Author:
Kelley Daniels
Date:
09/09/2023
Experiences:
Kelley is your go-to for all things NFT!
Experiences:
Kelley is your go-to for all things NFT!
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Table of Content
What are instant crypto loans?
An instant crypto loan is a type of loan where you put up your cryptocurrency as collateral for the loan which can either be in fiat currency or cryptocurrencies. Fiat currency is traditional, established currency like the US dollar or the euro. These types of loan can be almost instantaneous, so if you’re looking for instant crypto credit lines they may be the best option for you. The speed of these loans is amazing, when compared to traditional lenders like banks, but of course you usually need the cryptocurrency upfront to collateralize your loan.
You’ll discover that different platforms offer varying crypto lending rates, so it’s wise to have a crypto lending calculator to hand while doing your research. We take the hard work out of researching crypto lending platforms because you’ll discover our useful reviews and articles provide all the information needed to make the best decision.
Nexo is just one of the online platforms offering the opportunity to grab a crypto loan instantly. Check out our Nexo.io review to discover more. You’ll find the platform is easy to use, and once you’ve completed your application, your loan could be approved within just seconds. Some stablecoins can take longer to hit your account, so you should expect Tether (USDT) or USD Coin (USDC) to be in your account within about 30 minutes. If you do opt to receive your loan in fiat currency you’ll need to wait longer, as these payments need to be wired to your account. On average, fiat currency loans are available in your account within 24 to 48 hours.
How to speed up the loan process
Once you’ve found the right crypto lending platform you’ll be anxious to get on with your application. The good news is that just so long as you have the cryptocurrency collateral available to deposit, your application should only take minutes. Some of the ways to expedite your loan further include:
Finding the best DeFi crypto loans is much easier when you partner with BitStacker. We take all the hassle out of sourcing reliable lenders online and can walk you through the application process to make your lending decision a simple, seamless solution to meet all your needs.
Speed is not the only consideration
The speed of application is not your only consideration when looking for instant crypto loans online. Just some of the other important factors to consider include:
- APR or Annual Percentage Rate which is an indicator of the amount of interest you’ll be paying on your loan. The APR is the annual cost of the loan and will include the interest rate and any other fees you’ll be charged.
- LTV or loan to value ratios are another important aspect to consider. The LTV is the way platforms determine how much you can borrow and is worked out by dividing the amount of the loan you’re asking for by the value of the collateral you supply. You can typically expect most platforms to offer a 50% LTV ratio, but this does vary between lending platforms so is worthwhile checking out. For example, Nebeus offers a 50% LTV ratio for its quick loans, but up to 80% LTV ratio for flexible loans, which are just as easy to apply for.
- How trustworthy is your lender and can you depend on getting your collateral back at the end of the loan term? This is a vital aspect to consider and you should take as long as possible to review your chosen lender online. Look at user reviews and try to find out as much as you possibly can about the platform. Your collateral is valuable to you and if your lender should happen to go bankrupt you likely won’t get your collateral back.
- Consider the term of the loan and think about whether several short-term instant crypto credit lines would be more appropriate for your needs. This way you are not risking your collateral for long periods of time with one platform and can hopefully avoid any risks of them going insolvent
- Crypto price fluctuations are another important factor to bear in mind. Cryptocurrency prices change all the time, so it’s important to opt for creditworthy collateral assets. A crypto like Bitcoin is unlikely to change as much as assets like Aave. Bear in mind that if your LTV ratio gets too high, the platform is likely to liquidate your collateral in order to see some returns.
- Good customer support options are another essential aspect to look out for with crypto lending platforms. This may not be so critical if you’re a cryptocurrency expert, but novice crypto dealers will appreciate the opportunity to chat with customer service agents to resolve any niggling problems they may have.
We consider the above to be some of the most critical points to look out for with any crypto lending platform. Why not check out our YouHodler review to see how it stacks up?
Our recommended providers
Find out how instant crypto loans work
Choose your crypto lending platform with care, then set about applying for your instant crypto loan. You should have all your documentation to hand, as you will need to verify your identity. You’ll firstly need to open an account on your chosen site. It’s no big deal, and will just take a few minutes to complete the essential registration process.
Then choose the type of instant crypto loan you want to apply for and apply for the required amount. The platform works out how much cryptocurrency you need to put up as collateral, then you just upload the amount from your cryptocurrency wallet to the site. You’ll find this type of loan is relatively painless to expedite, with no need for credit scoring or lengthy meetings with credit control teams. Your crypto loan could be sitting in your account within seconds of uploading your cryptocurrency collateral.
You get to pay off the loan plus the interest over the designated term of the loan and at the end of the fixed period your cryptocurrency collateral is returned to you. One of the great benefits of these loans is that you don’t have to sell off your cryptocurrency assets in order to raise funds. If you believe your asset will increase in value over the longer term you are probably reluctant to sell it on. This way you retain your cryptocurrency assets just so long as you handle your loan correctly.
Many platforms pay interest on the value of the crypto loan that’s locked into the platform and unspent, so you can benefit from holding your funds on the site.
If you shop around you could find instant crypto loans at 0% interest, so there’s absolutely no cost for taking out some of these loans. Check out all the BitStacker reviews to find out more.
Instant crypto loans compared to traditional loans
So, how does a crypto loan work? It’s far easier to obtain instant crypto loans than traditional bank loans. All the necessity for human interactions is taken away and with just a few clicks of the mouse you could be accessing your instant crypto credit line. You don’t need to worry about meeting bank managers or discussing your loan with credit managers; your cryptocurrency collateral takes away any necessity for that!
You’ll also find there’s no need for credit scoring when you apply for instant crypto loans. Just so long as you stay within the stipulated LTV ratio you’ll be fine. In this respect, instant crypto loans could be classed as similar to secured loans within the traditional banking sphere.
For secured loans, like instant crypto loans, the LTV ratio is worked out by dividing the amount of loan requested by the collateral and very much depends on different lending platforms. Traditional lenders and banks work in much the same way when working out whether to offer secured loans. Within the traditional banking sphere, unsecured loans are determined by the value of the property you are buying, whether it’s a house or car. Unsecured loans involve a certain amount of credit scoring, and can be compared to zero collateral crypto loans, which we discuss further below.
Other types of crypto loans
There are many different types of crypto loans available in the marketplace, including zero collateral loans and flash loans. You will have to spend a lot of time looking for zero collateral crypto loans, as they have only just been introduced to the marketplace. Flash loans are virtually instantaneous loans provided by platforms like Aave.
You need to have expert knowledge of transactions in order to write your own flash loan, and Aave states they are reserved for developers as they have the essential knowhow to complete the transaction. Basically, flash loans may only be granted for a minute or so, as the borrower completes a blockchain transaction to buy and sell currencies, and pay back the loan within the same application. They can prove a fantastic tool for experienced cryptocurrency users wanting to make money on arbitrage solutions.
Zero collateral crypto loans
Zero collateral loans are new to the DeFi marketplace and can be more difficult to obtain. You should not expect instant crypto credit lines if you’re applying for these loans, as the lenders are more wary of lending out on an unsecured basis. There are platforms offering zero collateral crypto loans, but again you need to be careful and check them out thoroughly prior to making any application.
You should expect any zero collateral crypto lender to investigate your financial situation in great depth. The platform is taking a great risk by offering zero collateral loans, as they have no collateral to fall back on in the event that you default on the loan. You could view this type of loan as similar to the unsecured loans offered by the traditional banking sector, so expect to go through a type of online credit scoring if you do apply for one.
The reasoning behind zero collateral loans is that the marketplace is over-collateralized. This ties up valuable collateral and truly speaking why does anyone need to apply for a loan if they have valuable collateral to hand? You’ll find that interest rates are higher for these types of loans, and lenders prefer to lend to institutions than private individuals. That said, the DeFi space is expanding all the time and lenders are eyeing up the valuable mortgage and student loans marketplace!
Instant crypto loans conclusion
Now you know all about how to get a crypto loan instantly, it’s time to start the hunt for your perfect lender. We can help you in this respect; why not check out some of our comprehensive lending platform reviews to discover more?
It’s a good idea to use your existing exchange for instant loans as it can really speed up the application process. If you’re already registered on site then there’s no need to complete validation and ID registration processes. That said, it’s always a good plan to have a handle on the different interest rates and loan terms available to you. That’s where BitStacker excels.
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