Tired of wasting your time in banks? CoinRabbit is offering crypto backed loans where you can withdraw money in a couple of hours off your cryptocurrency. No hassles, no credit checks, and no selling.
How Do Crypto Backed Loans vs Traditional Loans Work?
Centralized banking systems are the foundation of traditional loans. Lenders evaluate your financial history, income, and credit score; they often require a lot of supporting documentation. Collateral, such as a house or vehicle, is usually needed and the procedure takes days or weeks.
Crypto backed loans use blockchain technology. You deposit crypto as collateral, often more than you borrow to cover price volatility. This already serves as proof of your solvency. No credit checks are needed, and funds are available in minutes. By the way, in our blog we have described in detail how to borrow against bitcoin step by step. In recent years, the popularity of crypto loans has been steadily growing.
Source: extrapolate.com
Comparing Crypto Backed Loans and Traditional Loans
Approval Time
Crypto backed loans are quick to approve because they use collateral checks without a lot of reviews. In CoinRabbit, you are approved in 10 minutes of depositing your crypto collateral, and then you receive the money without any paperwork.
In traditional loans, there is a thorough evaluation process including credit and income checks and can take days or weeks (3-5 business days to access personal loans or 30 days to access a mortgage).
Collateral Requirements
Crypto backed loans are over-collateralized with cryptocurrency to reduce the risk of volatility, and usually 150-200 percent. CoinRabbit allows you to borrow against more than 300 cryptos such as BTC or ETH with a minimum loan of $100 and LTV ratios that determine the borrowable amount. By the way, previously we discussed in more detail best Bitcoin backed loans.
Secured traditional loans like mortgages use property (e.g., a home valued at $300,000 for a $240,000 loan at 80% LTV) as a collateral, while unsecured ones rely on credit without assets.
Credit Check
Crypto backed loans generally skip credit checks, focusing solely on the collateral’s value for approval. CoinRabbit requires no credit history review – you just need to email registration and crypto deposit.
Traditional loans mandate thorough credit checks to assess risk, such as reviewing FICO scores (e.g., needing 670+ for favorable rates), which can deny access if scores are below 580.
Interest Rates
Crypto backed loans сan provide lower interest rates thanks to the high value and liquidity of collateral, with CoinRabbit offering rates as competitive as 16% APR.
In traditional Loans interest rates depend on loan type, collateral, and the borrower’s credit score и может достигать 30 процентов, with secured loans generally lower than unsecured loans.
Accessibility
Crypto backed loans are highly accessible globally via online platforms, available 24/7 without geographic limits.
Traditional loans are location-based, requiring bank visits during business hours and often excluding those without local accounts or good credit.
Regulation
Crypto backed loans operate in an evolving regulatory landscape, varying country by country.
Traditional loans are more conservative and heavily regulated worldwide. They are reducing risks through government-backed standards.
| Aspect | Crypto Backed Loans | Traditional Loans |
|---|---|---|
| Approval Time | 10 minutes | 3 to 30 days |
| Collateral | Cryptocurrency (over-collateralized) | Property, credit score, or none |
| Credit Check | No | Yes |
| Interest Rates | Variable, often higher | Fixed or variable, generally lower |
| Accessibility | Global, 24/7 | Location-based, business hours |
| Regulation | Evolving | Heavily regulated |
Pros and Cons of Crypto Backed Loans
Pros
- Speed and Accessibility. Funds are available in minutes without bank accounts or credit checks. This is great for quick needs.
- No Asset Sales. Sell crypto without selling, tax-free and potential price increases.
- Flexibility. Invest in funds to do what you want in terms of trading, real estate or personal expenditure without any limitations.
Cons
- Volatility Risk. You need to monitor the market and margin calls more closely in order to control the situation.
- Learning Curve. New users need some time to understand how blockchain and wallet management work.
- Crypto ownership. You must already have a crypto portfolio to take out a loan.
Pros and Cons of Traditional Loans
Pros
- Predictability. It is easier to predict fix payments.
- Reduced Interest on Prime Credits. Good credit scores will open good rates that tend to be lower than the average rates of crypto loans.
- Credit Building. When you pay on time, your credit score will increase, and this will help to borrow later.
Cons
- Slow Process. Funds are delayed by days or weeks to get approvals.
- Credit Barriers. Bad credit may be a barrier to entry or charge a lot.
- Geographic Limitations. Availability is limited by the availability of local banks and economic situations, less global than cryptocurrency loans.
Why Should You Use CoinRabbit For Your Crypto Loan?
- 10-Minute Loans, No Bureaucracy
Secure a crypto loan in just 10 minutes with no paperwork or credit checks. Simply register with your email and deposit crypto-your assets are your proof.
- 300+ Cryptos Accepted as Collateral
Use Ethereum, XRP, Solana, or countless altcoins to unlock liquidity. Your full portfolio works for you, not just the big names.
- Top-Tier Cold Storage Security
Your collateral stays safe in a cold wallet with multi-signature controls, requiring multiple internal approvals for any access. No single person can touch your funds.
- No Rehypothecation Policy
Unlike banks that reuse your deposits, CoinRabbit never lends out your collateral. Your crypto remains fully yours, securely stored, and never used for third-party loans or risky trades
How Does CoinRabbit Deal With Risks?
- Cold Storage and Multi-Signatures
Your assets are safeguarded in cold storage with multi-signature controls, ensuring top-level security and preventing unauthorized access.
- Auto Increase Feature
This tool monitors your loan’s LTV ratio. When market drops push it too high, it activates automatically. Auto Increase pulls extra funds from your account to increase collateral, keeping your loan stable without manual intervention. By adjusting collateral proactively, it minimizes margin calls and prevents liquidation before it starts.
- 24/7 Monitoring and Notification System
CoinRabbit provides direct monitoring of your loan application round the clock. Receive instant notifications through email notifications or SMS when your LTV changes and take timely action to be ahead of the threats.
The information provided in this article is for educational and informational purposes only and should not be construed as financial advice. Cryptocurrency investments carry a high level of risk, and it is essential to conduct thorough research and consult with a qualified financial advisor before making any investment decisions. The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any financial institution or organization. We do not take responsibility for the platforms we recommend. Always invest responsibly and consider your individual financial situation before making investment choices.
Last Updated on October 16, 2025 by Dan Marsh
