Many crypto-enthusiasts often prefer to “hold” cryptocurrencies in the hope that sooner or later the asset will begin to increase in value, however, this is not always effective. One can notice a trend that all the financially savvy people keep their fiat funds in banks, which offer different interest rates so that people can gradually multiply their capital, while banks are effectively dealing with their deposits, these kinds of options used to be available only in the fiat sector of the economy, cryptocurrency loans are now entering the market. In order to stay on the cutting-edge Guarda has already partnered with CoinRabbit to provide you with the best experience.
What is a cryptocurrency loan?
Cryptocurrency is primarily an investment asset, the sale of which involves a loss of potential profit. However, if you pledge it, you preserve your assets and at the same time benefit from them
Getting loans with cryptocurrency is surely less complicated than getting traditional loans from banks. The term “Crypto loan” refers to loans made in digital currency, rather than fiat currency. Cryptocurrency loans work in a very similar way to conventional loans where someone borrows a certain amount in digital currency and then repays that amount plus interest over a certain period of time. Unlike personal loans or credit cards, collateralized loans are much more secure for the lender, which enables the borrower to take advantage of cheap interest rates.
Let’s take a look at this case: Jack is a crypto enthusiast and has fiat loans that need to be paid back as well as bills to pay. He can’t quite match his income with his expenses, and he has no choice but to sell his accumulated cryptocurrency assets of 1 BTC. However, he definetely doesn’t want to part with them because he is sure that the value of BTC will increase in the near foreseeable future.
That’s when Guarda can come to the rescue. To get loan users send their crypto as a collateral, and our partner then lends stablecoins (USDT or USDC) to them at a certain interest rate. You can use crypto as a collateral asset to receive 50% of the LTV (loan-to-value) in stablecoins. It will be held safely and returned to you as soon as you repay your loan.
What are the benefits?
- You can get your collateral back anytime. In order to do that, you have to make your loan’s repayment. It consists of the amount lent and the accumulated APR counted monthly during your loan’s period. After your payout transaction is confirmed, your collateral will be sent back to you.
- No additional fees for loans longer than 30 days.
- The annual fee is charged at the beginning of each month. You can easily check the total amount of the loan, including all the fees, in your loan details in the Borrow tab.
- Borrow as much and as often as you want. There’s no real limit as long as you’re willing to post the collateral.
How to get a crypto loan?
- Launch Guarda Wallet on web or desktop, open the “Borrow” tab and calculate your loan using different collateral options. (Note: You can check loan terms, annual interest rate, price down limits, and fees after setting a collateral amount and the currency you want to borrow.)
- Select your payout address and collateral amount ($100 or more) and confirm the transaction. You will see a confirmation page with transaction details and will be able to set up SMS notifications. We really advise you to turn notifications on at this point because that is the quickest way to receive important information about the rates and status of your loan. We will only notify you if your loan reaches any of the three limit zones, or if your collateral has been sold. Seriously, no spam!
- As soon as the collateral is sent and confirmed in the network, you will receive the loan amount to your payout address in a few minutes without any additional checks. Both outgoing and incoming transactions will be also seen in your History tab.
The partnership between Guarda and CoinRabbit is a new round of digital development and an additional user-friendly feature that Guarda is introducing to fully engage users with its ecosystem. Certainly, these things deserve the most attention, because now, in order to get a loan for a certain amount, there is no need to stand in bank queues, collect tons of paperwork, look for certificates, etc.
One of the major advantages of a crypto loan is that, unlike traditional banking, you won’t be subject to your credit score assessment. This makes lending more accessible to people who don’t have a credit history, underbanked consumers who don’t have a bank account, and freelancers who struggle to access credit. The blockchain ecosystem allows us to get rid of hundreds of centralized intermediaries that complicate the process.