Binance flexible loan is an isolated, over-collateralized and open-term loan product. Allows users to take multiple isolated loan positions. For example, this might mean taking an ETH loan with TUSD collateral in one position and a BTC loan with USDT collateral in another position.
Binance Flexible Loan allows you to use Simple Flexible Product Earnings assets as collateral to borrow any available cryptocurrency. Therefore, your assets will continue to reap rewards, allowing you to take advantage of them even when borrowing against them.
To get the loan, you must have more collateral than the loan amount requested. So if you want to borrow 100 TUSD, you have to provide collateral worth more than that first.
You can repay the loan at any time in the same cryptocurrency as the borrowed funds. Open positions have no expiration date unless your position is liquidated or certain cryptocurrencies are no longer supported on the platform.
How Does the Value-To-Debt (LTV) Work for Binance Flexible Loan?
Binance flexible loan is open-term, meaning you can keep your positions open indefinitely as long as the relevant LTVs are not exceeded. As a result, each position in a margin-loan pair has a different LTV rate, margin call and LTV liquidation level.
You can calculate LTV using the following formula:
LTV = Loan Value / Collateral Value.
If the initial LTV for USDT is 65 percent and you have committed 1,000 USDT, you can borrow up to 650 USDT in your chosen cryptocurrency.
How to Use Flexible Credit?
After Binance gets a flexible loan, you can decide how you want to use the loaned assets. You can use borrowed assets for any purpose, including trading on the spot market, investing in Binance Earn products, or withdrawing from Binance. You can also use the cryptocurrency with a Binance card for your personal expenses or convert the cryptocurrency to fiat.
However, the pledged collateral remains with Binance Flexible Loan as collateral for the return of your borrowed digital assets. Also, each cryptocurrency is subject to varying maximum amounts that you can pledge or borrow.
Binance Flexible Loan Advantages
Real-Time APR Rewards
The advantage of the Simple Earn Flexible Product is that when you use assets as collateral for your loan, these assets continue to earn rewards in the form of real-time APR. In simple terms, this means that they will continue to earn additional rewards or interest as your assets are used as collateral, allowing you to benefit from them even when borrowing against them. This effectively lowers your net interest rate on your loan.
Competitive Interest Rates
The competitive interest rates of a flexible loan product allow you to borrow cryptocurrencies at a lower interest rate compared to many other loan options available in the market. This can save you money on interest payments and potentially lower the overall cost of your loan, making it more affordable in the long run.
All interest rates for each cryptocurrency on Binance Flexible Loan are updated every minute.
No Transaction Fees
There are no transaction fees for flexible loan products. This means that you will not be charged any additional fees for processing your loan. This may include activities such as making loan repayments or accessing funds from your loan account. By eliminating transaction fees, credit becomes more affordable for you as you don’t have to pay additional fees to manage your credit.
How is Interest Processed for a Loan?
Interest on a Binance flexible loan is calculated every minute based on the total amount of money owed (the outstanding loan) and the interest rate (APR) set for that minute. This means a small amount of interest is added to the total amount owed as each minute passes. This accumulation of interest, which continues after each minute, gradually increases the total outstanding loan balance.
The total amount of Simple Earn Flexible Product assets committed for the Binance flexible loan will be reflected in the “Margin amount” column in your Earn wallet.
What is the Difference Between Flexible Rate and Fixed Rate?
The stable rate behaves like a fixed rate in the short run but may rebalance depending on changes in market conditions in the long run. A floating rate is a rate that is updated every minute based on factors such as asset volatility and market conditions. As a result, it is important that you pay close attention to the rate you pay.
As the name suggests, the flat rate will stay fairly flat and is the best option for planning ahead how much interest you will need to pay. Variable rates change over time and may be the best rate.
