It was only a matter of time before cryptocurrency-based loans became a thing. One such provider that recently entered this innovative marketplace is Bankera Loans.
Launched in late 2019, the platform offers crypto-backed credit lines from just €25, up to a whopping €1 million.
Fancy finding out whether or not Bankera Loans is right for your crypto-financing needs? Be sure to read our in-depth review.
What is Bankera Loans?
In a nutshell, Bankera is an online platform that allows you to obtain a line of credit, in return for putting your cryptocurrency holdings up as collateral. In this sense, the platform operates in a similar nature to a traditional secured loan, insofar that the size of collateral will dictate how much you can borrow.
In the case of Bankera Loans, this starts at just €25 and goes up to a maximum of €1 million. As we’ll cover shortly, the interest that you pay on your crypto line of credit will depend on a number of variables. At the lower end, you can get an APR of 6.95% if the line of credit is based on the LTV (loan-to-value) of 25% or less, and you borrow €5,000 or more.
At the higher end, you’ll pay up to 16.95% APR if you require the LTV of between 50% and 75%, and you borrow less than €1,000. Regardless of the amount you wish to borrow, all loans are based on a term of 12 months. However, you can pay your loan off early at no extra cost, or potentially extend it further if the need arises.
One of the most attractive aspects of using an alternative lender like Bankera Loans is that you can choose how you wish to receive the funds. For example, you have the choice of having your loan funds paid in cryptocurrency or deposited into your Euro-denominated bank account.
Finally, it is also important to note that Bankera has its very own digital token. Known as the Banker (BKN) token, it gives you the opportunity to reduce your interest rates further.
So now that you have a brief overview of what Bankera Loans is, in the next section, we are going to explore how the financing process works in more detail.
How Does Bankera Loans Work?
Here’s a step-by-step process of how a Bankera Loans line of credit would work in practice.
Step 1: Assess How Much You Wish to Borrow
First and foremost, the amount that you will be able to borrow through Bankera Loans will depend on the value of your collateral. As is the case with most secured loans in the traditional space, this is based on the LTV of the underlying asset.
For example, let’s say that you have 1 BTC. For simplicity, we’ll assume that the current value of BTC is €10,000. Bankera Loans offers an LTV of up to 75% on its lines of credit, meaning that you would be able to borrow a maximum of €7,500 (75% of €10,000).
Step 2: Deposit Your Collateral
Once you’ve decided how much you wish to borrow, you will then need to deposit your collateral. This will always be in cryptocurrency, and the specific coin that you can use will depend on the loan package you opt for.
Nevertheless, the deposit process works much in the same way as a third-party cryptocurrency exchange, insofar that you’ll need to transfer the coins to your unique Bankera Loans wallet address. Once the funds arrive, you’ll be able to start drawing down your credit line.
Step 3: Withdraw Your Loan Funds
It is important to note that you are under no obligation to start drawing down your Bankera Loans credit line. On the contrary, if you decide further down the line that you no longer wish to borrow anything, you can simply withdraw your collateral back out.
With that said, you will have the option of drawing the loan funds down in fiat currency or cryptocurrency. If opting for the latter, you’ll need to have a bank account that is denominated in Euros.
As soon as you start drawing your line of credit down, interest will be applied to the amount that you borrow.
How do I Repay My Line of Credit?
You will need to repay at least the interest amount each month. This is due on the same date that you withdrew the money out, albeit, one month later.
In terms of making the payment, you once again have two options. For those that wish to stick with fiat currency, you can make your repayments via your European bank account. You need to verify your identity before you can do this.
Alternatively, you can repay the interest with a supported cryptocurrency.
Take note; you also need to keep an eye on the value of your collateral. Unlike traditional loan security that is denominated in fiat currency, your cryptocurrency holdings will go up and down in value. As such, you stand the risk of having your security liquidated if the LTV of your loan reaches 90% or more.
If this is the case, Bankera Loans will likely attempt to sell your collateral in the open market to cover what you owe. As such, you are advised to top-up your collateral position to ensure your funds are not liquidated.
Financing Packages at Bankera Loans
Bankera Loans offers three different loan packages – each of which comes with varying rates of interest.
Here’s the lowdown of what you need to know.
In order to receive the lowest interest rates on your line of credit, you’ll need to keep the LTV to 25% of less. In doing so, you’ll get 6.95% for borrowing €5,000 or more, and 8.95% for loans of between €1,000-€5,000.
Loans of less than €1,000 will attract the interest of 10.95%
You will have the option of depositing your collateral in BTC, ETH, XEM, or DASH.
If you need an LTV ratio of between 25% and 50%, you’ll need to pay a higher rate of interest. Loans of below €1,000 cost 13.95%, while loans of €5,000 or more cost 9.95%.
If you borrow between €1,000 and €5,000, this will cost you 11.95% in interest. Take note; you’ll only be able to deposit BTC or ETH if opting for this package.
If you need to borrow an LTV amount that sits between 50% of 75%, you’ll pay the highest rates offered by Bankera Loans.
Loans of less than €1,000 cost 16.95%, while loans of between €1,000 and €5,000 cost 14.95%.
Finally, loans of €5,000 or more attract an interest rate of 12.95%. Once again, your collateral needs to be paid in either BTC or ETH.
Regardless of which package you opt for, you can borrow between €25 and €1 million, and choose to receive your loan funds in cryptocurrency or Euros.
Customer support at Bankera Loans is available on a 24/7 basis via live chat or email.
In summary, Bankera Loans is a notable option if you’re looking to borrow between €25-€1 million, and you’re happy to put your cryptocurrency holdings up as collateral.
While the lowest rates are reserved for those looking for an LTV ratio of 25% or less, the platform can facilitate loans of up to 75%.
The most attractive selling point of Bankera Loans is that you have the option of having the funds transferred into your Euro-denominated bank account or via cryptocurrencies.