Let’s talk a little bit about crypto loans here, they are becoming more and more popular each day, and the places you can get loans or lend your money are multiplied by numbers exponentially.
Crypto loans existed already in 2017, but they have come to the knowledge of big audiences this year, and they are blooming. Crypto loans and different variations are available in exchanges, platforms, crypto banks, and more.
The principle of lending money is an easy concept to understand. On the other side, you have the lender, and on the other side, you have the borrower, and of course, in the middle, you have a decentralized or centralized platform facilitating the loan.
If you need a crypto loan, you put their cryptocurrency as collateral, like bitcoin, and you will get a fiat or stablecoin loan. Or you can put fiat or stablecoin as collateral and get your loan as cryptocurrency.
The benefits of crypto loans are countless. First of all, no credit checks. You get the loan instantly after you have the collateral in the lending platforms account. You don’t lose your cryptos, and you use your loan elsewhere as you wish. You can also get the benefits of the possible. If your cryptocurrency collateral value rises, for if bitcoins market price increases and you have it as collateral, you can either take more loans against your collateral or withdraw some collateral back to you.
Vice versa, if the value of your collateral decreases, your lending platform will ask from your margin call, which means you have to add some more collateral to stabilize your loan. Don’t worry. They give you a liquidity alarm right on time, so you don’t lose your assets right away. If you don’t stabilize your assets to its current value, of course, they will liquidate your collateral after all. Of course, depends on the lending platforms, their rules vary, and you should check the loan terms before choosing your lender.
Loan interests can be shallow compared to traditional banks. For example, celsius.networks interest rates start at a 0.7% annual interest rate. In general, crypto loans are very competitive against any conventional bank offers. You should also check the loan to value ratio. It means how much collateral you have to put in against your loan. The percentage varies from…