How to use Binance Crypto Loans.

What Are Crypto Loans?

A crypto loan, much like a securities-based loan, such as an auto loan or mortgage, uses your personal digital currency as collateral when borrowing money. Your digital assets are then restricted from being traded or being used for transactions before you have repaid the borrowed money.

There are many benefits to using crypto lending as opposed to traditional, centralized financial lending, such as low-interest rates, not needing a credit check to access modern financing. Funding through crypto loans is quick when compared to security-based loans.

However, when using crypto lending platforms, the borrowing rate is usually in the single digits, regardless of credit score or past lending situation. The average borrowing rate of Bitcoin (BTC) for example, was about 5% in August 2021.

Crypto lending platforms typically process your loan request within the same business day, rather than the lengthy step-by-step process at a bank to secure a traditional loan.

Uses for Crypto Loans

There are a few reasons why a crypto loan may be attractive to investors. Traders often don’t want to liquidate their assets, and when funds are needed, it is useful to have the option to open a loan. Another common use for a crypto loan would be to receive interest on assets. For instance, traders can use BTC as collateral to acquire a loan in BUSD.

Another reason to use a crypto loan rather than a traditional loan is the speed at which funds can be acquired. BTC loans can be acquired nearly instantly, making your crypto assets extremely liquid and convertible, to capitalize on market opportunities quickly and easily.

Centralized (CeFi) options require KYC, and users must follow regulations. The main appeal for CeFi platforms is that they provide better security and are often backed by a reputable exchange, like Binance.

Both CeFi and DeFi options are entirely transparent and resolve on a blockchain. Also, they both usually offer users the ability to create savings accounts with them.

Binance — One of the Best Crypto Lending Platforms.

Binance, the world’s largest crypto exchange, not only allows you to buy & sell virtual assets in seconds but also to both finance and stake your cryptocurrency. Binance prides itself on being a secure, fast, and elegant solution, attempting to provide monetary freedom across the globe.

Over the last few months, Binance has made massive improvements to its customer support system. During this time period, the active user base of Binance has increased ten-fold, with a positive correlation in customer support requests. This improvement was made possible by creating an in-house customer support service, allowing Binance to properly track support results based on team performance, and assigning agents to assist you based on their expertise within Binance and the broader crypto loaning ecosystem.

— How to Borrow and Repay Crypto Loans on Binance.

Borrowing Crypto Loans on Binance.

Receiving a crypto loan through Binance is easy. While logged in on the official Binance webpage, click “Finance” followed by “Crypto Loans’’, then select the asset you wish to borrow, the collateral asset, and the loan term. Once all of your information has been confirmed, select “Start Borrowing Now”.

Once you have completed this step, you will be asked to confirm your information. It is recommended to read the Binance Loans Service Agreement to ensure you understand the agreement and your responsibility to repay the loan.

The collateral will be removed from your spot account, and the received loan will be replaced with your loan amount. You are now free to withdraw your stablecoin to your bank account or financial institution of choice. The interest rate is charged on an hourly basis, and the loan can be repaid at any time.

How to Repay Crypto Loans on Binance.

To pay off your crypto loan balance, simply select “Ongoing Orders” then “Repay” to first repay the interest of the loan, followed by the principal.

You can either enter the repayment amount manually or select a repayment ratio. After reviewing and double-checking the details, click “Confirm Repayment” to settle the loan. You will receive a confirmation message after your repayment processing has been completed.

4. You will see a confirmation message after the repayment has been successfully processed.

What is the Transaction Fee for Binance Crypto Loans?

By depositing or securing a collateral amount of crypto within your trading account, you are able to borrow USDT or BUSD through the Binance Loans platform. These stablecoins can then be removed from your account and used as you wish.

The amount you are able to borrow is based on your LTV (Loan-to Value) ratio. Taking the desired loan value and dividing it by your collateral value determines the amount you are able to borrow, and loans are fixed at 65% LTV. Interest is calculated hourly, and the loan can be repaid at any time.

Crypto Loans Without Collateral — Is That Possible?

As of 2019, Binance Margin has been enabled on the main Binance exchange platform. By enabling Binance Margin, a third party, Binance, will allow you to amplify your gains on successful trades, but this comes at the cost of multiplied losses.

As opposed to Binance Loans, using margin allows you to use your initial crypto value in a trade, rather than as collateral for access to additional funds. To avoid a “margin call”, or a forced liquidation of assets to cover the lender’s investment, your trade must retain a value that does not go below your initial investment of the margin trade. This is often done in low-volatility markets to prevent margin calls from occurring unexpectedly.

Get started by signing up for a Binance account or download the Binance crypto trading app.