However, with mainstream cryptocurrency prices spiking, some people may not be able to buy their own tokens. Fortunately, crypto loans provide the opportunity to own crypto assets for a fixed term, after which you need to return them to the crypto owner.
Crypto loans are quite straightforward: you need to complete a short form with the details of your required loan, such as the amount you need to borrow and the term, and provide collateral. Then, the DeFi platform matches the request with one of the available lenders, and you will receive the crypto assets in your personal wallet. Let’s see what are the top three benefits of crypto loans and why their popularity is soaring.
1. Quick Application
People who need to access capital often resort to bank loans. This is a lengthy procedure even if you qualify, but some bank loans may require you to have a stellar credit history or back up your loan with very valuable goods, such as your home or your car, that you stand to lose if you cannot repay the loan.
Fortunately, crypto loans are more straightforward. There is no credit check or paperwork to be completed, apart from a short form with your loan details. You also need to connect a Metamask wallet because you need to transfer the collateral. In turn, you have to pay a reasonable, fixed interest rate to the lender.
2. Fast Funding
After you are approved for a bank loan, you may not receive your capital straight away, but if you need quick capital, crypto loans can be available to you within minutes. If you have an urgent matter, a funding gap, or you need non-taxable liquidity for any other reason, a cryptocurrency loan is a good option that you can now consider.
3. Fixed Terms
When applying for a crypto loan, you are in charge of the details of your loan. You can choose the asset you want to borrow, the collateral, the amount, and for how many days you need the loan. The fixed term of the loan means that you know for sure that the assets will not be called back by the lender, although some platforms may allow this feature.
You stand to benefit from a fixed interest rate, so you can calculate how much the loan will cost you. In most cases, bank loans may come with variable interest rates and many other hidden fees that are not charged by non-custodial DeFi platforms. They simply match borrowers with lenders, unlike banks that are financial intermediaries that charge their clients for these transactions.
Thanks to DeFi platforms, obtaining access to capital has never been easier. It works the same as a traditional loan, but there are several benefits: the process is much quicker, you don’t need to commit your house or your vehicle to secure the loan, and you can borrow on your own terms. If you are a crypto enthusiast, a crypto loan can help you achieve your objectives, whether it is margin trading, covering a funding gap, or others.