Preheat oven to 350 degrees F (175 degrees C). Grease a 9x13 baking dish.
Warm oil in a small skillet. Use tongs to dip tortillas into the oil one at a time, turning to warm both sides. Sprinkle an even amount of Cheddar cheese down the center of each warmed tortilla. Roll tortillas to enclose cheese; place seam side down in the prepared baking dish.
Combine the chili, onion, and half of the processed cheese in a large bowl. Pour the chili mixture over the tortillas; top with the remaining processed cheese.
Bake in the preheated oven until hot and bubbly, about 20 minutes.
