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Payday lenders provide small loans which typically must be repaid within two weeks. There is usually a maximum amount the applicant can borrow with this type of loan too. Before being approved for a payday loan, the applicant must submit a brief application. This application provides information which is used to verify the applicant's identity, employment status and banking information. Upon receiving this information, the payday lenders typically review and verify the information and either approve or reject the application.
The approval process for a payday loan is usually rather quick. Most payday lenders can approve applications on the following business day. If the loan is approved, the funds will be deposited in the borrower's bank account the same day the loan is approved. Applications submitted after a certain time may be processed the next business day and funds will be deposited into the borrower's account the second business day after the application is submitted.
Once the loan is approved and funds distributed, the borrower typically has 10 to 15 days to repay the loan. The loan is usually repaid on the borrower's next payday. However, if the next payday is within seven days of the loan approval, the lender sometimes allows the borrower to repay the loan on the subsequent payday. Failure to repay the full loan amount, plus applicable fees, by the end of the repayment period will result in the borrower being assessed interest on the loan.