The loan is typically given in cash and secured by the borrower's post-dated check that includes the original loan principal and accrued interest. The maturity date usually coincides with the borrower's next payday. On the maturity date the lender processes the check traditionally or through electronic withdrawal from the borrower's checking account if the borrower does not first repay or service the loan in person.
Payday lenders typically operate small stores or franchises, but large financial service providers also offer variations on the payday advance. Some mainstream banks offer a "direct deposit advance" for customers whose paychecks are deposited electronically. When a consumer requests the direct deposit advance they receive a predetermined, small cash advance. On the next direct deposit into the consumer's bank account that advance amount is removed by the bank plus a fee for the advance (usually around 10-20%).
Income tax preparation firms including H&R Block partner with lenders to offer "refund anticipation loans" to filers. However, these are not quite the same as cash advances or payday loand because they do not require an interest payment.
