# Risks for Borrowers

> You can always repay, unless repayments are paused, and Spout has no mechanism to claim more than your collateral.

Canonical: https://spout.finance/docs/what-borrowers-should-know/

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| Risk | What it means | How to manage it |
| --- | --- | --- |
| Price | Your collateral rises and falls with the stock, as if you held it, except for any rise given up when calls are exercised | Borrow only against stocks you are happy to hold |
| Liquidation | A large fall can trigger a partial or full sale, with a penalty of 4.1% to 12.5% of what is sold, depending on the asset | Keep LTV below 35%; add collateral or repay early |
| Gaps | Liquidations run in market hours, so an overnight or weekend gap is acted on at the next open, possibly well past the threshold | Leave extra room before weekends, holidays and company events |
| Assignment | In a cycle where calls are exercised, you give up the rise above the strike | Accept it as the price of a 0% loan; it only happens in rallies |
| Collateral lock | Collateral in an active cycle cannot be withdrawn until the cycle ends and its tokens are back from the issuer, usually the next business day | Plan withdrawals around the cycle shown in the app |
| Issuer and broker | Your tokenized stock depends on its issuer, and once it joins a pool the shares behind it sit in Spout's brokerage account | Read the issuer's terms and Your Assets and Custody |
| Pricing | A wrong or late price could cause a liquidation that should not happen, or delay one that should | Staleness checks and pauses reduce this; keeping room protects you further |
| Smart contracts | A flaw in Spout's programs could cause loss | See Security Practices and Audits |
| Availability of USDC | When the pool is at its 85% cap, you cannot borrow more until it frees up | Do not rely on borrowing more at short notice |

You can always repay, unless repayments are paused, and Spout has no mechanism to claim more than your collateral.