What is Yield to Maturity (YTM)?
Yield to Maturity (YTM) is the rate of return expected on a Note held to maturity. The YTM calculation assumes:
a) The Note is purchased at the listed price,
b) The Note is held to maturity,
c) All payments are received in full and on schedule according to the original terms of the loan, and
d) Lending Club collects its servicing fee.
For non-current Notes and payment plans, the YTM calculation assumes the borrower will resume paying the contractually-owed amount on the next payment due date and will continue monthly payments thereafter until the full outstanding principal is paid. For example, if the borrower is 3 payments behind when the loan is sold, the YTM calculation assumes that final payment will be made 3 payments after the original final payment date. (The YTM calculation does not assume a one time "catch up" payment will be made to bring the loan current within its initial term.)
YTM is only one means of assessing the potential value of a Note and should be used in concert with other items such as loan status, payment history, Markup/Discount, etc. Because any loan may have a status other than “current” during its term, YTM is speculative and is provided merely as a point of reference and not as any type of investment advice, guidance or guarantee regarding the performance of a Note.