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What is a crypto backed loan and how to make the most of it

Crypto backed loans concept is pretty straightforward – customers are able to use their cryptocurrency as collateral to obtain fiat loans. The service has become very popular in the past few years as crypto hodlers tend to see their digital assets as the long-term investment rather than the immediate spending capital looking for ways to increase the productivity of their digital assets. Before crypto hodlers options were limited to either hodl or trade. Crypto backed loans allow consumers to gain access to fiat liquidity while still keeping their digital currency.

Loan options

When looking for the best loan terms keep in mind that the loan interest rate will depend on the LTV (loan to value) ratio of the loan. Higher LTV would generally command higher interest rate but would provide more cash available. For example, with a 60% LTV a customer might see interest rates between 6% and 8%, but would only get 60% value of the pledged collateral given as cash, while with an 80% LTV the interest rates would be higher (up to 14%) but a customer would secure much more cash against the provided crypto pledge. With the average term of 12 months the higher LTV
loans are usually more popular but a bit more difficult to find due to higher risk factors to lenders providing such loans.

Another features to look at when getting a crypto backed loan are repayment terms and how the lender monitors the collateral fluctuations and what tools are in place to keep you as a customer informed should the value of your collateral go down or get near a margin call level. That is especially important with high LTV loans. As a borrower you want more cash against your collateral. But you also should always be informed and given enough time to either pay off the loan or add collateral should the value of your pledge drop. And when looking at repayment options – make sure the option of early repayment with no extra fees is available in case you want to close off your loan earlier than the initial term selected.

Bottom line – crypto backed loans provide a great option to crypto enthusiasts to keep their assets while getting fiat cash for every-day needs, such as bills, mortgage payments, travel, gifts or just leisure spending. Nebeus offers two loan programs, both with high LTV (72% LTV and
80% LTV) to help you maximize your crypto pledge potential. We closely monitor every loan and inform our customers immediately should the value of their pledge decrease. And we offer early repayment with no penalties as well, so you can borrow with confidence of having all major loan features covered when you use Nebeus.

Use this calculator 💰 to learn your options and if you would like to apply for a loan with us, the loan can be made available to withdraw in just a few minutes.

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