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Lumni Chile makes loans available to more students by not requiring collateral or guarantees. Instead, borrowers repay their loans by having a small percentage of their future paychecks earmarked to be returned to Lumni on a monthly basis. These amounts are proportional to the borrower's income. While they are students or unemployed, they only have to make a small token payment until they are gainfully employed. This means that borrowers who get high paying jobs will repay their loans faster than those with lower paying jobs. Repayments made out of the borrower's income will continue until the loan reaches maturity. Even if a student with a high paying job pays the original principal amount in full before the loan term ends the student will continue to make payments for the full loan term and will end up paying more than the original amount borrowed. The amount in excess of the original amount borrowed will be retained by Lumni to further their mission. However, if a loan reaches maturity without being paid in full (this may happen if the student has a low paying job) students will no longer be obligated make payments and any unpaid portion of the loan will be not be collected and therefore defaulted on Kiva. Any repayments received that are above the minimum payment due each month will be considered pre-payments, and will be distributed to lenders as usual.
About Lumni Chile:Lumni is a lending organization in Chile that helps students from low-income families pay their tuition through future income contracts. Founded in 2003, the organization is a pioneer in the field of human capital financing in Chile, and now also operates in Colombia, Mexico, Peru, and the United States. To date, it has financed nearly 2,000 students to pursue their education -- nearly all from low-income backgrounds. Kiva lenders’ funds will help the organization support even more students from low-income backgrounds to pursue their education in Chile.
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