Binance Crypto Loan is a financial service that serves Binance users to meet their short-term liquidity needs by providing crypto loans. Take for instance; Peter has 20 ETH presently, and he urgently needs a capital to make a turnover. But, Peter does not wish to sell his 20 ETH and prefers to hodl for a longer period of time. Peter now could use the 20 ETH as collateral to loan Cryptocurrency assets of corresponding value. This loan can be used by Peter to perform any trade on the Binance platform and he can also make a withdrawal.
Just like Peter, you too can enjoy the many benefits of Binance Crypto Loans as long as you’re a registered and verified Binance user. Binance Loans boasts of a wide range of supported crypto assets (not excluding BTC, ETH, BNB, BUSD and USDT. Check out the Loan Data page for more info), juicy interest rates, collateral assets, and loanable limits based on market conditions, and internal risk management. There are Loan terms of 7, 14, 30, 90 and 180 days. Payment of Loans in advance is accepted and Interest is calculated based on hours borrowed. Interest has to be repaid before the principal and you have to repay manually on the Order page.
How to use Binance Crypto Loans
Borrowing
1. Log in to your Binance account.
Open a free Binance account here if you are yet to have one and get Verified
2. From the Finance Menu>>> select Crypto Loans
3. Select the asset you wish to borrow and the amount, collateral asset and amount and Loan term>>> select Start Borrowing Now
4. Check through>>> select Confirm
5. The Loan is now available in your wallet for use.
Repayment
- From the Finance Menu>>> select Crypto Loans
2. Select Ongoing Orders
3. Select coin>>> select Repay
4. Input the Repayment amount directly or select a Repayment ratio or just select MAX>>> select Confirm repayment
5. You have successfully done repayment.
Special Functions of Binance Loans
- Renewal: Binance offers you the opportunity to renew your Loan should in case you need to.
- Loan staking: Binance allows for you to lend your crypto to a borrower and you both earn interest paid out in form of the crypto you lent or staked.
What you can do with Borrowed assets
- Withdraw: Borrowed assets can also be withdrawn.
- Trade: Borrowed assets can be used to trade and that is not limited to Margin and Futures trading as long as you meet the qualification for using the services.
Some Technical terms to know
- Liquidation price is the total price of the assets that are liquidated and this is when liquidation LTV is reached
- Margin call notifies you to increase your collateral when it drops in value due to the volatility of the market. This is in order to avoid liquidation of your assets.
- LTV (Loan-to-value) ratio is the ratio of the value of your loan to the value of your collateral. Index Price is used here. When you use different cryptocurrencies as collateral of the same value, the Loan you make is of a different value too as Different collateral coins have different initial LTVs. A high LTV connotes a high financial risk and once your LTV is higher than the margin call LTV, Binance will inform you to add more collateral or repay your Loan. Binance will liquidate your collateral to repay your Loan if your LTV is higher than the liquidation LTV. Don’t forget that the Crypto market can be very volatile hence all this. You can always adjust your collateral on the Order page by adding more collateral and when your LTV is lower than the initial LTV, you can as well remove some of your collateral
LTV is calculated thus…
- LTV = (Loan Amount/ Collateral Amount) x 100%
In conclusion, Binance crypto loans are an alternative when you want to hodl a little longer on that Cryptocurrency but still want to trade. Do let me know if you have any questions or comments.
https://www.binance.com/en/trade/BTC_BUSD?type=cross
https://www.binance.com/en/buy-sell-crypto?ref= ZCF73TU7
Happy Trading :)
