What do you know about Bitcoin loans? Are they a good alternative to a payday loan or a personal loan? Easy AZ Loans has some answers for you.
What is a Bitcoin Loan?Bitcoin lending is a peer-to-peer loan in which someone with extra Bitcoin agrees to lend you some of savings. In return, you agree to repay the loan by a set date and add the agreed upon interest to the amount you borrowed. Loans can be repaid in as little as six weeks, though some loans may have a repayment date of years from now. Loans usually include an origination fee and repayment fee. When you borrow money, you work with a service that puts your loan request out and lenders with available Bitcoin help fund the amount you need. You may end up getting funding through dozens of people. You repay your loan through the service. There's a higher risk of lenders not getting repaid when the due date is set years in advance, so short-term loans are usually the ones that are quickly approved. Remember that others are funding your loan, so they don't want to take on a lot of risk. They want to lend you the money you need and get repaid when you promise you'll repay them. If you don't repay on time, most Bitcoin lending services tack on more interest to your loan's current interest rate. For example, Bitbond adds another 5 percent if your payment is late. You may also need to pay an arrears fee. Bitcoin loans are fast. As long as you can prove you're trustworthy, most peer-to-peer loans go through without a hassle. You may need to provide some form of government identification, a way to repay the loan (Amazon, eBay, or PayPal), proof of income, and a verifiable address, email, and phone number. To prove your address, expect to be asked for a copy of something like your electricity bill, property tax bill, or phone bill.
The Pros and Cons of a Bitcoin LoanNow that you understand a little about what it takes to get a Bitcoin loan, let's look at the pros and cons.
- Funds are received quickly.
- Bitfinex and Poloniex are two of the best Bitcoin lending sites and have earned a solid reputation.
- Interest rates can be lower than payday loan rates.
- Lenders may be pickier about lending to people with no credit history or poor credit.
- There is a risk of hacking causing issues.
- Bitcoin can deflate in value quickly which makes lenders wary.
- Minimum and maximum loan values apply.