Lending Club uses its low operating costs to pass savings on to investors in the form of solid returns and low investing costs. There are no hidden fees or charges. Lending Club collects fees from investors when they receive payment proceeds, so our revenue from investors is tied directly to their cash flow.
Lending Club provides servicing for the loans facilitated through our platform. This includes maintaining investor accounts, collecting and processing principal and interest payments from borrowers, and distributing these payments net of fees to investors. Investors pay Lending Club a service fee equal to one percent (1%) of the amount of any borrower payments received within 15 days of the payment due date. If borrowers miss a payment, investors do not pay a service fee.
When borrowers prepay their loans (pay off all or part of a loan earlier than the contractual due date) during the first 12 months after a Note is issued, we limit the size of the service fee charged to investors in Notes corresponding to the applicable loan in order to protect their returns. For those first 12 months, an investor will never pay a monthly service fee greater than 1% of the contractual monthly payment amount due to such investor. For example, if the contractual monthly payment amount due to an investor is $300 and a prepayment of $4,000 is distributed to the investor's account, he or she would only be charged a service fee of $3 (1% of $300) that month.
When borrowers miss payments and loans become late, Lending Club uses best practices from the banking industry to bring delinquent loans back to “current” status. Currently, Lending Club charges investors one of the following collection fees, which is deducted from any amount recovered: 1) 18% of the amount recovered if a collection action must be taken with respect to a loan and no litigation is involved, or 2) 30% of hourly attorneys' fees, plus costs, if litigation is involved. Lending Club does not charge a collection fee if no payments are collected, and no collection fee will be charged in excess of the amount recovered.
Please note that Lending Club currently charges investors a reduced collection fee, which may be discontinued at any time. The normal collection fee is a percentage of the amount recovered: up to 35% if a collection action must be taken in respect of a loan and no litigation is involved; or 30% of hourly attorneys' fees in the event of litigation, plus costs.
Lending Club Notes are offered by prospectus filed with the SEC. Please consider the risks of investing.