Bitcoin lending is undoubtedly changing the loans sector. With crypto lending, securing a loan is faster because lenders have fewer requirements compared to traditional lenders. But some people think Bitcoin lending is risky. So, how beneficial is Bitcoin lending? This article highlights the top benefits of Bitcoin lending.
Flexible Loan Terms
With traditional loans, borrowers don't have much to say when it comes to their terms. Ultimately, the bank determines the amount and the interest rate. And even if you shop around, you won't notice a significant difference between different lenders.
Bitcoin loans have a more customizable process. For instance, you decide the amount to the borrower, the loan-to-value ratio, and the loan duration. You also choose how you want to receive the loan.
Even the repayment terms for Bitcoin loans are pretty flexible. For instance, you can opt to pay the loan in a few months. Some Bitcoin lending platforms also have low-interest rates for borrowers that pay within a specific period. Thus, Bitcoin loans have flexible terms than traditional loans.
Anybody that has ever tried to apply for a traditional loan knows how traditional banks complicate the process. With conventional lending, the credit score of the borrower determines the amount they can get. A low credit score means you may not get the amount you want. Several factors, like your income and credit history, will also influence the traditional lender's decision.
Additionally, banks require borrowers to provide much personal information, like employment proof, social security number, government-issued ID, and bank statements. What's more, borrowers have little or no control over the loan terms. The bank dictates the loan interest rate and amount based on your credit score and employment.
Essentially, borrowing via a traditional bank is a time-consuming process. It's even possible for people without employment or low credit history. And with the world having 1.7 billion unbanked adults, many people can't get traditional loans.
Bitcoin lending doesn't require a borrower to have a bank account. What's more, the credit score is not an issue with most Bitcoin lending platforms. Therefore, Bitcoin loans can help people get loans without the requirements of conventional banks.
Bitcoin Lending is Faster
A traditional bank loan's approval can take weeks or days. While some banks can approve a loan the same day, they consider several factors. That means the approval process can be a problem for a borrower that needs the funds faster.
With Bitcoin lending, a platform can approve a loan within hours. Although you may have to present your ID, most Bitcoin lending platforms don't require you to submit many documents to prove your eligibility. You can get a loan, provided you have Bitcoins to use as collateral and a government-issued ID.
And if you don't have Bitcoins, you can purchase them on platforms like the Bitcoin Code App and use them for collateral. Such as Oil Profit allows you to buy Bitcoins with fiat money and send them to your digital wallet. Once you have the coins, securing a Bitcoin loan will be easier because you can use them as collateral.
Low Transaction Fees
Traditional banks have cumbersome fee structures. When converting a conventional loan to a different currency, the bank will give you poor exchange rates and a hefty fee. Thus, you lose some of the money that you borrow.
Bitcoin lending is different because it has clear fee structures. What's more, Bitcoin lending charges you lower fees than a conventional bank. Additionally, Bitcoin lending platforms don't charge exorbitant fees and exchange rates for converting the tokens to another currency.
The benefits of Bitcoin loans explain why many people, especially in developing nations, are going for this option. Nevertheless, borrowers should learn about different Bitcoin lending platforms and loan terms to benefit from this innovation.