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What Happens if I Do an Early Loan Repayment?

Published, 17 September, 2020

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BlockFi clients will sometimes pay off their crypto loans early. This is called prepayment. Some clients decide to do this when another investment opportunity comes up or when the loan is no longer needed.
Additionally, once your loan is paid off, all of your crypto collateral will be released to a Bitcoin (BTC)Ether (ETH), or Litecoin (LTC)address of your choosing. Any gains from the price appreciation are the client's to keep once the loan is paid off. Additionally, if any forks or airdrops were to occur during the loan term, we will return any additional coins that occurred during the loan term as long as our custodian supports that coin. Click here for more information about how BlockFi stores client collateral.
Some clients who inquire about prepayment are interested in starting a new loan. The best option for these clients can be to refinance their current loan with additional principal, adjustment to collateral amount, or a new loan term. This extends the value of their original collateral and helps the client with additional funding needs.

Are there prepayment penalties?

Although we lend on 12-month loan terms, some people turn to BlockFi for shorter-term funding (sometimes referred to as a bridge loan).
With BlockFi, there is no penalty for early repayment. If you payoff early, the remaining interest is forgiven. This means that you won't be charged for the interest you would have paid if the loan had been continued through the rest of the 12-month term. Cool, right?

What is important to know about prepayments?

When considering whether to take out a loan, you should first establish what you will be using the loan for and how long you need to put the financing to work. BlockFi's loan structure gives you the flexibility to either prepay (if your funding needs require a shorter time-frame) or refinance at the end of the term (if you require a longer time frame for your financing).
Some clients will use the funds to put a down payment or fully purchase a house while they are waiting on their mortgage to come through. They will then repay the loan with the proceeds from the mortgage. A BlockFi loan allows you obtain financing quickly and with interest-only payments. Also known as a 'bridge loan,' some clients will take out the loan for the amount of time it takes to close on the mortgage. Then they will and pay BlockFi back once that deal has closed.
Other clients will use the funds to help start their business. A BlockFi loan keeps monthly payments low and gives business owners the ability to pay back the loan once the business becomes profitable. Whether this happens in 6 months or 12, BlockFi's terms can help accomplish business goals of any size.

What are the legal assurances that protect the return my collateral?

We have numerous protections set up for return of collateral. The first is the loan contract - it outlines our obligation to return collateral once the loan is paid off. BlockFi operates under Article 9 of the Uniform Commercial Code, which governs secured lending and file a UCC-1 with the state you reside in. Additionally, we work with a 3rd party loan servicer that is set up to guarantee execution of loan contracts. BlockFi is the only crypto backed lender with institutional backing from investors and institutional-quality custody partners. Click here to learn more about collateralized loans.
Have questions? Contact us here!

Last updated on October 28th, 2021

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As of February 14, 2022, the BlockFi Interest Account (BIA) is no longer available to new clients who are US persons or persons located in the US and existing US clients with BIA accounts are unable to transfer new assets to their BIAs. Learn More.
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Digital currency is not legal tender, is not backed by the government, and crypto accounts held with BlockFi are not subject to FDIC or SIPC protections. Digital currency values are not static and fluctuate due to market changes. Not all products and services are available in all geographic areas and are subject to applicable terms and conditions. Eligibility for particular products and services is subject to final determination by BlockFi. Rates for BlockFi products are subject to change.

BlockFi Rewards Credit Card: For more information, please see BlockFi’s Terms of Service. BlockFi is not a Bank. Cards are issued by Evolve Bank & Trust, Member FDIC, pursuant to a license from Visa® USA Inc. Rewards are not offered by Evolve Bank & Trust and are instead offered and managed by BlockFi.

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See blockfi.com/terms for more information.

2022 © All Rights Reserved.

As of February 14, 2022, the BlockFi Interest Account (BIA) is no longer available to new clients who are US persons or persons located in the US and existing US clients with BIA accounts are unable to transfer new assets to their BIAs. Learn More.
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This icon serves as a link to download the eSSENTIAL Accessibility's free assistive technology app for individuals with physical disabilities.

Digital currency is not legal tender, is not backed by the government, and crypto accounts held with BlockFi are not subject to FDIC or SIPC protections. Digital currency values are not static and fluctuate due to market changes. Not all products and services are available in all geographic areas and are subject to applicable terms and conditions. Eligibility for particular products and services is subject to final determination by BlockFi. Rates for BlockFi products are subject to change.

BlockFi Rewards Credit Card: For more information, please see BlockFi’s Terms of Service. BlockFi is not a Bank. Cards are issued by Evolve Bank & Trust, Member FDIC, pursuant to a license from Visa® USA Inc. Rewards are not offered by Evolve Bank & Trust and are instead offered and managed by BlockFi.

BlockFi International Ltd. holds a Class F digital assets business license under the Digital Assets Business Act, 2018 (as amended) and is licensed by the Bermuda Monetary Authority to conduct the following digital assets business activities: (i) issuing, selling or redeeming virtual coins, tokens or any other form of digital assets (ii) operating as a digital asset exchange (iii) providing custodial wallet services (iv) operating as a digital asset derivative exchange provider and (v) operating as a digital assets services vendor.

See blockfi.com/terms for more information.

2022 © All Rights Reserved.