Brother, let's say I have a loan of $20,000 and I pay off $500 every month for that for the next 3-5 years. I also have $10,000 in savings. Do I pay zakat on the $10,000? How the zakat will be calculated?
Assalam u Alaikum Wa Rahmatullah,
If you have $10,000 in savings that is not being used in any useful way then you should use that money to pay off your loan. If you are not going to use that money to pay off your loan then you should be paying Zakat over this $10,000 in addition to any other Zakatable money or assets that you may own.
And Allah knows best.
Mufti Ikram ul Haq
Fatwa Center of America