Apples to apple, loans to loans — crypto vs. traditional lending
As we have already discussed this in the previous article, I’ll only include a short snippet here.
“Traditional loans are less volatile but involve a long, tedious process entailing background checks and demanding credit scores. Even after a successful loan application, which could take anywhere from 1–6 months, applicants have to wait until the funds get disbursed. However, if they need money within a few hours’ or a day, and have the crypto to back it, a crypto lending platform can simply lock that in as collateral and get a fiat loan with none of the hassle faced in traditional venues.”
Now you can say; Okay, but you are comparing apples to oranges here, what about apples to apples? What if I want to find the best deal within one of those sectors, not have them compete against each other. It’s a good question, because it really does matter what we choose. When talking about loans in general, there are a few categories someone’s requirements can be broken down into:
- Loan disbursement speed
- Interest rate
- Any credit score check needed?
We weren’t the first to discover the market needs a simple service that does all the heavy lifting for them. A unified platform that’s connected to all possible lending providers and has access to the metrics of loans helps customers save an enormous amount of time (and headache). Probably the most well known company to help its customers waste less time is Lending Tree, the US based intermediary between lenders and potential borrowers. They designed an elegant, streamlined solution that grew up to become a huge success in the online finance sector. Doug Lebda, CEO of Lending Tree sums it up well:
“We want to change the balance of power,” he says. “Today, customers feel thankful for getting a loan, as if the lender had done them a favor. We want the banks to come to you. That means making them compete directly by putting their offers side by side, so that customers can choose on what really matters in this business — prices measured in rates and points.”
When it comes to crypto collateral based loans, we’re taking a very similar approach to Lebda’s. Users can submit a lending request on the INLOCK platform, specifying their preferences regarding loan parameters that matter to them the most. Once the platform processes the request (a few minutes), it allows institutional lenders to compete for the borrower. They can offer loans with different terms, giving the borrower the freedom to choose the most compelling one. What “the best loan” is can differ hugely from person to person, so we made sure customers can specify enough parameters:
- Loan disbursement speed
- Interest rate
- Overcollateralization value
- Type of cryptocurrency used as collateral
Depending on the activity of the lenders, this process can take as little as a few hours, giving users fast access to the purchasing power of their crypto without having to actually sell it.
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Originally published at ico.inlock.io on August 30, 2018.
