[Spaceships] Islamic Banking and Financing Spaceships Purchases

[ericthered]

The "Rent to Own rather than Mortgage" model has some interesting consequences:

1) The renter may walk away at any point and owe nothing. Perhaps he looses a great deal of money he has already spent, but there are no bankruptcy proceedings. The bank gets the house.

2) The bank fully owns the house up until the point that it does not. There are variations on this where the bank grants stakes in the house as the rental period progresses, but the bank owns at least part of the house, not a debt on the house. This probably makes repossession simpler.

3) There is little in the way of late fees for payments. If I take an extra year to pay off the house, they can't increase the amount of money I owe them for that reason only.

[RyanW]

If I understand it correctly, the most frequent interpretation of the Islamic prohibition on usury doesn't forbid a seller offering a buyer a longer time to pay in exchange for a higher price. Charging $24,000 for a car and $3,000 for credit would be forbidden. Charging $27,000 for the same car on the understanding that it would be paid over five years would not.

Edit: The big thing seems to be that profiting from an exchange of money for money is forbidden. Profiting from the exchanging of money for a thing is perfectly legitimate, and discussing the payment terms in coming to an agreement on price seems to be considered just fine.

[(E)]

What about the Usury-no system requiring an "Investor's Agent" as part of the crew, holding certain overrides and possibly serving in a similar role to chief engineer?

In theory the Usury-no model seems to require more transparency on both parties behalf.

[Refplace]

Originally Posted by RogerBW

Using the "company finance" model, the level of control varies - the Islamic bank may be hands-off and just take its percentage, or it may want to be a partner in the venture, even to the extent of having a representative permanently involved in running it. As far as I can tell this varies with different Islamic subcultures.

The bolded part has interesting adventuring possibilities.
I know nothing of the subjrect so just inserting my thoughts to create gameable differences based on the thread.
Interest Loans: You pay back the loan in installments and have to deal with late fees and penalties.
Cownership: Both parties own the ship, the buyer agrees to a minimum percentage of revenue to to the lender. The revenue pays off the loan plus a fee. In the meantime the owner may have a rep aboard and has some control over its use. This could be restrictions for risky or illegal endeavers or even extend to ports of call and trade routes. Good for a government based loan. Violation may result in repossession as a breech of contract.

The actual total cost should work out about the same in settings you have both methods. Although I could see the former favored by races or cultures that liked risk taking or personal freedom more than security and predictability.

[Humabout]

How does a usury-no system account for and offset inflation? If you loan me $1,000 today and there is 3% inflation between now and when I pay back the loan, the bank is recieving only $970 in purchasing price parity on the original principle of $1,000. That's a loss.

Can a person charge interest to offset projected inflation or simply adjust the princle for inflation as it occurs? Or is that then considered usury?

[sjard]

I guess the question I'd have is what definition of Usury you're using. Since the only one I am really aware of is lending at an "unreasonably high" rate of interest, I'm not sure how that would be an issue.

[Refplace]

Originally Posted by Humabout

How does a usury-no system account for and offset inflation? If you loan me $1,000 today and there is 3% inflation between now and when I pay back the loan, the bank is recieving only $970 in purchasing price parity on the original principle of $1,000. That's a loss.

Can a person charge interest to offset projected inflation or simply adjust the princle for inflation as it occurs? Or is that then considered usury?

Despite changes in inflation the % of ownership would stay the same.
So tie the fee to the cost of the item as adjusted for inflation.
In the rent to own model each payment buts a certain percentage of the ship.

[Humabout]

Originally Posted by Refplace

Despite changes in inflation the % of ownership would stay the same.
So tie the fee to the cost of the item as adjusted for inflation.
In the rent to own model each payment buts a certain percentage of the ship.

This doesn't answer my question. It also doesn't address inflation; if anything it raises the question of depreciation of capital. But ignoring that, I want to know if the prohibition of usury permits offsetting accrued inflation with additional charges to the principle.

[Humabout]

Originally Posted by sjard

I guess the question I'd have is what definition of Usury you're using. Since the only one I am really aware of is lending at an "unreasonably high" rate of interest, I'm not sure how that would be an issue.

I guess Im usung whatever definition Vicky is using. It sounds like he means that you acn't profit off of lending money, but when long term loans, as are the norm in business, are involved, changes jn the value of money make the concept of "making money" a bit murky.

[TGLS]

Originally Posted by Refplace

Cownership: Both parties own the ship, the buyer agrees to a minimum percentage of revenue to to the lender. The revenue pays off the loan plus a fee. In the meantime the owner may have a rep aboard and has some control over its use. This could be restrictions for risky or illegal endeavers or even extend to ports of call and trade routes. Good for a government based loan. Violation may result in repossession as a breech of contract.

Honestly, if this is the outcome of no-usury, it sounds like the result is money lending is replaced by joint stock companies, at least in the commercial sector.