Lending Club (NYSE:LC) has tweaked the way it manages the “grace period” for borrowers when they make payments past the due date. Previously, borrowers received a 15 day grace period for any penalties on payments less than 15 days late. Beginning today, Lending Club requires borrowers to pay the additional accrued interest as a result of their late payment.
Under the new Lending Club policy, if a borrower pays between 1-15 days past their due date, they will still not accrue a late fee, but they will have to pay the additional accrued interest as a result of their late payment. This will have the effect of additional interest being accrued over the life of the loan due to the incremental higher principal balance throughout the life of the loan. Any additional interest accrued over the life of the loan ultimately has the effect of increasing the loan maturity by one month.
The new policy begins with all loans as of February 24, 2017. While a minor change on the behalf of Lending Club it will add incentive for borrowers to pay promptly while generating slightly more revenue if a borrower is late.
Lending Club stated; “We believe this policy is beneficial for both borrowers and investors.”