- Borrowers can propose loans and lenders can propose loan offers detailing the duration, interest rate, collateral and re-payment type.
- Loans are over collateralized, up to 70%, with crypto, this makes these loans relatively “secure”.
- If the borrower defaults there is collateral to pay back the lender, capital plus interest.
- The value of the collateral is monitored and if it drops below 90% of the lent sum, CoinLoan liquidates the collateral and returns it to the lender.
- Repayments can be made in both crypto and FIAT.
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Would you like to borrow or lend funds against Bitcoin or other cryptocurrencies? Coinloan offers a system to manage loans to borrowers, which generates passive income for lenders.
What is a Crypto Loan?
A crypto loan is an agreement between a lender and a borrower. Both parties accept that either the collateral, the loan or the repayment will be made in crypto. In the cryptoverse, there are also stable coins. These coins mimic the value of FIAT currencies (USD, Euro, Ruble), this allows crypto loans to be based on FIAT.
What are investors on CoinLoan?
Investors are lenders. These are people or businesses who are willing to lend money to borrowers in exchange of collateral repayment and interest payments. The term investors and lenders is used interchangeably in this article.
What is CoinLoan?
Coinloan is an online marketplace for crypto loans. Lenders and Borrowers use this platform to make crypto loans. Coinloan manages this exchange and takes a fee in the process.
Coinloan allows borrowers to get a loan on their crypto assets, they can use the proceeds from this loan to make other investments or payments. This allows borrowers, not to sell their crypto assets when they are strapped for cash or when they identify an interesting business opportunity. Lenders can earn passive income on CoinLoan by providing loans to borrowers.
How much passive income can you make on CoinLoan?
The average ROI in lending on CoinLoan seems to be 12%. Some loans are higher, some are lower. These are high rates, but relatively average for the p2p lending industry. It is important not to get seduced by high rates before considering all risks.
Pros for Coin Loan
- CoinLoan was launched in 2016 and has survived the great crypto bear market.
- CoinLoan operates in Estonia, a European country with a stable government and the rule of law. They are regulated by the EFSA (Estonian Financial Supervision Authority) and has the following Financial Licenses: FVR000111, FRK000091, FFA000241.
- Using the site is easy, it is quick to make an investment in a loan, however, it takes time to find the right investment suited for you. Once an investment is made, borrowers receive all the funds quickly.
- All the borrowers are verified on the platform by CoinLoan, this makes it possible to pursue the borrowers in case the loans default and the collateral cannot pay the loans back.
- Borrowers and Lenders are able to create loan proposal according to their needs.
- Loan payments can be done in multiple fiat currencies. Dollars, Euros, Sterling, Rubles, Bitcoin, Bitcoin Cash, Ethereum, Litecoin and Monero and several stable coins including (TUSD, USDC, PAX, DAI, USDT)
- A loan agreement is generated for each loan, this is important documentation for taxes.
- It is possible for borrowers to bay pack Interest-Only or Principal + Interest.
- Loans are secured, but there are still risks. Think: “Not your keys not your coins”
- Possible to diversify by investing in different loans.
- Potential ROI is 12%, which is high, but relatively normal for p2p loans.
Cons for Coin Loan
- Borrowers can repay the loan early, the lenders would be paid back in full, however, they would need to find another loan opportunity to keep generating passive income.
- CoinLoan does not have an auto-invest option. Investors need to visit the site browse and choose a specific investment manually. This can result in losing an opportunity to someone who will be faster to find that investment.
- CoinLoan does not have an alert system, such a system could alert the borrowers and lenders to loans according to certain criteria,
- Unlike most p2p loan platforms, Coinloan does not have a buyback guarantee or a provision fund. This is not possible probably because of the low volume and also because of the collateral locked which provides a certain level of guarantees in case of defaults.
- The deal flow is low, this can be both a pro and a con. It is a con because there are no many deals it is a pro because some investors may overlook this platform, missing some juicy deals in the process.
- The minimum investment is $1,000 which is a high amount, especially considering that most investors would like to test the waters with lower amounts.
How does CoinLoan work?
1. Borrowers and Lenders submit Cryptoloan proposals
2. Investors and Borrowers research existing loan proposals.
Each loan proposal has the details in the images below.
3. Investors deposit fiat or stable coins.
4. The loan is either activated by the borrower or the lender.
If the lender has created a loan request, then the borrower can accept it and the loan is launched, if the borrower launched a loan proposal then the lender can accept it and launch the crypto loan.
Is CoinLoan Safe?
CoinLoan combines two business models, crowdfunding and crypto. Both industries are nascent and new. There are risks we know and there are other risks which we do not even know about. Cryptocurrency has regulatory challenges and p2p has not yet seen a global economic depression. Combing the two business models reduces some risks but creates others.
- CoinLoan going bust, this could complicate life for the lenders to keep track of their loans and collaterals.
- Collateral value going down and CoinLoan not being able to liquidate fast enough, this would result in lenders being exposed to default.
- Collateral being stolen or hacked. CoinLoan seems to emphasize security, but security is a competition between cops and thieves. Sometimes the thieves do get in!
- There is no insurance on the collateral of the loans.
CoinLoan takes crypto loans seriously, it has developed a p2p market for crypto loans which is transparent, flexible and fast. Consider all the pros and cons, Coinloan does have a very interesting proposition for the passive income seeker who has idle crypto assets or stable coins.