The Fosik Lending Advantage

About Us

Fosik Lending is a specialty loan administration company based in Kensington NSW that manages private "Mate to Mate" loans and soon to be mortgages. Fosik Lending will launch its first product, Loan Mate offering, in mid 2007.

About the Fosik Concept

For centuries, individuals have been lending money to their relatives, mates and business associates. Today, the volume of these private loans in the Australia is over $6 billion, according to The Federal Reserve Bank of Australia and latest Survey of Fosik Lending.

Despite this substantial volume, the process of managing private loans is fraught with emotional hazards, administrative hassles, and financial risks. For example, the average default rate on interpersonal loans is 14%, fourteen times higher than the 1% loss rate of bank loans.

One of the main reasons that the default rate is high for private loans is that repayment is typically organized in a haphazard manner, involving a lump-sum payment at the end of the loan term. Borrowers are often unable to make the lump-sum payment when it comes due and the loan ends badly for both parties with a high percentage of defaults. This can wreak havoc on a personal relationship.

The discipline of a monthly payment plan, especially one administered by a neutral third party using electronic funds transfer, can help ensure that the debt is repaid. When managed this way, the default rate of private loans drops substantially.

We have also found that lenders gain confidence knowing that, through Fosik Lending, once their loan is formalized, they have many of the options lending institutions have to recover unpaid debts, such as collections, foreclosure, and tax deductions for capital losses.

In practice however, borrowers and lenders usually can find a restructuring solution that works for both parties before the loan goes into default.