Eligibility to Apply for Lease Rental Discounting Loan

Eligibility to Apply for Lease Rental Discounting Loan
Eligibility to Apply for Lease Rental Discounting Loan
July 10, 2016

Is it that you are earning a good amount of money from the rental of your commercial or residential property? Even if you have a leased property, you may apply for a Lease rental discounting loan from an accredited lending institution under the pledge that your future rental earnings from your property will be authorized to them as loan payment. You may apply for LRD loan either to a bank or any reputed financial institution that has the provision in easy term.

The primary requirements to be eligible for the LRD loan

The lending institution must set a number of primary requirements known as the eligibility factor for an applicant of LRD loan. They check the following issues:

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  • Profile of the lessee.
  • Credit worthiness of the lessee in terms of rent paying capacity.
  • Location of the property with regards to factors such as growth prospects, presence of other industries, civic amenities etc.
  • 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 documents required to submit application

Some documents may be required from the client by the firm offering the lease rental discounting loan. Such documents are as follows:

  • Lease agreement
  • Property title document
  • Bank statement for the last six months
  • 2-years financial statement of your business which should contain Profit and Loss statement, Income and Expenditure, income tax and balance sheet.

Lease rental discounting allows you to borrow money against your property

One of the benefits of Lease Rental Discounting (LRD) is that you can use your property to obtain loans. There are some Lease Rental Discounts that offer as much as sixty five percent of the market value of your property as loan. This is a classic example of using what you have to get what you want.

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Lease rental discounting loan is for those who seek long term loan

Though some banks would be ready to give you a loan facility, the duration of the loan is usually short. However, Lease Rental Discount can offer you loans that can last up to twelve years or more. The long stretch of time will allow you to efficiently use the money for your business.

The types of business you can apply LRD loan for

People often erroneously think that lease rental discounting is made for some types of business. That is not true. The product has been structured to finance sole proprietorship (one-man business), partnership firms, private limited and public limited companies and career professionals (for example doctors, business consultants, chartered accountants and so on).

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This funding is good for those who get fixed rent for their property

The proceeds from this loan can be used to cater for personal and business needs of the individual. The loan is calculated by the lending institution or bank as the discounted rent potential of the commercial property or residential building.

LRD is an agreement between the lessee, leaser and lending institution

This is an agreement between the three parties. The leaser would stop taking the rent and the leaser is expected to now pay the rent to the lending institution through an escrow account. The maximum time of this agreement is usually capped at fifteen years.

Make sure that the lending institution is reputed

It is necessary to survey your lender and be sure that they have built a reputation over time. The success of the agreement to a large extent will depend on how sincere your lending institution is. The market is currently flooded with lenders claiming to offer the best deals but not all of them can be trusted. This is why in is very important to conduct a good research before choosing your financial institution or lender.

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Article highlights

  • The growth of any business is accompanied by need for more money.
  • Lease rental discounting loan is the most popular form of loan.
  • Both business and career professionals can seek lease rental discount.
  • The procedure for getting a LRD loan is very strenuous and it takes long time.
  • Lease rental discounting allows you to use your rent to seek for loans.
  • A number of documents are required to attach with your application for LRD loan.
  • These loans are usually given to be repaid after a brief moment.
  • Lease rental discounting allows more loan time.
  • Lease rental discounting loan covers a wide array of business.
  • A reputable financial institution is desirable to sanction the loan successfully.

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