What is Binance Flexible Loan?
Binance Flexible Loan is an isolated, overcollateralized, open-term loan product.
Image: Crypto Loans ( Hand Sketch)
Features
Open-term, Overcollateralized, Isolated margin
Interest is subject to change every minute
Interest is accrued every minute that adds to the outstanding loan amount
Currently supports 15 major tokens as collateral assets; Simple Earn Flexible Products assets are used as collateral. If desired collateral is not currently subscribed to Flexible Products, the Flexible Loan order will automatically subscribe them to Simple Earn Flexible Products
Benefits
Users can keep their loan positions indefinitely (as long as these tokens are supported by the platform, and positions are not liquidated)
Borrowed assets can be used for any purpose (trade, stake, withdrawn), as collateral assets are locked in each Loan Order
Repay outstanding loans anytime without penalties
Flexibility to add or remove collateral based on LTV health
Interest rate is typically the lowest cost option in Binance (in comparison to Margin/Stable Rate Loans)
Collateral from Simple Earn Flexible Product continues to earn Real-Time APR which increases the collateral value every minute (in some cases you get paid more APR on your collateral compared to borrow APR)
Interest rate setting is always being reviewed based on an assessment of competitiveness and other market conditions
Binance rates are comparable to the largest CeFi competitors and DeFi money markets
Note: Currently only can repay using the same cryptocurrency as the borrowed asset; repayments using collateral are currently not available but could be introduced in the future.
After the above explanations let's see some important things to be considered when borrowing a loan.
How to borrow a loan?
1. Log in to your Binance account and go to Finance then Crypto Loans.
2. Search for a coin from the filter, then click [Borrow] next to it.
3. Choose a loan type and enter the amount you wish to borrow. Then, choose collateral. The system will automatically calculate the collateral amount based on the initial LTV. You will also see the estimated hourly interest and liquidation price.
Read and agree to the Terms and Conditions and check the box next to it. Then, click [Start Borrowing].
4. You will see a pop-up confirming the loan.
What is LTV, and how much can I borrow from Binance Flexible Loan?
Depending on which cryptocurrency you wish to pledge, a different initial LTV may apply. LTV stands for Loan-to-Value. It represents the ratio between the value of the digital assets loaned to you plus accrued interest, if any, relative to the value of your collateral. These values are based on each cryptocurrency’s Price Index.
LTV = Loan Value / Collateral Value
For example, assuming an initial LTV of 65% for USDT: if you have pledged 10,000 USDT, you may borrow up to 6500 USDT worth of loanable assets. Or LTV of 65% for 1,000 USDT will be up to 650 USDT worth of loanable assets.
How do I perform loan repayments or adjust my loan LTV?
In the Ongoing Orders tab, click Repay or Adjust LTV to perform loan repayments or increase/reduce collateral respectively. You may only repay your Flexible Loan using the same cryptocurrency that you borrowed. Repayments using collateral assets are currently not supported.
Loan repayments will reduce the outstanding loan and accrued interest proportionately. For instance, you can’t choose to repay either accrued interest or outstanding loan only or in unequal proportions. You may also adjust the LTV for each loan position by increasing or reducing collateral.
1. Click Active Loan.
2. Go to Ongoing Orders then Stable Rate. Click Repay next to the order you wish to repay.
3. Select Borrowed Coin. Enter the repayment amount or select a repayment ratio. Check the box if you wish to keep the collateral in the order.
Review the details and click Confirm repayment.
4. You will see a confirmation message after the repayment has been successfully processed.
Which cryptocurrencies can you pledge or borrow on Binance Flexible Loan?
Binance Flexible Loan offers and accepts a wide range of cryptocurrencies as loanable and collateral assets, including USDT, BTC, and ETH.
Please note that same-cryptocurrency collateral-loan pairs aren’t supported on Binance Flexible Loan. For example, you can’t pledge BTC and borrow BTC within a single loan position, but you can have multiple loan positions to borrow BTC with non-BTC collateral.
The available cryptocurrencies for pledging and borrowing are updated from time to time. Please refer to the Loan Data page for more information.
What can I do with the cryptocurrencies borrowed from Binance Flexible Loan?
You may use the loan for any purpose, including trading on the spot market, depositing into Binance Earn products, or even withdrawing them from Binance. The collateral pledged will remain with Binance Flexible Loan as security for the return of the Digital Assets you’ve borrowed.
Remember to do your research because this article is only for information and not otherwise.
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Reference: https://www.binance.com/en/support/faq/what-is-binance-flexible-loan-and-frequently-asked-questions-1c9dddb774054983992b8977ae36577a
