What is collateral and why do I need it?
What Is Collateral?
The term collateral refers to an asset, in this case BTC or ETH that Nebeus accepts as security for a loan. The collateral acts as a form of security for Nebeus, the lender. In the event, a borrower doesn't pay back their loan it can be used to recoup losses if any.
Why do I need it?
Before Nebeus issues you a loan, it wants to know that you have the ability to repay it. This security is called collateral and It helps to ensure the loan is repaid. In the event the loan isn't paid back, Nebeus can liquidate the collateral, applying the money it gets to the unpaid portion of the loan. The remaining portion, if any, is automatically added to your wallet.
To have the option to recover your crypto, you need to select "When crypto prices are falling" before complete your loan agreement, otherwise the system will act automatically and sell your crypto to recover the loan.
What if my collateral drops in value?
We lend you the value of 72 - 85 % of your crypto-collateral (calculated on the day the loan is issued). If the crypto-market goes down, and the value of your collateral is reaching the value of your loan, you can: Add more crypto to your collateral ...
What can be used as collateral against a cash loan?
Currently, BTC and ETH can be used as collateral when taking out a cash loan.
My collateral has been liquidated due to a margin call: what can I do?
When your loan approaches a margin call and your Crypto collateral is at risk of liquidation, you will be notified via email. However, if there is no action taken from your side by the moment of a margin call, there is still a way to avoid your ...
What is a margin call and how does it work?
Nebeus loans use cryptocurrency as collateral which is locked to cover the amount of the loan according to your LTV. Collateral is used by the lender as insurance against the loan. When you enter into a loan backed by cryptocurrency you are agreeing ...
How long do I have to react to a margin call?
If you have selected "When crypto prices are falling" option before you complete your loan, you still can react regarding a margin call, but you have to be super quick by adding collateral to your wallet. We recommend that you leave some extra ...