How to compare Bitcoin lenders: APR vs LTV vs liquidation risk

Comparing Bitcoin lenders looks simple — line up the rates, pick the lowest. That's exactly how borrowers get burned. The advertised APR is a marketing number, the max LTV is a trap dressed as generosity, and the custody model — the thing most likely to actually cost you your bitcoin — never appears in the headline at all. A useful comparison weighs six factors together.

The six factors that actually matter

Before you look at a single rate, know what you're scoring. A fair comparison of any two Bitcoin lenders comes down to these, roughly in order of how badly each can hurt you:

1. Compare effective APR, not the headline rate

The number on the banner is almost never what you pay. The figure that matters is effective APR: the interest rate plus every fee, over the actual term and size of your loan. The gaps that inflate the real cost:

• Origination / admin fees — a 1–2% upfront fee adds a lot to a short loan.
• Tiered pricing — the advertised low rate often applies only to very large loans.
• Token gating — some platforms show their best rate only if you hold their token.
• Network / gas costs — on DeFi, opening, adjusting and closing all cost gas.

Always normalize lenders to effective APR for your loan size and term before ranking them. Our comparison table lists both the headline and an indicative effective APR for every lender, and the loan calculator shows interest over your chosen term.

2. Max LTV: more borrowing power means less safety

Loan-to-value is your loan divided by your collateral's market value. A lender offering 80% max LTV isn't being more generous than one offering 50% — it's offering you a thinner cushion. The higher your starting LTV, the smaller the Bitcoin drop needed to trigger a margin call.

When comparing, don't reward a lender for a high max LTV. Reward the one whose terms let you run a low LTV comfortably (low minimums, easy top-ups, partial repayments).

3. Liquidation risk: compare the buffer, and the trigger

This is the factor lenders bury and borrowers ignore — until it's too late. Two things to compare:

• Liquidation LTV — the level at which collateral is sold. A higher liquidation LTV (e.g. 85–90%) gives a bigger buffer between your starting point and forced sale; a tight one liquidates sooner.
• Partial vs full liquidation — some lenders sell only enough to restore a safe LTV; others close the entire position on a single breach. With some providers a margin call means full liquidation, not a top-up. This single policy difference can be the difference between a scare and a wipeout.

Also compare the margin-call gap — the room between the call and liquidation. A lender that calls at 70% and liquidates at 80% gives you a window to react; one that calls and liquidates close together barely does.

Same loan, same collateral — but Lender A lets Bitcoin fall far further before selling you out. Model your own numbers with the liquidation calculator.

4. Custody and rehypothecation: the factor that can lose everything

Rate and LTV decide what a loan costs. Custody decides whether you get your coins back at all. Compare lenders on how they hold collateral:

5. Fees, minimums, and term flexibility

The details that decide whether a lender even fits your situation:

• Minimum loan — ranges from ~$100 at some platforms to $75K–$150K at institutional lenders. A great rate you can't access doesn't help.
• Term & repayment — fixed 12-month vs open-ended; whether early repayment is penalty-free; whether partial repayments and collateral top-ups are allowed (these are your main tools to avoid liquidation).
• All-in fees — origination, admin, and any liquidation penalty. Fold these into effective APR.

6. CeFi vs DeFi: pick the failure mode you understand

Neither is universally safer — they break in different ways. Choose the risk you can actually monitor and tolerate. For the full mechanics of either, see our guide to how Bitcoin-backed loans work.

Putting it together: a simple scorecard

When you've got two or three lenders in the running, score each on the factors above and let the weights reflect your situation — a long-term holder borrowing small weights custody and liquidation buffer heavily; someone borrowing briefly at low LTV can weight effective APR more.

1. Effective APR for your size and term — lowest real cost wins.
2. Liquidation buffer — higher liquidation LTV and a wide margin-call gap win.
3. Custody — multisig or segregated beats pooled/rehypothecated.
4. Partial liquidation — top-up beats full-position close-out.
5. Fit — minimum, term, and repayment flexibility match your plan.

Then borrow well under the max LTV regardless of who wins — the safest lender still can't save a position opened with no cushion.

More head-to-head comparisons: Ledn vs Strike · Ledn vs Nexo · Ledn vs Unchained · Strike vs Unchained · SALT vs Ledn · Coinbase vs Morpho · Nexo vs YouHodler.

Frequently asked questions