'What are the possible reasons for loan rejection?'

In an online chat with readers, Neeraj Saxena of Avanse Education Loans answered queries on how to pick the right education loan.

With the towering costs of quality education in our country, education loans serve as a respite for millions of students in the country.

The easy accessibility and flexible terms of education loan providers have further made career decisions simpler than ever for both students and parents.

At the same time, it is important to carefully analyse the terms and conditions of loan providers in order that you understand the right loan for you.

In order to help our readers make an informed decision, Rediff.com had organised an online chat with Neeraj Saxena, CEO, Avanse Education Loans on May 30.

For those who missed the live chat, here's the edited transcript:

dinesh: What are the possible reasons for loan rejection?

Neeraj Saxena: Bad CIBIL / credit history is the primary reason for loan rejection. However, there are other reasons as well including - co borrower not meeting financial eligibility, collateral property not being legally clear, etc.

appa: Can you tell me which courses are not covered under education loan? Is there a way to find out?

Neeraj Saxena: This depends on the lending institutions' policy.

Most banks only lend to AICTE / UGC approved colleges.

romil: Between public and private banks, which offer the best interest rate for education loan?

Neeraj Saxena: Apart from one or two scholar loan schemes offered by specific banks, private institutions offer equally competitive interest rates.

mustafa: What is the process to apply a study abroad loan?

Neeraj Saxena: For processing a study abroad loan, you need to have your and your co borrower's KYC (Know Your Customer) documents, your academic records and the co-borrower's financial documents.

kaushal: Sir do banks check parents' CIBIL score before granting loan? I already have a home loan of 15 lakhs. Will my son get an education loan of 20 lakhs?

Neeraj Saxena: Yes, CIBIL scores are checked for any loan processing. You getting a further loan depends on your income and current obligations.

janu: Which is the better options federal loans or private loans?

Neeraj Saxena: Federal loans are more a US concept whereby a US citizen can avail of education loans directly from the Government.

In India, you will need to approach a bank of a private education loans provider for your funding needs.

Panse Kaisare: What is the eligibility criterion for engineering loan in India?

Neeraj Saxena: Engineering is like any other academic programme in as far as education loans is considered. Loan eligibility differs with each case.

Gunjal dhage: What is the maximum amount of loan you can get for international studies?

Neeraj Saxena: Your loan eligibility depends on several factors including your academic performance, choice of course, co borrower etc.

rakesh: I had taken an education loan of 5 lakhs from Indian Overseas Bank 3 yrs ago for my engineering.

My dad is paying the interest for the same.

Can I take an additional loan to complete my MBA and repay them together?

Neeraj Saxena: It is possible for you to take loans separately for two different courses.

On repayment, the terms may differ from product to product and on the lending institution as well.

However, do bear in mind that the current education loan EMI will be considered to check you eligibility for the new loan.

Jaykar Kajale: Do I need to produce a copy of my admission while applying for a loan? Or can I apply in advance?

I want to be sure whether I am eligible for a loan before applying to the college. Pls advice. 

Neeraj Saxena: Both options are possible, though the rate of interest of the education loan will be ascertained once the college admission is finalised.

The loan value eligibility can be evaluated before the admission process.