Sometimes there may be a period where you’d need to take out a loan, possibly to offset debt or to make a payment deadline. At some point in time; we might have either been denied or approved access to it due to our past lending history. Especially for individuals who are new to lending and borrowing; since they would need to provide sufficient documents to receive the said loan.
Recently the Crypto ecosystem is preparing itself to overthrow the regular fiat structure of our society, as it adds various functions that our traditional banks are used to; while also providing additional services that our local banks can’t. Centralized finance has continuously relied on arbitrary metrics to ensure that said individual can receive a loan. It also decides which individual has to build up a better credit score to assure the broker that they are trustworthy.
Unlike our regular or local loan sharks, brokers, and banks, cryptocurrencies and crypto lenders are not concerned with an individual’s credit history. Since these individuals always have a clean, transparent, and understandable report of the transaction on the repayment of loans. Crypto exchanges like Binance allow users to borrow up to 65% of their collateral value and loaned funds.
Well, if you’ve been waiting for answers, get ready to find them here.
These loans provided by the CeFi platforms can be used anywhere, and the borrower determines repayment. Loans like BTC and BSC loans, etc, can be acquired from Binance almost instantly, and in this article, we will show how to go about it.
What Are Crypto Loans?
As mentioned earlier, being in the crypto space would mean that such individuals get to make a lot of investments. It also means that the user needs to get or be acquainted with the latest trends and information that just pop up in the marketplace. Sometimes, doing so requires a lot of money, which such individuals might not have at the specified period, and that’s where crypto loans come in.
Cryptocurrencies like BUSD, ETH, and BTC have investment options like “margin trading” – a type of trading option. Getting a loan in the crypto industry is similar to doing so in a traditional bank; however, the only difference between these two sectors is how the loan is repaid or accounted for. While traditional banks use the individual’s credit scores to get a physical value of the risk they can invest in the borrower, crypto loans don’t consider any of that at all.
To get a Binance loan, the user needs to use their digital currencies available on their wallet as collateral when borrowing Binance Smart Chain or BNB. Cryptocurrencies used as collateral are restricted from being traded during the loan period to avoid issues of repayment and then released after the repayment has been made.
How to Borrow A Crypto Loan from Binance
Binance is currently the world’s largest crypto exchange platform; since it allows buying and selling of all types of cryptocurrencies, NFTs, and other virtual assets. Aside from that, the exchange platform can act as a local bank and broker loans to finance and stake your cryptocurrencies. With the increase in popularity and usage of the Binance platform, there would also be an increase in the need for cryptocurrency-loan brokerage options.
Here’s How An Investor Can Borrow Crypto Loans On Binance
To borrow or receive the Binance crypto loan, an investor or user would need to set up an account with the Binance exchange platform. Once an account has been set up, the investor needs to purchase a specific cryptocurrency to use as collateral. After that, getting the loan is pretty much straightforward.
After setting up a Binance account and purchasing the specific crypto you wish to use as collateral, log into the Binance exchange platform’s website or app. Then, while logged into the website, locate the “Finance” section, and click on it
Next, click on the “Crypto Loans.” Proceed to select the asset or cryptocurrency that you wish to borrow from Binance; choose its collateral asset, and then the loan repayment term. Once you’re done, then click on “start borrowing now.”
After completing the above step, the Binance app or website page would require the borrower to confirm the provided information. So, it’s very important that the borrower reads the Binance Loan Service Agreement for a better understanding of the loan payment responsibility and agreement. Once your identity and other information have been confirmed, your collateral will be removed from your Spot Wallet, and the withdrawable loan will be deposited.
Here’s How An Investor Can Repay Their Borrowed Loan On Binance.
Now that you know how to borrow a crypto loan from Binance, here’s how you can repay it. To pay an outstanding loan, all the borrower would have to do is visit the website, select “Ongoing Orders,” then select “Repay.” Doing so will allow the borrower to first repay the interest attracted, and then the principal. Such an investor could decide to manually enter the payment if he or she chooses to pay twice or in ratios. Once you’re done, click “confirm repayment.” You now no longer owe Binance!
Uses of Crypto LoansThere are several reasons that might make an investor try out crypto loans. First of all, remember we mentioned earlier that traders might experience liquidation due to incorrect trades, which gets them prematurely liquidated. Such a situation leaves them with the need for a crypto-loan. Another substitute reason could be due to the speed and ease at which these loans are released, compared to requesting a loan from the local banks.