Lease Rental Discounting :-

Lease Rental Discounting (LRD) is a term loan offered by banks where the borrower pledges future rental income as collateral. LRD involves an agreement between three parties: the borrower (the owner of the leased property), the lessee or tenant (who rents the property), and the lending institution providing the loan.

In this arrangement, the lessee is required to deposit the agreed-upon rent directly into an escrow account managed by the lender, rather than paying the borrower. This direct deposit facilitates the repayment of the loan, with the borrower effectively receiving a loan based on the future rental income expected over the lease term. The EMI amount for the loan is fixed at the time of borrowing and cannot be altered during the loan tenure.

The unique selling point of LRD loans is that they allow borrowers to leverage their current rental income streams to secure long-term loans. These loans can be used for various purposes, such as business expansion, meeting long-term or working capital needs, debt restructuring, or other financial requirements. LRD is particularly beneficial for individuals with significant rental income who may be unable to secure a direct loan against their property, perhaps due to an existing loan on the real estate.

The maximum tenure for an LRD loan is typically up to ten years. These loans often have lower interest rates compared to unsecured loans and can be processed quickly and efficiently, making them an attractive option for borrowers seeking fast access to funds.

Key Features of Lease Rental Discounting:

Secured Loan:
LRD is a secured loan where the rental income from a leased property acts as collateral. The loan amount is determined based on the discounted value of the future lease rentals.
Loan Amount:
The loan amount is usually a percentage of the total rental income over the lease tenure, after applying a discount factor. This percentage varies based on the lender’s policies, the location of the property, the creditworthiness of the tenants, and the lease agreement's terms.
Longer Tenure:
LRD loans generally come with a longer repayment tenure compared to other types of loans, making the EMIs more affordable. The tenure often aligns with the remaining lease period of the property.
Low Interest Rates:
Since LRD is secured against a steady stream of rental income, lenders often offer competitive interest rates, making it a cost-effective financing option for property owners.
Flexible Usage:
The funds obtained through LRD can be used for a variety of purposes, including business expansion, debt consolidation, purchasing new property, or any other personal or professional financial requirements.

Advantages of Getting Associated with Finnova Advisory for Lease Rental Discounting (LRD)

Finnova Advisory provides expert assistance in Lease Rental Discounting (LRD). We have established strong partnerships with a wide array of banks and financial institutions, offering you a broad selection of lender options. Based on your eligibility and financial needs, we ensure a fast and efficient process, competitive interest rates, and flexible collateral options, making LRD an ideal solution for your business.

We collaborate with private banks, Public Sector Undertakings (PSUs), cooperative banks, and Non-Banking Financial Companies (NBFCs) to provide comprehensive support. Our team of specialists is committed to delivering unbiased advice, guiding you through every step of the process. As a trusted mediator, we are dedicated to helping you secure corporate finance services from some of the leading banks and financial institutions, ensuring you receive the best possible terms for your business needs.