LendingClub charges an investor service fee of 1% of the number of borrower payments received by the payment due date or during applicable grace periods. The service fee is not an annual fee and may, therefore, reduce annual investor returns by more or less than 1%. LendingClub services the loans facilitated through our platform by maintaining investor accounts, collecting and processing principal and interest payments from borrowers, and distributing payments net of service and collection fees to investors.
When borrowers prepay their loans (pay off all or part of their loans 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 those loans 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, they would be charged a service fee of only $3 (1% of $300) that month.