Public Square & Theology 101

What Does the Old Testament Say about Loans and Interest? Part 3

How Interest-Free Loans Provide Old Testament Social Justice
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In our recent discussion of the Old Testament (OT) teaching on lending, we’ve explored some of the key questions as well as the three main OT passages that address the issue, looking particularly at Deuteronomy 23:19-20. Today, I’d like to begin the discussion of what the OT teaching on lending means for us today.

Lending is One Key Component of OT Economic Social Justice

Although key differences arise from the different interpretations concerning the main passages (Exod. 22:25; Lev. 25:35-37; Deut. 23:19-20), all three views completely support this action: capable Israelite farmers should offer interest-free loans for the working poor—among their kinship—who need subsistence living assistance.

Through their compassionate lending, Israelite farmers addressed a pressing financial need for those in their local region who had the potential for repayment, i.e., the lower-income working poor. “You should rather open your hand, willingly lending enough to meet the need, whatever it may be” (Deut. 15:8).

For those in financial need who could not repay a loan, other forms of generosity better served that circumstance. For example, farmers permitted the poor and needy to glean produce from their fields (Lev. 19:9-10; Deut. 24:19-22; e.g., Ruth 2:1-23). They also made a separate tithe contribution every three years to their regional storehouse for local distribution of produce to the poor and needy (Deut. 14:28-29, 26:12-13).

Regarding lending, Psalm 112:5 states, “Good will come to those who are generous and lend freely, who conduct their affairs with justice.” So, why not make an outright gift rather than provide a loan? Because, for those who are able to work, lending affirms their dignity and avoids the potential for dependency. OT scholar John Goldingay clarifies this principle:

“Lending and borrowing is a common feature of life. In Western society it mostly means people with resources increasing those resources by lending to people with none. In the OT lending is a means of the rich helping the poor, not helping themselves, and not making them the recipients of charity but giving them [the working poor] means of reestablishing themselves, after which they would pay back the loan (see, e.g., Exod. 22:25-27). Its ideology was closer to that of credit unions and building societies. Here [in Psalm 112:5], goodness includes being willing to use one’s surplus wealth for the benefit of others. When they pay it back, it becomes available to help yet others.”

What about teaching on lending in the New Testament (NT)? Jesus identified two general forms of economic social justice for the poor and needy: “Give [alms] to the one who begs from you, and do not refuse the one who would borrow from you” (Matt. 5:42). NT scholar John Nolland captures the distinction well, “Loans would have as their goal getting people back on their feet; almsgiving assumed continuing dependency.” Charity and lending have differing purposes. Our focus in this series is on the matter of lending.

Where Humans Are Engaged in Financial Transactions, There is Potential for Abuse

The OT commanded lenders not to charge interest for subsistence living assistance loans to the working poor. Another passage from Psalms makes the same point: “[He] who does not put out his money at interest and does not take a bribe against the innocent. He who does these things shall never be moved” (Ps. 15:5). Temptations for abuse come from a heart of greed, as Jesus noted, “Take care and be on your guard against all covetousness for one’s life does not consist in the abundance of possessions” (Luke 12:15). Sadly, abuses of financial transactions will still take place. Yet we must not throw out the proverbial baby with the bathwater. The OT explicitly teaches that offering interest-free loans is one legitimate form of generosity for subsistence living assistance for the working poor.

Direct Application Includes Informal Personal Loans from Family and Friends

The best application of this principle fits the category of informal, personal, interest-free loans—loans not from an organization but from within one’s own network of family and friends. This category of generous lenders has existed since ancient times and continues today. I have been a recipient of such loans and have been a lender myself.

In exchange for the interest-free loan, the borrower would traditionally give the lender a pledge—some item of personal property selected by the borrower (Exod. 22:26-27; Deut. 24:6). The pledge (also called a “pawn”) provided an aspect of mutual exchange for the loan that maintained the dignity of the borrower and signaled a promise of repayment. When the loan was paid off, the lender was expected to return the pledge (Ezek. 18:7). Or, if not repaid, the pledge could be retained by the lender. Although the OT affirmed the legitimacy of taking a pledge, it also encouraged lenders to forgo requiring pledges (Ezek. 18:16).

What kind of subsistence living assistance needs might apply today? We could begin with the four basic material needs of food, clothing, shelter, and basic transportation to get to work. Medical costs might fit here also. Case-by-case discernment may be required. Yet, if a low-income worker does not have ready access to a network of family and friends with the means to provide an interest-free loan, then the practical avenue for temporary relief would be to connect with nearby charitable organizations.

In summary, one component of OT economic social justice is providing interest-free loans for the working poor who have the potential to repay a loan. For those able to work, receiving an interest-free loan affirms their dignity and avoids the potential for long-term dependency.

Editor’s note: Read Dr. Issler’s full article on the topic, “Lending and Interest in the OT: Examining Three Interpretations to Explain the Deuteronomy 23:19-20 Distinction in Light of the Historical Usury Debate,” published by the Journal of the Evangelical Theological Society.

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