# Borrowing **Borrowing vs. Selling** Selling means you might miss out on potential gains from your assets. Borrowing with C14 lets you get working capital without selling, useful for unexpected expenses, leveraging holdings, or new investments.
**Initiating a Borrow** First, supply assets as collateral. Then, in the Borrow section, choose the asset to borrow, set the amount based on your collateral, select a stable or variable rate, and confirm. You can switch rates anytime.
**Borrowing Limits** It depends on your supplied value and available liquidity. For instance, you can’t borrow an asset if there is not enough liquidity or if your health factor doesn’t allow it.
**Loan Repayment Terms** Repay with the same asset you borrowed, plus interest. For loans based on USD price, consider borrowing stablecoins like USDC or USDT.
**Stable vs. Variable Interest Rates** Stable rates serve as a constant rate initially but may adjust over time due to market fluctuations. Conversely, variable rates fluctuate according to the current supply and demand in the market. While stable rates provide a predictable interest amount, making them ideal for budgeting, variable rates can vary and sometimes offer better terms based on market trends. Conveniently, you have the flexibility to switch between stable and variable rates anytime via your dashboard.
**Switching Interest Rates** To switch interest rate between stable and variable rate, go to your dashboard and click the “APR Type” switch for the desired asset.
**Interest Rates Determination** Interest depends on the asset's supply-demand ratio. Variable rates change constantly, while stable rates offer more predictability. Find your current rate in the Borrowings section.
**Understanding Health Factor** The health factor is a numerical measure indicating the security of your deposited assets compared to your borrowed assets and their value. A higher number means your funds are more protected from being liquidated. If the health factor drops to 1, your deposits might be liquidated. A health factor under 1 is at risk of liquidation. At a health factor of 2, the value of your collateral compared to what you've borrowed can drop by up to 50%. The health factor is influenced by how much you can borrow against your collateral, known as the liquidation threshold.
**Health Factor Fluctuations** Fluctuations in the value of your supplies directly affect the health factor, either strengthening or weakening your borrowing position. An increase in the health factor increases the stability of your borrowing position by moving the liquidation threshold further away. If the value of your collateralized assets declines relative to the borrowed assets, the health factor will also decline, increasing the likelihood of liquidation.
**Repayment Flexibility** The loan repayment period is not fixed, providing the flexibility to maintain the borrowing status as long as your position remains secure. However, it's important to note that the accumulation of interest over time gradually reduces the health factor, potentially increasing the risk of asset liquidation.
**Loan Repayment Process** Repaying a loan is a simple process: visit the Borrowings section of your dashboard, click Repay on the borrowed asset, choose the amount, and then confirm the transaction.
**Avoiding Liquidation** To improve your health factor to avoid being liquidated, you have the option of either repaying the loan or depositing more assets. Between the two, repaying the loan is generally more effective. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://c14.gitbook.io/c14/basic-functionality/borrowing.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.