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What are crypto loans?

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Fox Business

Tue, Apr 12, 2022

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Aliens TLDR

Crypto loans allow you to use your cryptocurrency as collateral to borrow cash.

If you don’t want to risk your cryptocurrency but need cash, you can consider a personal loan, which is generally unsecured and low-risk.

What is a crypto loan?

How do crypto loans work?

Pros and cons of crypto loans Crypto loan alternatives Crypto loans are secured loans that use cryptocurrency as collateral.

You can get a crypto loan for cash or a stablecoin cryptocurrency, depending on the lender.

SECURED PERSONAL LOANS: WHAT YOU NEED TO KNOW You can apply for a crypto loan at BlockFi, Celsius, Coinbase, and other cryptocurrency exchanges.

When applying for a crypto loan, you choose your payout option (USD or a stablecoin if available) and put up your cryptocurrency as collateral.

Crypto loans generally have low interest rates.

If you don’t want to tie up your crypto assets, consider a personal loan — in most cases they don’t require collateral.

Your LTV is the ratio of the loan amount to the value of your cryptocurrency collateral.

A crypto loan is also an option if you want to make a larger purchase somewhere that doesn’t accept cryptocurrency as payment.

You may have difficulty qualifying for a $50,000 personal loan , for example, but if you have at least $100,000 in cryptocurrency, you can likely get a crypto loan.

Because of that volatility, crypto loans have important benefits and drawbacks to consider: Quick funding No credit check Low interest rates No tax consequences High-risk borrowing Some lenders charge origination fees You can’t sell or trade your collateral cryptocurrency until the loan is paid off Cryptocurrency isn’t federally insured Cryptocurrency can be a high-risk investment, so it’s important to weigh all the potential advantages and disadvantages of a crypto loan before pursuing one.

If a crypto loan doesn’t fit your needs, consider these less-risky financing options: Personal loan — If you have good credit, you could qualify for a low interest rate on a personal loan .

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