How to Borrow Against Bitcoin at 0% APR: Platforms and Conditions Explained

Borrowing against Bitcoin at true 0% APR — meaning no interest ever on borrowed funds — is rare. However, there are models where you can effectively achieve 0% interest on some or all of your borrowing, if you understand the conditions under which it applies.

The main path to 0% APR borrowing today is through credit-line structures rather than fixed-term loans.

1. Clapp — 0% APR on Unused Credit in a Bitcoin-Backed Credit Line

How it works:

Clapp issues revolving crypto credit lines backed by Bitcoin and other crypto assets. You deposit BTC as collateral and receive a borrowing limit. You can draw funds up to that limit when you need them.

Where 0% APR applies:

• Unused credit carries 0% APR — you pay no interest on the portion of your credit line you don’t use.

• Interest only accrues on amounts you borrow and is tied to your LTV (loan-to-value) which should stay below 20%.

Key features:

• Transparent cost tied to usage, not promotional gimmicks

• Flexible repayment — no fixed schedule or early-repayment penalties

• Real-time LTV tracking and margin notifications to help manage risk

• Multi-asset collateral support

• Institutional credit lines now available with negotiable LTV and rates starting from 1% APR

Best for: Users seeking predictable costs, flexible access to liquidity, and control over interest exposure.

2. Decentralized Finance (DeFi) Credit Lines — Protocol-Level 0% Exposure on Unused Funds

Some DeFi protocols allow for credit-line-like arrangements where you can effectively pay no interest on unused borrowing capacity if you manage LTV conservatively. These are not simple Bitcoin loans — they are primarily onchain constructs.

Examples include:

• MakerDAO vaults (DAI) — indirect 0% exposure on DAI borrowing if you keep your position large relative to usage and manage stability fees carefully.

• Aave/Compound credit lines via third-party wrappers — technically possible to maintain a position where net interest is minimal depending on utilization, but this is complex and not standard.

Important: Pure 0% APR in DeFi borrowing is generally not guaranteed. You usually end up paying stability fees, borrowing fees, or protocol taxes unless conditions happen to align. DeFi 0% is effectively a temporary or conditional state, not a standard product.

3. Peer-to-Peer (P2P) Deals (Rare & Negotiated)

Some users negotiate direct loans with other users on P2P marketplaces that can, in rare cases, carry 0% interest. These arrangements are not standard products and carry significant counterparty risk:

• Agreements vary widely

• Oftentimes collateral is placed in escrow, but risk remains

• Availability is inconsistent

This is not a reliable or scalable path for most borrowers.

When 0% APR Actually Applies

To borrow at effectively 0% APR, you typically must:

• Use a credit line (not a fixed loan) — interest applies only to funds you use.

• Keep LTV conservative — lower LTV reduces interest on borrowed amounts and helps keep risk low.

• Borrow only what you need — unused credit stays interest-free.

• Monitor positions actively — market movements affect LTV and can trigger interest increases or margin calls.

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Ways to Borrow Against Bitcoin at 0% APR

Final Thought

If your goal is real-world borrowing against Bitcoin with the lowest effective cost, the credit-line approach is currently the most practical path. Clapp’s model — with 0% APR on unused funds, usage-based interest on borrowed amounts, and real-time risk alerts — represents one of the clearest implementations of this philosophy.

“0% APR” should be read as a structural outcome (when unused or low-usage) rather than a permanent rate on borrowed capital.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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