Just like your home or your vehicle, cryptocurrency can be used as collateral to obtain a loan in fiat money. Crypto loans come with low and fixed interest rates, quick access to funds, and the opportunity to temporarily liquidate your cryptocurrency without actually selling it. Next, we will discuss what a crypto loan is and how you can get one.
What Is a Crypto Loan?
A crypto loan is obtained by using your cryptocurrency as collateral. In a traditional loan, you need to back it up using your personal belongings, such as your vehicle or even your home. If you miss your payments, the bank will seize the belongings that you used as collateral.
A crypto loan works similarly, but you don’t risk your car or house, and everything happens in a decentralized environment. There are no intermediaries or third parties involved. You simply use your cryptocurrency as collateral and receive your fiat money instantly. Unlike the time-intensive and complex processes required by traditional banks, all you need is a device (like your smartphone) and cryptocurrency.
How to Get a Crypto Loan?
To access a crypto loan, you need to access a defi lending platform. This is a medium where interested parties can interact using blockchain technology. For instance, SmartCredit.io is a defi lending platform created to facilitate peer-to-peer lending on a global scale.
A defi lending platform is a platform that uses decentralized finance lending protocols, which are based on smart contracts. The transparent platform is not entitled to your assets; in fact, it is non-custodial, which means that you are the owner of your assets, being able to access every protocol on the blockchain. Since there are no third parties, you won’t have to cover additional costs and everything happens anonymously.
As briefly mentioned above, SmartCredit.io uses a no-nonsense approach to help you get access to the cash you need. All you have to do is provide your loan details and access to your crypto wallet, and you gain quick access to your fiat currency.
On the platform, you can choose from many different cryptocurrencies to use as collateral. Also, compared to banks, your collateral ratio will be much lower, so you will have a lower fixed interest rate. This provides peace of mind knowing that you won’t enter into an affordable agreement only to see later on that the interest rates skyrocketed overnight.
Is a Crypto Loan Better Than a Traditional Loan?
More and more individuals and businesses alike turn their attention to crypto loans. Apart from cutting costs due to the lack of intermediaries, crypto loans have a few more benefits:
- Much quicker than traditional loans that may take multiple business days;
- No need for a credit score check;
- Small businesses or young entrepreneurs have quick access to funds without restrictions;
- Cryptocurrency loans are not taxable.
All in all, crypto loans are highly lucrative if you own cryptocurrency and you’d like to get access to cash without selling it (and paying taxes on it). The lack of intermediaries makes crypto loans a good choice for individuals and businesses alike. The peer-to-peer defi lending platform SmartCredit.io is the right place whether you want to borrow or lend.