# Taking out a loan (Borrowing)

Once you have deposited funds in Basic you can take out loans against your deposits. Your deposits are used as collateral to secure you loan.

Why?

If you feel your deposited assets will rise in value then you don't want to sell these assets. But if they are held in a wallet (HODL strategy) they are inert and can't be used. By borrowing against them you can free your liquidity for other purposes, including spending or further speculative actions, and the underlying assets can remain as collateral while appreciating in value (or depreciating).

If the collateral assets appreciate in value then the liquidation of your deposit to repay the loan becomes less likely (your initial deposit is now worth more), and should the collateral deposit reduce in value then the likelihood of liquidation increases (your initial deposit is worth less).

### How to take out a loan

1. Visit basic.loans.
2. Deposit collateral and enable collateral - [See instructions here](/english/tutorials/depositing-assets-lending.md).
3. Choose the asset you wish to borrow and select "Borrow".

<figure><img src="/files/hXSvX80Lb10jL4NYrY17" alt="" width="375"><figcaption></figcaption></figure>

4. Choose how much to borrow. The interface will show you the "Max. Safe Borrow" value. Anything above this is at high risk of liquidation. Perhaps instantly!

<figure><img src="/files/c1ap1HUjs0cLEeWVLJhd" alt="" width="375"><figcaption></figcaption></figure>

{% hint style="warning" %}
Take careful note of the information in the borrowing pop-up window:

"It‘s always safe to borrow up to 85% of your borrowing limit. Borrowing close to 100% puts your collateral at risk of instant liquidation."
{% endhint %}

5. Click "Borrow" and complete the transaction in your wallet.

Y*ou are now borrowing against your deposited assets.*

{% hint style="success" %}

* There are no time-bound terms for the loan.
* The interest rate varies depending on market activity.
* The liquidity utilisation for your assets varies depending on market activity.
  {% endhint %}


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