<P> Although some have noted that these loans appear to carry substantial risk to the lender, it has been shown that these loans carry no more long term risk for the lender than other forms of credit . These studies seem to be confirmed by the United States Securities and Exchange Commission filings of at least one lender, who notes a charge - off rate of 3.2% . </P> <P> The basic loan process involves a lender providing a short - term unsecured loan to be repaid at the borrower's next payday . Typically, some verification of employment or income is involved (via pay stubs and bank statements), although according to one source, some payday lenders do not verify income or run credit checks . Individual companies and franchises have their own underwriting criteria . </P> <P> In the traditional retail model, borrowers visit a payday lending store and secure a small cash loan, with payment due in full at the borrower's next paycheck . The borrower writes a postdated check to the lender in the full amount of the loan plus fees . On the maturity date, the borrower is expected to return to the store to repay the loan in person . If the borrower does not repay the loan in person, the lender may redeem the check . If the account is short on funds to cover the check, the borrower may now face a bounced check fee from their bank in addition to the costs of the loan, and the loan may incur additional fees or an increased interest rate (or both) as a result of the failure to pay . </P> <P> In the more recent innovation of online payday loans, consumers complete the loan application online (or in some instances via fax, especially where documentation is required). The funds are then transferred by direct deposit to the borrower's account, and the loan repayment and / or the finance charge is electronically withdrawn on the borrower's next payday . </P>

When does a pay day loans typically mature