What is a LendingClub Note?

Notes are securities that correspond to fractions of loans. This image depicts an example of a loan that corresponds to a Note an investor might purchase. The characteristics shown include the corresponding loan's interest rate, grade and sub-grade, loan amount, loan purpose, and term.

LendingClub Notes with grade, interest rate, and term

Understanding your LendingClub Note investment

When you invest at LendingClub, you are not making loans directly to the borrower, instead, you are investing in SEC-registered securities called Member Payment Dependent Notes, or “Notes,” which correspond to fractions of loans. As borrowers make their monthly loan payments of principal and interest, LendingClub takes out applicable fees and deposits the portion corresponding to your Note into your account.

A laon is broken up into smaller pieces and sold to investos as securities called LendingClub Notes

Building your portfolio of LendingClub Notes

How to evaluate a Note:

  • Grades and sub-grades: LendingClub assigns a grade (A–E) and sub-grade (1-5) to each Note, which reflects LendingClub’s assessment of the credit risk of the corresponding loan. For example, if the borrower has a weaker credit profile they would get a lower grade and sub-grade, like E5. If the borrower has a stronger credit history, they’d get a higher grade and sub-grade, like A1 or B1.
  • Interest rates: The stated interest rate on each Note varies depending on the credit risk of the corresponding loan. So higher grade Notes (higher credit quality) come with lower interest rates. Lower grade Notes come with higher interest rates to factor in the risk you’re taking on by investing in weaker credit. 
  • Terms: Loans mature in 3-or 5-years and are paid off monthly by borrowers. Each payment includes both interest and principal. Know that borrowers can pre-pay their full loan amounts and are not subject to any early payment fees or penalties.

LendingClub Note grades and sub-grades

Chart of LendingClub Note grades

Check out our performance page to understand why diversifying across multiple Notes at LendingClub is important, and how different Note grades and terms have performed. No matter what grade and term criteria you choose, it is always important to consider diversifying your risk. Learn more about the benefits of diversification.

We take care of the complicated stuff so you don't have to

In addition to managing the payments deposited into your account, LendingClub will also work on your behalf to attempt to collect any late or delinquent payments if a borrower defaults. To learn more about collections, click here.

Need additional assistance with investing in Notes? Our Investor Services team is here to help! Contact us at investing@lendingclub.com or 888-596-3159.