G-d instructed Moses to tell the Jewish people, “You must not take interest”
Leviticus 25:36
There is a subtle yet crucial difference between an investor profiting from his investment and a lender profiting from a loan. When we invest in a financial venture, the invested money still belongs to us; thus, our money is “working” for us. We have therefore earned the profit that the venture returns.
In contrast, a loan transfers ownership of the principal to the borrower; the money now belongs to the borrower, even though he is obligated to repay it later. Thus, taking interest on a loan is profiting from someone else’s effort without having participated in that effort. The lender is collecting interest based only upon the fact that the money used to belong to him.
Taking interest on a loan is therefore opposed to the way G-d wants the world to operate. G-d intended that we refine ourselves by working for our achievements, both spiritual and material. In the words of the sages, “If someone says to you, ‘I have toiled without results,’ do not believe him. If he says, ‘I have not toiled, but have nonetheless seen results,’ do not believe him either. Only if he says, ‘I have toiled and seen results,’ believe him.”
—from Daily Wisdom