WCAX3
Monday April 17, 2023
By Cam Smith
SOUTH BURLINGTON, Vt. (WCAX) - In the Muslim faith, taking out loans that generate interest is not allowed. But through a new partnership, a South Burlington credit union is the first institution in Vermont to offer what they call Halal Loans.
Maryan Maalin moved to Burlington in the early 2000s from a refugee camp in Somalia. Over the last 17 years of being in the United States, Maalin says as a Muslim, she’s been unable to establish credit until now.
“This may be the answer to my prayers, that this opportunity came along, and I did not hesitate right away,” Maalin said. “I like to be true to my religion.”
The North Country Federal Credit Union rolled out what they’re calling Halal Loans, which range from $500 to $4,000. Recipients pay an upfront fee equal to what they would have paid in interest.
“I’d rather pay fees up front than paying interest,” Maalin said.
In Islam, interest on loans is forbidden because it would introduce an inequity. If a loan has interest on it, the bank would profit. In general, relationships that favor the lender are prohibited in the Muslim faith.
“If you take a loan, you should pay back the loan as is. For example, if you take a loan for a certain amount of money, you pay back as is, with no interest added to it,” said Imam Islam Hassan of the Islamic Society of Vermont.
The North Country Federal Credit Union created its new Halal Loan program in partnership with the Islamic Society of Vermont to create more banking opportunities for Muslims.
“Creating partnerships that somebody wouldn’t normally see as a natural partnership, it’s about what’s possible in our community and finding situations where we can bring disparate organizations together and find common ground,” said Jeff Smith of the North Country Federal Credit Union.
The loans are given out based on an individual’s income, proof of residence and credit history. And it’s not just for Muslims; any member of the credit union can apply.
While these loans can take up to four years to repay, Maalin says this is a small step in the right direction.
“If I can build my credit and borrow money without interest, I will be able to buy a house without paying interest and also get a nicer car for my family,” Maalin said.
Although the initial program is starting small, the credit union says there may be room for more expansion in the future.
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