Is it permissible to borrow from an institution that imposes late fees or interest upon non-payment, even if the borrower possesses what covers the loan and intends to repay it before the due date?

What the institution deals with is a type of usury (riba), because it imposes interest or fines on the borrower in case of delayed payment. This is precisely usury, and it is like the saying of the people of Jahiliyyah (pre-Islamic ignorance): "Either you pay, or you increase." The permissible loan stipulates that it should not bring any benefit (manfa'ah); every loan that brings a benefit is usury. And all fees imposed on the borrower based on time or delay, or based on the amount of the sum, are usury. We advise the questioner to fear Allah and to avoid dealing with usury except in cases of extreme necessity.