How to Calculate Loan Collateral?
Oftentimes, platform users experience difficulties in calculating the collateral amount for loan arrangements. Generally, crypto collateral coverage depends on loan amount, loan duration and it should meet the Initial LTV ratio (50%) at the date of striking the loan deal. The value of pledged collateral is directly contingent upon current exchange rate dynamics and correlations, hence it can either increase or decrease in due course.
LTV is calculated by the formula:
LTV = (Loan Amount + Interest)/Total Value of Collateral × 100.
However, the Initial LTV ratio can be personally adjusted when making your Loan Request – from 50% to 80%. Additionally, you can make use of online P2P Calculator, which can be easily located on the main LendaBit.com webpage. It is a handy instrument for automated calculations, which gives concise visuals to help determine all necessary variables, inclusive of collateral.
Below you will find illustrative examples how to conveniently determine the collateral amount.
NB! All collateral calculations are dependent on the current exchange rate, hence all numbers/quantitative indicators are relevant at the time of writing this blog article.
On LendaBit.com homepage, you can make use of P2P Loan Calculator. For instance, you want to apply for a 1000 USDT loan for debt consolidation. Enter the amount and click the preferred collateral currency (BTC or ETH). By default, loan term is set to 1 month (but you can adjust it in order of your preference). So, for a 1000 USDT loan, collateral will amount to 0.3201529 BTC or 11.64633982 ETH.
Log in to your LendaBit.com account.
Go to LoanBuilder and choose the Loan Wizard option.
Demonstratively, for a 250 USDT loan, the collateral amount in BTC will equal 0.08917984.
Likewise, the collateral amount in ETH will equal 3.24351349.
*Please keep in mind that it is recommended to maintain the Initial LTV ratio at 50% in view of significant crypto market fluctuations.