Unlike traditional financial institutions, where eligibility for a loan is determined by credit score, Binance offers users cryptocurrency loans with collateral at reasonable interest rates. Borrowing and repaying loans from cryptocurrency exchanges is easy, especially since Binance offers users a wide range of crypto assets.
How do Binance crypto loans work?
Binance supports many loan and collateral assets including BTC, ETH, USDT, BUSD, BNB, etc. The latest list of supported assets and interest rates can be found on the Binance Loans page.
Binance loans come in two types: flexible and stable. However, the interest rate and borrowing limit will vary depending on the crypto assets you plan to borrow and whether you are a VIP or regular user. Interest is also calculated hourly or annually.
The two loan types have terms that appeal to different users based on the amount you plan to borrow and the interest rate.
flexible interest rate loan
This independent overcollateralized perpetual loan product allows you to borrow cryptocurrencies using your crypto assets as collateral without committing to a specific loan term. This loan option will incur interest on the virtual currency borrowed, and the interest rate will depend on the type of virtual currency borrowed and current market conditions. Interest accrues every minute and is added to the total loan balance. You can repay the loan at any time without penalty.
If you choose a Flexible Rate Loan, you will automatically be enrolled in the Simple Earn Wallet and will be able to earn daily rewards by depositing cryptocurrencies with flexible or locked terms.
You can also use borrowed cryptocurrencies for various purposes such as trading, margin trading, and staking.
stable interest loan
This loan type allows you to borrow USDT or BUSD against your cryptocurrency holdings. Since the loan is collateralized, you will need to provide Binance with the equivalent cryptocurrency. The interest rate for stable loans is fixed and based on the loan-to-value (LTV) ratio, which is the percentage of secured loans. For example, if your LTV ratio is 50%, you will need to give Binance twice as much crypto as you borrowed.
This loan type is a good option if you need immediate access to cash and have crypto assets you want to use as collateral. The fixed interest rate makes it easy to make a repayment plan, and the LTV ratio allows you to stay within your budget.
How does collateral work with Binance loans?
Binance allows you to borrow 10x your assets and up to 65% of your collateral value. However, the amount that can be borrowed and collateralized differs depending on the crypto asset.
Collateral is held as collateral for the crypto assets you borrow. However, Binance reserves the right to claim collateral if the current loan value and collateral value exceed the borrowed collateral value.
The current loan value and collateral value (LTV) can exceed the liquidation LTV if the value of the borrowed assets increases or the value of the collateral decreases.
How to get a Binance crypto loan
Before borrowing a cryptocurrency loan from Binance, you should be aware that the exchange requires collateral and has a minimum amount you can borrow depending on the assets required to process the loan. Here’s how to get a cryptocurrency loan on Binance.
- If you don’t have a Binance account yet, create one and verify
- On the Binance homepage, hover your mouse over payment and click binance loan.
- Select the type of loan (stable or flexible) and enter the amount you wish to borrow. Then select a collateral asset. Based on your initial LTV, the system will instantly calculate your collateral amount. Also displayed are the annual and net annual interest rates, the estimated hourly interest rate, and the liquidation price.
- Be sure to read and agree to the Binance Loan Service Agreement and Simple Earn Service Agreement before ticking the box next to it and clicking start borrowing.
- A pop-up will appear confirming the loan.click confirmation Complete the process.
Here are some tips to keep in mind before diving into Binance crypto loans.
- Choose loanable coins and collateral wisely: Binance supports a wide range of crypto assets as collateral and loanable coins, so it should be considered carefully. Collateral and loan amount are determined by the initial loan-to-value (LTV) ratio, which is the percentage of the loan amount divided by the collateral value. Therefore, the higher the LTV, the higher the risk of liquidation.
- Monitor your LTV ratio: The LTV ratio varies depending on the market value of collateral and loanable assets. Once your LTV ratio reaches 90% or higher, your collateral will be automatically liquidated to pay off your loan.
- Beware of market volatility: The crypto market is volatile and unpredictable. Collateral and loanable asset prices can change rapidly in short periods of time. This can affect LTV ratios and liquidation risk. Therefore, you should always do your research and only borrow what you can afford to lose.
How to pay off a Binance crypto loan
You can pay back your Binance crypto loan by following these steps:
- Log in to your Binance account and[支払い]Hover over and click. binance loan.
- click active loan.
- under Ongoing ordersclick pay back debt next to the order you want to refund
- Enter repayment amount (or click ) Max next to Coins), and select the repayment ratio if you want to pay in bits. Check the box if you want to keep collateral on the order. Review the details and click Confirmation of repayment.
- You will receive a confirmation message once your payment has been processed.
Pros and Cons of Binance Loans over Traditional Loans
Binance offers a convenient and flexible way to borrow crypto assets using other assets as collateral. But how does a loan from Binance compare to a traditional loan?
- No credit check: Unlike traditional loans, loans from Binance do not require credit checks, income or employment verification. All he needs is his verified Binance account and enough collateral to borrow money.
- quick and easy: With its simple and user-friendly interface, Binance allows you to borrow funds in minutes. You can adjust your loan-to-value (LTV) ratio, use borrowed or collateral coins to repay your loan, and renew your loan at any time.
- low interest rates: Binance offers different competitive interest rates depending on loan type, term and coin. You can also enjoy lower interest rates by holding BNB tokens or using them as collateral.
- high security: Binance is a relatively safe and reliable platform to protect your funds and data.
- market risk: Cryptocurrency borrowing is subject to market fluctuations and price fluctuations. LTV ratios and collateral values should be monitored to avoid liquidations that could result in the loss of collateral.
- limited options: Binance only supports certain crypto assets for lending and borrowing, which may not meet some of your needs and preferences. Also, you need sufficient collateral in the supported coin to borrow funds.
- Clearing fee: Once the LTV ratio reaches 90%, Binance will charge a liquidation fee of 2% of the total loan amount. They deduct this fee from the collateral before returning the remaining balance.
Binance makes borrowing and repaying crypto loans easy
Binance offers a convenient and flexible way to borrow cryptocurrencies and use them for various purposes. By following the steps above, you can easily pay off your crypto loans on Binance and avoid unnecessary fees and losses.
Therefore, due to the risks and uncertainties involved, proper research should be done before renting and it is advisable to rent assets only when necessary.