In murabaha, a financing organization purchases goods needed by the client, then sells them to the client at a price that includes a disclosed markup, with payment in installments or in full at a later date. The total amount is fixed in the contract and does not change thereafter.
The key difference from a loan is the subject matter of the transaction. Here, acquisition of specific goods is financed rather than money being issued; the organization becomes the owner of the property at a certain point and assumes the associated risk. It is the fact of actual sale and purchase that makes the markup permissible, rather than interest.
A mandatory condition is disclosure of the acquisition price and markup amount to the buyer. Hidden markup violates the structure of the transaction itself.
Practical features for the client: the repayment amount is known in advance and does not change with market rate fluctuations, but early repayment does not always reduce it proportionally since the sale price is already agreed upon. When comparing with a regular loan, the total amount of payments over the entire period should be compared.