The Laws of Interest part 2 vol.3 no.2
One of the basic principles behind the interest laws is that the lender is not allowed to receive benefit for allowing the borrower to hold his money for a length of time. A loan which would lead to almost any benefit would infringe on the interest prohibitions, either on a Torah or Rabbinic level. The benefit does not necessarily have to be directly monetary.
The lender and borrower are not permitted to set up a loan on condition that the borrower will cancel a previous debt that the lender owes him. Likewise it is prohibited for the borrower to promise the lender that he will send the lender any extra business because of the loan. The lender is not allowed to lend on the condition that the borrower will have to pay an elevated price on a certain item the lender sells. Similarly, the borrower cannot borrow while promising to sell an item below its normal fixed price to the lender. The lender is not even allowed to lend on condition that the borrower will pay a sum of money to a third party to satisfy the will of the lender. According to many authorities all of the above cases infringe on a Torah prohibition.
The borrower may not borrow on condition that the lender will live in his dwelling without paying the otherwise expected rent. However, it is permissable if the lender will cancel the loan in place of the usage of the dwelling.
If a person wants to buy an object but does not have money, the seller may not sell the item at a higher price because he has to wait to be paid until a later time. In such a case the buyer is “borrowing” from the seller by not paying him at the time of the sale. If he pays a higher price he is paying Rabbinic interest.
It is permissable for the lender to take collateral for his own security. However, he is not allowed to lend on the condition to benefit from the object of collateral. Even if the benefit is not certain to come,the lender still transgresses a Rabbinic prohibition. For example, the lender took land as colateral planning to benefit from the possible crop. Since the crop may not grow and therefore the interest is not certain the lender only transgresses Rabbinic interest. It is permitted to use the collateral if by doing so the debt will be totally annulled.
Use 
to go to the next halacha page.
