# Detailed lending process

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### 1. The lender places an order book offer

* The lender places a SOL offer in the order book for a given collection
* This remains here until a borrower takes the offer

### 2. The lender refinances a loan from auction

* Refinancing auctions allow lenders to immediately enter a loan by taking over an existing loan that has received a refinancing call
* This allows you to start earning interest immediately, compared to SOL offers waiting in the order book for borrowers

### 3. The loan starts

* Interest begins to accrue linearly, every second

### 4. The borrower repays the loan in full

* When the borrower repays, the lender recovers the principal and interest accrued at that particular moment

### 5. The lender sends a refinancing call

* A lender can send a refinancing call to an active loan, at any given time
* What happens next will be determined by the offers in the order book

### 6. The order book can auto-refinance the loan

* A healthy loan is more than likely to match an existing offer in the order book
* If so, the loan will be auto-refinanced
* The lender will recover the principal + interest accrued and exit
* The new lender will enter the loan from scratch

### 7. The order book cannot auto-refinance the loan

* If the order book contains no better or matching offers, the loan is sent to the refinancing auction

### 8. The 72 hour refinancing auction starts

* The loan will be offered to new lenders on the same terms
* During this time the collateral cannot be liquidated
* The borrower is able to repay if they want to

### 9. A new lender takes the refinancing auction

* Refinancing involves covering the principal of the previous loan and accrued interest, allowing the previous lender to exit in full
* The borrower continues to borrow, now at a higher interest, and can still repay anytime

### 10. The refinancing auction ends

* The auction ends after 72 hours if no new lender has stepped in to refinance the loan, *and* if the borrower still hasn't repaid
* If this is the case, the lender does not recover the principle or interest owed
* Instead the lender receives the collateral