The Madrid side have also negotiated an option to buy the Spain U21 international at the end of the season should he impress.
Tottenham Hotspur youngster Iago Falque has joined Rayo Vallecano on loan for the 2013-14 season, Marca confirm.
The Spanish side will have the option to buy the player at the end of the loan for an agreed undisclosed fee, should they so choose.
Falque initially joined Spurs on loan with the option to buy in 2011, when former Tottenham manager Harry Redknapp brought him to the club from Juventus.
The 23-year-old only made one competitive appearance for Spurs, last September in a goalless Europa League draw against Greek side PAOK.
At the turn of the year Falque joined Almeria on loan, helping the Spanish Segunda side earn a third place finish and promotion to the top flight, his 22 appearances and two goals proving to be a huge help.
Despite showing promise, Spurs manager Andre Villas-Boas seems to have no real interest in Falque. Despite the imminent departure of Gareth Bale, Villas-Boas clearly feels that Falque would not be suited for a role on Spurs’ left wing. The option for Rayo to purchase the player outright could well spell the end of Falque’s brief Tottenham career.