What Is The Full Form Of LRD In Banking?
LRD full form in banking is Lease Rental Discounting. It is a neat little financial tool that banks and financial institutions use. This handy tool is specially made for folks owning properties, mostly commercial ones, which they’ve rented out to some high-trust folks or corporations. The magic of LRD is that it lets property owners use their future rental income as a ticket to get a loan from the bank. The first box you gotta tick for LRD is owning a commercial property like an office space or a retail store, that you’ve rented out to a trusty tenant.
What Else Should You Know About LRD?
So, imagine you’re in a situation and need some funds for personal reasons or to boost your business. Well, the bank’s got your back! You can take that future rental income you’re expecting and use it as collateral to secure a loan. The bank then puts on its detective glasses and evaluates your commercial property’s market value, the rental income you’ve got coming in, how trustworthy your tenant is, and the ins and outs of your lease agreement. After some number crunching, they’ll come up with a loan amount that’s usually a fraction of your property’s value or a multiple of your annual rental income.