Compare Crypto Loans in 2021: Complete Cryptocurrency Lending Guide

Aug 20, 2021
Bitcoin logo with the text saying "compare crypto loans"

Whether you take part in decentralized finance (DeFi) or not, one can’t deny it’s had an outstanding impact on the overall cryptocurrency lending industry. It’s never been easier to get a loan and that’s due to the competitive forces of both centralized and decentralized lending products pushing each other to new heights. With so many options out there, it’s helpful to compare crypto loans in 2021 to see which is best for you. 

Compare crypto loans: What is a cryptocurrency loan?

Cryptocurrency has come a long way since Bitcoin (BTC) first hit the scene in 2009. What started as a sneaky way for people to pay for goods and services on the dark web has quickly evolved into a revolutionary technology that’s freeing people from the bonds of traditional finance as we speak. Crypto loans are perhaps the best example of this. 

A cryptocurrency loan is very similar to loans you would find in traditional finance--at least in concept. With crypto loans, there is a borrower and a lender. The borrower seeks money for some purpose and the lender is willing to lend that money while receiving some extra payment back--typically in the form of an interest payment. Oftentimes, collateral is required to secure the crypto loan. 

Crypto loans are peer-to-peer with no middleman required

Compare crypto loans vs. traditional bank loans

While crypto loans and bank loans may seem quite similar in theory, they differ in a variety of ways. Here are a few examples when you compare crypto loans vs traditional banks loans:

  • No third-party: With traditional loans, the bank acts as the third party between the lender and the borrower. In the case of crypto loans, the blockchain-backed protocol handles the loan terms directly to the borrowers.

  • No application process: Crypto loans don’t require a loan application process. Anyone can request a loan and get it regardless of race, background, education, or financial situation.

  • No credit checks required: While some lending platforms may require an ID verification process for anti-money laundering purposes, there are no credit checks required.

  • Loans are protected by collateral: Almost all crypto lending platforms require the loans to be backed by crypto collateral. This not only helps to protect the lender’s funds but also helps the borrower as well since it guarantees they are in good financial standing to even get the loan.

  • Instant loans: Unlike getting a loan through a bank, there is no waiting time to receive a crypto loan. Within minutes, a borrower can sign up, deposit crypto as collateral and receive their loan. That would take days or weeks with a traditional loan. 

Compare crypto loans: Is volatility a problem?

Using crypto as collateral means it’s much easier to get a loan compared to a traditional bank. However, crypto collateral applies to the same rules of volatility as any other cryptocurrency. Yes, it’s great to use crypto as collateral because it means you can stay in the market and benefit from that cryptocurrency’s growth during the loan period. However, it also means you could potentially lose that collateral if the price falls enough.

That’s why it’s important to compare crypto loans and loan-to-value ratio (LTV). YouHodler for example features a loan plan with the highest LTV in the industry (90%). That means if you deposit 1 BTC for example, your loan is 90% of that value. That being said, the higher LTV there is the riskier the loan is.

YouHodler also has a lower LTV like 50% where if you deposit 1 BTC you get just 50% of that value for the loan for example. It means you get less money but also your loan is a bit safer. This is because crypto lending platforms all have a rule that states if the value of your collateral drops below a certain amount due to volatility, the lender is forced to sell the collateral so they can protect themselves from loss. 

Hence, when you compare crypto loans, it’s good to see which platforms over a diverse set of loan plans with medium to high LTV so ensure you have options that help you profit but also can help you protect your collateral as well. 

All the information in the table taken from public official resources as of August 16, 2021

Compare crypto loans: can lenders profit?

Due to its peer-to-peer nature, lenders stand a chance to profit from lending out their funds to borrowers. In this case, everyday people can act as “a bank” and earn interest on crypto, stablecoins, or fiat funds they lend out. As a way to incentivize lenders, DeFi platforms offer interest rates paid out on a regular basis. Some of these interest rates are cartoonishly high but of course, they come with risks.

Rug pulls”-- or a type of scam where developers abandon a project and take all the money--are unfortunately a common occurrence in DeFi. While many people may make a great profit-earning interest from DeFi, they could be playing a game of financial musical chairs, hoping they are not the last ones left holding the bag. For this reason, it may be good to compare crypto loans from verified, centralized platforms. 

YouHodler, Nexo, Crypto.com, and BlockFi are some of the most popular ones out there. YouHodler offers up to  12% APR + compound interests on stablecoins and cryptocurrencies. Since it is a regulated FinTech company with a transparent team structure bound by E.U. laws, the chances of a rug pull are zero and other security issues are extremely limited due to insurance and security audits. 

YouHodler does not require any lock-up period for deposited assets. That means you can withdraw anytime you want. It also does not require you to buy any native token in order to earn 12% as Nexo or Celsius does. Therefore, you can deposit your favorite cryptocurrency and start earning interest immediately. away. If you don’t want to take a loan, you don’t have to, but the platform does have several cool features you might want to check out. 

Compare crypto loans: should I get a crypto loan?

Crypto loans are a fantastic way to use your cryptocurrency without selling it. You can still use its value without missing out on future price growth. Thanks to the wide range of platforms out there, it’s easier than ever to get a loan. Just make sure when you compare crypto loans, you consider all factors. 

DeFi may have the flashy hype and high-interest rates but that comes at an extreme cost. Security vulnerabilities in DeFi continue to be a big problem and one could risk everything there. 

If you go the centralized route, make sure to see which platforms offer a good balance of flexibility, efficiency, honesty, and convenience. A few platforms out there are not as advertised so make sure to do your own research.

If you want to save time, just go to YouHodler.com and check out our web app and mobile apps. YouHodler has the highest LTV on the market, flexible loan plans, high-interest rates on savings accounts, and unique tools like Multi HODL, Turbocharge, and crypto exchange capabilities. It’s a one-stop shop for all your crypto needs. 

Create your YouHodler account in minutes. CLICK HERE to start. 

Get YouHodler Crypto Wallet App

An efficient and innovative tool powered by crypto-backed loans to help you capitalize on market volatility

YouHodler is regulated in  Switzerland and the EU

Partnership with regulated EU/Swiss payment providers

YouHodler S.A. Regulated Financial Intermediary and Pawn Broker

YouHodler Italy S.R.L. OAM Registration

VASP Registration wth the Bank of Spain