How to Manage Your Bitcoin Loan Collateral (Free Checklist Inside) - Milk Road

Setting Up + Managing Your Ledn Loan

So, you’re thinking of taking the plunge on a Ledn Bitcoin-backed loan.

Well, knowing where to take out a loan is just the first step. What really matters is how you manage that loan once it’s open.

That means knowing how to:

• Estimate how long you’ll keep the loan – and what it’ll cost you
• Choose the right repayment method (and have a plan for it)
• Stay ahead of market dips by managing your LTV
• Use Ledn’s built-in tools to keep things running smooth
• Lock down your account like a pro.

Why Borrow Against Your Bitcoin?

Not sure why borrowing against your Bitcoin is such a great hack? Check out our recent articles breaking down how bitcoin-backed loans work, and our deep-dive into Ledn’s pros and cons.

With tax advantages, lightning-quick funding, and absolutely zero credit checks– bitcoin-backed loans truly are the bees knees.

We’ve also explored why Ledn stands out as one of the most trusted platforms in this space, thanks to its $9 billion loan track record, top-notch transparency, and rock solid security standards.

Got it? Great. But what do you do next?

What You’ll Learn in This Guide

In this guide, I’ll walk you through how to set up and stay in control of your Bitcoin-backed loan with Ledn – so you can borrow confidently, without surprises.

At the very end, you’ll also get a Ledn loan checklist.

This will help you keep your loan in tip-top shape and protect your Bitcoin loan collateral from crypto market chaos.

Sound good? Let’s get right to it!

10-Second Refresher – Ledn Loans

In case you forgot, or you haven’t come across Ledn, here’s a 10-second refresher on how Ledn loans work:

• You deposit $BTC, and borrow up to 50% of its current value.
• All loans have a straightforward interest rate (starting at 12.4%), with no monthly repayments. This means the rate you see is exactly the rate you pay… no strings attached.
• You can make payments whenever it’s convenient for you – not when the bank wants them.

You don’t have to repay a single dime until you’re ready.

1. Know your Plan – Estimate Loan Length + Interest Costs

Before you take out a Ledn loan, there’s just one rule: Plan, plan, plan.

Before you hit that confirm button, you always want to run some quick numbers – as well as think about how you’re going to pay it back when you’re done.

Stay with me.. it’s less work than you think.

It might also just change the way you set up your loan, for the better.

How long are you borrowing for?

Ledn’s standard loan term is 12 months, but these actually roll over as needed (provided your LTV is healthy).

If you’re planning to hold the loan for a while – say, more than a year – remember that interest adds up. Ledn doesn’t charge monthly payments or early repayment fees, but interest does build up daily.When your 12-month term ends, that interest gets rolled into your loan if you renew – otherwise, you’ll pay it off when you close the loan.

What does that mean?

Basically, your loan balance will slowly creep up over time with the accrued interest. If the value of your Bitcoin loan collateral drops, your loan gets riskier than it was when you opened the loan. In some cases, this can push you closer to liquidation without you even realizing it.

Because of this, it’s a good idea to estimate how much the interest will cost you and make sure you’ve got enough extra collateral to cover it.

A little planning now, can save a lot of stress later.

2. Be Repayment-Ready

You also want to know how you’re going to pay back your loan, and plan for it. Will you be using crypto, stablecoins like USDC, or maybe a bank transfer?

Ledn gives you a few flexible ways to repay your loan, depending on what works best for you.

You can even repay just part of your loan, if you no longer need the whole amount (more on this below).

You can pay with $BTC or $ETH directly through the platform for instant settlement, though US residents should check if their state is supported.

You can also repay using $USDC from your Ledn account, or send a USD wire transfer – just note that bank transfers can take a few days to process.

There are no penalties for paying early, so you’re free to settle your loan whenever it makes sense for you.

3. Leave a Buffer for Volatility

You’ll already know all about volatility – it’s basically crypto’s middle name.

Bitcoin is known for its wild price swings, and that’s something you really need to factor in when taking out a loan.

Over a couple years, it’s not unusual to see Bitcoin rise or fall by 30–50% in a matter of days or weeks.Corrections are especially common after a big price rally.

Even though Bitcoin has gone up over the long term, it’s never been a smooth ride. So if you’re planning to hold your loan for several months, make sure you’re prepared for a potential dip.

Do the math on what a 30% drop could do to your LTV, and consider posting extra collateral up-front to give yourself a buffer.

It’s better to be over-prepared than risk getting liquidated in a downturn. After all, avoiding selling your $BTC is likely the reason you went for the loan in the first place.

4. Use Ledn’s Bitcoin Loan Collateral Management Tools

Being leaders in the Bitcoin-backed lending space, Ledn provides you with a range of tools and options for managing your bitcoin loan collateral.

To set the scene, here’s a quick overview of LTV and crucial levels on Ledn:

LTV on Ledn

Your loan-to-value (LTV) ratio is the most important number to monitor when you borrow against your Bitcoin.

It represents how much you’ve borrowed, compared to the value of your collateral.

Ledn loans typically start at 50% LTV. In other words, you can borrow up to $5,000 USD (or $USDC) if you put up $10,000 worth of $BTC or $ETH.

But if your collateral value drops (aka Bitcoin dips in price) and your LTV rises too high, you could be at risk of liquidation.

That’s where their alerts come in.

LTV Alerts & Liquidation Thresholds

To make sure you’re always aware of your loan’s health, Ledn automatically sends you email alerts if your LTV increases:

• At 70%, you’ll get a heads-up to top up your collateral.
• At 75%, you’ll get a follow-up reminder.
• At 80%, Ledn will automatically sell enough of your collateral to cover the loan.

On the flip side, if your LTV drops below 30%, you may be eligible to redeem some of your collateral. Keep an eye on your LTV to stay safe.

Topping-Up Your Bitcoin Loan Collateral

A loan top-up simply means adding more collateral to lower your LTV and reduce your risk of liquidation.

On Ledn, this is super easy to do.

Just click “Top-Up” in your loan dashboard, choose whether you’re using funds from your Transaction Account or sending in more from an external wallet, and confirm.

Ledn’s Auto Top-Up Feature

But what happens if $BTC dumps in the middle of the night on a weekday, and you’re asleep?

Don’t worry, this is where Ledn really has your back.

‘Auto Top-Up’ is a handy feature of theirs that helps you stay ahead of market dips without having to constantly check your loan. You can turn it on in your loan settings.

With Auto Top-Up, if your LTV hits 70%, Ledn will automatically pull funds from your $BTC or $ETH Transaction Account to bring it back down to 50%.

If there isn’t enough in your account to fully top up, Ledn will use whatever balance is available and send you a heads-up if more is needed.

As long as you have Auto Top-Up enabled and enough $BTC in your Ledn Transaction Account, you’re protected from sudden price drops.

No need to check charts or manually transfer funds.

Partial Loan Repayments

Don’t need the entire loan anymore?

A partial repayment lets you pay off a chunk of your loan without closing it completely.

You can do this with $USDC straight from your Transaction Account (minimum 100 $USDC), or via a USD wire transfer (minimum $1,000).

Making a partial repayment will lower your LTV, reduce the risk of liquidation, and cut down on the interest you’ll pay over time.

There are no fees for partial repayments, $USDC payments are executed instantly, and you can make one whenever you like.

Just note that when you’ve made a repayment, it can’t be undone – so double-check everything before you hit confirm.

Redeeming Excess Collateral

If your LTV drops below 30% and your loan’s been active for at least 60 days, you might be able to pull some of your Bitcoin loan collateral back out.

Then you can put it back to work,

As long as you haven’t redeemed in the last 60 days and have at least $100 USD worth of excess collateral, you’ll see a “Redeem Collateral” button on your loan dashboard.

Ledn will release enough to bring your LTV back up to 40%, and the funds go straight to your Transaction Account.

You can then use that Bitcoin however you like – whether it’s to earn interest, trade, or even open another loan.

5. Rollover or Restart: Refinancing Options

Refinancing a Loan

Refinancing with Ledn lets you adjust your loan, as long as it's been open for 30 days.

Whether you want better terms, a different loan type, or just a fresh start, refinancing makes it possible.

You'll receive whatever interest rate Ledn is offering at the time of refinancing. If your loan has been live for 30 days and the rates drop, you can refinance into this lower rate.

If your LTV is 60% or lower when your loan ends, it might even renew automatically (except for some Canadian provinces).

To start a refinance, just reach out to Ledn’s support team and they’ll sort you out.

6. Secure It Like a Bank Account (Or Better)

Last but definitely not least: security.

When it comes to managing a Ledn loan, security isn’t just a nice-to-have. It’s essential.

Bitcoin-backed loans are powerful tools, but they come with serious responsibility. If someone accesses your Ledn account and moves funds, there’s no reversing it. No chargebacks. No safety net.

Keeping your account secure is one of the simplest, yet most critical, ways to protect your assets and keep your loan safe.

So treat your Ledn login like your bank account – if not even more seriously.

• Enable 2FA right away
• Use a strong, unique password
• Never share login info or recovery phrases
• Avoid clicking links in suspicious emails – bookmark Ledn’s site instead

Ledn also takes their side of the security equation seriously. They meet SOC 2 Type 2 standards, work with the best custodians, and run regular audits.

But your personal login hygiene is the last line of defense.

✅ Your Ledn Loan Checklist:

Check off the list below when you’re opening your Ledn loan.

Then you can sit back and relax, knowing your Bitcoin loan collateral is in good hands:

☐ Estimate how long you’ll keep the loan and what it’ll cost in interest

☐ Plan when and how you’ll repay ($BTC, $ETH, $USDC, or wire)

☐ Leave extra collateral for market dips

☐ Turn on Auto Top-Up on Ledn

☐ Use a strong password + enable 2FA

Now, you’re good to go! Have a gold star ⭐️

Kick back, crack a cold one, and enjoy that fresh liquidity with your mind at ease – Ledn style.

Borrowing Doesn’t Have to Be a Headache

That’s the game plan – well done for making it to the end!

Managing a crypto-backed loan with Ledn is honestly pretty straightforward, especially once you know what to look out for.

As long as you’ve got a rough idea of how long you’ll need the loan, how you’ll pay it back, and you keep an eye on your LTV – you’re in a great spot.

Ledn gives you the tools, alerts, and flexibility to make it all feel way less intimidating. And with features like Auto Top-Up and partial repayments, it’s kind of like having training wheels for your first few loans.

Give Ledn a Go Today

If you’re thinking about diving in with a crypto-backed loan, jump over to Ledn and check it out for yourself.

Ledn’s been around since 2018, has never lost a single satoshi of client funds, and has issued over $9 billion in loans – so can bet they know what they’re doing.

With a 4.7-star TrustPilot rating and a spot in Galaxy’s top 3 CeFi lenders, it’s safe to say you’re in good hands.