Lending Club uses its low operating costs to pass savings on to investors in the form of solid returns. 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 payments received within 15 days of the payment due date. If a borrower misses a payment, investors do not pay a service fee.
When a borrower prepays their loan (pays off all or part of their 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 that 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, best practices from the banking industry are used to bring delinquent loans back to “current” status. Currently, investors are charged the following collection fees, which are deducted from any amount recovered: 1) 18% of the amount recovered if the loan is 16 or more days late and no litigation is involved, or 2) 30% of hourly attorneys' fees, plus costs, if litigation is involved. Investors are not charged a collection fee if no payments are collected, and no collection fee will be charged in excess of the amount recovered.
Please note that investors are currently charged a reduced collection fee in some instances, which reduction may be discontinued at any time. The normal collection fee is a percentage of the amount recovered: 30% if the loan is less than 60 days past due and was originated no more than 90 days prior to the date of collection; 35% in all other cases, except litigation; 30% of hourly attorneys' fees in the event of litigation, plus costs.