The bonus accrual feature pays an enhanced monthly interest rate of 50% of the existing monthly interest rate. For example, a 12% annual loan paying 1% interest per month would accrue 0.5% of the monthly bonus. This will accrue over the remaining Tolerance Period ( 0 to -180 days), and will only be payable once the loan has been repaid, if we are successful in recovering sufficient property proceeds.
As an example, if a loan is 180 days overdue in the Tolerance Period Tolerance Period ( 0 to -180 days) the investor would receive a bonus accrual of 3%.
The bonus is attached to the loan part and is payable to whoever owns the live loan part at the date of repayment.
(For example, if a loan is sold during the Tolerance Period Tolerance Period ( 0 to -180 days), the new lender receives the bonus if they continue to hold the loan part until the loan is repaid.)
We believe this feature helps balance the risk/reward investment opportunity of overdue loans. This is paid in preference to Lendy's share of margins and fees.