Q&A: Is Paying a Penalty Considered Interest?
Is Paying a Penalty Considered Interest?
Question
Today I came to pay travel fees for Highway 6 Cross North
On one of the invoices it said
"The invoice includes a special charge for non-payment"
Apparently I paid late, and then there is a line that says:
"Collection fee for an unregistered customer" 1.37 NIS
When I called them to ask whether they have a heter iska and whether this is interest, they told me it is a kind of penalty, not interest.
They did not give me a satisfactory answer as to whether they have a heter iska or not. I searched on Google and did not find a clear answer.
As for the payment,
I gave in this morning and paid the
"Collection fee for an unregistered customer" 1.37 NIS
Is it possible that I paid interest and thereby violated the prohibition of interest, or is this a penalty for not paying on time?
Honestly, their clauses are not clear.
Answer
I do not think this is interest. It is reimbursement of expenses for special collection efforts and/or a punitive penalty for late payment. It is not a fee for waiting for money, and therefore in my opinion there is no interest here. The whole matter is not about a loan, so in any case there is no Torah-level prohibition of interest here.
Discussion on Answer
Good question
regarding coercion.
So do you just pay and violate the prohibition of interest?
Say someone has a loan from the gray market and then repents—what do they actually do?
There is no requirement of "be killed rather than transgress" when it comes to interest. But with regard to the state, it would not help you to get yourself killed. They would still take the money from you.
By the way, it also isn't in your hands. They can force you to pay. So either way there is no question here.