Customer Service: (800) 404-0254

What is a Collateral Loan?


Getting approved for a loan can be difficult when you don’t have a great credit score. Luckily, there are other forms of collateral you can use to secure a loan.

Explore this Guide:


What is a Collateral Loan?


In order to understand collateral loans, how they work, and how you can use them, you need to understand,


What is Collateral?


Collateral is a personal asset when it is being used as financial security. For example, you might need to use something you own that has monetary worth in order to secure a loan.


These types of loans are called collateral loans. Auto loans are the most common type of collateral loan.


If you own your car completely (meaning you aren’t still paying for the car), then you can use your car’s title to secure a loan.


This helps lenders mitigate the risks of lending money to their customers. It also makes it easier for borrowers with low credit scores to get the loans they need.


Secured Loan vs Unsecured Loan


When a loan has a type of security attached to it (like the title of your car or a high credit score) then it is also known as a secured loan.


When a loan doesn’t have any type of security attached to it, then it’s known as an unsecured loan. The risks the lender takes on when issuing an unsecured loan are higher because the chances the borrower will fail to repay the loan are higher.


Pros and Cons of Secured Loans vs Unsecured Loans:

  • Unsecured loans usually have much higher interest rates and fees
  • Secured loans include using your own property or assets to secure the loan


Types of Secured Loans:

  • Personal loans
  • Title loans
  • Mortgage
  • Pawn loans


Types of Unsecured Loans:

  • Signature loans
  • Student loans
  • Credit cards


How Do Collateral Loans Work?


In order to get a loan that’s backed by collateral, there are a few things you’ll need to do.


First, you need to own the property you want to use as collateral outright. You can’t use your personal property as loan security if you don’t own it completely.


If you are still paying off another loan on your house or your car, then you can’t use that asset as collateral.


Second, you have to find a lender that offers collateral loans. Check City is one of those lenders. At Check City, you can take out a collateral loan on your vehicle.


Once you get approved for the loan, you’ll sign the papers and allow the lender to take out a lien on your property.


What is a Lien?


A lien is a partial ownership of personal property given to lenders when securing certain types of loans.


Reasons to Get a Collateral Loan


Why would someone want this type of loan? There are many advantages. The main reason is to get a loan for bad credit.


Loans that are backed against a personal asset are less likely to need a perfect credit history from borrowers because the loan’s security is tied up with a personal resource instead. Just remember, if you fail to pay back the loan or fail to make payments on time, this will still negatively impact your credit score.


People need loans for many reasons every year. A survey found that in the past year as many as 114.4 million people in the US took out personal loans.


Personal loans are taken out for many reasons. They can help pay bills, pay for groceries, consolidate debts, fix your car, pay medical bills, renovate part of your house, or even help pay for a wedding.


Collateral Loan Examples


If something you own has monetary value, then there is a possibility it can be used to secure a loan that’s backed with collateral.


Your assets have worth and that worth can be used to your advantage when you need to borrow money.


Savings Account:


If you have a savings account that meets a lender’s requirements, you might be able to use it to secure a loan. The idea is that the funds in your savings account are security to back up the loan in the case you have trouble repaying the loan.


Having an adequate savings account also lets the lender know you have the ability to repay the loan, which strengthens your chances of getting the loan approved.


Residential Mortgages:


A residential mortgage usually refers to the type of loan someone gets in order to buy a house. When you sign up for a residential mortgage loan, you allow the lender to have a lien on the house you buy until you finish paying off your mortgage.


This type of loan is tying the property you are purchasing to the loan taken out to pay for the property.


Allowing lenders to have a lien


Home Equity Loans:


Home equity loans let you use the equity or financial worth in your real estate property to help get a loan.


If you have a house or a mortgage, there’s a possibility you can use it to apply for additional loans. Your home is a major asset with lots of lucrative value. In general, real estate property is a huge financial resource.


These loans can include single-family homes, townhomes, condominiums, multi-family homes, and even mobile homes. It all depends on the terms and conditions set up by your home equity loan lender.


Margin Trading:


Margin trading is a finance term in investing and stocks. A margin is an extension of credit so that someone can trade on the stock market even though they don’t have the funds required.


By using margin trading, you can trade and invest more than you could by yourself. These investments can then be enough to cover your credit and more so you still see a great profit.


The major disadvantage of using margin trading is if the investments don’t pay off or if you lose money because now you will owe the investment funds you borrowed as credit.


Car Title Loans:


Car Title Loans are the most common type of collateral loan. They work by allowing lenders to take out a lien on your vehicle. This means that the lender’s name is on the title of the car during the loan term. This will allow them to take your car away in the event you fail to repay the loan.


But lenders don’t want to possess your car. They want borrowers to successfully pay back their loans. Repossessing a vehicle is only a last resort that lenders will generally only use when no other option is available. Ideally, they’re going to make more of a profit if they can help their customers pay back their loans.


How to Get a Collateral Loan at Check City




To get a Title Loan from Check City, all you need to do is bring a few items to your neighborhood Check City location.


Bring These Items:

  • Your vehicle and title
  • Proof of registration
  • Your photo ID
  • Ability to repay


Once you have these items you can fill out a title loan application online, at a store, or over the phone at (800) 404-0254.




All you have to do after that is wait for your application to get approved and for the Title loan funds to come your way.


In Conclusion,


When you need funds you need them fast and you need them from a lender you know you can trust.


Check City takes the trust and privacy of our customers very seriously. At Check City, you can find security in knowing your working with licensed lenders who are here for you.




The Balance. “Collateral Loans,” by Justin Pritchard, “The Basics of Trading on Margin,” by John Russell.

Investopedia. “Loan Basics: Collateral,” by Julia Kagan.

finder. “Personal loans statistics,” by Anna Serio.


written by Kimber Severance, Check City Copywriter

What is an Adverse Action Notice?

person clicking an email button

If you’ve received an adverse action notice in the mail, you might be wondering what it means.

Explore this Guide:


What is an Adverse Action?


An adverse action is a notice that lets someone know their application was denied. You could receive this notice in the form of a letter or an email.


When you apply for credit, a job, an installment loan, or insurance coverage and that application is denied, the person or business that received your application might send you a formal “adverse action” notice or letter. This formal letter lets the applicant know their application did not get approved.


An adverse action notification can apply to many instances of denial or termination. You can receive an adverse action if you were denied a job, if your loan application was denied, or if you are being dropped from any other kind of contract or benefit.


The person or business that sends the adverse action will often have their own requirements that applicants must meet. The adverse action will often outline which requirements you lacked or any other reasons why you weren’t approved for the job, raise, promotion, or loan.


For instance, if you apply for a loan, your application might be denied because your credit score isn’t high enough to meet the lender’s credit score requirements.


Likewise, a job application might be denied due to something in your background check like a criminal history. In both instances, the company might send an adverse action as a way to let you know your application was denied.


What Does an Adverse Action Notice Mean?


An adverse action means your application or request didn’t get approved. An adverse action will also outline the reasons your application or request was denied.


An adverse action is helpful because now you know what you need to work on to get approved next time. You might need to work on decreasing debt or increasing your credit score to get approved for a loan, bank account, or credit card.


What is on an Adverse Action?


The content of your adverse action includes information about why your application was not approved.


Companies might not list every single reason you were denied, but they will list a few of the main reasons you were denied.


Here are some examples of reasons your application might not get approved resulting in an adverse action notice:

  • the application you submitted was incomplete
  • your application for credit was denied
  • special credit terms you requested were denied
  • the lender has a counteroffer
  • something in your credit history doesn’t meet their requirements
  • something in your background check doesn’t meet their requirements
  • you don’t meet minimum age requirements
  • you don’t meet minimum income requirements
  • your overall debt is too high
  • you have too many recent credit applications
  • you don’t have enough credit history
  • your credit score is too low
  • you have a history of late payments


The adverse action will have some other basic information on it as well:

  • applicant’s name and address
  • applicant’s credit score
  • official reasons for the application’s denial
  • contact information for the consumer or credit report agency that was used
  • explanation that the credit agency was not responsible for the denial and thus doesn’t have answers about why the application was denied
  • explanation that the client has a right to get a free copy of the consumer or credit report
  • explanation that the client also has the right to dispute any inaccuracies of any kind in the report


With the information found on an adverse action, you can now better understand where your credit score stands and how you might be able to improve your credit.


Examples of an Adverse Action


You can receive a notice of adverse action from many places and for many reasons. Here are a few examples of an adverse action:

  • a landlord denies your rental application or is evicting you from the premises
  • a lender denies your application for a loan or line of credit
  • an employer denies your application for employment


The adverse action will look different based on who is sending it.


If the adverse action is from your landlord then the notice will have the name of the property, the landlord, the landlord’s signature, and bulleted lists outlining why your rental application was denied.


If the adverse action is from a financial institution, it will look similar, but the bulleted items will be financial requirements that applicants must meet, and not rental requirements that tenants must meet.


Pre Adverse Actions


What is a pre adverse action letter?


A pre adverse action is a notice that comes before the official decision has been made. Pre adverse actions are used most often during the hiring process to let an applicant know that something failed in their background check.


A pre adverse action is not an official denial though. It simply informs the applicant that the company is considering denying or withdrawing their job offer and why that is the case.


Just like an official adverse action, a pre adverse action notice contains the following information:

  • explanation that a full adverse action is being considered
  • a copy of the report that contains the information causing an adverse action to be considered
  • the contact information for the reporting agency
  • an outline of all the applicant’s rights from the Fair Credit Reporting Act (FCRA)


The reason some employers will send a pre adverse action is to give the applicant time to dispute the application denial before the denial is official. This is especially helpful in the case of a failed background check.


When Do You Get an Adverse Action Notice?


There are many reasons you might receive an adverse action. When you get an adverse action you will most likely receive it electronically or in writing.


For example, many adverse actions will come to you in the mail or via email.


When you get an adverse action, you can expect to get it anywhere around 7 to 10 business days after you’ve been denied.


Here are just a few examples of the instances when you might get an adverse action:

  • when you want to get a loan
  • when you want to get a credit card
  • when applying for a new apartment
  • when applying for a job


There are also some rules and guidelines for applications set by the Equal Credit Opportunity Act (ECOA) and the Fair Credit Reporting Act (FCRA) that businesses must follow when approving and denying applications.


Be aware of your rights so you know when a denied application was justified or not.


For example, no one can deny you credit or employment because of your race, color, religion, national origin, sex, marital status, age, or because you get public assistance.


FCRA Requirements


If you are wondering whether your credit score meets FCRA requirements, you can learn more about them on


On this website, you’ll find all the legal details about the FCRA, its purpose, and its requirements.


What to Do if You Get an Adverse Action Notice


So you got an adverse action. You’re probably wondering what to do now.


The first thing you need to do when you get an adverse action is understand your rights.


For example, when an application of some kind gets denied based on your credit, consumer, or criminal history then the party that denied your application is legally obligated to send you a formal adverse action, outlining why you were denied.


They also need to provide the contact information of the agency they used to get your credit, consumer, or criminal history so you can also access that information.


Once you understand your rights, get your own credit report to see your credit score and credit history for yourself.


Now that you have your own credit report in hand, check your credit history for any errors. If you do find an error, an inaccuracy, an instance of fraud, or an incomplete area, dispute it directly with the credit agency to get it fixed.


After taking care of any potential errors on your credit report, you can use insights from your credit report to work on improving your credit score.


A typical credit report includes your payment history, amounts owed, the length of your credit history, credit mix, and any new credit. So if you are frequently late making payments you’ll see this information here and can work on making this part of your credit history better.


By working to better your credit score, you can eventually apply again with more confidence, knowing that the reasons you were denied have improved.


How to Avoid an Adverse Action


An applicant’s credit history is very informative for the people and company’s processing your application.


By looking at a credit report, they can know if you will make payments on time, if you can handle this amount of debt, and how responsible you are overall with your finances.


The best way to avoid an adverse action is to prevent negative marks on your credit report in the first place. The following are a few examples of negative actions you want to avoid getting on your credit report:


Late or Missed Payments


Avoid late or missed payments first by living within your means.


If you are currently living paycheck to paycheck, find a way to increase your monthly income or downgrade your lifestyle to better fit the budget you have. This will make it a lot easier to keep up with all your payments.


You can also make use of autopay options wherever you can. Autopay is a great way to automate your budget and never miss or be late on a payment again.


Defaulting on Credit Accounts


What does it mean to default on a credit account?


Defaulting on credit is when you’ve missed multiple payments on a debt or fail to make payments on that debt at all. Avoid defaulting on credit accounts by avoiding going into debt you can’t afford.


Each time you take on a debt, it should be carefully planned into your current monthly budget. If it won’t fit into your budget, then seek out other options.


Overall Debt is Too High


Your total debt becomes too high when it goes over a certain debt to income ratio. The ideal debt to income ratio is under 36%. This means that ideally, you would only have 36% of your monthly income going toward debts.


Typically, 43% is the highest many lenders will accept when processing an application for a loan or line of credit. But you want to keep your debt to income ratio lower than this whenever you can.


If your overall debt payments are higher than 40% of your income, then make a strict budget and payment game plan to start reducing your debts.


Stay Updated on Your Credit Report


You can also help prevent these negative marks on your credit history by keeping tabs on your credit report yourself.


Don’t wait for an application to get denied to check out your own credit history.


Once a year, go through your consumer and credit history for accuracy and to see how you are doing.


This way you will be aware of any financially unhealthy habits you need to work on and you’ll be able to catch and take care of mistakes before submitting applications that will look at your credit history.


Get Good Credit Where Credit is Due


Not all financial actions get counted in your credit score unless you do something to make them count.


For instance, make sure your on-time utility or phone payments are going toward boosting your credit score by contacting your credit agency and allowing them to add that information to your credit file.


If you plan responsibly, you can also use credit cards to make all these payments, then pay off your credit card immediately in order to make this positive payment history impact your credit history for the better.



Experian. “What Is an Adverse Action Letter?” by Ben Luthi.

The Balance. “What Is an Adverse Action Notice? Use this disclosure to understand and overcome a credit denial,” by Latoya Irby.

Investopedia. “Adverse Action,” by Jason Fernando.

Examples. “What Is an Adverse Action Notice?”

Hire Safe. “What is Adverse Action?” “Credit reporting requirements (FCRA)”


written by Kimber Severance, Check City Copywriter

Confidence with Licensed Direct Lenders

direct road

The first things you need to know before shopping for a loan are the difference between direct vs indirect lenders and the importance of using a licensed lender.

Explore this Guide:


What are Licensed Lenders?


Licensed lenders are lenders who have a specific license to lend with the federal and state government.


Licensed lenders have to follow both state and federal government requirements. If a lender is licensed, then you know they follow important regulations to keep their borrowers safe.


How Do Lenders Get Licensed?


To get a license, lending companies need to meet specific requirements, apply and get approved, and keep their services up to date with state and federal regulations.


Lenders apply for this license with the Nationwide Mortgage Licensing System (NMLS), the Department of Business Oversight (DBO), the Department of Financial Institutions, or the Residential Mortgage Lender License (RML).


To meet the strict approval process’s requirements lenders need the following:

  • A detailed business plan
  • Disclosures
  • Certificates of authority
  • Organizational charts
  • Financing requirements
  • Background checks for everyone involved in the lending
  • Application fees ranging around $400
  • Surety bonds


Lenders who specialize in dealing with mortgage loans have added special requirements like getting approval from the following organizations:

  • Federal Housing Administration (FHA)
  • Veterans Administration (VA)
  • Farmers Home Administration (FmHA)
  • Government National Mortgage Association (Ginnie Mae)
  • Federal National Mortgage Association (Fannie Mae)
  • Federal Home Loan Mortgage Corporation (Freddie Mac)


Licensed lenders also have to deal with regular state and federal audits that routinely make sure licensed lenders are following all laws and regulations. This means they have to keep very detailed and organized financial statements and documents.


When a lender is licensed, you know as a borrower that the lender is being held by a higher standard.


What are Direct Lenders?


Direct lenders offer loans directly.


Some examples of direct lenders include banks, credit unions, and financial institutions like Check City.


At a direct lender, borrowers apply and receive loan funds all with the same company. This includes payday loans online, bad credit loans, personal loans, cash loans and more.


What are Indirect Lenders?


Indirect lenders offer loans indirectly.


Another term for indirect loans and indirect lenders is dealer financing. This is because working with indirect lenders is like going to a loan dealership where lots of different loans are available and a salesperson is going to try and sell you a specific one.


At an indirect lender, borrowers apply for a loan with the indirect lender, who then gives that application to many other third-party lenders in order to get a client their loan.


Direct Lenders vs Indirect Lenders


Like with all lending options, there are pros and cons to both direct and indirect lenders.


Indirect Lenders have the interest of many different lenders to take their attention away from you and your needs as a borrower.


Payments and interest rates for indirect loans are often higher because you’re paying for the extra work of the loan intermediaries and the actual lender.


Your creditworthiness will be a higher priority to get a loan with an indirect lender since indirect loans are higher risk loans than direct loans.


Borrowers who seek indirect lenders are often stumped on what lender to use and thus seek the help of a loan intermediary.


Direct Lenders often have lower interest rates and payments than indirect lenders do.


They also often come with better payment plan options because they can offer more flexibility since they are the actual lender.


Customers often experience less pressure from direct lenders because direct lenders don’t have to make loan sales for other lenders the way indirect lenders do.


You also won’t have to deal with loan negotiations that can get messy and complicated with a direct lender. Everything is just written out clearly ahead of time so you know the kind of loan you are signing up for before you even apply.


Your private and personal information is also more protected with a direct lender since direct lenders don’t send your application information to multiple lenders like indirect lenders do.


Instead, your application information just goes to the direct lender.


Business Lending vs Consumer Lenders


Business Lenders lend funds specifically to businesses while Consumer Lenders lend funds to individuals.


Some lenders offer loans to both businesses and consumers while other lenders only offer one or the other.


Direct Lender Loans


A direct lender loan is the best type of loan because you’ll be dealing directly with the lender instead of with a third-party loan intermediary.


A direct lender loan may be able to get you better interest rates, better payment options, more flexible loans, more personal customer service, and more transparent loan terms.


Direct Lender Installment Loans For Bad Credit


Direct lenders who offer installment loans are more likely to approve loans for borrowers with bad credit.


Because they have a direct relationship with the borrower, they can offer other forms of loan security, like with signature loans or title loans. That way, borrowers with bad credit still have loan options available to them too.


Guaranteed Payday Loan Direct Lender


Payday loans are a type of loan designed to help borrowers get to their next paycheck sooner.


Payday loans are a quick and small loan designed to be paid off quickly. The purpose of a payday loan is to give customers quick, emergency finance options for when they need them most.


The payday loan process is much faster with a direct lender. A speedy approval and funding process for payday loans is essential to getting customers the funds they need right when they need them.


Direct Lender Online Installment Loans Instant Approval


When you work with a direct lender you can sometimes get instant approval or preapproval for loans.


That’s because you are working directly with the actual lender so they can quickly make those loan application decisions for you.


Indirect lenders don’t usually have the power to grant instant approvals or preapprovals for loans because they are not the lender.


Check City is a Direct Lender


Is Check City a direct lender? Yes!


Since Check City is a direct lender you can take all your loan questions and concerns to us directly. You can also get some of our loans as quickly as the same day with direct deposit or by coming into your nearest Check City Store.


Check City is a Licensed Lender


Is Check City a licensed lender? Yes!


You can take a look at Check City’s lending licensing by visiting our Responsible Lending Statement Page or our State Licensed Lender Page.


Because Check City is a licensed lender we have to meet all the important requirements set to keep our lending secure and safe. And we’re glad to do it!


In Conclusion,


The best loans come from lenders who are both direct lenders and licensed lenders who comply with both the state and federal rules and regulations.


This is the best way to make sure your loan comes with the best terms and the most security.



The Balance: Small Business. “What Is Lending? Definition and Examples of Lending,” by Jean Murray.

Utah Department of Financial Institutions. “Consumer Lending.”

Investopedia. “Mortgage Broker vs. Direct Lender: What’s the Difference?” by Zina Kumok. “Loan Officer License Information: Everything you need to jump start your career and earn your Loan Officer License!”


written by Kimber Severance, Check City Copywriter

What is ACH Payment?

making an ACH payment online

You may not realize it, but you probably use ACH payments more than you know.

Explore this Guide:


If you’ve never heard of ACH then this article is for you.


Most likely, it’s a network you use a lot without even realizing it.


What is ACH?


The term ACH stands for Automated Clearing House. It is run by the National Automated Clearing House (NACHA), which is where it gets its name.


It is an electronic system that transfers funds. This electronic money transferring system is most commonly used for payroll, direct deposit, tax refunds, online bill pay, tax payments, loan payments, and other payment or electronic money transfers.


It is how we move money digitally. In fact, it is so essential to modern-day finances that almost 93% of Americans use the Automated Clearing House to get paid.


What is Automated Clearing House?


Automated refers to the fact that it’s an automated system. This is what makes ACH ideal for transferring electronic funds because the system does it automatically and no one has to manually process each transaction.


The Clearing House is the electronic network that electronic transactions go through to get processed safely and securely. This way each electronic transfer doesn’t have to go through lots of other channels to get to where it needs to go.


The Automated Clearing House network can handle our electronic money transfers in the fastest, most secure, and most direct way.


It is used by US financial institutions, businesses, government organizations, and individuals.


What is ACH Number?


An ACH number is an ACH routing number unique to a financial institution. Banks and credit unions use this number to transfer funds from bank to bank.


This 9-digit number can also be referred to as the routing number for electronic deposits or direct deposits.


The ACH routing number may be different than the routing number on your checks or the routing number used to wire funds to or from your financial institution. It’s important to ensure you have the correct ACH routing number when providing this to the transmitter.


ACH Number vs Account Number


An ACH number is the financial institution’s account number for electronic deposits and transfers.


An account number is the routing number of someone’s personal financial account, whether that’s a bank account or credit union account.


Each bank account number has a unique account number with 8 to 12 digits. Think of it as a unique identification number for your personal financial account. Meanwhile, the ACH number is the unique identification number for financial institutions.


What is ACH Payment?



An ACH payment is an electronic payment. Electronic payments use the Automated Clearing House system in order to process the electronic money transfer.


If you make an online payment to pay a bill or a loan payment, it might get referred to as an ACH payment.


ACH Payment Examples:

  • Credit card bills
  • Debit card payments
  • Other bills
  • Subscription payments
  • Sending money using Venmo or Paypal


What is ACH Transfer?



When you transfer money online you are making an ACH transfer. Whether you’re moving money from one account to another or sending money to a friend with PayPal or Venmo, you’re using the Automated Clearing House to transfer those funds.


ACH Transfer Examples:

  • Sending money using Venmo or PayPal
  • Transferring money from bank account to another
  • Transferring money from your checking account to your savings account
  • Direct deposits like paychecks or tax refunds


What is an ACH Transaction?



When you buy something online or use an electronic payment method like a debit card or your phone, you’re making an ACH transaction.


ACH Transaction Examples:

  • Direct deposit
  • Paychecks
  • Automatic bill payments
  • Making electronic purchases
  • Transferring money to an online bank account


What is ACH Credit



A credit to your account is when funds are added to your account.


An ACH credit is when funds are given to an account through an electronic deposit.


When you receive a direct deposit of some kind you can refer to that online transfer as an ACH credit because the Automated Clearing House is the system the funds went through to get to your account.


ACH Credit Examples:

  • Paychecks
  • Government benefit checks
  • Tax refunds
  • Depositing money into your online account
  • Getting a refund


What is ACH Debit



A debit is when funds are subtracted from your account.


An ACH debit is when funds are sent from your account through an electronic withdrawal.


Anytime you make an electronic payment you are using the Automated Clearing House to securely transfer those funds from your account to somewhere else.


These debits are often scheduled to be paid automatically on scheduled dates. Using ACH to set up automatic payments is a great way to make sure you always pay your bills on time.


ACH Debit Examples:

  • Utility bills
  • Rent
  • Mortgage payments
  • Credit card bills
  • Loan payments
  • Subscriptions
  • Making purchases online


What is an ACH Deposit



ACH deposits are when funds are added to an electronic account through electronic means. These deposits allow companies and individuals to send and receive money from their online accounts.


ACH Deposit Examples:

  • Paychecks
  • Interest payments
  • Social security
  • Tax refunds


What is an Originator?


An originator is a word often used for the person who starts the electronic transfer. So if account A is sending money electronically to account B then account A is the originator and account B is the receiver.


The originator’s account might also be referred to as the Originating Depository Financial Institution (ODFI), while the receiver’s account might be referred to as the Receiving Depository Financial Institution (RDFI).


How Does ACH Work?


First, the originator makes the first move to begin the electronic transaction. The originator will have to provide accurate information like the account and routing number of the receiver for the electronic ACH file.


Second, the file with all the necessary information for processing is electronically sent to the Automated Clearing House network.


Third, the Automated Clearing House will automatically and electronically go through, verify, organize, and schedule the files they receive.


The ACH network holds the electronic transactions and sends them out in groups or batches at scheduled periods throughout the day. This makes the deposit system faster so it doesn’t get overloaded at any one time.


Is ACH Secure?


Using the Automated Clearing House to handle your online transactions is one of the safest ways to manage your electronic funds. Since it is operated by the National Automated Clearing House Association you can rest assured knowing your electronic transactions are being handled with the utmost security.


The only real risk in using this electronic money handling network is that you’ll need to use your bank account number to send and receive funds. Some personal information is almost always required in any financial transaction though. So long as you are careful to only give this sensitive information to legitimate people, businesses, and employers your risks are low.


How Long Does it Take for ACH to Deposit?


Because of the batch processing system the Automated Clearing House uses to process electronic transactions faster, deposits can take as little as 1 to 4 business days to fall into the receiver’s account.


If you send a deposit during a weekend or holiday, then those funds might not drop until 1 to 4 business days after the holiday is over.


But many times funds can be deposited into an online account that very same day.


ACH vs Wire Transfers


Though very similar, Automated Clearing House transfers and wire transfers have a few key differences.


Wire transfers are electronic transfers between bank accounts and Automated Clearing House transfers are direct deposits.


ACH transfers are usually free, processed in batches instead of one by one so they get processed faster, and are automatically processed instead of manually processed by a bank teller.


Wire transfers can be sent and received internationally though, while ACH transfers are a network that only operates in the US.


Reasons to Use ACH


  • Get your funds faster
  • Cheaper way to send and receive money without the fees you would have for transactions like cashing a check
  • Secure way to send and receive money from your account
  • Can schedule regular payments
  • Paperless money transfers are better for the environment and less hassle for you
  • Won’t miss payments if your payments are electronic and automated
  • Electronic ACH payments can’t get lost in the mail


One downside is that since the Automated Clearing House is an automatic payment you do run the risk of accidentally not having enough funds in your account when the scheduled payment occurs.


You still need to be aware of when you have payments scheduled so you can make sure you have enough in your account.


In Conclusion,


The ACH network is something many of us use every day without even knowing it.


But understanding more about what it is and how it works can help you make better decisions when sending and receiving money and can help you understand your personal finances on a deeper level.



Bureau of the Fiscal Service. “Automated Clearing House.” “What is ACH: ACH Almost Certainly Touches your Life.”

The Balance. “What Does ACH Stand For?” by Justin Pritchard.

Investopedia. “ACH Transfers: What Are They and How Do They Work?” by Rebecca Lake.

Investopedia. “Automated Clearing House (ACH),” by Will Kenton. “History of Nacha and the ACH Network: A Proud Past and a Vision for Tomorrow.”


written by Kimber Severance, Check City Copywriter

Loan Terminology You Should Know


Check your knowledge of basic loan terminology.

Explore this Guide:


There are many reasons to get a loan.


Loans can help you get the things you need now instead of waiting years to save up.


They can help get you the car you need to get to work, a home to call your own, or even help you pay your bills on time to avoid hard-hitting late fees.


Before you take advantage of what different loan services can do for you, you should take a moment to test your knowledge of basic loan terminology.


Automated Clearing House (ACH)


The Automated Clearing House (ACH) is a program designed for processing online financial transactions. It can help with credit transfers, direct debits, direct deposits, and fee charges.


This is the program that allows borrowers to select auto payment options and direct deposit.




The term amortization means to gradually pay off a debt through making planned payments on the principal and interest over time. This is similar to installment loans where you make loan payments in installments rather than all at once.


Amortization is when you spread out the cost of a loan or debt over a period of time. Amortization calculators are then used to figure out how much each installment payment should be.


Annual Percentage Rate (APR)


Annual Percentage Rate (APR) is the interest rate of a loan over the course of one year. It’s how much interest would be applied to your loan over the course of an entire year.


APR also includes more than just the interest rate. It includes all of the extra rates and fees you would pay for a loan.




The person who fills out the application for a loan is called the applicant. The applicant can also be referred to as the borrower.




Another term for the applicant is the borrower. This term is used to refer to an applicant who is applying to borrow funds through a loan service.




A co-signer is someone who also signs the loan application.


They aren’t the main applicant or borrower but they are helping the main borrower secure the loan by also signing the application. This additional signature helps secure the loan because the cosigner takes on responsibility for the loan as well, helping the applicant look more secure in the eyes of the lender.


Debt Consolidation


Debt consolidation is an important type of debt refinancing for people with high consumer debts.


To consolidate means to bring many things together into one. When you consolidate debts, you bring many debts into one loan. This allows you to pay off debts and start fresh with one single loan.


For example, if you have debts on several different credit cards, you could use debt consolidation to pay them off and stop paying all those different interest rates.




When you default on a loan, you fail to meet an obligation on your loan contract. This could mean you didn’t make a payment or were late making a payment.




When something is deferred it is put off or delayed.


You can apply for a loan deferment if a loan company offers deferments and you meet their deferring requirements. Then you can defer, delay, or reschedule your loan payments.


Deferments are helpful when something like a late paycheck makes it difficult to repay the loan.




A downpayment is the first payment you make on a large purchase that requires a loan.


Often, the higher initial payment you can make, the less you’ll have to pay off later via the loan, and you can sometimes get better payment options and interest rates too.


Fixed Rate


A fixed rate is a type of interest rate that remains the same during the life of the loan. Other loan types might change the interest rates at certain points during the loan’s life depending on what’s outlined in the loan agreement.




The interest is an extra percentage that accumulates during the life of a loan. This is what helps pay the lender for issuing the loan in the first place.


Each lender has different practices for how interest percentages are applied and how interest payments are made.




A lien is what you grant a lender when you give them partial ownership of one of your assets during the life of a loan.


Liens are often used in Title Loans, also frequently referred to as auto loans. A lien gives the lender partial ownership on the title of your car to secure the loan while you pay it off.


Using collateral like a lien on the title of your car can help borrowers who have low credit scores and need another method to insure the loan.


Loan Approval or Loan Commitment


When your loan application gets approved it might be called a loan approval or a loan commitment.


Loan approval might also differ from your loan commitment, because there could possibly be a final step involved in the loan approval process that is for you to actually commit to the loan agreement upon accepting your loan approval.


When your loan application gets approved, you’ll most likely receive a notification from the lender through the contact information you provided them on your loan application.


Loan Denial


When your loan application gets denied you’ll receive a formal loan denial often in the form of a letter or email. This formal loan denial notification will often tell you the reason your loan was denied.


This could be due to something on your credit report like high debts or a low credit score. It could also happen because the lender just needs some more information from you or something was incorrect on your loan application.


Loan Underwriting


Loan underwriting refers to the loan terms and application and approval process of a loan.


During the loan approval process, a lender needs to look at certain things to see whether you qualify for the loan. A lender will look at an applicant’s credit score and any other financial information like your financial capacity and collateral.


The loan’s underwriting includes all the qualifications a borrower needs to meet before they can get approved for that loan.




A mortgage is a type of loan used for purchasing a home.


Real estate has its own loan type because mortgages come with unique requirements and characteristics because property and ownership are involved.


Origination Fee


Loan agreements often come with fees. An origination fee is one of the first fees you pay when getting a loan.


This fee pays for the loan company’s handling and managing of the loan.


The origination fee is meant to cover the costs of processing your new loan. Hence the reason it’s called an origination fee, because it pays for creating a new loan.




When a lender offers pre-approval, this means that they offer the ability to apply before applying.


They can quickly tell if you would get approved for a loan and let you know if you are pre-approved. Then you can decide whether you want the loan or not.


Pre-approval is a quick way to know early on what loan products you qualify to take out.


Preliminary Disclosures


A preliminary disclosure is a brief overview of your financial assets and standing.


It lists your general assets and liabilities or the things you have financially working for and against you. It’s a financial inventory that helps lenders understand where you stand financially.


There’s also a final disclosure that gives more details about your financial inventory.


Preliminary Title Report


A title report is a report that outlines all the details of ownership on a title, like liens. A preliminary title report might be a briefer overview for the sake of time and efficiency when applying for a title loan. It goes over the basic property records.


Primary Residence


Your primary residence is the main place where you live. Some people might frequently stay with family members, but your main place where you live the most is your primary residence. It’s where your bedroom and most of your things reside.


Lenders need to know your primary residence so that they can send any important mail to the correct address where you will be the most likely to get it.




The principal balance is the initial starting amount of the loan. For example, if you take out a loan for $100 then $100 is the principal.


But by the end of the loan, with all the accumulating interest, rates, and fees added, the loan amount might grow beyond $100.


Promissory Note


A promissory note can also sometimes be called a note payable.


This note is a legal promise in writing to pay a certain sum at a certain time. Promissory notes might be used when someone is indebted to someone else and will outline all the terms of that debt.




Refinancing is when you take an existing loan contract and adjust it. Often refinancing is used to help stretch out payments over a longer period of time in order to lower your monthly payments.


It can also be used when you need a bigger loan and want to refinance for a larger loan sum.




The title of a car is what tells you who owns the vehicle. The title to a house or property also outlines the ownership of that property.


If you are still paying off a car or home loan then the lender will also be on the title.


If you take out a title loan then the loan company will also temporarily take out a lien and appear on the title of the car during the life of the loan.


Variable Rate


A variable interest rate can also be called an adjustable rate or a floating rate. This type of interest is not fixed and becomes higher or lower depending on a benchmark interest rate or market index.


In Conclusion,


If you’re going to get loans you should know what different loan terminology means. This will help you be more aware of the loan process and know you’re getting the best loan product around.


Find the best loan products around at your nearby Check City or by visiting Check City’s online loan services!



US News. “What Is Loan Underwriting?” by Ben Luthi.

Investopedia. “Principal,” by James Chen.

Real Estate Lawyers. “What is the Preliminary Title Report?” by AUTHOR.

Credit Karma. “What is APR and why is it important?” by Lance Cothern.

Investopedia. “Variable Interest Rate,” by James Chen.

Investopedia. “Amortization: What is Amortization?” by Alicia Tuovila.


written by Kimber Severance, Check City Copywriter

What is an Annuity?

annuity definition

Annuities can be a helpful financial tool for retirement. They can create regular income payments in your retirement years and defer year-end taxes as you grow your annuity balance.

Explore this Vocabulary Guide:

What is an Annuity?

The word “annuity” means “series of payments.” Annuities are a type of fund often created through a contract with your insurance. Annuities are a fund created to be paid back to you, usually at a later date. Annuities are often set up for retirement.

Annuities are usually set up in the following way: you make regular payments into the annuity account, the balance in the annuity can grow tax-free, and then at the time you’ve specified in your annuity contract, payments from that annuity will get paid back to you in installments, like an allowance.

An annuity is different from a 401K because when you receive your annuity payments back, they are subject to income tax.

Immediate Annuity

Many annuities are set up so you can only start receiving funds after a certain age or after you’ve retired. But immediate annuities are set up so you can start receiving payments right away.

An immediate annuity can also be called an immediate payment annuity, a single-premium immediate annuity (SPIA), or an income annuity. It is a type of annuity that guarantees income to the annuitant almost immediately.

Immediate annuities are created when an annuitant pays a lump sum into the annuity all at once. Then those funds become available in regular repayments to the annuitant sooner because they didn’t have to wait for the annuity balance to grow.

Deferred Annuity

A deferred annuity is the most common type of annuity. Deferred means that this annuity is set up to start making payments to you only after a certain date in the future.

When you start receiving payments, how long you receive payments, and how much you receive in each payment are all things you determine in your annuity contract.

Delaying payments in a deferred annuity plan helps you make smaller deposits to grow your annuity funds over time. Your annuity funds are also not subject to income tax so long as they remain in the account.

Variable Annuity

Variable annuities allow you to fund your annuity balance through investments. Then, the annuity pays you back depending on how well those investments do.

The risk with variable annuities is that if your investments do poorly, your payments might be lower. But if your investments do well, then a variable annuity can pay better than a fixed annuity.

Fixed Annuity

A fixed annuity is not based on the annuity owner’s investment portfolio. Instead, a fixed annuity is funded directly by the owner. Then, a fixed annuity will give the owner fixed payments that don’t fluctuate the way an account based on investments might.

Fixed annuities usually have an accumulation phase when the annuity owner is putting money into the account. Then the annuity has a surrender period when the insurance company will pay back the annuity balance to the owner in regular installments.

With a fixed annuity, these payment amounts are guaranteed to stay the same.

Fixed Index Annuity

A fixed index annuity is like a combination of variable and fixed annuities. A portion of the annuity balance is based on the performance of your investments. But a fixed index annuity will help protect your payments if the market goes down.

A fixed index annuity provides the best of both worlds: guaranteed protection for your payments, but allow for potential growth.

How Do Annuities Work?

Basically, an annuity is a funding account designed to set up regular payments for yourself.

When setting up an annuity you’ll have to set up what type of annuity you want, how long you want to let the annuity accumulate and grow, when you want to start receiving your annuity funds back in payments, how regularly you want to receive those payments, and how much you want those payments to be.

Annuities can provide a stream of income in your retirement years and can sometimes offer higher returns than the funds you originally put in. Every insurance company will have their own practices for how they handle annuities. Make sure you speak with a provider to thoroughly understand the annuity contracts they offer.

Income Annuity

An income annuity is a type of immediate annuity. As soon as someone takes out the annuity they start receiving payments from it, but the amount of each payment might vary.

Income annuities are called income annuities because they are designed to act as regular income and are often used to fund someone during their retirement years.

Present Value of Annuity


The present value of annuity refers to how much funds are needed at the present time to fund future payments. The present value of annuity takes into account the change in money’s value over time and helps you see which will yield higher returns for you, taking out a lump sum right now, or spreading out your withdrawals in regular payments over time.

Future Value of Annuity Calculator


The future value of annuity determines the value of your future payments. The future value of annuity takes into account the rate of return or the interest rate. If your annuity has a higher interest rate than your annuity’s future value will grow.

Annuity Calculator

A good annuity calculator will help you figure out and decide on several things: the withdrawal amount, the intervals between withdrawals, the principal, the interest rate, and how long the annuity will last.

The principal refers to the lump sum you initially start out within the annuity account. All of these variables are things you’ll need to decide, figure out, and research so that your annuity works for you. You can find an exceptional annuity calculator on Bankrate by clicking the link here: Annuity Calculator at Bankrate

Annuity Formula

There are several complex annuity formulas you can use to help you figure out parts of your annuity. With annuity formulas you can find the future value of your annuity payments, the present or current value of it, the periodic payments when the present value is known, the periodic payments when the future value is known, the number of payment periods when the present value is known, and the number of payment periods when the future value is known.

You can find all of these annuity formulas and an explanation of each formula variable on formula sheets like the one in the following link: Annuity Formulas at Time Value of Money and Financial Calculator Tutorials

Annuity Rates

Multi-year guaranteed annuities (MYGAs) are fixed annuities with a guaranteed interest rate. MYGAs are usually set up for 1 to 10 years. According to research done by, the best annuity rate for MYGAs is 2.8% for a 10 year plan, 3.1% for 7 years, 2.7% for 5 years, and 2% for 3 years. is a great place to research the best annuity rates because they fact check their information and they update their rates table frequently.



Investopedia. “Annuities Guide.”

The Balance. “How Deferred Annuities Work for Long-Term Saving.”

CNN Money. “Ultimate guide to retirement: What is a variable annuity?”

Nationwide. “What is a fixed indexed annuity?”

Credit Karma. “How do annuities work?”


written by Kimber Severance, Check City Copywriter

What Does APR Mean?

what is APR?

APR Definition: APR stands for Annual Percentage Rate and refers to the percent a loan customer or credit card holder will pay in interest and fees over the course of a year.

Explore this Vocabulary Guide:

What Does APR Mean?

Annual Percentage Rate (otherwise known as APR) is a percentage of all the fees and extra costs of a loan over the span of one year. This number helps loan customers understand the overall added costs of a specific loan option so they can more easily compare rates between different lenders.

Example of APR

APR example

In order to truly understand what APR means it helps to have an example. Say you want to borrow $100 and the lender or credit card charges a 10% APR. To figure out how much you’ll actually end up paying, you’ll want to multiply $100 by 0.10 (10%). You’ll end up paying $10 in interest and fees.

The Purpose of APR

There are a lot of different kinds of rates and terms that go into taking out a loan and it can all get confusing to add up. This is where APR can help simplify the overall costs of different loan options.

APR shows an overall percentage of how much you would pay in additional fees to borrow during a full year.

But there are reasons to not only consider APR when shopping for a loan:

You might not be borrowing for an entire year. You might only be borrowing for a few months or even a few weeks instead of a matter of years. If your loan term is shorter than a year then you might not end up paying the full APR’s worth of extra fees.

You also might not pay interest rates and fees all at once. Instead, you might be charged interest on your loan throughout the life of the loan, which will affect how some fees get calculated and how and when you pay them. Many lenders will charge their interest a little here and a little there throughout the life of the loan rather than all at once.

You might refinance the loan. This rate also doesn’t consider that you might refinance the loan, which can also change this math. You might need to increase the amount of your loan at some point or extend your loan term in order to make smaller payments. Refinancing will then affect how much interest you end up paying.

APR Calculator

calculate APR

If you want to figure out how to calculate APR, don’t worry, it’s actually really easy. By calculating your APR into a daily rate, you can better understand how much a loan’s APR will affect you.

All you have to do is divide the APR percentage by the 365 days in the year. So if your loan has a 10% APR, you will divide 0.10 by 365 to get 0.000274. Then you take this number and convert it back into a percentage by moving the decimal to the right 2 spaces. This means that the daily rate of the loan is 0.0274%.

APR vs Interest Rate

The interest rate is an extra percentage that a lender charges a borrower for the risk they take in letting you borrow. But the interest rate is its own fee and doesn’t account for any other fees or charges that might be involved in the loan.

APR accounts for the interest rate and any additional fees that might be involved. Because of this the APR is a higher number than the interest rate and works well as an overall comparison number between loan options.


APY stands for Annual Percentage Yield. It can also be referred to as the Effective Annual Rate (EAR). It takes even more costs of a loan into account than APR since it also includes compound interest.

Compound interest refers to the way interest gets applied to the loan. For instance, some loans will “compound” or apply interest once a day, once a month, or once a week, depending on the lender. How interest gets applied will change how much that interest ends up affecting your loan. APY takes this into account.

What Does APR Mean on a Credit Card?

APRs are going to impact credit card holders differently from loan borrowers. For example, many credit cards will have multiple APRs that change depending on the transaction. When you use your credit card to take out cash you might have a different APR applied to that transaction then if you were using those credit card funds to make a purchase.

Credit cards with a 0% APR will often have restrictions on what you can and can’t do with your credit card funds. For instance, you might not be allowed to borrow on a 0% APR card for longer than a few months before an APR will be applied.

We also sometimes use credit cards differently than we use loans. Loans are for larger one time purchases, but credit cards are often used more gradually and for longer periods of time. Credit cards can also come with perks that might make higher APRs worth it. APR might also not affect your credit card usage as much as it would a loan if you are good about paying off your credit card bills each month before they can accumulate much interest, if any.

What Does APR Mean for Cars?

APR will also have specific pros and cons when taking out a car loan. Title loans are when a borrower uses their car as collateral to borrow a loan, while an auto loan is used to purchase a vehicle. Either loan will be paid in installments for a matter of months or years and can often include APR penalties for missed or late payments.

On average, auto loan rates in the US are around 5.27% for a 60 to 80 month loan term. But many car loans end up being for longer than 60 months, creating higher and higher APRs. Lower credit scores and the condition of the car can also be factors in increasing the APR on a car loan.

What Does APR Mean for Mortgages?

One of the key features of APR is that it includes the interest rate and any other fees or charges tied to the loan. This is especially relevant with mortgages, or home loans. When purchasing a home, there are many costs involved. Your mortgage will include many of these extra costs and this additional loan cost will be reflected in your mortgage’s APR. Some of these extra mortgage costs include payments to the real estate broker, origination charges, inspection fees, and closing costs.

Different Kinds of APR

APR can be implemented in a variety of ways. Because of this, it is important to understand what type of APR is being applied to your loan or credit card.

Variable APR

When an APR is described as “variable” that means that the APR rates change over time. This can be a benefit because the APR could lower later, but it could also get higher. Whether they rise or lower usually depends on what the general APR rates are doing in the area.

Variable APRs can also rise due to a penalty. So if you fail to make a payment on time or if you default on the loan your variable APR might increase.

Fixed APR

When an APR is fixed a borrower will know all the logistics of your loan upfront. The rates don’t change over time or fluctuate with the market. Instead, borrowers receive a set rate when they first start the loan and that percentage stays the same for the life of the loan.

Fixed APRs are beneficial because they won’t get higher one day, but they also don’t get a chance to lower your APR later either.

Multiple APR

Sometimes your loan or credit card will have different APRs for different transactions. For instance, you could have a different APR applied when you transfer a balance and a different one applied when you take out a cash advance. Most often, multiple APRs are used for credit cards.

0% APR

A 0% APR means that the amount you borrow isn’t being charged an interest rate. But for most loans, a 0% APR doesn’t last forever.

Many lenders who advertise a 0% APR have many restrictions and caveats surrounding that 0% APR that they aren’t telling you. They might have higher fees elsewhere in their application process, or the 0% APR is only for a certain amount of time or for up to a certain monetary amount. For example, a credit card featuring a 0% APR might only apply for the first 15 to 18 months and then the APR changes.

A 0% APR means that you pay no interest on new purchases and/or balance transfers for a certain period of time. The best 0% APR credit cards give 15-18 months without interest. But the average 0% APR intro period is about 10.5 months for cards offering 0% purchases.

Why It’s Important to Understand APR

If you are shopping for a loan near you or looking to apply for a new credit card, it’s important you understand what APR is and how it applies to you. Once you understand what APR is, you can better utilize APR rates to understand which loans and credit cards are the best options for you.

All loan and credit card shoppers should gain a thorough understanding of APR before they apply for a new loan or credit card.


written by Kimber Severance, Check City Copywriter

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