Fatwa ID: 01246
Answered by Mufti Mohammed Tosir Miah
Using interest money to pay for interest based loan
In the name of Allah, the most Beneficent, the most Merciful.
The recipients of interest money are the poor and destitute. However, some scholars such as Hadhrat Ashraf Ali Thanwi (RA) and Molana Khalid Saifullah Rahmani have said that one may use the interest money to make toilets for the poor or to repay an interest based loan. (Raddul Muhtar p.553 v.9 & Jadeed Fiqhi Masaail p.406 v.1)
Therefore, it will be permissible for you to use interest money to pay for the interest-based loan
Only Allah Knows Best
Mohammed Tosir Miah
Darul Ifta Birmingham.