# Liquidation

In **RainFi**, **there is no price-based liquidation** mechanism. Unlike traditional lending platforms that trigger liquidation based on asset price volatility or LTV thresholds, **RainFi only liquidates a position when a loan is not repaid by its due date**.

This time-based liquidation model gives borrowers more control and reduces stress related to market fluctuations.

***

#### When Does Liquidation Happen?

Liquidation **only** occurs when the borrower **fails to repay the loan before or at the end of the loan period**. If the loan remains unpaid past the deadline, the collateral (token or NFT) is automatically liquidated to repay the lender.

***

#### Grace Period

RainFi offers a **grace period** to help users avoid immediate liquidation:

* **1 hour of grace** is given **for each day** the loan is borrowed.
* The **maximum grace period** is **8 hours**, regardless of loan length.

> 🕒 Example:\
> If you borrow for 3 days, your grace period is 3 hours.\
> If you borrow for 14 days, your grace period caps at 8 hours.

***

#### How to Avoid Liquidation

To stay safe from liquidation, the borrower can choose from **three available options**:

1. [**Repay the Loan**](/account/dashboard/active-loans/repay.md)\
   Repay the borrowed amount (and any accrued interest) before the due date to recover your collateral and close the position.
2. [**Extend the Loan**](/account/dashboard/active-loans/extend.md)\
   Choose the *Extend* option to increase the loan duration. This creates a new loan under the current pool terms and gives you more time to repay.
3. [**Market Sell**](/account/dashboard/active-loans/market-sell.md)\
   If you want to exit the position early or avoid repayment manually, use *Market Sell*. This sells the collateral (via DEX or marketplace) and automatically repays the loan with the proceeds. Any remaining value after repayment goes to you.

***

#### Summary

RainFi offers a borrower-friendly approach by eliminating price-triggered liquidations. As long as you manage your repayment or use available actions in time, your collateral remains safe.


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