Crypto-Backed Loans: What are they & why get one?

26.05.21 08:15 AM Comment(s) By Doina

What are Crypto-Backed Loans?

A crypto-backed loan is a loan that you secure using your cryptocurrency as collateral. It’s the perfect tool for using your crypto investments to get cash without needing to sell your crypto. 


Why Take Out a Cryptocurrency-Backed Loan?

Cryptocurrencies today have become investments, and many people buy crypto for the long term in hopes of future gains. But sometimes, when unforeseen circumstances arise, people are forced to sell their investments to cover their expenses or pay for other needs. By leveraging crypto as collateral towards a crypto-backed loan, you can maintain ownership of your crypto investments while securing a EUR, USD, or GBD loan.


How can I use a Crypto-Backed Loan? 

People use Nebeus to take out cryptocurrency-backed loans for many reasons. Some people get loans to pay for daily expenses, while others have more ambitious plans or needs. Based on analyzing data on how Nebeus users have been using their loans, here are several options on how you can use a Nebeus crypto-backed loan: 


  1. Pay for your short-term needs and expenses – in traditional terms, this type of loan is called a bridge loan.
  2. Paying for travel expenses – you can leverage your crypto to get a loan to pay for your vacation expenses.
  3. Buying a home – securing a long-term crypto-backed loan is a great way to pay for your mortgage downpayment.
  4. Funding a business – you can leverage your existing crypto investments to secure a loan and finance your business while keeping your digital asset investments.
  5. Paying off more expensive loans of debt – with traditional interest rates being expensive, you can secure a loan on Nebeus with a lower APR and use it to pay off a more expensive loan or debt.
  6. Investment diversification – a more advanced use case for crypto-backed loans that allows you to maintain your crypto investments while securing a loan and re-investing the funds into another asset.
  7. Investment multiplication & leverage – another very advanced use case for crypto-backed loans is when our users secure a loan, buy more crypto using those funds, and use that crypto to secure an additional loan. In traditional investment terms, this is called leveraging and is only used by advanced traders and users who have substantial cryptocurrency knowledge.


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