Crypto Lending vs. Traditional Lending – Which One Is Better?
When it comes to taking a loan, most of us would choose a bank as our preferred sector. After all, it’s a proven, known, and a much, much safer method.
But, what if we told you that there’s a much better alternative available out there?
Yes, we’re, indeed, talking about Crypto lending. As far as our research says, it’s an excellent method of getting some money and completing your financial goal with it.
Keep reading to know more about it.
What Is Traditional Lending?
Traditional lending, in essence, is all about getting a lumpsum amount of money from a bank or any other centralised financial institution. In this aspect, the interest rate you must pay will depend upon your credit score and the amount of money you’re borrowing.
Also, as a borrower, you’ll need to use collateral to secure your loan from the lender. It can be anything between your motorbike or your house. Now, if you want, you can get whatever you are looking for without offering a collateral for the same.
However, in that case, you’ll have to pay a huge amount of interest rate. Also, in this case, the amount of money you can get from the lender will be limited.
Depending on the person you’re borrowing the money from, you can either pay it all at once or do it in instalments. Having an excellent credit score can help you a little in this aspect.
What Is Cryptocurrency Lending?
When it comes to taking a loan, opting for a bank is certainly well and good. However, in our opinion, the process tends to be too lengthy for some people. And, if that wasn’t enough, you will not get any money from anyone if you don’t have a high credit score.
Therefore, in that case, you have the choice of Cryptocurrency lending in your pocket. As the name implies, you can take some sort of Crypto with this type of loan and pay the same to get whatever you wanted to buy. Nonetheless, there’s a catch to it.
Unlike a conventional loaning system, you cannot get it from a bank or a centralised financial institution. Instead, you have to acquire the same from a Crypto broker or investor.
Apart from this, you can also collateralize the amount of money you’re borrowing. Therefore, it will be easier for you to pay it all off without worrying about losing your belongings.
And, there’s no need to go anywhere to get the loan you’re asking for. Just open the bitcoin loophole website, get connected to an investor, and trade the amount from them.
It’s that easy.
Crypto Lending Vs. Traditional Loan – The Differences!
As you’ve already guessed, a traditional and a Crypto-based loan is quite different from each other. Thus, to make it easier for you to understand, we’ve talked about it in a tabular format.
Let’s get started, then.
| Point | Traditional Lending | Cryptocurrency Lending |
| Interest Rate | Can be high or low depending on the amount and collateral. | Usually lower than a conventional loan by quite an extent. |
| Collateral | A non-liquid collateral is needed to get the loan you’re asking for. | The amount you’re borrowing can be used as a collateral here. |
| Paperwork | You have to complete complex paperwork while applying for it. | The paperwork, in this aspect, will be much subtler and easier. |
| Loan Processing | It might take around a month or so to complete the processing. | Only an hour or so will be needed to take care of the paperwork. |
| Asset Switching | There’s no way you can make a switch between currencies. | You can switch between currencies whenever you want. |
What Should You Choose, Then?
The culture of Cryptocurrency lending is still quite new and all in the market. So, we can’t be too sure about the credibility of the same. However, there’s something we can tell you.
It’s a much safer and more convenient option.
Therefore, we’d surely encourage you to go for it. However, before you do so, don’t forget to keep an eye on the lender. Also, choose the trading app carefully.
You wouldn’t want to fall into a mess by making the wrong choice now, would you?
