How It Works
The Note Trading Platform is an electronic marketplace where individuals and organizations can buy and sell Notes corresponding to consumer loans issued through the Lending Club website. Learn more about the Notes by reading the prospectus filed with the Securities and Exchange Commission.
About the Platform
Buy and Sell Orders
Sellers list Notes that they would like to sell and enter an asking price. Buyers browse Notes that are available for sale, review payment history and the evolution of the borrower's credit score, and buy Notes at the asking price. Trades take approximately 1 business day to settle. It is important to note that in some circumstances an order may be canceled by the system after it has been listed. A trade or listing may be cancelled for the following reasons:
- Lending Club began processing a payment on the loan corresponding to the listed Note.(This means that the Borrower's payment date has arrived and Lending Club is in the process of collecting a regular monthly payment and distributing it to investors.)
- Lending Club received a special payment from a Borrower corresponding to the listed Note and Lending Club is in the process of distributing that payment to investors. (For example, the Borrower has made an extra or early payment on the loan.)
- The loan corresponding to the listed Note moved into a Default or Charge Off status.
- The loan corresponding to the listed Note has a pending bankruptcy filing.
Information About the Notes
Each listing contains the Note's interest rate, issue date, outstanding principal, accrued interest, number of payments left, payment history to date, and the variation of the credit score of the underlying borrower since the issue date. Note, however, that the Notes are not "re-graded" over time, so you should not rely on grades assigned to Notes at the time they were issued to assess the current risk of a Note.
The Notes traded through the Trading Platform pay monthly interest. The payment date varies with each Note, so before you buy a Note, make sure you review both the payment history (to review whether past due interest was paid) and when the next payment date is scheduled to occur. Note that buyers receive interest payments, irrespective of whether they buy the Note on the first day after the previous payment has been made, on the last day before a payment is being made, or any time in between, so you might want to factor in accrued interest in your assessment of the value of a Note. Accrued interest since the last payment date is displayed prominently on the Browse Notes page.
FOLIOfn charges the seller a trading fee equal to 1% of the purchase price. There is no fee charged by FOLIOfn to buyers for trades; however, buyers holding Notes are charged a service fee by Lending Club for collecting and distributing payments.