Payday Loans vs Islamic Loan*

As the Credit Crunch burns a hole in the pockets of ordinary people more and more of us are turning to Payday Loans to fill the hole.

On the face of it the amount to be repaid looks negligible e.g. if you borrow £100 from Wonga.com you need only pay £137.50 after 30 days.What desperate people forget is that Wonga.com’s APR (Annual Percentage Rate) is a mouth-watering 5,853%!

That's a kind of number that makes people break out in flames!

So, how does Islam deal with the thorny issue of Personal Loans ? Actually...


Islam has a lot to say about loans - and interest too.

In Arabic the term for interest is Riba’ and it is totally forbidden. That’s right. Interest is not allowed. So the way Islam deals with Loans is simple; you can only have one type.

One that doesn’t charge interest!

* An Islamic Loan is known in Arabic as "Qard Hasan" which translates as a "Benevolent Loan" or a "Beautiful Loan".

So, let’s put things into perspective. Here’s a list of so-called LEADING providers of Payday Loans. Let’s compare them with the "Qard Hasan" offered by Ansar Finance.

Provider                  APR  

Ansar Finance         0 %
Wonga.com             5853 %

PaydayUK               2949 %

UK Payday Today   2708 %

247 Cashline           2685 %

Cash Lady               2670 %

So, what’s the verdict?Who wins in the pow-wow between Pay Day Loans vs Qard Hasan?

The answer is plain and simple. Payday Loans are pretty "Ugly" critters and the further you stay away from them the better unless you enjoy getting burnt.