Business Halacha: A Loan and My Car


carQuestion: I took a short-term loan of $4,000 from my neighbor. To assure him that I would repay promptly, we agreed that if I wouldn’t pay back in two months, he could take my car, which is worth $10,000. Is such an obligation valid?

Answer: This kind of exaggerated, conditional obligation is referred to in halacha as asmachta (B.B. 168a). This means an obligation that was just made to reassure the lender or one that the borrower relied would not come to pass. An asmachta obligation is not viewed as a serious commitment and is not binding (C.M. 207:2,13).

An asmachta obligation is valid, however, if it was made (or if stated that it was made) with a kinyan sudar in a reputable beis din. In this case, we view the obligation as one that was meant seriously (207:15). Alternatively, if the agreement stipulated that the ownership of the car is retroactive to the time of the loan (mei’achshav), the Shulchan Aruch does not consider it asmachta, whereas the Rama does (207:14).

In a case where the borrower obligates himself to reimburse any collection costs, some authorities maintain that this is not considered asmachta, since the borrower caused the lender an actual loss (SM”A 61:12; Pischei Choshen, Halva’ah 2:ftnt. 105).

Authored by Rabbi Meir Orlian

These articles are for learning purposes only and cannot be used for final halachic decision.

The Business Halacha email is a project of Business Halacha Institute ( and is under the auspices of Rav Chaim Kohn.

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  1. One can hardly consider this asmachta as cars are frequently used as collateral for loans and often “picked up” when borrower defaults. 40% LTV is not “asmachta for collateral. It is not less than an apotiki as it is a metaltilin frequently relied upon for collection of debts which bzman hazeh has a din of karkah, no?

    Now the Question, what about ribbis?