These definitions have been explicitly defined by our Prophet ﷺ. You can read the hadith directly in my article over there. For simplicity, I have summarized what our Prophet ﷺ said.
The three definitions of riba
Any benefit from a loan for the lender
Any unequal exchange of same assets
Any currency exchange designated at a future date
These three definitions of riba are defined by the Quran and hadith. Allah has banned riba in the full spectrum — riba in loans, spot transactions, and future transactions. Past, present, future. Ultimately, we can’t use money to make money. That’s riba.
I find it noteworthy that most hadith about riba do not even mention loans, but instead talk about the rules in transactions. Our Prophet ﷺ was so brilliant, he even caught the debt hidden in foreign exchange swaps.
Allah has made the rules clear to prevent loopholes to riba.
You can’t sell something you don’t own
You can’t sell something you don’t possess
You can’t re-sell something at the same place and time where you bought it
You can’t combine a contract with a loan
You can’t condition one contract for another contract in one transaction
In co-investments, you have to share losses
Other rules not related to riba
You can’t lie during transactions
You can’t inflate auction prices with fake bids
You can’t have transactions that hinge on an unknown outcome, that is you can’t gamble
You can’t cancel a transaction after separation, unless you have mutually agreed otherwise
You can’t delay your debt repayment
You must inform and offer to co-owner before selling to others
Governments can’t allow price fixing. (whether through laws, monopolies, or riba)
There are two special sales transactions.
If someone were to sell anything in advance, then they must specify quantity, weight, and time of delivery. The buyer must pay fully in advance. (this is called a “salaam” sale). This can not be used in currency transactions.
An agreement to pay in the future in exchange for making something. For example, the Prophet ﷺ asked an Ansari women to have a slave construct a pulpit. (this is called an “istisna” contract). The prerequisite for such a contract is that something has to be manufactured.
In summary, loans always benefit the borrower. This is established by Quran. That’s how easy Islam is. Because Islam is a clear religion.
Why is the terminology used by Islamic scholars appear so complicated?
The economy today is very different from the economy of the Muslim ummah during the early Islamic scholars. In the past, transactions were based on bartering. Today, we live in world with cash transactions. A different world.
Today, they use fancy words to trick Muslims into riba. In my mind, I have no doubt some people use Arabic terms to confuse people into practicing riba.
Ijara means leasing.
Mushraka means co-investments.
Salam means paying now for something to be delivered in future. (they must specify quantity, weight, and time)
Istisna means an agreement to pay in the future in exchange for making something. For example, the Prophet ﷺ asked an Ansari women to have a slave construct a pulpit.
In the past, not all coins were equal. As coins circulated, they would get worn out. An old dinar coin wasn’t equal to a new dinar coin. Some coins were broken in half to pay for transactions. Other coins were adulterated with lead. Quite literally, a dinar coin wasn’t equal to another dinar coin.
This is why our Prophet ﷺ said to separate the gold in transactions, even if it was in a necklace.
I bought on the day (of the Victory of Khaibar) a necklace for twelve dinars (gold coins). It was made of gold studded with gems. I separated (gold from gems) in it, and found (gold) of more (worth) than twelve dinars. I made a mention of it to Allah's Messenger ﷺ, whereupon he said: It should not be sold unless it is separated.
This is part of my series on Interest Free Zone: All of the Sahih hadith related to riba, A study of weak hadith on riba, Defining riba, A detailed breakdown on why Islamic mortgages are backdoor riba, Do credit card rewards programs have riba?, Madness on options riba
Related, I have a Riba and Ruin series: Economics is to keep you a dummy, What happened to SVB?, Ward of the State, First Republic: A tale of a fake bank & a fake auction, Hush, hush, a small bank goes poof
Related, I have a Selling Islam series: Salaried Shaykhs, Can paid Shaykhs make mistakes?