Short answer
Repent sincerely, and pay the loan off as fast as you reasonably can so you pay as little interest as possible. Keep up the payments you agreed to, since defaulting adds harm and breaks the law. The house, car or degree you paid for is yours to use. Move to an Islamic option if one exists, and do not take new interest loans.
Entering an interest loan without real necessity was a sin requiring tawbah (repentance). The item bought with the money is validly owned. The borrower should repay the principal, clear the debt early where possible to reduce interest, and not take further interest loans; continuing to pay what is legally owed while working to end it is what the muftis advise.
The four schools agree on this.
Explanation
Many people took a mortgage, car loan, student loan or credit card balance before they knew the ruling, or in a weak moment. Allah says of riba, "whoever has received an admonition from his Lord and desists may have what is past" (2:275). Repentance is open as long as you live.
Practical steps:
- Tawbah: regret it, ask Allah's forgiveness, and resolve not to take interest loans again.
- Pay it down fast: overpay where the loan allows it without penalty, use savings that are above your needs, and sell things you do not need. Every early payment cuts the interest.
- Keep your payments up: you agreed to them, and default brings fees, more interest and legal trouble. Refusing to pay the interest part is not a solution.
- Refinance halal: if an Islamic bank or co-op can buy out the debt under a genuine murabaha, ijarah or diminishing musharakah, switch. See Is an Islamic mortgage halal?
- Ask for help: family or friends may lend you the balance interest free (qard hasan), which the Quran praises.
What you bought is yours. The sale of the house or car was a valid sale, so you may live in it, drive it or use your degree. The sin was in the loan, not in the thing.
Do not let the debt crush you. If you are in hardship, the Quran tells lenders to give time (2:280), and some debt advice services can freeze interest. For the full ruling on paying interest, see Is it haram to pay interest? For debt consolidation, see Is debt consolidation halal?
Ask a mufti about your own case. This answer explains the general ruling. When the details of your situation matter, as they do here, ask a qualified mufti and give them the full facts. Where to ask a scholar.
The evidence
Quran, Surah Al-Baqara 2:275
ٱلَّذِينَ يَأْكُلُونَ ٱلرِّبَوٰا۟ لَا يَقُومُونَ إِلَّا كَمَا يَقُومُ ٱلَّذِى يَتَخَبَّطُهُ ٱلشَّيْطَٰنُ مِنَ ٱلْمَسِّ ۚ ذَٰلِكَ بِأَنَّهُمْ قَالُوٓا۟ إِنَّمَا ٱلْبَيْعُ مِثْلُ ٱلرِّبَوٰا۟ ۗ وَأَحَلَّ ٱللَّهُ ٱلْبَيْعَ وَحَرَّمَ ٱلرِّبَوٰا۟ ۚ فَمَن جَآءَهُۥ مَوْعِظَةٌۭ مِّن رَّبِّهِۦ فَٱنتَهَىٰ فَلَهُۥ مَا سَلَفَ وَأَمْرُهُۥٓ إِلَى ٱللَّهِ ۖ وَمَنْ عَادَ فَأُو۟لَٰٓئِكَ أَصْحَٰبُ ٱلنَّارِ ۖ هُمْ فِيهَا خَٰلِدُونَ ﴿٢٧٥﴾
Those who consume interest cannot stand [on the Day of Resurrection] except as one stands who is being beaten by Satan into insanity. That is because they say, "Trade is [just] like interest." But Allah has permitted trade and has forbidden interest. So whoever has received an admonition from his Lord and desists may have what is past, and his affair rests with Allah. But whoever returns to [dealing in interest or usury] - those are the companions of the Fire; they will abide eternally therein.
Allah accepts the repentance of those who stop.
Quran, Surah Al-Baqara 2:279
فَإِن لَّمْ تَفْعَلُوا۟ فَأْذَنُوا۟ بِحَرْبٍۢ مِّنَ ٱللَّهِ وَرَسُولِهِۦ ۖ وَإِن تُبْتُمْ فَلَكُمْ رُءُوسُ أَمْوَٰلِكُمْ لَا تَظْلِمُونَ وَلَا تُظْلَمُونَ ﴿٢٧٩﴾
And if you do not, then be informed of a war [against you] from Allah and His Messenger. But if you repent, you may have your principal - [thus] you do no wrong, nor are you wronged.
Repentance from riba is accepted, and the principal stays lawful.
Sahih Muslim 2703
Sahih... من تاب قبل أن تطلع الشمس من مغربها تاب الله عليه ...
"Whoever repents before the sun rises from the west, Allah accepts his repentance."
The door of repentance stays open.
Where the ruling is recorded
- Radd al-Muhtar (Ibn Abidin), Kitab al-Buyu', section on loans (qard). The narrow allowance for real need and the sin outside it.
- Fatawa Mahmudiyya, Chapter on riba and bank loans. Advice to those already in interest-based loans.
Checked by our team. For a more accurate answer to your own situation, consult a scholar. Quran translation by Sahih International. Hadith Arabic from the standard editions of the six books and the Muwatta, with gradings as recorded there; the English is our own rendering. Spotted a mistake? Tell us.