Charlotte Miller

Let’s answer frequently asked questions on LRD Loan

With thousands of startups and more than 100 unicorns that have been founded in India, there is a revolution in the manner that we Indians do business. Everyone has the goal of either monetizing a concept, bringing a contemporary perspective to an old business model, or reimagining a current operation of their organisation.

And due to all this, everyome can be the owner of their own startup, or you might be looking for money to launch a new business.  In either case, an LRD loan might be the solution you’ve been searching for. If you are an experienced business person who is searching for additional cash to expand your company’s portfolio or even to diversify into a new market, you may also be interested in an LRD Loan. In this case, the LRD loan may be the solution to your quest for additional capital. The predictability of future cash flow is just as important as having a loan from LRD.

The long form of “LRD” stands for “lease rental discounting,” and it refers to a term loan secured by income-generating commercial property or assets. The LRD Loan is based on the assumption that the leased property you own generates fixed rent, which you have the ability to use as “Collateral” in order to create funds instantaneously.

Now, an LRD Loan can be obtained based on the discounted value of future rental income, in addition to taking into account the property’s fundamental value. Borrowers who provide Pan Numbers of All Banks have the option of putting the loan money toward personal expenses or investing it to grow their businesses.

So noe let us answer some Frequently Asked Questions LRD loan:

  1. Who is eligible to apply for a loan through the Lease Rent Discounting (LRD) programme?  Giving details of your Pan Numbers of all banks is crucial when determining your eligibility for the loan.

For Individuals: Receiving a salary- Any individual who is currently employed full-time in any government undertaking or any reputable private sector organisation in India is considered a salaried individual. Non-Resident Indians (NRIs) who are employed by reputable businesses in certain foreign countries are also eligible to apply for a loan through our business.  

For Professionals: Allopathic doctors, architects, chartered accountants, cost accountants, practising company secretaries, management consultants, and lawyers are examples of professionals.  Individuals who are self-employed include retailers, wholesalers, manufacturers, and service providers, among others.  Non-Individual Entities Sole Proprietorship Firms, Partnership Firms, Limited Liability Companies (both Private and Public), and Public Limited Companies 

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How much of a loan may I qualify for based on the value of the property? 

Borrowers are usually eligible to borrow up to 70 percent of the current value, depending on how much money you bring in each month for taking the LRD loan.

How long of a timeframe am I able to get a loan for? 

LRD loan is generally offered for tenures ranging from three to ten years long. The period of the loan will be limited to the customer’s retirement age or 60 years at the time the loan matures for salaried customers, and it will be limited to 65 years for customers who are self employed. 

Do I need a co-applicant for LRD loan? 

Yes. Your application will not be processed until all co-owners of the property sign on as co-applicants and provide the required  Pan Numbers of all banks. If you are the only person applying for or owning the property, you will need to have one adult member of your family sign up as a co-applicant. Co-applicants are required in the event that the business in question is either a partnership firm or a company. Partners and promoter directors, respectively. 

What kind of collateral do you require from me? 

The rent is put in an escrow account after you provide Pan Numbers of all banks, and the tenant is responsible for making the payments. As collateral, the leased property that is being used as the basis for the loan will be taken. This property could be residential or commercial. Under this programme, eligibility requirements must be met by properties that are finished being built.

If I wanted to prepay the entire loan amount, would that be an option for me? 

Yes. After a waiting period of six months from the date of the loan’s final distribution, an individual has the ability to prepay the loan at any time. Fees associated with foreclosures of LRD loan will be assessed as necessary and informed to borrower. 

What exactly are the charges for foreclosure of LRD? 

If the loan is paid off within a year of the date of the first disbursement, the amount of the outstanding loan balance at the time of foreclosure will be subject to a foreclosure charge equal to five percent of that amount plus the applicable service tax. If the loan is paid off within 12–24 months from the date of the first disbursement, the foreclosure charge will be 3 percent plus the applicable service tax. If the loan was paid off after 24 months from the date of the first disbursement, the charge for foreclosure will be two percent plus the applicable service tax. 

Can I make pre-payments? 

After six months have passed since the date of the LRD loan‘s initial disbursement, you will be able to make partial pre-payments of a minimum sum of Rs 50,000. This payment may only be made once each calendar year, and it may not exceed 25 percent of the total amount still owed on your loan at the time that the request is submitted. At the time of foreclosure, the interest rate that is applicable to the loan’s foreclosure will be applied to any and all partial prepayments that were made more than a year before the loan was foreclosed upon. 

Can you tell me where to make repayment of the loan? 

The escrow account that was formed upon providing Pan Numbers of all banks specifically for the purpose of collecting the rent from the tenant who is now renting your property will be used to make the repayment toward your loan.

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