In the Name of Allah, Most Gracious, Most Merciful.
All praise and thanks are due to Allah, and peace and blessings be upon His Messenger.
In this fatwa:
In his response to your question, Prof. Dr. Monzer Kahf, Professor of Islamic Finance and Economics at Qatar Faculty of Islamic Studies, states:
The difference between lending and this double sale is that in double sale there is always a property that is exchanged, but in lending there is no such condition. A loan may be used to pay a previous loan. This does not add any value of new utility to the economy.
In sale, there is always an added value, wealth or utility. Loan with increment is haram and called usury (riba) in the Qur’an, while sale is always permissible as long as the item itself is permissible.
Allah Almighty knows best.
Editor’s note: This fatwa is from Ask the Scholar’s archive and was originally published at an earlier date.