If you’ve been wondering how to get a Bitcoin loan, then look no further—this guide is for you.
After following three quick steps, you can go from Bitcoin loan beginner to pro without having to sell your cryptocurrency. That’s welcome news because it keeps your investment portfolio intact while simultaneously leveraging it for cash.
While Bitcoin loans are a win-win for you and the nascent decentralized finance (DeFi) ecosystem, the most crucial aspects of getting your first Bitcoin loan are all about doing your own research.
Use this guide to determine which Bitcoin lending company is the right fit for you. After figuring out who offers the best terms for your needs, enjoy the flexibility that cryptocurrency lenders provide when compared to traditional lending companies.
1. Choose a Bitcoin Lending Company
Choosing a Bitcoin lending company that suits your needs is first and foremost when landing your first Bitcoin (BTC) loan.
As cryptocurrency loans have gained popularity, more Bitcoin lending companies have popped up, giving you a wealth of options to choose from. Options are great, of course, but there are many differences between them that are important to understand before making your decision.
Additionally, some lending companies have more robust platforms, financials, and wallets covered by insurance—qualities you’ll surely appreciate from a crypto lender.
The best Bitcoin lending companies have not only highly capable teams with vast experience but also firmly established roots in the cryptocurrency loan industry.
However, choosing a Bitcoin lending company isn’t only about the company—it is also about your needs. A few questions to consider when selecting a Bitcoin lending company are:
- How much cryptocurrency do you have to put toward collateral for your loan?
- Which cryptocurrencies will you use for collateral?
- What is your ideal time frame for loan repayment?
- Do you prefer a platform that discounts loan fees if you use a platform token?
These questions—and their answers—are vital to determining which Bitcoin lending company is right for you. Thankfully, many excellent choices in the decentralized finance ecosystem exist, making it easy to find a Bitcoin loan product that works for you.
Best Bitcoin Lending Sites
The best Bitcoin lending sites share one thing in common: fair and equitable cryptocurrency loan rates that equally favor lenders and borrowers. Traditional loan companies tend to feel pitted against borrowers, but that’s not the case when getting a crypto loan.
After having provided billions of dollars in loans to cryptocurrency users since the inception of Bitcoin loans in 2017, the best Bitcoin lending platforms have all coalesced around the principle of providing maximum customer service and security.
BlockFi
As a crypto loan stalwart now considered a veteran of the industry, BlockFi has pioneered the industry and set the trends that have today become standards.
Being a pioneer alone doesn’t make BlockFi one of the best Bitcoin lending sites, however.
Instead, the platform continues to provide leading infrastructure for crypto loans that allow people to refinance costly student loans, purchase homes, and pay down outstanding credit card debt.
BlockFi uses standard 50% and lower LTV Ratios to calculate crypto collateral deposit amounts, then secures your wallet with Gemini Custody, one of the world’s leading crypto custodians.
[lender-shortcode lender=”BlockFi”]
SALT Lending
SALT Lending made waves during its ICO in 2018 for coming to market with a cryptocurrency lending platform.
Back then, the concept of using cryptocurrency to secure a loan was completely foreign. Nowadays, it’s commonplace, and SALT Lending has proven the validity of its concept with millions of dollars’ worth of loans doled out to borrowers.
Compared to other Bitcoin loan platforms, SALT Lending offers higher LTV ratio options (so you can get a larger loan with less collateral) and more collateral deposit options.
The SALT Lending platform also revolves around the SALT token, which you can use to pay down your loan at discounted rates.
[lender-shortcode lender=”Salt Lending”]
Celsius Network
Celsius is doing big business in the cryptocurrency loan world. As of November 2019, Celsius Network had originated over $4.25 billion worth of crypto loans — an industry record.
While most of those loans went out to institutional users, Celsius extends its services to retail users as well. The popularity of Celsius Network loans is such that the platform runs occasional promotions, such as 1% APR on 25% LTV ratio loans when borrowing USD or stablecoins.
Like SALT Lending, Celsius Network offers borrowers the option to repay their loans using CEL tokens at far better rates than when paying off interest with fiat currency.
[lender-shortcode lender=”Celsius Network”]
Nexo
Well over 2,000 cryptocurrencies are on the market today. In fact, diversification has long been touted as a key strategy in cryptocurrency investing.
If you’re looking to get a Bitcoin loan and want to deposit a variety of digital assets to do so, then Nexo is the platform for you. Nexo lets you deposit 24 different cryptos as collateral for its instant crypto credit line.
What’s more, Nexo’s platform is insured by BitGo, a Goldman Sachs-backed custodian that extends $100 million protection to wallets. Finally, Nexo is regulated by Onfido, the same compliance company keeping Coinbase, HSBC, and TransferWise in check.
[lender-shortcode lender=”Nexo”]
YouHodler
While the Bitcoin lending platforms in this section offer years of industry experience, competitive rates, and the backing of famous financial institutions, YouHodler has a different approach.
Rather than mimic the crypto loan structures of those who have come before it, YouHodler has thrown the rulebook out of the window by offering crypto loans at 90% loan-to-value ratios.
In effect, YouHodler makes it possible for those with a small amount of collateral to get an outsized loan using an assortment of today’s most popular cryptocurrencies. The platform also offers unique options such as close without repay—a tool for exiting the loan with a fee.
If you’re big on flexibility and want to put down a small amount of collateral to start, then YouHodler has you covered.
[lender-shortcode lender=”YouHodler”]
2. Find a Loan Offer or Create One
Alright, you’ve found a Bitcoin lending platform that works for you—now what?
Not to worry, the next step is just as simple as the first. It is time to start shopping around for a loan offer or create one yourself.
The best Bitcoin lending sites share one thing in common: fair and equitable cryptocurrency loan rates that equally favor lenders and borrowers.
If you’re unfamiliar with the crypto industry and/or the decentralized financial ecosystem, the very notion of creating your own loan offer might sound downright crazy. But it isn’t, and after doing it, you may find it impossible to go back to ready-made loan offers.
However, custom loans aren’t always necessary because the majority of crypto loans generally fall into the same brackets. Another thing to consider is that crypto loans are a two-way street, meaning lenders will need to be enticed by the offer as well.
To break this down for you, here is a quick guideline to the types of loan options that exist today.
- Loans offered by platforms: These are the types of cryptocurrency loans you can expect to find at the best Bitcoin lending sites. They are standardized according to LTV ratios, cryptocurrencies available to deposit as collateral, interest amounts, and repayment periods.
- P2P loans offered by lenders: These loans operate similar to those offered by platforms, except they are made by individual lenders and exist on decentralized peer-to-peer lending sites.
- P2P loans offered by borrowers: As a borrower, sometimes there just isn’t a loan that fits your needs completely. That’s where decentralized crypto loan platforms come in. They allow borrowers to create custom loan offers that entice lenders to lend to work with them.
So far, decentralized lending platforms allow more customization than crypto loan platforms such as Nexo, Celsius, and SALT Lending, but less in the way of custodianship and insurance. Therefore, regardless of which type of loan you choose, slight compromises will need to be made.
Once you’ve decided on the type of crypto loan offer that works for you, getting started is a cinch and gets you well on your way to DeFi freedom.
3. Agree to Loan Terms and Start Repayments
After choosing a Bitcoin lending platform and either selecting or creating a crypto loan offer, the last step is to put the loan into action.
Agreeing to the loan terms starts the clock on your loan and its repayment schedule. At this point, you’ll have completely ironed out the amount you’re borrowing, which cryptocurrencies are being used as collateral, the LTV ratio, interest rate, and repayment terms.
The details of your cryptocurrency loan are important. Read them closely and follow the loan terms to avoid any unnecessary issues in what is generally a very easy and straightforward process.
FAQs About Bitcoin Loans
Still have questions about how Bitcoin loans work? Not to worry, here are a few quick guidelines that answer your questions about Bitcoin loans.
How does Bitcoin lending work?
Bitcoin lending works by connecting borrowers who want to receive a cash loan with lenders who accept cryptocurrency as collateral. To get a Bitcoin loan, you will use your Bitcoin (or another cryptocurrency accepted by the lending platform) as collateral to secure your loan.
After you have repaid your loan in full, your cryptocurrency collateral will be released back to your wallet.
Because the value of cryptocurrency is volatile, however, you may need to deposit more collateral over the life of your loan or you risk being margin called. If you are unable to deposit more crypto, the lender has the right to liquidate your crypto assets to recoup the value of the loan.
What is a Bitcoin loan?
A Bitcoin loan is a cryptocurrency loan that enables you to borrow cash with your crypto assets instead of selling them.
Bitcoin loans give investors and borrowers a way to leverage their cryptocurrency holdings to borrow fiat money. The advantage of a Bitcoin loan is it gives borrowers access to the capital they need without forcing them to sell their digital assets.
How do I get Bitcoins?
There are several ways to get Bitcoins to use in a Bitcoin loan. You can buy Bitcoin with cash, debit, credit, or with other cryptocurrencies at popular exchanges such as Binance, Coinbase, Gemini, and other trusted Bitcoin exchanges.
Alternatively, easy Bitcoin apps like Square Cash App allow you to quickly convert cash into Bitcoin without having to create a cryptocurrency exchange account.
Final Thoughts on Getting a Bitcoin Loan
Compared to just a couple of years ago, Bitcoin loans are now easier than ever to apply for and receive. Most loans are approved either instantly or within minutes, require zero credit checks, and don’t affect your credit score no matter what happens.
Additionally, getting a Bitcoin loan means you don’t have to sell your cryptocurrency to get cash—a huge boon if you want to stay exposed to the cryptocurrency market.
Considering the speed, ease, and user-friendliness of the best Bitcoin lending platforms available today, you might say Bitcoin loans have become the blockchain’s first notable application.
If you’re ready to dive into your first Bitcoin loan, it never hurts to do as much research as possible beforehand so that you’re 100% comfortable with the process before getting started.
