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Most investors wonder how to get a crypto loan once they have a long-term view of the investment so that they can be converted to reinvest or buy other digital assets.
Crypto loans are a hybrid product of the traditional financial system in the form of crypto financing. The cryptocurrency loan system is straightforward: set the amount of cryptocurrency available as collateral and receive real money in the crypto wallet according to the amount pledged. Once the money is deposited in the wallet, the customer can settle them as much as he wants. As soon as the pledged cryptocurrency is needed, the customer can unfreeze the crypto and get his collateral back by paying an annual percentage rate.
To better understand the process and reveal all the nuances of crypto-backed loans, consider the example of crypto lending platform CoinRabbit. Follow these easy steps to get a crypto loan.
choose collateral currency
The first thing to do is to choose a cryptocurrency for the collateral. The platform offers over 140+ currencies, which occupy the top positions worldwide in terms of trading volume. Such a large option helps to use different currencies as collateral, makes the process of obtaining loans more accessible, and protects customers from unplanned drastic changes in price.
Loan-to-value is the disparity between the amount of money borrowed and the actual market value of the currency of the collateral. The larger the LTV, the higher the loan amount to be provided, while the margin call increases. LTV must be selected before collateral can be transferred. It is calculated as a percentage rate. Choose any of the levels offered, changing only the collateral parameters and the size of the loan issued. The terms of payback and LTV have been clearly outlined at the time of transacting. So, LTV is the ratio between the amounts, then a marginal call is a position that seeks to either cut the loan amount or add more collateral to recover the balance.
loan currency selection
After choosing cryptocurrency for collateral, there is a choice of crypto loan currency. Almost all of them are stablecoins that provide liquidity for transactions – they are easy to convert into fiat money and with their help it is possible to buy a wide range of assets or assets. Nevertheless, despite its name, stablecoins have not been so stable lately, so investors should first choose an asset to buy and only then – debt currency to avoid overpaying due to rate changes. .
Loan Verification without KYC
Know Your-Customer (KYC) is a system where loan is issued only after specifying additional personal data. The best of crypto lending platforms offer the possibility of verifying loans without KYC or credit checks. Just fill in a few required fields to make a deal, and all that remains to be done is to just wait to receive the loan cryptocurrency within 15 minutes. If the time to get the loan is more than 15 minutes, it seems inconvenient due to the high crypto market volatility. If the customer can give up identification and receive crypto in the wallet without entering ID or bank card data, this makes it possible to make a cryptocurrency loan for any amount in a matter of minutes.
After signing up or logging in, receive money transfers to any cryptocurrency wallet specified at the transaction conclusion: cold, hot, hardware, local, desktop, mobile, online, and even accounts on crypto exchanges . The range of possibilities depends on the chosen crypto lending platform. Some crypto loan platforms offer full availability in their service to make the user experience not only pleasant but also from a technical point of view.
Have to make an investment strategy
People may ask what they can do with the crypto loans received. Anything! Money received on bail can be spent anywhere – everything that falls into the wallet belongs to the owner and is completely at his disposal:
- Add some promising assets to the portfolio;
- Consolidate a real portfolio;
- buy real estate or property;
- Pay for services in crypto.
no loan payment required
After obtaining a cryptocurrency loan, there is no need to make monthly payments – only under “flexible terms” – of the amount borrowed and the amount consisting of an annual percentage rate (APR). Such a system allows payment to be accumulated every month without spending money. Thus, there is no need to worry about monthly calculations and put money in income-generating assets, after which the earnings from the invested money will cover the final payment with excess.
getting the collateral back at the right time
When borrowing crypto, the size of the collateral amount is not so important as the calculation and exchange rate of the cryptocurrency at a given point in time. For example, with high rates on crypto loan currency, a lot of money can be obtained in return. At the same time, while paying the higher rate, a larger amount has to be returned as per the change in the rate. However, there is also an optimal option: loans for high and repayment for low – this will maximize the payment amount and reduce the one-time payment and APR, which we described above.
keeping all the extra benefits
Cryptocurrency as a type of investment is better than usual. And here’s why:
- Earn on the difference in the exchange rate, keeping the difference between the starting and ending amount;
- invest borrowed funds in any property;
- If the collateral suddenly goes into liquidation, a client and his assets purchased with borrowed money will remain safe, as the loan will be repaid automatically.
The profitability of cryptocurrency loans is unlimited: all pledged crypto remains on the balance, and at the same time, if the rate increases when lending crypto, it increases the amount paid. This gives an opportunity to invest some additional funds in the property. If you have any questions or doubts, try how it works by borrowing for $100 against crypto.
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