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Lease Rental Discounting (LRD) is one of the loan schemes offered by banks in return of rental receipts derived from lease contracts with corporate tenants.

Lease Rental Discount

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Lease Rentals are considered to be the bills that are owed by other corporations to the lessor.

Lease Rental Discount - An Overview

Under LRD, the borrower pledges the future rental earnings in the form of receipts from the leased property to the bank for loan repayment. In the above process, the borrower gets the loan for the leased property, the tenant or the lessee is paying the repayment to the bank in the form of the installments till the time he holds the leased property. The type of property must be a commercial one in case you consider taking this type of loan.

LRD is particularly beneficial for the builders/ developers who make a huge investment in raising a commercial property for rent/ lease purposes. The amount invested by the builders is in a way locked as the returns are received only in the form of rentals. Thus, they decide to go for LRD from banks by pledging their future rentals from the property.

Lease Rental discounting is a wise method of generating funds utilizing your pre-owned property not only ensuring you security of your asset but also helps you to invest further according to your plan.

The various factors that a bank takes into account while offering LRD are:

  • - Profile of the lessee/ tenant
  • - 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 focuses on is that by no means it should be facilitating the conversion of black money

Documents Required for Lease Rental Discount

The following is the list of documents required for the approval of the loan:

  • - Loan application form
  • - Photograph
  • - Identity proof
  • - Residence proof
  • - Educational qualifications certificate, latest 3 months’ salary slip and/or proof of business existence
  • - Form 16/ITR or latest 3 years’ Income Tax returns or business profile
  • - Latest 6 months’ bank statement or last 3 years’ profit/loss and balance sheet
  • - Processing fee cheques
  • - Property related documents
  • - Title of ownership of property
  • - Approved sanction/building plan
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