Hackernoon logo4 Reasons Why Crypto Loans Are Gaining Currency Worldwide by@bitcompare

4 Reasons Why Crypto Loans Are Gaining Currency Worldwide

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It's estimated that up to nearly six million people own cryptocurrency wallets. The world of cryptocurrency is booming and people all over the world are trying to get in on the action. Cryptos offer users the ability to use decentralized and secure digital currencies.

And lately, crypto loans have become increasingly popular as well. These loan types make the process of borrowing money much easier than traditional methods. However, for many people, the idea of crypto loans feels risky, and as if it's too good to be true.

We want to dispel those worries and let you know that crypto loans really do live up to the hype. Don't believe us? Keep on reading and we'll take you through the top reasons why you should consider taking advantage of crypto loans. 

1. Crypto Loans Are More Accessible

If you've ever applied for a traditional loan, then you already understand how lengthy the process can be. When it comes to standard lending, your credit score is going to be a major factor in determining how much money you're able to borrow. 

If your credit score is low, then you might not be able to get the funds that you need. There are also several other factors, like income and credit history, that are going to be taken into consideration.

After you've found a bank that's going to offer you a loan, you'll need to provide all kinds of personal information. You also won't get a lot of say with regards to the terms of the loan. And if you don't already have a bank account, then getting a traditional loan may not even be a possibility for you.  

You don't need to worry about those issues though if you're going for a crypto loan. First off, you won't need a bank account. And on many crypto lending platforms, your credit score won't be taken into consideration.

With crypto loans, people are able to get the funds they need even when banks won't give them a chance. 

2. Crypto Loans Are Fast 

When you borrow money from the bank, it can take a couple of days to a couple of weeks for your loan to be approved. While more banks are speeding up their processes, there are still many that aren't. If you need a loan as soon as possible, then going to a bank isn't really an option.

When it comes to crypto loans, many platforms will approve your loan within one day. These platforms won't pour over a ton of documents to see if you're eligible or not, although they'll likely need to see your ID. 

As long as you have a government-issued ID and enough cryptocurrency to deposit as collateral, you should be eligible for a loan. This is why the process is so much faster with crypto. 

Some crypto lending platforms might take a little longer. Especially if it's a peer-to-peer (P2P) network. These networks require cooperation between the lenders and borrowers, so the process doesn't happen as quickly.

3. You Can Get More Flexible Loan Terms With Crypto Loans

If you go to a bank in order to get a loan, you won't have a lot of choices when it comes to the loan terms. The bank is ultimately going to decide what your loan amount and interest rate are going to be. While you can browse different banks, you're not going to find a whole lot of differences between your options.

When it comes to crypto loans, loan terms are much more customizable. As the borrower, you will get to decide how long you want the loan to be for. You'll get to choose the loan-to-value ratio (LTV) as well as the fiat currency that you'll be paid out in.

The loan amount is going to depend on how much collateral you have. However, the rest of the loan terms are going to be pretty flexible, especially when you compare the process to traditional banking. 

Some of the crypto loan platforms will offer you extremely flexible repayment terms. Some won't even make you pay minimum monthly payments so long as you're able to pay back the loan in full by the end of the loan's duration. 

Crypto loan platforms also tend to be extremely transparent. This means that the loan terms are going to be laid out clearly. Any added fees will also be clearly stated. 

And platforms like BlockFi won't charge you with any penalties if you pay the loan back early.

4. Crypto Loans Are Safe

Traditional banks are notorious for misusing people's money, creating fake accounts in clients' names, and laundering funds. 

To many people, crypto loans may seem risky simply because the currency is digital. However, crypto loans are extremely safe and any reputable lender is going to clearly state their security measures on their website. 

Some sites will even insure all of the digital assets on their platforms. 

And thanks to the blockchain, all of your crypto transactions are going to be recorded and transparent.

The Importance of Knowing Why Crypto Loans Are Useful

Hopefully, after reading the above article, you now understand some of the reasons why crypto loans are so useful. As we can see, crypto loans are a safe, effective, and fast alternative to traditional bank loans. So the next time you need a loan, make sure to look into what crypto options are available to you.

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