Who is it paid to? Why don't they end up with more money?
When you borrow money, the money is "created" by an entry in the ledger, in exchange for the collateral. When you pay it back the creation is reversed, and the collateral is returned.
The same thing happens when you write a check. You create money by writing the check. When the check is cashed, the money is transferred, and the check is no longer valid.