Lease Rental Discounting Consulting Services
Lease Rental Discounting (LRD) is means the loan schemes provided by banks under which a loan can be obtained by any applicant against his her leases property. An applicant obtains loan against his/her leased property. Under Lease Rental Discounting (LRD), the borrower pledges the forthcoming rental collection from the leased property to the bank for loan repayment. Lease Rental Discounting (LRD) is typically offered against commercial properties.
Lease Rental Discounting (LRD) is particularly profitable for the builders/developers who make a huge investment in raising a commercial property for rent/lease purposes. The investments of the builders are in a way sealed as the returns are attained only in the form of rentals. Thus, by engaging their upcoming rentals from property, they opt for Lease Rental Discounting (LRD) from banks. Banks also ensure that the future rental earnings from the property are secured before offering Lease Rental Discounting (LRD). The various factors that a bank keeps in mind while offering Lease Rental Discounting (LRD) are:
- Credit worthiness of the lessee in terms of rent paying capacity.
- Location of the property with regards to factors such as growth & expansion prospects, presence of other industries, civic amenities, etc.
- Profile of the lessee.
- One of the most important points that a bank keeps in mind is that in no way it should be facilitating the conversion of black money into white through LRD.
The legibility of the loan under LRD is computed by taking 70-75% of the net rental income and segregating it by per lakhs EMI of the tenure of left over years in the lease rent agreement. Banks generally open a deed account along with the applicant. The rental/lease income is credited into this account and EMIs are reduced pit of it.