When a person returns his debt, is it alright if he returns more than the principal amount in order to thank the lender for this loan. Please reply with Qur’ānic and Hadīth references.
Indeed returning the debt with some extra-money besides the principal amount is a very gracious thing on the part of the borrower. It is his expression of gratitude towards the lender. Today this is perhaps much more desirable because of inflation. The money he borrows gets depreciated because of inflation and hence if he repays over and above, he might be in fact making up for this loss caused to the lender.
In this regard, however, it should remain clear that this extra amount is merely a favour from the borrower. In no case, should a lender demand an extra amount because this would amount to charging interest on his part, which of course is forbidden.