Ruling on lending money to one who goes to extremes in spending on his daughter’s trousseau for the purpose of boasting and showing off

In principle, lending money is a righteous deed and is recommended (mustahabb).

In principle, lending money is a righteous deed and is recommended (mustahabb), because of what it involves of showing kindness and relieving distress. Hence the lender will have a great reward for giving the loan, as the Prophet (blessings and peace of Allah be upon him) said: “There is no Muslim who lends something to another Muslim twice, but it will be like giving charity once.” Narrated by Ibn Majah (2430); by Ibn Hibban in his Sahih; and by al-Bayhaqi in both marfu‘ and mawqif reports. It was classed as hasan by al-Albaani in Irwa’ al-Ghalil (5/225)..

Giving a loan may be obligatory (wajib), prohibited (haram) or disliked (makruh)

In principle, giving a loan is a charitable act, but in some cases it may be otherwise, so it may be obligatory (wajib), prohibited (haram) or disliked (makruh).

It says in Asna al-Matalib (2/140): Yes, if he thinks it most likely that the borrower will spend it on sinful purposes or on that which is makruh, it is no longer a righteous deed.

Ar-Ramli said in his commentary thereon: [The author says:] “Yes, if he thinks it most likely…”; in fact, it becomes haram in the first case and makruh in the second, or it may be wajib (obligatory), as in the case of helping one who is in need. End quote.

It says in al-Mawsu‘ah al-Fiqhiyyah (33/113): But it could be either obligatory (wajib), prohibited (haram), disliked (makruh) or permissible (mubah), according to the circumstances or the consequences, because means are to be judged according to their outcomes.

Based on that:

If the borrower is in need and the lender is well off, then lending to him is obligatory.

If the lender knows or thinks it most likely that the borrower will spend the money on something that is sinful or disliked (makruh), then it is haram or makruh respectively.

If a businessman wants to borrow money, not because of need but in order to expand his business in the hope of making more profit, then lending to him is permissible, because it is not for the purpose of helping one who is in financial distress, such that it may be regarded as something that is required according to Islamic teachings. End quote.

Shaykh Ibn ‘Uthaymeen (may Allah have mercy on him) said in ash-Sharh al-Mumti‘ (9/94): It is obligatory to give a loan sometimes, such as when the borrower is in need and his need cannot be met except through a loan.

But it is not obligatory except for one who can afford it without causing him to fall short in what he needs for his own maintenance and that of his dependents.

And sometimes it [lending money] may be haram, if the borrower is borrowing it in order to do something that is haram, because Allah, may He be exalted, says (interpretation of the meaning):

{but do not cooperate in sin and transgression} [al-Maa’idah 5:2].

But in principle, for the lender it is recommended, because it comes under the heading of showing kindness. End quote.

Lending to someone whose aim is to boast and show off

Showing off, boasting and going to extremes in providing trousseaux for brides is, at the very least, makruh (disliked), and may be haram. Allah, may He be exalted, condemns extravagance and excess, as He says (interpretation of the meaning):

{And be not excessive. Indeed, He does not like those who commit excess} [al-An‘aam 6:141]

{and eat and drink, but be not excessive. Indeed, He likes not those who commit excess} [al-A ‘raaf 7:31].

And He condemns wastefulness, as He says (interpretation of the meaning):

{And give the relative his right, and [also] the poor and the traveler, and do not spend wastefully.

Indeed, the wasteful are brothers of the devils, and ever has Satan been to his Lord ungrateful} [al-Isra’ 17:26-27].

Al-Minnawi says in Fayd al-Qadir (1/50): Extravagance or excess means spending on something on which it is appropriate to spend, but spending more than is appropriate; wastefulness means spending on something on which it is not appropriate to spend. End quote.

Shaykh Ibn ‘Uthaymeen (may Allah have mercy on him) said: Some of the scholars said that the walimah (wedding feast) is a kind of spending that should be based on custom and tradition, so it is Sunnah and appropriate inasmuch as it is in accordance with custom, the wealthy according to their means and the poor according to their means, provided that it does not reach the level of extravagance and showing off. If it does reach such a level, then it becomes haram or makruh."(Ash-Sharh al-Mumti‘  12/321).

If you know that the borrower intends to spend the money in a way that is makruh, then you should not help him in that.

And Allah knows best.