What are crypto loans? - Aliens: AI Crypto News & Markets Updates












What are crypto loans?

Fox Business

Tue, Apr 12, 2022


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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