If a borrower misses a payment, SALT automatically liquidates a portion of the total collateral to cover both the missed payment and any associated fees. If a borrower continues to miss payments, the collateral will continue to be liquidated to cover monthly payments of principal, interest, and fees until the loan-to-value ratio exceeds a predetermined threshold. Once the default reaches the triggering threshold described above, a balance of the collateral is liquidated to cover the missed payment and to calibrate the over-collateralization. This process continues until the loan is fully retired or matures. Lenders may elect to receive their funds in either the currency of the original loan or the equivalent value in blockchain assets. After the principal of the loan and accrued fees are paid out of the collateral, any remaining assets are returned to the borrower.
Articles in this section
- How does a SALT loan work?
- What can I use a SALT loan for?
- What happens if I fail to repay my loan?
- How is a SALT loan different from credit card debt?
- What is a blockchain-backed loan?
- Is a SALT loan secured or unsecured?
- Are loans personally guaranteed by borrowers?
- What is the minimum and maximum I can borrow?
- How do I make my loan payment?
- Are there any origination or prepayment fees?