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Tips for Managing Your Loan
Bitcoin markets can get volatile at times, and we like to remind our loan clients about the options they have to manage their loans and maintain a healthy LTV ratio. The LTV or "loan-to-value" ratio is the number you get when dividing the outstanding dollar amount by the market value of the bitcoin collateral. A healthy LTV ratio is any number below 70%. When the LTV ratio is above 70%, our system will send an email notification to let you know that additional bitcoin collateral is required in order to maintain a healthy LTV ratio. If and when that happens, we request as much additional bitcoin as is required to bring your LTV back to 50%. It is important to monitor this level closely, as Ledn must take action to sell sufficient bitcoin to repay and close the loan if the LTV ever exceeds 80%.
In this blog post, we will summarise the options that loan clients have when they receive a requirement for additional collateral.
You received a notification that your Loan is at a high LTV - now what?
Step 1: Log into your Ledn account and check the status of your loans
Once logged into your Ledn account, you need to click on the Dollar Loans tab if you have any open Dollar Loans, and/or on the B2X Loans tab if you have any open B2X Loans. If you have one of each make sure you visit both pages to verify the status of all open loans. Below is what the dashboard screen looks like and where the tabs are located:
Once in the Active Loans tab, you will see your active B2X Loans, and the B2X Loans that need to be topped up will be highlighted in red. You can then click on either "Top-Up" (add more bitcoin) or "Repay" (repay the loan) - we go over these options in detail below:
Step 2: Select Option to Meet Top-Up Requirement(s)
When it comes to managing your loan, there are several options available to you so that you maintain a healthy LTV.
- Top-Up by sending more bitcoin to your loan collateral from your Ledn BTC Savings.
- Top-Up by sending more bitcoin to your loan collateral address from a 3rd party wallet (i.e. bitcoin you may have on an exchange or in a self-hosted wallet)
- Repay your Ledn Loan instantly with bitcoin (now available for certain U.S. states).
- Repay your Ledn Loan instantly with USDC.
- Repay your Ledn Loan through a U.S. dollar wire transfer.
Options to Top-Up your Bitcoin for each Loan:
Please remember that you can add additional bitcoin to top up the bitcoin collateral of your loan at any point in time during the term of your loan, you do not have to wait until your LTV reaches 70%. The Top-Up address assigned to your loan is unique and will not change for your Dollar Loans or B2X Loan.
A. Top-Up by sending more bitcoin from your Ledn BTC Savings:
If you have any balance on your Ledn BTC Savings, topping up your loan collateral is fast and easy - you can simply click on the "Top-Up" option next to the open Ledn Loan you wish to send more bitcoin collateral to. The following screen will appear:
Next, under the FROM SAVINGS tab, type the amount of BTC you want to send from the balance available on your BTC Savings. Then click on "Transfer from Savings".
B. Top-Up by sending more bitcoin from a third-party wallet (exchange or self-hosted wallet):
Locate the collateral top up address for your loan by clicking the "Top-Up" option next to one of your open Ledn Loans - afterwards click on the FROM EXTERNAL SOURCE tab under "Top-Up", the following screen will appear:
Once you have located your loan top-up bitcoin address, you can copy it and send Bitcoin from a 3rd party wallet to your Ledn Loan address to meet your collateral requirement.
Remember you must add bitcoin to each one of your open Ledn Loans that have an LTV higher than 70%
Options to Repay your Loan:
C. Repay your Ledn Loan instantly with bitcoin (now available for certain U.S. states):
You can use our "Repay with Bitcoin" feature to repay your loan at anytime. You can find the option by clicking on the "Repay" option for any loan in your "Active Loans" tab. A repayment menu will then appear (as seen above). You can then select Submit under the Bitcoin option and follow the steps prompted.
D. Repay your Ledn Loan instantly with USDC:
Loan clients also have the option to repay their loan with the USDC balance on their Ledn USDC Savings account. To repay the loan using this option, simply select the Submit under the USDC option on the repayment menu for your loan and follow the steps prompted. Note: you will only be able to use this option if you have a sufficient balance for the repayment on your Ledn USDC Savings account.
E. Repay your loan through a U.S. dollar wire transfer:
Last but not least, there is also the option to repay your loan via wire transfer. To repay through a wire transfer payment, simply select Submit under the "Bank Wire Transfer" option from the repayment menu for your loan and follow the steps prompted. You will receive Ledn's banking details for your wire transfer payment. Repayments in via wire transfer can take 1-2 business days to process. Please note that loans remain open until the repayment is posted on the account.
Until repayment has not been received and applied towards the loan debt and the corresponding Ledn Loan is not shown as closed on your Ledn account, you are still subject to liquidation if your LTV surpasses the 80%.
As you can see, there are many ways in which you can keep a healthy LTV level. While we can't predict the price moves, we can certainly be prepared to react accordingly if and when they happen!
We hope you find these tips helpful, and please feel free to reach out if you have any questions about your loan!
Have questions? Contact us @ support@ledn.io