How do crypto loans actually work? Considering borrowing against my Bitcoin

I've been holding Bitcoin for about 2 years now and it's done pretty well. Got about $8k worth currently. The thing is I need around $3-4k for some unexpected expenses but I really don't want to sell my Bitcoin because I'm bullish long-term and don't want to trigger a taxable event.

Someone mentioned crypto loans where you can borrow cash using your Bitcoin as collateral. Sounds interesting but I honestly don't understand how it works or if it's a good idea.

From what I've pieced together:

• You put up your crypto as collateral
• They lend you cash (USD, EUR, whatever)
• You pay interest on the loan
• Eventually you pay it back and get your crypto back

But I have a bunch of questions:

How much can you actually borrow? Like if I have $8k in Bitcoin, can I borrow $4k? Or is it less because of some ratio thing?

What happens if Bitcoin price drops? This is the part that worries me. If BTC crashes while I have a loan out, do they just take my Bitcoin? How does that work exactly?

What are the interest rates like? Is it comparable to a personal loan from a bank or way higher?

Which platforms actually do this? I've heard of Nexo and maybe YouHodler? Are there others? Are they safe or is this risky business?

Is this actually better than just selling? I keep thinking maybe I'm overcomplicating this and should just sell $4k of Bitcoin, pay the taxes, and be done with it. The loan thing seems appealing but also feels like there's hidden complexity or risks I'm not seeing.

Has anyone here actually taken out a crypto loan? How did it work out? Any gotchas I should know about before even considering this?