Almost everyone has been low on cash at one point or the other or not had sufficient money to do something they wanted to do. This is why people take loans. You get money in advance and you can pay it back once you are in a better financial position.
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As a crypto trader or investor, there are moments when you urgently need fiat but do not want to liquidate your asset. Or maybe you need to get into a trade, but you do not want to touch the crypto you’re hodling. Crypto loans could be very useful for you in such conditions.
What Are Crypto Loans?
A crypto loan is a secured loan which involves the use of the borrower’s crypto assets as collateral to be held by the lender in exchange for liquidity. The borrower must then fulfil the repayment obligations in order to get the crypto back at the end of the loan term. However, if he defaults, the lender can take possession of the crypto assets used as collateral to secure the loan.
Generally speaking, a borrower would be approved for a loan amount which is a percentage of the crypto he has pledged as collateral. Notably, the interest rates are typically lower compared to other financing methods like personal loans and credit cards.
How Are They Different From Traditional Loans?
While the fundamental principles guiding the operation of crypto loans and traditional loans are nearly the same, a distinction may be seen in terms of how the loans are accounted for. Traditional loans are given based on the customer’s credit scores as a determinant for eligibility or the amount which may be borrowable to such customer. However, crypto loans are given based on the value of the crypto being used as collateral.
There is also a marked disparity in the duration of the loans. Crypto loans terms are shorter than traditional loan terms. For example, the loan terms on Binance loans can be as short as 7 days. Also, crypto loans generally operate on hourly interest rather than monthly interest (because crypto is more volatile than traditional currencies, making them riskier for the lender and borrower).
Where Can I Get Crypto Loans?
Binance is the biggest and most popular crypto exchange in the world. Over the years, Binance has continued to deliver on its vision to “Exchange the World” by providing great and useful financial products and services. One of such very useful financial products is Binance Loans.
In my personal experience, Binance Loans is easily the best crypto lending platform out there. Subsequently, I’ll be sharing the reasons why I often recommend it to family and friends.
WHY SHOULD I USE BINANCE LOANS?
Binance Loans is a crypto loans platform through which users can conveniently and easily borrow popular cryptocurrencies. It provides a wide range of options for supported crypto assets, interest rates, collateral assets, and maximum loanable limits based on market conditions, and internal risk management.
Below are some of the perks of using Binance loans:
The loan terms are flexible. Users have the freedom to decide the length of their loan anywhere from 7 to 180 days.
There is no penalty for early repayment. Users are free to repay before the due date if they want to and will only be charged an interest fee based on hours borrowed.
You may use the funds anywhere. There are no restrictions on how or where you can use the funds. You can use it anywhere on the Binance ecosystem or withdraw it.
Loans can be staked. Some collateral assets can also be staked to generate crypto rewards and reduce loan interest.
How Does Binance Loans Work?
Through Binance Loans, Binance provides crypto loans to its users, allowing them to meet their short-term liquidity needs. If you have a Binance account and you have completed kyc, you are free to borrow on Binance Loans.
How to borrow:
Log in and then head to the Crypto Loans page and follow the steps below.
Step 1: Input the amount and crypto you want to borrow.
Step 2: Select the asset you want to provide as collateral. The amount you need to provide will show in this field based on the Initial LTV seen on the right-side panel.
Step 3: Choose the length of your loan (from 7 days to 180 days).
Step 4: Click [Start Borrowing Now] once you’re happy with the details of your loan.
When Should I Use Crypto Loans?
You Need Funds But Don’t Want to Liquidate Your Assets
If you find yourself in a situation where you need some extra funds to enter a trade or meet some immediate liquidity need without having to liquidate your crypto assets, taking a crypto loan is the perfect fix. Instead of liquidating, you can use the asset as collateral to obtain a loan. It’s killing two birds with one stone. You get to meet your immediate need and can recover your crypto assets upon loan repayment.
You Need an Instant Loan
In emergency situations, it makes more sense to get a crypto loan. This is because crypto loans can be obtained almost instantly and approval is almost guaranteed. On the other hand, traditional loans have a much more strenuous application process and longer processing times. Further, traditional financial institutions may even decline your loan application if you do not have an adequate credit score.
You Want to Receive Interest on Assets.
You may use loans as a strategy for making profits. For example, you can use BTC as collateral to acquire a loan in BUSD. Upon repayment, the collateral is returned and if the BTC has appreciated in value, the borrower is left with a profit.
Check Out Binance Loans Today!
As cryptocurrency continues to become more widely adopted, threading the path towards mainstream adoption, crypto users keep looking for new ways to use their crypto assets. Crypto loans is one of these exciting new ways in which crypto assets can be utilised. They are much more preferable to traditional loans. They offer speed, flexibility and accessibility. Borrowers can acquire loans instantly with more flexible repayment time. They make the opportunity to get loans easily available to underbanked populations, as well as persons with little to no credit history.
With Binance loans, crypto loans get even much better with flexible terms, freedom to use the funds anywhere and the loan staking option.
Everything’s better with binance.
If you don’t have an account yet, sign up on Binance today to start enjoying crypto loans: https://accounts.binance.me/en/register?ref=YA35VD1V
Take a Binance loan today: https://www.binance.com/en/loan/busd
The crypto market is volatile and loans come with their own set of risks. Ensure you have more than enough in your wallet or portfolio to cover interest fees, collateral and principal repayment before taking a loan.