If a lender incurs an expense over the course of processing the loan, may he demand that the borrower pay for that expense, or would such a demand transgress the Torah prohibition of Ri'bitt (interest)?
Consider, for example, the case of a $50,000 loan which the borrower wishes to receive in cash. The lender must withdraw this amount from the bank, and the bank charges a fee for withdrawals of this amount. May he demand that when the borrower returns the money he pays as well the sum of this withdrawal fee? A similar question arises in a case where the borrower pays the loan with a check that bounces. Banks normally charge a penalty for the deposit of a check that bounces. May the lender demand that the borrower pay for this expense?
In both cases, Halacha certainly allows the lender to charge the borrower for these expenses. Ri'bitt is defined as compensation for the time during which the lender allowed the borrower to retain his money. Asking the borrower to pay for expenses incurred clearly does not serve as compensation for the period of time in which the borrower held onto the lender's money; this extra payment is demanded as reimbursement for expenses incurred over the course of processing the loan. Undoubtedly, then, no prohibition would be entailed whatsoever if the lender charges the borrower for these expenses.
Summary: If a lender incurs expenses as a result of the loan, such as if he must pay a withdrawal fee or if the borrower repays the loan with a check that bounces, the lender may demand that the borrower reimburse him for these expenses.
See Milveh Hashem written by Rabbi Moshe HaLevi, pages 118-123.
