If a person borrowed an item from a neighbor (such as a plastic chair) and the item broke due to negligence by the borrower. Can the borrower purchase a new identical item and give that back to the lender or since the item is more valuable than the borrowed one (because it is new instead of used) then this would be a problem of ribbis (interest).
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There is no Halva'ah here so there can't be any prohibition on interest. This is a case of Sh'eilah which one can certainly charge for (known as Sechirah).
A year and a half ago, someone apparently returned an item of mine, that had been slightly broken before the loan. Upon further inspection, it appeared that the returned item was a new replacement. This inspired me to ask Rabbi Leib Tropper several questions on the subject. He confirmed that: