What is an ACH Authorization?


Ask A Lender and Get an Answer
It seemed strange to me that my lender asked for authorization to automatically withdraw money from my account. Is this legal? What kind of authorization is this ACH Authorization and is it possible to avoid granting it to the lender?

– Susie


The Answer

When you are applying for a payday loan, your lender will require you to sign the agreement that is known as an “ACH authorization” to accept the loan.

“ACH” stands for “Automated Clearing House.”

Simply put, when you provide a lender with this authorization for your bank or credit union account, you are giving them the legal right to pull the amount due on your loan plus interest from your account on the due date.

If you provide this authorization and change your mind, you are within your legal rights to submit an official revocation at any time. If you do this, the lender is no longer legally authorized to take money from your account.


SDL365 Works with Lenders That are Members of Online Lenders Alliance
The answer on this page is provided in collaboration with some of our trusted lenders who are proud members of the Online Lender’s Alliance. The purpose of the provided answers is to inform the consumers about the specifics of online lending. It should not be treated as legal advice or regulatory guidance. The information is updated periodically and may include links or references to third-party resources or content. SDL365 does not endorse any third-party nor does it guarantee the accuracy of the third-party information. We encourage you to consult other resources that might serve your needs and take into account your particular situation.

 

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