Cryptocurrency has gained enough traction as an investment option in recent years. To get a crypto loan, you need to use your cryptocurrency as collateral to borrow cash. What about the well-known merchant loans? Who can help you with them?
Crypto loans are secured loans: they use cryptocurrency as collateral. These loans are similar to mortgage or auto loans. Only, you need to put your cryptocurrency as collateral instead of your house or car. When applying, you can choose your payout option (USD or a stablecoin if available).
Credit checks don’t play a role in this case since you’ve provided collateral to get access to cash. As for interest rates, they’re generally low. Repayment terms are shorter as compared to other loan types: often 12 months or less.
You can receive a crypto loan through a crypto exchange or crypto lending platform. If you need help with crypto loans or merchant loans, turn to a reputable alternative online lender in the U.S. that understands the nuances associated with your business. With a true payment expert, you can enjoy fast access to the funds you need at the cheapest possible rates.
Crypto Loan Types
Here are the types of crypto loans:
- Crypto Collateral Loans
Expect all crypto loan sites to require collateral to approve you for a crypto loan without running a credit check on you.
- Crypto Loans Without Collateral
Apart from what’s mentioned above, a small number of platforms let institutional investors get access to crypto loans without providing collateral. However, this process requires in-depth credit checks and a full host of documentation.
- Crypto Flash Loans
There are DeFi platforms supporting the concept called crypto flash loans. In this case, you can borrow crypto with the help of a smart contract agreement without putting up a security deposit.
- Custodial vs Non-Custodial Crypto Loans
In the case of a custodial crypto loan, the platform providing it will be responsible for deposits and withdrawals, loan fund distribution, repayments, and interest rates.
Non-custodial crypto loan providers are decentralized. A smart contract is needed for the execution of the funding agreement.
Getting a Crypto Loan: Is It Right for You?
When applying for a crypto loan, expect the lenders to charge an origination fee for your loan application processing. Mostly, the amount you can borrow is based on the total amount of cryptocurrency you have.
The monthly interest and principal payments will be charged either with cash or cryptocurrency: it’s up to the lender. After you’ve paid off the loan, you can get back your cryptocurrency.
A crypto loan can be the right choice for you if you want to make a larger purchase that requires cryptocurrency as payment. Besides, crypto loans allow you to access funds fast and without a credit check. Moreover, they come with a lower interest rate as compared to many other financing options.
The risk of taking out a crypto loan is that cryptocurrency prices change and fluctuate frequently.
Crypto Loans: Should You Get One?
A crypto loan uses digital currency as collateral, similar to merchant loans requiring you to provide collateral. You pledge your crypto assets to get access to funds, which you need to repay over time.
Author Bio: Michael Hollis is a Detroit native who has helped hundreds of business owners with their merchant loans solutions. He’s experimented with various occupations: computer programming, dog training, accounting… But his favorite is the one he’s now doing — providing business funding for hard-working business owners across the country.