How to get a Loan in Bitcoin

bitcoin loansGetting a loan from traditional institutions can be¬†¬†difficult if you don’t have a proof of income. And even if you get a loan, it often comes with high interest rates.

Bitcoin loans offer a valuable alternative to traditional currency loans, as they bring serious advantages for borrowers:

  • no proof of income required
  • funds are instantly available
  • low interest rates

You can get a loan in Bitcoin no matter where you live or what bank account you have. It’s also completely legal, as it stays within the boundaries of national laws worldwide.

How Bitcoin Lending Works

It’s very simple – there are online platforms where lenders and borrowers are matched according to a few different criteria. First, the borrower needs to create an account at the Bitcoin lending platform and verify the personal details before proceeding to the next step. Personal details usually include the following:

  • A picture of Government issued personal identification document
  • Email, address, and telephone verification
  • Credit card verification
  • Connection of the account with Social media such as Facebook, Twitter, Google+ and LinkedIn
  • Connection of PayPal, Amazon or eBay account

The next step consists of entering the amount of loan, the time period, and the interest rate the borrower is willing to pay. If there is a loan offered with similar terms and conditions, the platform completes the loan process.

In case no lenders are willing to lend Bitcoin at the suggested terms, the loan is put on a ‘demand list,’ where lenders can see the borrowers’ offers.

The interest rates are usually paid daily and are set between 0.0100 and 0.0200 percent. Monthly interest rates for Bitcoin lending are typically set between 1 and 5 percent.

How to Get a Bigger Bitcoin Loan

When getting a loan in cryptocurrency, there is one unspoken rule borrowers should know:

Always make timely interest payments

Maintaining the highest level of integrity and paying on time is crucial for forming good account standing. Keeping an impeccable credit rating is a way for getting future loans approved, as well as getting higher amounts from lenders. If the borrower fails to return the loan, it’s highly unlikely any lender will take them seriously in the future. Of course, borrowers who are new to the platform usually get lower amounts and for shorter periods of time, until they prove their trustworthiness.

What Happens if a Loan is Not Repaid

If the borrower fails to repay the loan, an arbitration company gets involved. The arbitration company sues the borrower in their country in order to get the lender’s money back.

Top 3 Bitcoin Lending Platforms

Commercial projects backed by Bitcoin and altcoins have started to gain in popularity, with platforms providing such services skyrocketing together with the growing BTC ecosystem. Below is a review of 3 top Bitcoin lending platforms:

  1. BTCJam

btcjam bitcoin loan

BTCJam is a peer-to-peer lending platform which connects lenders and borrowers together. Their ecosystem is composed mostly of microloans.

Besides aforementioned personal details required in the registration process, BTCJam likewise requires a high-resolution photo of the user holding an ID card besides its face.

When it comes to supported countries, the lending platform doesn’t allow lending or borrowing for the national residents of North Korea, Cuba, Iran, Sudan, Syria and other countries that are under US embargo or UN sanctions.

After successfully completing the registration process, users can apply for a loan. All loans are reviewed manually in order to prevent fraud. The loan review usually takes 24 hours during business hours. BTCJam operates Monday to Friday, Pacific Standard Time.

Loans have a repayment period of up to one year, and the platform takes a fee from the borrower. The amount depends on the borrower’s rating:

  • Rating A+ comes with a flat fee of 1 percent
  • Ratings A and A- come with a 3 percent fee
  • Ratings B+ and B come with a 4 percent fee
  • Ratings B- and lower come with a 5 percent fee

If the borrower is late five or more days, the Late fee will be charged. The Late fee is 5 percent of the unpaid overdue amount beginning with 15 USD in BTC.

Pros

  • Many different loans
  • Good community reputation
  • Responsive support

Cons

  • The fees are immediately deducted from the borrower’s balance
  • Scammers have been known to use the platform
  1. Bitbond

bitbond bitcoin loan

Bitbond is a global peer-to-peer Bitcoin lending platform for small businesses. The ecosystem of Bitbond consists primarily of entrepreneurs who usually have a strong online presence and a good reputation meaning that lenders risk is generally lower than on other platforms.

The registration process is straightforward, and it takes just a couple of minutes to complete.

The Bitbond platform doesn’t have country-related policies, meaning that anyone can join and offer or ask for a loan.

The platform offers loans in five different time periods with the following fees:

  • 6 weeks with 1 percent fee
  • 6 months with 1.5 percent fee
  • 1 year with 2 percent fee
  • 3 years with 2.5 percent fee
  • 5 years with 3 percent fee

The interest rates are set according to the borrowers’ integrity which is determined by their account rating.

Pros

  • Low-risk loans
  • Higher amounts available for businesses

Cons

  • The user experience could be better
  1. BTCPOP

btcpop bitcoin loan

BTCPOP is a peer-to-peer lending service. This is the only platform that offers borrowers instant loans and offers insurance for the lenders. The platform is known for the introduction of many novel concepts (in Bitcoin lending) such as debt collateral and loan insurance, which are most likely going to become standard soon.

The registration process is a bit complex, and it takes time to complete. Information required for registration include:

  • Government ID photos – front, back, picture of the user holding the photo and a paper with a four digit reference number
  • Proof of residence – pictures of two recent utility bills
  • Postal verification – submission of a four-digit number sent to home address
  • Income verification – pictures of a tax statement, bank statement, paycheck stub, etc.
  • Video verification – recording a 15 seconds video stating full name, four-digit reference number, and showing the number written on a piece of paper
  • Phone verification – SMS confirmation
  • Credit Card verification – Platform charges one dollar to the user’s credit card and the user must submit a four-digit reference.
  • Social Media confirmation – linking all the main social accounts to the platform

BTCPOP allows loans to users from all countries around the world.

Fee schedule and insurance rate are tied to the account’s credibility:

  • A – 5 percent fee, 50 percent insurance rate
  • B – 5 percent fee, 35 percent insurance rate
  • C – 5 percent fee, 25 percent insurance rate
  • D – 5 percent fee, 15 percent insurance rate
  • E – 5 percent fee, 10 percent insurance rate
  • F – 5 percent fee, 5 percent insurance rate

Pros

  • Innovative insurance features
  • Great support

Cons

  • Struggles with liquidity

Conclusion

Getting a loan in Bitcoin is cheaper, less of a hassle and since the value of Bitcoin continuously grows, it can be quite rewarding.

Being a responsible borrower and paying in a timely manner is the key to building a good credit rating. And a good credit rating can come in handy, especially for users who have no proof of income such as freelancers and cryptocurrency investors.

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