What are the repayment terms for Bitcoin-backed loans?
Manage your Xapo Bank loan with flexible repayments. No penalties for early repayment, and your BTC collateral stays secure. Read more below.
How often do I need to repay?
There is no set schedule for your payments. You can make payments at any time during the loan term. Just ensure you can repay the loan in full by the end of the term.
Can I repay my loan early?
Yes, you can repay your loan early at any time during the loan term. Early repayment may reduce the total interest you owe. When repaying, the accrued interest is paid first, followed by the outstanding principal.
To repay your loan:
Open the Xapo Bank app
Select Loan
Tap the Repay button and follow the prompts.
Are there penalties if I repay my loan before the end of the term?
No, there are no penalties for early repayment. You can make payments at any time during the loan term. Just ensure that you are able to repay the loan in full by the end of the term.
What happens if I can’t repay the loan on time?
If you cannot repay the loan on time, your Bitcoin collateral will be sold to cover the loan amount and any accrued interest. Only the amount necessary to repay the outstanding balance will be sold. Any remaining Bitcoin collateral will be returned to your BTC Vault.
How can I avoid unnecessary liquidation?
In order to avoid unnecessary liquidation of your collateral, especially when Bitcoin prices are volatile, follow the below:
Maintain a healthy LTV: Regularly monitor and maintain it below the indicated liquidation percentage.
Pay on time: Ensure you do not miss the loan due date payment.
Respond to margin calls: Promptly respond to any margin calls.
Add collateral: Decrease your LTV by adding more Bitcoin as collateral.
Partial repayment: Lower your LTV by repaying part of the loan to reduce the outstanding balance.
How can I decrease my LTV?
To decrease your Loan-to-Value (LTV) ratio:
1. Add Bitcoin as Collateral:
Open the Xapo Bank app
Tap on Loan
Select Add Collateral and follow the prompts.
2. Partially Repay the Loan:
By repaying part of the loan, you reduce the outstanding balance, which lowers your LTV ratio.
If your loan becomes unhealthy and you receive a margin call, adding more Bitcoin to your collateral will decrease your LTV and help you avoid liquidation.
What is a margin call?
A margin call occurs when the value of your collateral, such as Bitcoin, falls below a certain threshold, prompting the lender to request additional funds or assets to maintain the required Loan-to-Value (LTV) ratio. If you don’t meet the margin call by adding more collateral or repaying part of the loan, Xapo Bank will sell your Bitcoin to cover the outstanding balance.
Is collateral rehypothecated?
No, we keep your collateral untouched in the BTC Vault. You will get it back the moment you fully repay your loan.
*Currently, residents of the United Kingdom and Australia do not have access to Bitcoin-backed loans.
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