I have heard that Prophet(s.a) have pawned his Dhat al-Fudul with Abu ash-Shahm Jew, in return for some 30 sa(weights relate to food) of barley for his family. Does it involved Interest? Or did Abu ash-Shahm lend what ever requested without intrest.
The relevant ahadith are:
أن النبي صلى الله عليه وسلم اشترى طعاما من يهودي إلى أجل، ورهنه درعا من حديد
The Prophet (ﷺ) purchased food grains from a Jew on credit and mortgaged his iron armor to him.
توفي رسول الله صلى الله عليه وسلم ودرعه مرهونة عند يهودي، بثلاثين صاعا من شعير
Allah's Messenger (ﷺ) died while his armor was mortgaged to a Jew for thirty Sa' of barley.
This is a case of رهن (Rahn) , whereby something is deposited with the lender as collateral for a loan. If the borrower defaults then the loan can be settled through selling the security. This is permissible in general and proven from the Quran in verse 2:283.
The security is returned to its owner on repayment of the loan, there is no condition of paying interest and rather it is well known that interest on a loan is haram, both taking it and giving it. While various translations may have used the term pawned or mortgaged, the Islamic version of this transaction does not involve interest.
The lender being a Jew makes no difference. He was likely a dhimmi, and living under Islamic law even non-muslims could not legally engage in interest. So it is unlikely that the Prophet would have permitted it in a transaction in which he was himself a party.
كتب رسول الله صلى الله عليه وسلم إلى أهل نجران وهم نصارى: أن من بايع منكم بالربا فلا ذمة له
The Messenger of Allah ﷺ wrote to the people of Najran who were Christians: Whoever of you trades with Riba then there is no Dhimma on us for him (i.e. the treaty of protection is broken)
قرأت كتاب أهل نجران فوجدت فيه: إن أكلتم الربا فلا صلح بيننا وبينكم
I read the agreement (of the Prophet) with the people of Najran and it was written in it: If you will eat Riba then there shall be no peace between us