** The following information does not constitute financial or tax advice. **
Celsius is changing the game for cryptocurrency users with the recent announcement of 0% APR crypto loans for California customers. If you own one of the 40 available cryptocurrencies, you can apply for a loan in USD or stablecoins.
In collaboration with Celsius, we will take a closer look at the details of this new type of loan. We will also explain how these loans work.
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What is Celsius
Before we dive into the details, here’s a quick introduction to Celsius. As one of the leading earnings and credit platforms, Celsius sees itself in offering more financial opportunities through cryptocurrency.
Celsius was founded in 2017 and launched its crypto-backed loan product in 2018. The company received its Finance Lender license in California in August 2021. Then the platform made the big announcement to offer 0% crypto loans to California users. The latest announcement is a game changer for both Celsius and California crypto owners.
Would you like to learn more about Celsius? Check out our full review.
Launch of 0% APR crypto loans for California
Starting in August 2021, Celsius began offering 0% APR crypto-secured loans to California residents. Correctly! Currently, if you live in California, you can borrow interest-free money on your crypto assets.
How much can you borrow?
In order to take out a loan at Celsius, you need to deposit your cryptocurrency as collateral for the loan. You can take advantage of the APR of 0% when you take out loans with a LTV of 25%. In other words, the value of your loan cannot be more than 25% of the value of the cryptocurrency that you have deposited as collateral.
Celsius offers loans in stablecoins (USDC, USDT, GUSD, TUSD, PAX and MCDAI) from $ 500 and Fiat (USD) loans from $ 15,000.
Which cryptocurrencies can be used as security?
Celsius supports over 40 cryptocurrencies on its platform, many of which can be used as collateral for borrowing. Collateral options may vary by jurisdiction. In addition, not all coins are supported at every LTV level.
Popular coins that are supported as collateral by Celsius are: BTC, ETH, CEL, LINK, MATIC, UNI, LTC, ADA, DOT, XLM, AAVE, BCH, SNX, ZEC, USDC, DASH, MANA, EOS, OMG , BAT, PAXG, ZRX, COMP, USDT, BSV, KNC, ETC, UMA, TUSD, LPT, TGBP, MCDAI, THKD, GUSD, PAX, TAUD, BUSD and XAUT.
You can also take out a loan in various currencies. These include TUSD, GUSD, PAX, USDC, MCDAI, USDT, and USD.
How soon do you get the funds?
Celsius makes it quick and easy to apply for a loan through its mobile app. Filling out your loan application only takes a few minutes. Eligible borrowers are usually approved within 24 hours.
Once approved, credits issued in stablecoins will be sent straight to your Celsius account. Fiat loans, on the other hand, are transferred to your bank account by wire transfer.
What’s the catch?
It is rare to find such a cheap loan rate. After all, lenders want to make money through interest payments. So, you might expect that there would be many “episodes” on these 0% APR crypto loans for California.
In fact, you won’t find many of the most common ones. For example, you don’t pay any creation or delay fees. Plus, you don’t have to undergo a credit check or provide evidence of your income to qualify for the loan.
However, before you take out a loan with Celsius, it is important to understand how to protect your loan in the event of a margin call (when the value of your crypto collateral drops below your contracted LTV).
How to Handle a Margin Requirement on Your Celsius Crypto Loan
If a margin call is issued on your loan, Celsius will automatically notify you and give you three options to avoid liquidation:
You can resolve your margin call right from the Celsius app by adding additional collateral (in the same coin) to keep your loan active.
Complete your loan via the Celsius app by finalizing your interest and principal payments in one of the supported stablecoins.
Manually close your loan by contacting the Celsius loan team that will finalize your main payment in fiat.
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What about users who live outside of California?
Currently, Celsius is only offering 0% APR crypto loans for California. However, users who live in other states can still benefit from the lowest crypto-backed loan rates in the industry, starting at just 1% APR.
The interest rates vary depending on how much collateral you want to provide. Remember, however, that you can get up to 25% off your monthly interest payments by making payments with Celsius’s native CEL token.
Why would you want a crypto loan?
Celsius is making waves by announcing 0% APR crypto loans for California residents. However, the question needs to be asked – why would a cryptocurrency holder want to take out a crypto-backed loan?
First, it allows you to continue HODLing instead of having to liquidate your crypto investments to take advantage of their value. Second, you can avoid the capital gains tax that comes with selling crypto for a profit.
All in all, crypto-backed loans offer cryptocurrency holders a flexible way to use the value of their funds without selling their digital assets.
How do crypto loans with 0% APR work at Celsius?
Would you like to take out a crypto-covered loan with Celsius? This is how you make it happen.
First you need to create a Celsius account before you can proceed. After that, you can choose what kind of money to borrow. Remember, you can choose from TUSD, GUSD, PAX, USDC, MCDAI, USDT, and USD.
Next, choose the duration you want. Finally, Celsius will review your information for approval. To access the 0% APR option, the loan amount must be less than 25% of the collateral amount. Check out this short video tutorial:
Do you want to know how much you can borrow? Check out this nifty calculator from Celsius.
With the introduction of 0% APR crypto loans in California, Celsius is opening a whole new way for crypto users to unlock the value of their funds. And even if you don’t live in California, you can enjoy the lowest lending rates in the industry, starting at 1% APR, depending on your jurisdiction.
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Loans made or arranged under a California Finance Lenders Law license. Celsius is licensed by the California Department of Financial Protection and Innovation under the California Finance Lender Law License No. 60DBO-133776 licensed. Celsius Loans are issued by Celsius Lending LLC under this license.
The terms of each loan are set out in the respective loan agreement. Therefore, please read the loan agreement carefully before applying for a loan.
Celsius loans are “balloon” loans, which means that interest payments are made monthly and the principal is repaid at the end of the loan term. Interest rates vary from 1% to 8.95% APR, depending on your LTV (Loan to Value) choice, with up to 25% discount on interest if you choose to pay interest in CEL tokens. If you cancel your loan before 6 months have elapsed, the full interest rate for the first 6 months is due.
Celsius loans are not available in all jurisdictions. Check your Celsius mobile app to see which rental options are available at your location.
Celsius does not provide financial, tax, legal, or other professional advice and you should consult your own independent advisor before making any financial decision and assess whether digital assets and the risks involved are suitable for you given your financial situation and circumstances You are appropriate.