Blog Borrow 7 Best Crypto Loan Platforms for Borrowers Today

7 Best Crypto Loan Platforms for Borrowers Today

date September 24, 2020 time 4 min read 978 views

Loans against cryptocurrencies have attracted a lot of attention in recent years. They come with perks like fast approval processes, low transaction fees, tax benefits, and worldwide availability. They also allow investors to unlock the value of their cryptocurrency while still holding. We’re going to take you on a tour of the best crypto loan platforms you can work with today.

How do crypto loans work?

How do crypto loans work
How do crypto loans work (source: blockchainsimplified.com)

A crypto loan works similar to any loan offered by a bank or other financial institution. The main difference is that you receive your loan in cryptocurrency instead of USD and usually, you pay back your loan in crypto as well. 

Loans are almost always in a stablecoin like USDT or DAI. Because crypto users prefer to remain anonymous and it’s hard to do a credit check on a crypto account, almost all crypto loans are also secured by collateral. This puts more risk on you as the borrower as your assets can be liquidated if you fail to repay, but also allows you to access loans at a much lower interest rate.

Where can I borrow cryptocurrency? – 7 best crypto loan platforms for you

Crypto loan platforms are classified into two broad categories: Decentralized loan platforms and Custodial (Centralized) platforms. Each one has its advantages. Below we’re going to do a crypto loan comparison between different popular crypto lending platforms.

Loans are almost always in a stablecoin like USDT or DAI
Loans are almost always in a stablecoin like USDT or DAI (source: crypto.u.today)

Decentralized crypto loan platforms

MakerDAO

MakerDAO is debatably the most popular DeFi lending platform operating on the Ethereum blockchain. With Maker, any individual can lock up ETH in MakerDAO’s smart contracts to create its equivalent dollar value in DAI. If you lock in more Ethereum, you create more DAI.

If you want your Ethereum back, you must pay back the amount of DAI you borrowed plus extra interest to the smart contract.

Pros

  • Borrowers don’t need to register or submit any identification documents to access loans.
  • DAI is available globally.
  • Fast transfers.

Cons

  • The only crypto asset available to borrow is DAI.
  • It can be difficult to convert DAI directly to USD.
  • Most other cryptos accepted are still based on the ETH blockchain.

Compound Finance

Compound Finance is a decentralized, blockchain-based lending and borrowing protocol. Lenders don’t lend directly to borrowers. Instead, they send crypto assets to liquidity pools, where you can access their crypto as loans. You can search more for the benefit of compound interest investments.

Pros

  • Relatively good liquidity.
  • No lock-in term i.e you can take a crypto loan for any length of time.
  • Overall low rates.
  • No personal information is needed. 

Cons

  • Loans have variable rates, which are calculated at every new Ethereum block
  • Limited options for loans.

Centralized crypto loan platforms

MyConstant

Constant help you borrow cryptocurrency with flexible terms

Created in 2019 and headquartered in California, MyConstant is one of the most promising new contenders for the best crypto loans. Operating worldwide, they offer loans against over 75+ different cryptos at rates as low as 6% APR.

Pros

  • Can get loans against 75+ cryptos.
  • Repay at the end of the term.
  • Interest as low as 6% APR.
  • Can repay early.
  • Easy conversions between fiat and stablecoins.

Cons

  • Has only been operational for a short period.
  • A small range of rates between 6 and 7%.

Nexo

Headquartered in Switzerland, Nexo is a blockchain company that caters to cryptocurrency holders in over 200 locations. You can borrow in more than 40 different fiat currencies against your crypto assets.

Pros

  • You can access loans from $1000 up to $2,000,000.
  • Interest rates start at 8% and you are charged only on the amount withdrawn.
  • Nexo offers their own debit card to customers.

Cons

  • Offer a very low loan to value ratio (20 to 50% i.e If you need a loan of 2 bitcoins you need to offer collateral of 4 bitcoins or more).
  • A limited number of cryptos you can borrow against.
  • Higher interest rates if you don’t use Nexo tokens.

BlockFi

BlockFi is a New Jersey-based crypto lender platform that offers low-cost USD loans to crypto holders worldwide. Borrowers can get loans through BlockFi at rates as low as 4.5%.

Pros

  • You can pay interest monthly and the principal amount at the end of the loan term.
  • Will allow you to convert fiat money to stablecoins at a one-to-one ratio.

Cons

  • Only Bitcoin, Litecoin, or Ethereum are accepted as collateral.
  • Low loan to value (LTV) ratio (50%). To get a $5,000 loan, you need to deposit crypto worth $10,000.
  • Only accepted in 47 states. Cannot be accessed in countries sanctioned by the US, EU, or the UK.
  • Charges origination fees for loans.

YouHodler

YouHodler is a new entry on the list of best crypto loan platforms hailing from Switzerland.

 Pros

  • A high loan to value ratio (90%), i.e., borrowers can get a loan worth 90% of the crypto securing the loan.
  • You can choose to end a loan agreement without full loan repayment.
  • Can repay by credit card.

Cons

  • It’s a young platform without a proven track record.
  • Have strict Know Your Customer(KYC)/AML laws.
  • Charges a 5% fee for withdrawals to a bank card.
  • Borrowers can get a crypto loan against only 12 crypto coins.
  • $100 minimum loan amount.
  • Only 5 fiat currencies are offered.

Coinloan

Based in Estonia, Coinloan was among the first peer to peer lending sites bad credit. Loan terms range from 7 days to 3 years with an interest rate of 10.3%.

Pros

  • Very flexible loan terms.
  • Provides business loans.

Cons

  • The only accepted collaterals are BTC, ETH, BCH, LTC, XMR, and CLT.
  • Crypto assets are stored in uninsured wallets.

Get a crypto loan from the platform that gives you the most options

Besides offering loans against 75+ different cryptos and fiat to stablecoin conversions, at MyConstant, we offer a wide range of tools for earning interest and trading your crypto.

When not on loan, you can invest your idle cryptos and earn a generous 9% APY through our crypto lend feature. That’s not all, if you want to use your loan to buy more crypto, we’ll find the lowest prices online for you right on our platform. You can use your profits to repay your loan. You can even repay early for a lower interest.

Signups are free. Come check us out today.

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