When Bitcoin made its first debut in 2009, it opened up a floodgate of other cryptocurrencies. This saw myriads of investors make a leeway to the crypto arena and as of now, there’re over 36 million crypto wallets in existence.
This number is set to increase even more in the future as more investors want a piece of the crypto pie. Some of them are even taking out loans so they can join in the hype.
So, are you considering investing in cryptocurrency, but don’t have the needed cash on hand? Learn whether you should borrow cash to buy crypto here.
Should I Borrow Cash to Buy Cryptocurrency?
While there’s no denying that investing in the world of crypto is beneficial, it’s vital to note that there’re huge risks associated. Taking out a loan to buy crypto should be a well-weighed out decision. Here’re five questions to consider before you do.
1. How is the Current Crypto Market?
This is the million dollar question that you should consider before taking out a loan to buy cryptocurrency. It’s vital to note that even though myriads of investors benefit from crypto every day, these profits aren’t always assured.
On that note, before you borrow cash to buy crypto, ensure you’re well informed about the current market conditions. If you take out a loan to purchase crypto and the value of the cryptocurrency you bought declines, you’ll be in a pretty bad mess!
This is because you’ll not only incur losses, but you’ll also be in debt as you must repay the loan. This is even messier as it’ll affect your creditworthiness if you’re unable to pay it back in full.
To avoid being in such a situation, ensure you keep up with what’s happening in the world of cryptocurrency. If the current market is bullish, then you should consider taking out a loan to cash in on the benefits, but if it’s bearish, you should lay low.
2. How Much Money Should I Borrow To Invest in Crypto?
If things are looking good in the crypto arena, then the next question that you should seriously consider is how much money you should borrow. The answer to this question depends on your ability to payback. Keep in mind that things can be quite unpredictable when it comes to crypto.
One minute everything could be looking good, and the next minute things are going south. In respect to that, don’t borrow more than you can afford to lose. Take out a loan you’ll be comfortable paying back when things go haywire.
3. What Are My Options?
Once you decide the amount you want, you should also consider the options at hand. Nowadays, loan borrowers have a long string of options varying from traditional to non-traditional. Here’re some of your options:
A Personal Loan
This is an unsecured loan that you can borrow from a bank, a credit union, or even an online lender. As noted, you don’t need any collateral to get this type of loan. Owing to this, lenders will often assess your creditworthiness before approving you for a loan.
Some of the factors used to assess this include your credit score and report. The good bit about a personal loan is that unlike other types of loans, you don’t need to explain anything to the lender.
How you use your loan is up to you. Also, lenders on this page don’t care about your credit score. They’ll offer you a loan even if you’ve got bad credit, enabling you to invest in crypto.
Crypto Loan Lending Programs
Other than personal loans, you should also consider borrowing cryptocurrency loans from crypto loan lending platforms. As a way to ensure no investor is left out in the crypto buzz, many companies are now creating platforms where interested parties can borrow cash. However, it’s vital to note that they only offer crypto-backed loans.
That means for you to qualify, you need to first invest in some crypto so you can use it as collateral. Other than buying crypto, you can use this type of loan for anything, including leisure.
The above are just a few of the options you have when it comes to borrowing cash for crypto. Thus, before you make any move, do due diligence by researching your options so you can make an informed decision.
4. How long is the Loan Repayment Period and what’s The Interest Charged?
With your options at hand, the next step should be to know how long is the loan repayment period and the amount of interest charged by each type of lender. The interest charged is particularly crucial as it dictates the total amount that you’ll pay in the long run.
Also, the longer the repayment period, the more likely you’ll pay more than you should for the loan. On that note, ensure you consider these vital metrics while reviewing lenders.
5. Are There Any Additional or Hidden Charges?
The interest rate of a loan you’re eyeing might be on point, but when you scratch beyond the surface, it might come with a lot of additional charges. Such charges will result in you paying way more than the loan value.
Therefore, before you borrow cash for crypto, ensure you’re aware of all the associated charges. Some of the charges you need to be on the lookout for include:
- Processing fees
- Appraisal fees
- Administration fees
- Credit report fees.
While such charges will not have any effect on your interest rate, they’re usually included in your monthly payments. This causes the total amount you’re supposed to pay back to skyrocket.
Some lenders will even charge you a penalty fee if you pay your loan earlier than the set date. Ensure you’re well informed about all the charges associated with the loan. If the total amount outweighs the loan amount, then you’re better off not borrowing it.
Should I Borrow Cash For Crypto?
The decision to borrow cash for crypto comes down to you. In other words, it’s based on how much of a risk taker you’re as the crypto market is incredibly volatile.
However, note that regardless of its volatility, countless investors have and are still reaping massive profits from crypto. So as long as you play your cards right, it’s possible for you to be one of them. Check us out for more crypto-related topics.
