Binance Loans allow you to borrow cryptocurrencies ( like USDT, $BTC ) by putting up other crypto as overcollateralized collateral. It's a legitimate feature with competitive features, but not "good" or "bad" universally. It depends on your risk tolerance, market knowledge, and goals.
Want to get liquidity without selling your holdings (avoiding capital gains taxes in some jurisdictions) or for leveraged trading? This feature is for you and very useful, but extremely risky due to crypto volatility. Not Binance's fault. Many users lose money, especially through liquidation (forced sale of collateral when prices drop). It's not a "free money" tool and has led to significant losses for inexperienced users.
Ler's take a close look at their loans key features (as of late 2025).
Looking at the types, we've mainly Flexible Loans (open term, repay anytime), with options for fixed terms (7-180 days) and VIP loans for high volume users.
Their interest rate(s) is/are calculated hourly (you only pay for time used). Rates vary by asset and market demand, often low for major coins (e.g., ~0.05% daily for BTC, leading to low annual APY like 1-5%), but can be higher for others (up to 30%+ in some cases or promotions as low as 1.6%).
Their initial Loan-to-Value (LTV) is around 65-78% (borrow up to ~65% of collateral value). Margin call at ~85%, liquidation at ~90-95%.
They've wide range of supported assets (BTC, ETH, USDT, BNB, etc.) as borrow or collateral (no same asset pairs).
Binance loans minimum starts from small amounts (~$1 equivalent); VIP loans have higher mins (e.g., $500k).
One sweetest thing is Binance's collateral bonus. In Flexible Loans, collateral earns yield via Simple Earn while pledged.
See more great advantages below:
Hold long term assets (e.g., BTC, ETH) while borrowing stablecoins for expenses or trading. Sweet, right? That's what I call liquidity without selling.
It's often cheaper than traditional loans or other platforms; hourly accrual means short borrows are inexpensive. I borrow from Binance because of low/competitive rates and their flexible repayment structure. No fixed schedule; repay early with no penalty. Also, I borrow from them to increase trading exposure (e.g., spot, margin, or futures), leveraging potential.
And there's no credit check. Anyone with crypto can borrow.
You earn on collateral. Flexible loans let collateral generate rewards simultaneously.
But the aspects I'm not happy with are Binance loans disadvantages and risks. Not good at all. Yes, this is the full truth below.
The biggest danger. If collateral value drops (or borrowed asset rises), LTV rises. At liquidation threshold, Binance auto-sells your collateral to repay the loan + 2% fee. In volatile markets, this can happen fast, wiping out positions. Real user stories helps us to know how people turned small amounts into big gains but lost everything in crashes due to not repaying or adding collateral. Call it the liquidation risk.
Borrowing magnifies downside. Interest accrues constantly, and overdue loans triple rates before liquidation. I term it as amplified losses.
Crypto prices swing wildly; a 20-30% drop can trigger liquidation. Termed volatility.
Interest eats profits; no fiat options directly. That's the opportunity cost and fees, right?
Binance is reputable (SAFU fund, proof of reserves), but past regulatory issues exist. Not available/restricted in some countries (e.g., US has Binance.US with fewer features). And this is the platform risk, hmm.
Many reviews note it's confusing and leads to losses if misused. Binance's loan isn't for beginners, it a little bit complex.
Borrowing isn't taxable, but liquidation or interest might be. You may not be able to dodge taxes.
Overall, it's "good" for experienced users needing short-term leverage or liquidity in bull markets, but most retail users lose money trying to "profit" from it, per community reports.
Learning How to Potentially Profit (With Strong Warnings)
Binance Loans aren't a guaranteed profit machine. Crypto borrowing is speculative and high-risk.
Profits come from using borrowed funds to earn more than the interest cost + risks.
Consider the following common strategies:
1. Leveraged long positions (bet on price rises). This is how to do it:
- Collateralize $ETH , borrow USDT.
- Use USDT to buy more ETH or trade on margin/futures with leverage.
- If ETH rises > interest cost, repay loan and keep extra ETH.
Example is, borrow at low rate, buy during dip, sell higher. Got it?
2. Yield farming or staking borrowed assets
- Borrow stablecoins, put into higher yield products (e.g., Binance Earn, DeFi).
- Profit if yield > borrow rate.
3. Arbitrage or short term trades
- Borrow to exploit price differences across markets.
This is how to approach it safely (if at all).
Always start small by using only what you can afford to lose (1-5% of portfolio). Take a low LTV. Borrow conservatively (e.g., 30-50% LTV) for buffer against drops. And monitor constantly. Check LTV daily; set alerts for margin calls. Use stop loss/take profit. In trading, limit downside. Remember to go shirt tern only. Minimize interest accrual. Also diversify collateral to avoid single volatile asset. Make sure you have a payment plan. Add funds if LTV rises; repay quickly in volatility. Avoid night leverage by sticking to low multipliers.
Most "profit" stories are from bull markets; in bears or crashes, liquidations dominate. Leverage trading stats show ~70-90% of retail traders lose money long-term. This is not financial advice, borrowing to speculate is gambling. Consider alternatives like spot holding or low risk earning.
So:
If you're new, educate yourself fully on Binance's Loan Data page and test with tiny amounts. Crypto involves high risk of total loss.
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