GenMath Q2 W7 Business and Consumer Loans

GENERAL
MATHEMATICS
WEEK 7, QUARTER 2
The learner demonstrates
Content
understanding of basic concepts
Standards
of business and consumer loans.
The learner is able to decide

Performance wisely on the appropriateness of
Standards business or consumer loan and
its proper utilization.
MOST ESSENTIAL LEARNING
COMPETENCIES
Most Essential Learning Competencies (MELC’s)
The learner illustrates business and consumer loans. (M11GM-IIf-1)
The learner distinguishes between business and consumer loans

(M11GM-IIf-2)
The learner solves problems involving business and consumer loans

(amortization, mortgage). (M11GM-IIf-3)
ACTIVITY
Directions: Rearrange the jumbled letters to

reveal the answer.
Hint: these are some of the basic terms

related to the topic.
1. These are assets used to secure a loan.
(LLCOTREAAL)
COLLATERAL
2. It is the process of paying a loan over
time in a regular equal payment.
AMORTIZATION
(ARMOITAZNIOT)
3. It’s the money lent specifically for
personal or family purposes.
(ONCUMRES
CONSUMER LANO)
LOAN
4. It is a type of secured loan secured by
a collateral that the borrower is
obliged to pay at specified terms.
MORTGAGE
(OMTRGGEA)
5. It is a money lent specifically for
business purposes.
(UBSSINSE OANL)
BUSINESS LOAN
Introduction
According to Max of the movie The Adventures of
Sharkboy and Lavagirl, “Dream a better dream, then work to
make it real”. If you a have a big dream, you should have an
extra bigger persistence to achieve that dream. If you want to
buy something big and expensive, you have to save for it. If
you want a car, a house, or if you want to start your own
business, you have to deal with it diligently. Right?
Introduction
But in this world of modern business, you have the

option to achieve these dreams or buy what you want
instantly. By just paying a certain amount at a certain
period and interest, you can have the money. Yes, you
are right, we can apply for loans.
OBJECTIVES
After this session, learners are able to:

Define loan and its related terms;
Illustrate business loan and consumer loan; .
Distinguish business loan form consumer loan;

and
Solve problems involving business and
consumer loans.
BUSINESS AND
CONSUMER
LOANS
WEEK 7
DEFINITION OF TERMS
1. Business Loan – money lent specifically for a

business purpose. It may be used to start a
business or to have a business expansion.
2. Consumer Loan – money lent to an individual for

personal or family purpose.
DEFINITION OF TERMS
3. Collateral - assets used to secure the loan. It may

be real-estate or other investments.
4. Term of the Loan – time to pay the entire loan
5. Guarantor – a person who guarantees to pay for

someone else’s financial obligation if the
borrowers fail to do so.
Business Loan versus Consumer Loans
Term of
Business Loan Consumer Loan
Reference
Collateral May require collateral (real- May also require a collateral
estate, other investment,
equipment, fixtures or
furniture)
Guarantor Require the business owner Does not usually require a
to sign as guarantor guarantor
Term of the Shorter-term Longer-term
Loan
Business Loan versus Consumer Loans
Term of
Business Loan Consumer Loan
Reference
Interest Rate Higher interest Lower interest rate.
Documents The lendee has to submit a The lendee may require a
credit report, income tax credit report, bank statements,
returns and the company’s and income tax return. If
financial statement. he/she is employed, a
certificate of employment and
employee pay slips will be
submitted.
EXAMPLES
Directions: Identify
whether the following is a
consumer or business
loan.
Example 1. Mr. Agustin plans to have a
barbershop. He wants to borrow some
money from the bank in order for him to buy
the equipment and furniture for the
barbershop.
Business Loan
Example 2. A couple wants to borrow money from the
bank to finance the college education of their son.
Consumer Loan
Example 3. Mr. Alonzo wants to have some
improvements on their 10-year old house. He wants to
build a new room for their 13-year old daughter. He
will borrow some money from the bank to finance this
plan.
Consumer Loan
Example 4. Mr. Samson owns a siomai food cart
business. He wants to put another food cart on a new
mall in the other city. He decided to have a loan to
establish the new business.
Business Loan
Example 5. Roan has a computer shop. She owns 6
computers. She decided to borrow some money from
the bank to buy 10 more computers.
Business Loan
GROUP ACTIVITY
Create your own or similar real-life situation where
consumer and business loans are applied.
Criteria
Presentation of the output - 5
Mathematical content -
10
Teamwork -
SOLVING PROBLEMS
ON BUSINESS AND
CONSUMER LOANS
(AMORTIZATION AND
MORTGAGE)
DEFINITION OF TERMS
1. Amortization – it is the process of paying off debt

with regular payments made over time.
2. Mortgage – it is a loan from a bank or other
financial institutions that help a borrower purchase
a home or a car.
3. Chattel Mortgage – a mortgage on a movable
property.
DEFINITION OF TERMS
4. Mortgagor – is the one who borrows a mortgage.

5. Mortgagee – is the one who lends a mortgage.
6. Collaterals – are assets that can secure a loan.
7. Fixed-rate mortgage – a type of mortgage where
interest remains constant.
8. Obligation – it is what parties may do under a
contract or terms of agreement.
EXAMPLE 1
Problem: Mario came from a poor family. His parents have

no stable jobs. But due to Mario’s determination, he excelled
and was able to graduate college. After being permanent for
2 years in his work, Mario dreamt of providing a simple and
decent shelter for his family. He went to the bank and
applied for ₱ 1,000,000.00 loan. The bank approved his
application with following terms: 10% down payment, 12%
total interest, and must be paid in full after 5 years.
EXAMPLE 1
a. How much is his mortgaged amount?

b. How much should he have paid after 5 years?
Solution:
a. Down payment = (down payment rate) x (amount of loan
applied)
= (0.10)(1,000,000)
= 100,000
Thus,
Mortgaged amount = (amount of loan applied) – (down payment)
= 1,000,000-100,000
= 900,000
EXAMPLE 1
Solution:
b. Given: P = 900,000 j = 0.12
n=5
Therefore, Mario should have paid ₱1,586,108.00 after 5 years.

EXAMPLE 2 (CHATTEL MORTGAGE)
Problem: A person borrowed ₱1,200,000.00 for the purchase of a

car. If his monthly payment is ₱31,000.00 on a 5-year mortgage,
find the total amount of interest.
Given:
P = 1,200,000
monthly payment = 31,000
EXAMPLE 2
Solution:
The total amount paid is given by:
Total Amount = (31,000)(12months)(5years)
= 1,860,000
Thus, the total interest is the difference between the total amount paid and
the amount of mortgage;
Total Interest = 1,860,000 – 1,200,000
= 660,000
Therefore, the total amount of interest is ₱660,000.00.

EXAMPLE 3
Problem: If a house is sold for ₱3,000,000.00 and the bank

requires 20% down payment, find the amount of the mortgage.
Solution:
Down payment = down payment rate x cash price
= 0.20(3,000,000)
= 600,000
EXAMPLE 3
Solution:
Amount of the Loan = cash price – down payment

= 3,000,000 –
600,000
= 2,400,000
Therefore, the mortgage amount is ₱2,400,000.00

EXAMPLE 4
Problem: Ms. Rosal bought a car. After paying the down
payment, the amount of the loan is ₱400,000 with an interest rate
of 9% compounded monthly. The term of the loan is 3 years. How
much is the monthly payment?
Given: P = 400,000 r = 0.09; m=

12 t=3
n = 36
Find: The regular payment R

EXAMPLE 4
Solution:
The regular payment is ₱12,719.89.

Assessment and Application:
For the assessment and application activity,

please go to your google classroom.
Mam Beng

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GENERAL

The learner is able to decide

The learner illustrates business and consumer loans. (M11GM-IIf-1)

The learner distinguishes between business and consumer loans

The learner solves problems involving business and consumer loans

Directions: Rearrange the jumbled letters to

Hint: these are some of the basic terms

But in this world of modern business, you have the

After this session, learners are able to:

Distinguish business loan form consumer loan;

1. Business Loan – money lent specifically for a

2. Consumer Loan – money lent to an individual for

3. Collateral - assets used to secure the loan. It may

4. Term of the Loan – time to pay the entire loan

5. Guarantor – a person who guarantees to pay for

1. Amortization – it is the process of paying off debt

4. Mortgagor – is the one who borrows a mortgage.

Problem: Mario came from a poor family. His parents have

a. How much is his mortgaged amount?

Therefore, Mario should have paid ₱1,586,108.00 after 5 years.

Problem: A person borrowed ₱1,200,000.00 for the purchase of a

Therefore, the total amount of interest is ₱660,000.00.

Problem: If a house is sold for ₱3,000,000.00 and the bank

Amount of the Loan = cash price – down payment

Therefore, the mortgage amount is ₱2,400,000.00

Given: P = 400,000 r = 0.09; m=

Find: The regular payment R

The regular payment is ₱12,719.89.

For the assessment and application activity,

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