The advancements in modern technology paved the way for the emergence of digital assets or cryptocurrencies such as bitcoin or Ethereum. These are independent of any regulating bodies and heavily rely on blockchain technology. Because of the continuous upward trend of these assets, no matter if their short-term value is largely volatile, people greatly consider investing in these virtual tokens. Aside from a positive revenue that they can attain through trading or long-term investing, they can also use these cryptocurrencies to get loan approval.
Yes, you can get a cash loan by using your digital assets as collateral to your loan.
This type of loan is also known as a collateralized loan. More often than not, collateral is needed because it minimizes the risk on the part of the lender. In case the value of your virtual token decreases past a certain amount, the lender can liquidate part of your assets to bring the loan back to good standing. Since the value of cryptocurrencies is highly volatile, the liquidated amount may not even hurt your long-term investment. Thus, this is also advantageous on your part as the borrower because they still have the right to get the value of their long-term cryptocurrency investment once their loan is fully paid off.
Uses of Long-Term Loans
A long-term loan wherein you utilize your cryptocurrencies as collateral will allow you to make costly purchases such as buying your dream house, or a new car. It can also be that you want to diversify your investments and lower the risk of your portfolio through this long-term loan. Other uses include paying off huge travel expenses, as well as a high-cost debt. For others, they leverage on this loan to fund their business venture. While the purpose may vary from one individual to another, the key is on maximizing their cryptocurrencies for fiat money.
How a cryptocurrency loan works
A cryptocurrency loan works in the same way as other standard term loans. In this case, you borrow the money that you need, and you pay it back, including the interest and fees, over an agreed period. The payment frequency may vary from one borrower to another, and this depends on your loan agreement.
Since cryptocurrencies are independent of regulating bodies, your loan will generally come from other bitcoin users. In this case, you need to factor in the commission on the current exchange rate in the fees that you need to pay. Crypto lenders don’t judge your credit-worthiness through your credit score, but instead, they scrutinize your trust score, which is how much they can verify about your identity.
As soon as they can verify your account, all you need to do is to submit your application form, and you will already receive loan offers. Once you accept any of these offers, you will already be rewarded with your funds almost instantly. Just keep in mind that to leverage on this type of loan, you need to be living in a country where these cryptocurrencies are recognized.
Where can you get a crypto loan
Two of the most reputable platforms where you can get a crypto loan include BlockFi and Bitbond. In both platforms, all you need to do is to apply online and provide details about your digital assets. You also need to verify your email address and complete your profile. You can borrow as much as 50% of the total value of your digital assets. Make sure that you provide the requirements they need, such as your business accounts and social media profiles with verifiable contact information.
On the other hand, you no longer need to use your digital assets as collateral if you only need to obtain a short-term loan. The seasoned lenders and the financial experts behind uswta.org suggest that you should get a short-term loan should you find yourself in a situation that entails the need for a sudden huge expense. Some of the most common types of short-term loans that you can consider are merchant cash advances, lines of credit, payday loans, as well as online or installment loans.
To wrap things up, you can use cryptocurrencies as collateral to apply for a loan. Perhaps this is one of the good reasons why you need to invest in these digital assets already. Aside from this, you can also earn a lucrative sum by trading these virtual tokens, or earn a decent revenue through long-term investing. The key is in exploring the right cryptocurrency that you will put your money into.