Fees & Costs
Origination and trading fees reduce profits.
What is this risk?
Every loan involves costs that can eat into your returns: origination fees, interest payments, withdrawal fees, network transaction costs, and potential liquidation penalties. Some platforms advertise 0% interest but may have hidden costs elsewhere. These fees need to be factored into your overall strategy — a loan that seems profitable might become a losing proposition once all costs are included.
Think of it this way...
“Loan fees are like closing costs on a property — they reduce your overall profit and need to be accounted for upfront. A great interest rate means nothing if the fees wipe out your gains.”
How to Protect Yourself
Practical steps you can take to reduce or manage this risk
Calculate the total cost of a loan before committing, including all fees, not just the headline interest rate.
Compare fee structures across platforms — some have lower interest but higher origination fees, or vice versa.
Factor in transaction costs, especially on Bitcoin's main network which can be expensive during busy periods.
Consider using platforms with 0% interest loans if your strategy and risk tolerance align with their requirements.
Build a buffer for unexpected costs into your financial planning.
See This Risk in Action
Explore real-world scenarios where this risk plays a role
Other Risks to Consider
Explore other risks to get a complete picture
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