Understand the downside before you borrow.

Collateral volatility

Crypto prices can move sharply in short periods. A fall in the value of your collateral raises your loan-to-value ratio, even if you have not borrowed any more.

Margin calls

Most providers set a margin-call threshold. If your LTV crosses it, you may be asked to add collateral or repay part of the loan, often within a short window.

Liquidation

If your LTV reaches the liquidation threshold, the provider may sell part or all of your collateral. Liquidation can occur quickly, may be partial or total, and may trigger a taxable event.

Counterparty and custody risk

Your collateral is typically held by the provider or its custodian. If that entity fails, recovery of your assets is not guaranteed and may not be insured.

Cost risk

Variable rates, setup fees, late fees and liquidation fees all change the total cost. Compare the full fee schedule, not only the advertised APR.

Regulatory and availability risk

Product availability and terms vary by state and can change without notice. Verify current terms directly with the provider.