How does borrowing interest payment work until loan repayment?
- Health Factor
- Borrow rate Aave
I am trying to understand the process of paying borrowing interest until the loan is repaid. Does the interest get deducted from the collateral or does the borrower have to pay it at a predetermined frequency?
The borrower needs to actively repay, if he does not and he falls below 1 health factor then liquidation would occur, and a liquidation would repay his debt and claim certain amount of collateral for that.