May a Renter Request a Discount in Exchange for Paying Up Front?
The Talmud, in Maseceht Baba Mesia 63B, in defining the prohibition of Ribit (paying or receiving interest), uses the term "Agar Natar," which Rashi translates as "Sechar Hamtana" or "reward for waiting." The prohibition of Ri’bitt is thus defined as payment rendered to compensate for the time in which a person held in his possession money belonging to another.
In light of this definition, Rabbi Moshe Halevi (Israel, 1961-2001), in his work "Milveh Hashem" (p. 77), addresses the case of a person who rents a property or object and requests a discounted price in exchange for paying the full amount up front. For example, if a property normally costs $2000 to rent, the renter offers to pay $1500 up front and asks that he thereby be exempt from the final $500. Would this arrangement constitute Ri’bitt, given that the renter receives more than the value he received in exchange for immediate payment?
Rabbi Moshe Halevi rules that such an arrangement would not violate the Ri’bitt prohibition, because neither party is paying compensation for retaining the other's money. If a property owner agrees to sell or lease the property at a discounted rate, this is a commercial decision that does not at all relate to the laws of Ri’bitt. Neither party is receiving additional money or benefit for a delay in receiving payment; this is simply a case of an owner agreeing to an unusually low price for the rental, which is his prerogative as the owner. It is analogous to buying an item at a discounted rate.
Summary: An owner of a property or object may agree to lease the property or object for a discounted price in exchange for receiving full payment up front, and this does not constitute a violation of the prohibition against accepting or paying interest.
