HOW SHOULD I PREPARE TO USE CRYPTO LOANS VIA BINANCE

Olushola Chidozie

4 min readMar 26, 2022

26/03/2022

By Damilola Ogungbayi olushola

Key points:

What is Binance Loans
Advantages of Binance Loans
(a) Loans Staking
(b) Flexible Loan Terms
(c) BNB Holdings in Crypto Loans now
count toward the calculation of Daily BNB Balance
Before borrowing from Binance Loans, You should…
(a) Understand the Your VIP Tier
(b) Research on both your expected borrowing assets

and collateral assets

WHAT IS BINANCE LOANS?

Binance Loans provides a wide range of options for supported crypto assets, interest rates, collateral assets, and maximum loanable limits based on market conditions, and internal risk management.

ADVANTAGES OF BINANCE LOANS

1.Loan Staking:

This is a feature of Crypto Loans that
allows users to stake their assets as collateral to
reduce interest. Profits generated by your staked
collateral are used to reduce daily interest rates to

as low as 0%

2.Flexible term:

Binance provide 7, 14, 30, 90 and 180-day loan terms. Interest is calculated based on hours borrowed. You can always repay in advance and the interest is calculated based on the hours borrowed.

3.BNB Holdings in Crypto Loans now count toward the calculation of Daily BNB Balance:

Starting from 2021-12-09 00:00 AM (UTC), Net BNB Collateral Balance in the Crypto Loans will count toward users’ daily BNB balance.
Daily Average Binance Crypto Loans Net BNB Collateral Balance is calculated as the sum of the hourly snapshots of the Net BNB Collateral Balance in the Binance Crypto Loans account in a day divided by 24 (hours).
Please note:

Net BNB Collateral Balance = Total BNB Collateral Balance - Borrowed BNB - Interest in BNB.
If a user’s Net BNB Collateral Balance is zero or negative, it will count as zero.

The above data will be recorded using hourly snapshots.

4.Early repayment:

Repay anytime before the due date with no penalty fees. Once you return the loan amount, we’ll only charge you an interest fee based on hours borrowed

5.Use funds anywhere:

Users are free to use their borrowed crypto anywhere on the Binance ecosystem, from trading to making payments. Users can also withdraw if they want to use their funds outside Binance. Users can trade on Binance using the loan they make as long as the user meet the qualification for using the services. Yes, you can withdraw them as well.

6.Loan Renewal:

Loan orders can be renewed within 24 hours before the loan order expires. Before renewing the loan order, interest must be paid on the original order before renewing it.

BEFORE BORROWING FROM BINANCE LOANS, USERS SHOULD…

1.Understand the your VIP tier:

Binance Loans has launched Tiered Interest Rates. Users with higher VIP levels will enjoy lower interest rates, on all borrowable assets.

2.Research on both your expected borrowing assets and collateral assets:

Before using Binance Loans,Make thorough research on both the assets you want to borrow and the assets used for collateral.

3.Understand Loan-to-Value (LTV) Ratio:

Loan-to-Value (LTV) Ratio is a calculation that tells investors the actual value of their loan as compared to the value of their collateral. This is calculated using index price, which is not the same between coins. Thus, if any two coins were used as collateral of equal value, the LTV would differ between the collateral options.

What happens when my LTV is too high?

If your LTV is higher than the margin call LTV, we will inform you to add more collateral or to repay your loan. If your LTV is higher than the liquidation LTV, we will liquidate your collateral to repay your loan

4.Understand what is a Liquidation:

Liquidation occurs when a borrower does not repay their loan, even after they are given an extra amount of time from the original due date. If the principal cannot be met, the original collateral is liquidated to cover the loan. A liquidation fee is also incurred from the total borrowed amount (set at 2% on Binance).

5.Understand the loan term

Loan terms of 7, 14, 30, 90 and 180 days are available. You can always repay in advance and the interest is calculated based on the hours borrowed.

CONCLUSION

If you’re looking to utilize funds beyond your own means, or need to have ‘fast cash’ but don’t want to liquidate your crypto assets, a crypto loan can work nicely for you. With numerous options in cryptocurrencies to borrow and count as collateral, the ability to trade has grown even wider. And since you don’t need to have a credit score to apply for a crypto loan, anyone with crypto-assets can open a loan at will. Not only this, but they can choose how they wish to borrow. DeFi options allow users to borrow quickly and without peer-to-peer interaction. Instead, the loan is completed by a code or a smart contract.

To get started with crypto loans, make an account on Binance, and experiment to find what works for you. Click the link below

https://www.binance.com/en/trade-margin/BTC_USDT?ref=331234001