israelites, especially the needy, the law permitted charging interest to foreigners [1, 2, 3, 4, 8]. Deuteronomy 23:20 states, "You may lend on interest to a foreigner; but to your brother you shall not lend on interest" [8]. This distinction highlights the communal and covenantal obligations within Israelite society.
Over time, as commerce developed, the practice of charging interest became more common, even among Israelites, leading to condemnation from prophets. Nehemiah, for instance, confronted those who were charging interest to their fellow Israelites, demanding that they cease and restore what they had taken (Nehemiah 5:6-7, 10-13) [3, 5, 17]. Ezekiel also condemns the practice of lending at interest to those in need, viewing it as an abuse of the borrower (Ezekiel 18:8) [3, 13, 15].
Jesus further expanded on the spirit of these laws, instructing his followers to lend "without expecting to be repaid" (Luke 6:34-36). This teaching encourages generosity and kindness even to those who may not reciprocate, reflecting God's own kindness to all people [11]. The overarching principle in these biblical texts is that financial transactions, particularly lending, should be governed by compassion and justice, especially towards the poor and vulnerable within the community [10].
Sources
- Smith's Bible Dictionary “Smith's Bible Dictionary: Loan — The law strictly forbade any interest to be taken for a loan to any poor person, and at first, as it seems, even in the case of a foreigner; but this prohibition was afterward limited to Hebrews only, from whom, of whatever rank, not only was no usury on any pretence to be exacted, but relief to the poor by way of loan was enjoined, and excuses for evading this duty were forbidden. (Exodus 22:25; Leviticus 25:35,37) As commerce increased, the practice of usury, and so also of suretyship, grew up; but the exaction of it from a Hebrew appears to have been regarde”
- Smith's Bible Dictionary “Smith's Bible Dictionary: Usury — (The word usury has come in modern English to mean excessive interest upon money loaned, either formally illegal or at least oppressive. In the Scriptures, however the word did not bear this sense, but meant simply interest of any kind upon money. The Jews were forbidden by the law of Moses to take interest from their brethren, but were permitted to take it from foreigners. The prohibition grew out of the agricultural status of the people, in which ordinary business loans were not needed. and loans as were required should be made only as to friends and brother”
- Torrey's Topical Textbook “Torrey's Topical Textbook: Usury or Interest — The lending of money or other property for increase -- Le 25:37. Those enriched by unlawful, not allowed to enjoy their gain -- Ps 28:8. The curse attending the giving or receiving of unlawful, alluded to -- Jer 15:10. The Jews Forbidden to take, from brethren. -- De 23:19. Forbidden to take, from brethren specially when poor. -- Ex 22:25; Le 25:35-37. Often guilty of taking. -- Ne 5:6,7; Eze 22:12. Required to restore. -- Ne 5:9-13. Allowed to take, from strangers. -- De 23:20. True and faithful Israelites never took, from their brethren -- Ps 15”
- Easton's Bible Dictionary “Easton's Bible Dictionary: Loan — The Mosaic law required that when an Israelite needed to borrow, what he asked was to be freely lent to him, and no interest was to be charged, although interest might be taken of a foreigner (Ex. 22:25; Deut. 23:19, 20; Lev. 25:35-38). At the end of seven years all debts were remitted. Of a foreigner the loan might, however, be exacted. At a later period of the Hebrew commonwealth, when commerce increased, the practice of exacting usury or interest on loans, and of suretiship in the commercial sense, grew up. Yet the exaction of it from a Hebrew was regarded ”
- Nehemiah “Nehemiah 5:10 (LEB) — Also, I and my brothers and my servants are lending them money and grain. Please stop taking this interest.”
- Deuteronomy “You shall not lend on interest to your brother; interest of money, interest of food, interest of anything that is lent on interest. -- Deuteronomy 23:19”
- Leviticus “You shall not lend him your money at interest, nor give him your food for profit. -- Leviticus 25:37”
- Deuteronomy “You may lend on interest to a foreigner; but to your brother you shall not lend on interest, that Yahweh your God may bless you in all that you put your hand to, in the land where you go in to possess it. -- Deuteronomy 23:20”
- Exodus ““If you lend money to any of my people with you who is poor, you shall not be to him as a creditor; neither shall you charge him interest. -- Exodus 22:25”
- Proverbs (Protestant academic) “Tyndale House on Proverbs 28:8: 28:8 The law prohibited charging needy Israelites interest on loans (Exod 22:25; Lev 25:36; Deut 23:19). The rich were instructed to lend generously to the poor (Prov 3:27-28; 11:24; 28:27; 29:7, 14).”
- Luke (Protestant academic) “Tyndale House on Luke 6:34: 6:34-36 The law of Moses prohibited charging interest on loans to other Israelites in order to prevent exploitation of the poor (Exod 22:25; Lev 25:35-37; Deut 23:20). Jesus further instructed his followers to lend . . . without expecting to be repaid. By doing good even to those who do evil, we act as children of the Most High and imitate our Father in heaven, who is kind to all people (cp. Rom 5:8).”
- Leviticus (Protestant academic) “Tyndale House on Leviticus 25:36: 25:36-37 The purpose of a loan was to help a poor person get back on their feet, not to make money from their vulnerability. Interest was forbidden on loans to Israelites but permitted on loans to foreigners (Deut 23:19-20).”
- Ezekiel (Protestant academic) “Tyndale House on Ezekiel 18:8: 18:8 Lending money with interest to those in need was outlawed because of the temptation it presented to abuse the borrower (see Exod 22:25).”
- Exodus (Nonconformist/Puritan) “Matthew Henry on Exodus 22:25: Here is, I. A law against extortion in lending. 1. They must not receive use for money from any that borrowed for necessity (Exo 22:25), as in that case, Neh 5:5, Neh 5:7. And such provision the law made for the preservation of estates to their families by the year of jubilee that a people who had little concern in trade could not be supposed to borrow money but for necessity, and therefore it is generally forbidden among themselves; but to a stranger, whom yet they might not oppress, they were allowed to lend upon usury: this law, therefore, in the strictness of”
- Ezek (Protestant academic) “Tyndale House on Ezek 18:8: 18:8 Lending money with interest to those in need was outlawed because of the temptation it presented to abuse the borrower (see Exod 22:25).”
- Exodus (Baptist/Reformed) “John Gill on Exodus 22:23: If thou lend money to any of my people that is poor by thee, Such only need to borrow money, and to whom it should be freely lent, when it may be to the good of the borrower, and not any injury to the lender: this law, according to the Jewish writers, only respects Israelites, and not Gentiles; agreeably to which is Jarchi's note,"if thou lend, that is, not to a Gentile; and to which of my people? the poor, and to which of the poor? that is with thee:" thou shalt not be to him as an usurer; that will not lend without usury, nor without an exorbitant interest, and d”
- Nehemiah (Protestant academic) “Tyndale House on Nehemiah 5:11: 5:11 Nehemiah demanded that the rich lenders restore their fields and repay the interest (literally the hundredth part), which they should not have collected (see also Exod 22:25; Lev 25:35-37). The literal hundredth part suggests that the interest was one percent per month, lower than the twenty percent annual rate found in some documents of that time, or the sixty percent annual rate charged at Elephantine in Egypt. But even a relatively low rate of interest violated God’s covenant.”