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To calculate a Bitcoin-backed loan’s borrowing cost, total the payments and required fees over your planned borrowing period, then compare that amount with the cash or stablecoins you actually receive. Also calculate the loan’s APR and model Bitcoin collateral risk separately: a price drop can raise your loan-to-value ratio (LTV) and trigger a margin call or liquidation.
Start with the cash you actually receive
Write down the amount disbursed to you—not just the stated principal. A fee withheld from the loan reduces your usable proceeds; a fee added to the balance increases what you owe. A fee charged against Bitcoin collateral is still a cost even though it may not reduce the cash deposited to you.
Record each required charge and when it is due. Depending on the contract, fees may be paid upfront, withheld from proceeds, added to principal, or taken from collateral.
Build the payment schedule for your intended holding period
List every scheduled payment, including interest payments, principal repayments, and any balloon or final payment. If you may repay early, use the payoff amount for that date and check the agreement for accrued interest or prepayment charges. The cost depends on how long you actually borrow, not just the maximum term shown in an offer.
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Include required origination, platform, custody, transfer, servicing, and other fees. Keep contingent costs—such as default charges or liquidation fees—separate from your expected scheduled cost. They may not arise in an ordinary repayment scenario, but can matter substantially if collateral rules are triggered.
Calculate scheduled interest and total finance charge
For a simple interest-only loan with a constant principal balance, a basic estimate is:
Interest = principal × annual interest rate × time in years
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For example, a hypothetical $10,000 loan at 12% simple annual interest for one year would accrue $1,200 in interest: $10,000 × 0.12 × 1. Add required fees to estimate the scheduled finance charge. This is a mathematical illustration, not a lender quote or a complete APR calculation.
This shortcut does not fit every loan. It can misstate costs for amortizing balances, variable rates, or contracts with different compounding or day-count rules. Unchained describes its interest-only payments as based on outstanding principal, simple annual interest, and a 365-day year; use the contract’s own rate method and payment dates for a real estimate. Its terminology defines the finance charge as lifetime interest and origination fees. Unchained’s Bitcoin-backed loan information
Use APR and total dollars together
APR is a yearly measure that includes interest and certain credit costs, such as origination fees. Total dollars paid show the cash cost over your specific borrowing period. Neither figure replaces the other: APR helps compare annualized cost, while total payments and fees show what you expect to pay in dollars.
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Use the lender’s disclosed APR, but verify the agreement’s fee treatment and payment schedule. For a meaningful comparison, match the amount disbursed, term, payment timing, currency, and assumptions. If one lender deducts a fee from proceeds and another adds it to the balance, compare both the net amount received and all required payments.
Check how fees alter the comparison
Lender fee descriptions illustrate why headline rates are not enough. The following are examples from lender pages, not universal market terms or directly comparable offers:
| Published example | Fee or term described | What to verify |
|---|---|---|
| Lantern Finance rates page, last updated June 26, 2026 | Its page says starting APR includes base interest plus a 2% upfront fee; it also describes rates and availability as dependent on eligibility, jurisdiction, collateral, LTV, and agreement. | Whether the fee is included in the APR for your offer, how it is collected, and which terms apply to your location and eligibility. Lantern Finance rates and fees |
| BTCBacked page, accessed October 4, 2026 | Lists a one-time platform fee of 1.5% per year of the loan term, deducted from Bitcoin collateral, and a 5% liquidation fee if liquidation applies. | How the term-based fee is calculated and what amount the liquidation fee applies to. BTCBacked loan information |
| APX Lending line-of-credit page, accessed October 4, 2026 | Says there is no origination, early-prepayment, or unused-line fee and that interest is its only cost; it also says accrued interest is included in real-time LTV. | Whether those statements apply to your agreement and how the line’s balance and LTV change as interest accrues. APX Lending line of credit |
| Pledg India pilot page, terms identified as of July 2026 | Describes an all-inclusive APR in its Key Fact Statement, a 70% margin-call level, and an 80% liquidation level. | That these are pilot terms for the relevant India offer, and the exact fees and response rules in its Key Fact Statement. Pledg loan terms and pricing |
The examples differ in jurisdiction, fee base, payment structure, collateral treatment, and eligibility, so their figures should not be ranked as if they described equivalent loans.
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Calculate initial LTV and estimate a liquidation price
Initial LTV is the loan value divided by the value of Bitcoin pledged, multiplied by 100:
Initial LTV = loan value ÷ current collateral value × 100
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CoinCorner uses this definition and publishes its own warning, margin-call, and liquidation levels. Those thresholds are lender-specific, not general rules for Bitcoin-backed loans. CoinCorner definitions
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For a simplified liquidation-price estimate assuming fixed debt, no fees, and no accrued interest:
Estimated BTC liquidation price ≈ debt ÷ (liquidation LTV × BTC units pledged)
Use liquidation LTV as a decimal in the formula—for example, 80% as 0.80. The estimate is not a prediction or a substitute for the lender’s method. A contract may include accrued charges, use a particular price source, or specify different cure and liquidation procedures.
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A Bitcoin price decline can increase LTV even if you are making payments, because the collateral’s dollar value may fall faster than the debt balance. Before borrowing, locate the contract’s trigger levels and what happens when each is reached.
- Starting LTV and the balance used to calculate it, including whether accrued interest counts.
- Margin-call threshold and how the lender notifies you.
- Time allowed to respond and acceptable ways to cure the call.
- Liquidation threshold, whether the lender may sell all or part of the collateral, and how the sale is carried out.
- Any liquidation fee and the price source used to value Bitcoin.
Thresholds vary by product. Onramp’s help page for its partner Arch describes up to 50% initial LTV, a margin call at 70%, and possible partial liquidation at 80%; those figures describe that partner’s terms, not safe limits for all loans. Onramp: loan terms and conditions
A practical calculation checklist
- Enter the net proceeds: record the cash or stablecoins you will receive after any withheld charges.
- Map each cash flow: list scheduled payments and the payoff amount for the date you expect to repay.
- Add mandatory fees: note each fee’s amount, basis, and payment method, including charges deducted from collateral.
- Total scheduled cost: add expected interest and required fees; show total repayment and net proceeds alongside each other.
- Check APR: compare the disclosed APR with the agreement and ensure offers use matching amounts, terms, and payment assumptions.
- Stress-test collateral: calculate initial LTV and review the call, cure, and liquidation rules against the contract’s stated thresholds.
Online calculators can help organize estimates. Orange Abacus’s Bitcoin loan calculator identifies inputs such as amount, APR, term, liquidation LTV, origination fee, and margin-call buffer, and displays collateral, liquidation-price, repayment, and all-in-cost estimates. Treat outputs as estimates and verify every assumption against the signed documents. Orange Abacus Bitcoin loan calculator
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