Find Out: What is Lease Rental Discounting (LRD) Loans

For many individuals and corporations, a significant portion of their income gets generated from the rental income arising out of their investments in immovable properties. With Lease Rental Discounting, such individuals or corporations can acquire term-loans using their rental receipts as collateral. It’s a great way to raise loans from owned assets and the loan amount is provided to the lessor based on the discounted value of rental inflows and taking into consideration the underlying property value.

Factors Considered While Providing Lease Rental Discounting (LRD)Loan:

The eligibility criteria for LRD loans might vary from bank to bank, however, there are a few common factors that banks will assess:

-          Value of the Property

-          Lessor’s ability to repay

-          Residential Status

-          Value of other Investments including Immovable Assets

-          Title of the property and other technical aspects

-          Future Liabilities


How Does LRD Work?

Lease Rental Discounting (LRD)loans are issued by banks or NBFCs and such loans work on the grounds of an owned property being rented out and the lessor of the property is liable to earn fixed rental income at regular intervals from such property. Tenants, occupying the space, enter into an agreement with the property owner, which mandates them to pay a fixed monthly rent for a stipulated time period, typically known as the tenure. Based on the property value, the rental agreement and rental receipts, the property owner is sanctioned a loan and the process of repayment gets streamlined as the future rental income that will be realized is used to repay the loan directly to the lender as Bank EMI.

While each bank having its own criteria, usually, the loan amount can go up to 70% of the underlying property valuation. Nitstone Finserv, a non-deposit taking NBFC, registered with the Reserve Bank of India, offers Lease Rental Discounting (LRD)Loans at attractive interest rates. With the need to satisfy a few basic eligibility criteria, the NBFC entertains eligible LRD applications for a minimum 10 crores in loan requirement. There are multiple benefits of applying for a Lease Rental Discounting (LRD)loan as mentioned below:


Benefits of Lease Rental Discounting (LRD)Loan:

-          The loan amount can be used for the purposes of Business Expansion or furthering your investments in immovable properties.

-          Availability of Tax Benefits.

-          Zero charges on foreclosing the loan after a minimum lock-in period as specified by the lender.

-          Benefit of balanced cash-flows with the rental amount getting used to repay the EMI’s of the loan.

-          Vast opportunities of capital appreciation by using the loan capital in generating additional revenue through investments.


Eligibility Criteria for Lease Rental Discounting:

Certain common factors considered to check the eligibility for LRD loans include:

-          Indian Resident

-          Applications qualify from salaried or self-employed individuals, professionals with established practice or in case of non-individual entities, Proprietorship and Partnership firm and Private/Public Enterprises are eligible.

With an effective potential of expanding a growing business, LRD’s are becoming a common tool and the safest bet to raise capital while ensuring the repayment ability. It helps individuals and companies to diversify their investments while eliminating the need for large sums of personal capital. Get instant loans and for more information on the above topic, talk with our consultant at Nitstone.

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