If you use Bit2Me Loan, it is essential that you understand the key terminology to manage your loan. This glossary defines crucial concepts such as LTV (Loan to Value), Margin Call, and Interest Settlement, ensuring you operate with full knowledge and security.
Index:
- What is Loan to Value (LTV)?
- What does partial, total repayment/amortization or cancellation of a loan consist of?
- What loan-to-value (LTV) ratio can I get from my assets?
- What is LTV Price Execution?
- What does the Margin Call process consist of?
- What is Collateral/Guarantee reduction?
- What does Market Order mean?
- What does Loan Liquidation consist of?
- What is the Guarantee?
- What does Collateral/Guarantee Increase consist of?
- What is Interest Settlement?
What is Loan to Value (LTV)?
Loan to value (LTV) is the ratio between the value of the loan amount and the value of the guarantee, expressed as a percentage. E.g.: a loan of 5,000 dollars leaving as guarantee a quantity of cryptocurrencies worth 10,000 dollars results in an LTV of 50% (5,000/10,000).
What does partial, total repayment/amortization or cancellation of a loan consist of?
The repayment or amortization of a cryptocurrency loan can be done partially or totally:
- Partial: it is amortized by paying only a part of the outstanding principal and its interest, which reduces the debt and future interest but keeps the loan active for the remaining balance.
- Total or cancellation: It is amortized or cancelled by paying the outstanding principal and interest in full and permanently closing the loan, with no further associated obligations.
What loan-to-value (LTV) ratio can I get from my assets?
In Bit2Me Loan we have defined an LTV (Loan-to-Value) of 50% for Bitcoin (BTC), Ethereum (ETH) and XRP (Ripple). This means that the cryptocurrency guarantee you must provide must be double the value of the requested loan or the outstanding balance to be repaid.
What is LTV Price Execution?
It is a reference indicator (percentage) that represents the limit from which the LTV is higher than established in this Contract and the moment in which the Loan Guarantee will be liquidated, in accordance with the provisions of the corresponding section of the Specific Conditions. During the duration of the Loan, in the event that the LTV is greater than the LTV Price Execution, Bit2Me will liquidate the Guarantee in accordance with the provisions of this Contract.
What does the Margin Call process consist of?
The Margin Call process or "margin to adjust" is what will be provided to the user before liquidating the operation at 85% LTV. This margin call is stipulated from 75% LTV. This situation will be communicated to the client through notification via available communication channels, so they can take action to amortize/repay the loan partially/totally or increase the deposited guarantee.
What is Collateral/Guarantee reduction?
Action of reducing the collateral/guarantee by the client to Bit2Me during the life of the loan.
What does Market Order mean?
It means the Sell Order that Bit2Me will issue to an Exchanger on the Guarantee provided by the Client, in accordance with the provisions of this Contract.
What does Loan Liquidation consist of?
Loan liquidation will occur in the event of having to execute the guarantee and cancel the loan by Bit2Me. Consequently, it is the action of liquidating the proportional part corresponding to the amount owed by the client in a specific operation plus the defined liquidation commission. It must be taken into account that there will be a surplus that must be identified within the movement or with an independent movement identifying the "Guarantee Difference Return".
What is the Guarantee?
It means any cryptocurrency accepted by Bit2Me, which the Client must necessarily grant to Bit2Me upon signing the cryptocurrency loan, as a guarantee for the fulfillment of their obligations, in accordance with the provisions of the cryptocurrency loan operation contract.
What does Collateral/Guarantee Increase consist of?
It is the action of increasing the collateral/guarantee by the client to Bit2Me during the life of the loan.
What is Interest Settlement?
It is the action of recording in the account the debtor interest assigned but not accrued from an operation, resulting in the increase of the amount owed by the client within a specific operation.
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