It works fine when I add collateral (use direction=‘ADDITIONAL’), but when I’m trying to subtract collateral (‘REDUCED’) I get the obscure error: 400, -10046, 'Collateral Adjustment exceeds the maximum limit. Please try again.'
This is independent of the amount of collateral (and I’m making sure to LTV be below the needed level).
The mentioned error message is under https://binance-docs.github.io/apidocs/spot/en/#error-codes, which relates to your adjustment amount being too high.
Since this behavior probably also happens when you’re using the Website, I would suggest contacting the customer support there, because they’ll have visibility into your crypto loan settings and therefore the clarification will be quicker.