Fees can make a good loan great or turn a “low rate” into an expensive mistake. In crypto-backed lending, you’ll see familiar charges (APR, origination) and crypto-specific ones (network/gas, custody, liquidation). This guide explains each fee, shows how they add up, and offers practical ways to keep costs down while protecting your collateral.

The Big Picture: What You Actually Pay

Your total cost = (Interest over the term) + (One-time fees) + (Operational fees) + (Any liquidation/penalty fees if things go wrong).
Always compare loans using:
• APR & Term (interest cost over time)
• Upfront/One-time Fees (origination, setup)
• Operational Fees (network/gas, custody, oracle/valuation, withdrawal)
• Contingent Fees (late, liquidation)

Common Fees in Crypto-Backed Loans

1. Interest (APR)
   • The annualized cost of borrowing. Paid through your monthly payments.
   • Shorter terms reduce total interest but raise the monthly payment.
   • Variable vs. fixed: Know which you have and how adjustments are communicated.
   
   
2. Origination Fee (One-Time)
   • A percentage of the loan (e.g., 0–3%) to process and fund it.
   • May be deducted from proceeds (you receive less cash) or added to principal (you pay interest on it).
   
   
3. Network / Gas Fees
   • Blockchain transactions (funding, collateral top-ups, repayments in crypto) may incur gas/transaction fees.
   • Timing matters—busy networks can spike costs.
   
   
4. Custody / Storage Fee (If Applicable)
   • If collateral is held with a qualified custodian or in cold storage, a small ongoing fee may apply.

• Oracle / Valuation Fee (If Applicable)
  • Some platforms charge to maintain price feeds or periodic collateral re-valuations.
• Withdrawal / Transfer Fee
  • Moving funds out to a bank or external wallet may have a fixed or percentage fee, plus possible network costs.
•  Late Payment Fee
  • Charged if you miss a due date. Set up autopay and reminders to avoid it.
• Prepayment Fee (Varies by Product)
  • Some loans have no prepayment penalty; others may charge a small fee.
  • If there is a fee, compare it against the interest you’d save by repaying early.
• Liquidation Fee (Contingent)
  • If collateral value drops and your LTV breaches thresholds, part or all of the position may be liquidated.
  • A liquidation fee (and slippage) can be charged on the amount sold—this is the most expensive outcome to avoid.

LTV, Volatility, and the “Hidden” Cost of Risk

• LTV (Loan-to-Value) = Loan Amount ÷ Collateral Value. Higher LTV = less buffer, more liquidation risk.
• Volatility raises the chance of hitting liquidation thresholds, triggering fees and forced sales.
• Best practice: Maintain a 10–20% collateral buffer above the required minimum and set price/LTV alerts.

Example: Putting the Fees Together

Scenario (illustrative):
• Loan: $10,000, APR 10%, Term 12 months
• Origination: 1% ($100) added to principal → financed amount = $10,100
• Network/Gas (funding + first collateral deposit): $25 total
• Custody: none; Prepayment: none

Approximate outcomes:
• Monthly payment based on $10,100 at 10% APR/12 mo ≈ $887.59
• Total paid over term ≈ $10,651.08 → Interest ≈ $551.08
• Add one-time fees (origination $100 + gas $25) → Total cost ≈ $676.08 beyond the $10,000 you needed.

What changes the math?
• If origination is deducted from proceeds, you receive $9,900 but still owe $10,000.
• If gas spikes (busy network) or you make multiple top-ups, operational costs rise.
• If you repay early (and there’s no penalty), you cut interest.
• If liquidation occurs, costs can increase sharply due to liquidation fees and price slippage.

How to Compare Two Offers Fairly (Checklist)

1. Same Loan Amount and Term for both quotes.
2. Note APR and whether it’s fixed or variable.
3. Identify origination and whether it’s financed or deducted.
4. List operational fees (gas, custody, oracle, withdrawal).
5. Confirm late and prepayment policies.
6. Review liquidation rules/fees and LTV thresholds.
7. Compute total repaid (payment × months) minus loan amount = interest; then add all fees.

Ways to Reduce Your Total Cost

• Choose a term that balances monthly affordability with less total interest.
• If allowed, repay early to cut interest (check prepayment policy).
• Batch on-chain actions (funding, top-ups) to minimize gas.
• Hold a healthy collateral buffer to lower liquidation risk.
• Enable alerts; act early if LTV climbs.
• Use autopay to avoid late fees.

How OmniLender Keeps Fees Clear

• Transparent Quote: See APR, payment, term, required collateral, and all applicable fees up front.
• No Surprises: We explain whether fees are deducted or financed.
• Risk Tools: Real-time LTV, alerts, and easy top-ups to help you avoid liquidation.
• Support: Guidance on term selection, buffers, and repayment strategy.

FAQ

Q: Are crypto loan fees higher than traditional loans?
A: It depends on the product. Some costs are unique to crypto (network/custody), but borrowers often save when consolidating high-APR revolving debt into a structured term loan—especially if they avoid liquidation events.

Q: Do I pay gas fees on every payment?
A: Not always. It depends on whether you repay from a bank account, stablecoin wallet, or within-platform balance. We’ll show the expected fee path before you choose.

Q: What’s the biggest fee to watch out for?
A: Liquidation. Maintain a buffer and respond quickly to LTV alerts to avoid forced sales and liquidation fees.

Q: Is there a prepayment penalty?
A: Many OmniLender loans allow early repayment without penalty. If a fee applies on a specific product, we display it in your quote.

See your full cost breakdown—APR, fees, LTV, and projected payment—before you borrow: OmniLender.org

Need help optimizing term, fees, and LTV buffer? Talk to an OmniLender specialist: OmniLender.org/support

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