Business and Consumer Loans

GENERAL
MATHEMATICS
Pablo B. Matel
Define Differentia Solve
te
business between problems
and business involving
consumer and business
loans consumer and
loans consumer
loans
General Mathematics Business and Consumer Loans

Business Loan and Consumer Loan
 Loan is a debt provided by one entity (an
individual or an organization) to another entity at
an agreed interest rate.
 Business loan is money lent specifically for a
business purpose.
 Consumer loan is money lent to an individual for

Definition of Terms
 Collateral is an asset used to secure the loan.
 Guarantor is a person who will guarantee the
borrower’s payment of the loan.
 Term of loan is the time to pay the entire loan.

Business Loan vs Consumer Loan
Term of
Business Loan Consumer Loan
Reference
May require a collateral
Collateral (real estate, other Optional
investment, equipment or
furniture)
Guarantor Optional Guarantor is required

(Relatives or co-workers)
Bank Statement, Income Tax
Credit Report, Income Tax Return, Certificate of
Documents Return, Financial Statement Employment, Employee Pay
Slips
Term of Loan Short Long
Interest Rate High Low
Example
Determine whether each of the following situations illustrates
a business loan or a consumer loan.
1. Mr. Manzano plans to have a barbershop. He wants to
borrow some money from the bank for him to buy the
equipment and furniture for the loan
Business barbershop.
2. Margareth is planning to take up Engineering as her college
course. To support her, Mr. And Mrs. Alvar, her parents,
borrowed money from the bank forConsumer
her financial needs.
loan
3. Margarita decided to take her family for a vacation. To
cover the expenses, she decided to apply for a loan.loan
Consumer
Example
Determine whether each of the following situations illustrates
a business loan or a consumer loan.
4. Because of his love for our country, Mr. Razo always conduct an
Independence Day presentation to his barangay. But because of
COVID-19, he got a problem with his business and need extra
money to finance his advocacy. He realized that he needs to
borrow money from the bank to continue his annual Independence
Consumer
Day activity. loan
5. Instead of working as a manager in a certain company, Mr. Cruz
decided to leave his job and put upBusiness
an internetloan
cafe instead. To
Generalfinance his
Mathematics business, he borrowed money from Kabayan Bank.
Business and Consumer Loans
SOLVING PROBLEMS
INVOLVING
BUSINESS LOAN &
CONSUMER LOAN
Definition of Terms
 Amortization is the process of paying off debt
with regular payments made over time.
 Mortgage is a loan from a bank or other financial
institutions that help a borrower purchase a home
or car.
 Fixed-rate mortgage is a type of mortgage

Mortgaged Amount
�� =�� −��

Downpayment
�� =(�� )(�� )


Example 1
If a car loan of ₱1,380,000 requires a 20%
downpayment. How much is the mortgage?

Answer
Given �� =₱1,380,000 0%
:Formula
��=( Downpayment rate)( Amount of loanapplied )

s: �� = Amount of loan applied − Downpayment

Solution: Downpayment

Mortgage Amount

Conclusion: Therefore, the mortgage amount is .

Example 2
Angela borrowed ₱1,200,000 for the purchase of
a condominium. If her monthly payment is
₱29,750 on a 5-year mortgage, find the total
amount of interest.

Answer
Given �� =₱1,200,000 �� =₱2 9,750
: ��=5 years �� =60
Formula ��
��=(Monthly payment )(Number of payments)
s: �� =Total Amount − Mortgage Amount

Solution: Total Amount

Amount of Interest

Conclusion: Thus, the total amount of interest is .

Example 3
Mr. De Guzman borrowed ₱1,000,000 for the
expansion of his business. The rate of interest is
12%. The loan is to be paid in full after three years.
How much is to be paid after three years?
Future Value for Compound

Interest
Answer
Given P = ₱, j = 0.12, n = 3
:Formula:
� = � (1+ �)�
Solution:

Conclusion: Therefore, Mr. De Guzman should have paid after

three years.

Example 4
The 12 quarterly payments of ₱15,000 was made
to pay for a loan at 10% compounded quarterly.
Find the amount of the loan.
Present Value of Simple Annuity

Answer
Given R = ₱, r = 0.1, m = 4, j = 0.025, n = 12
: 1 −(1+ �)−�
Formula: �=�
Solution:
[ � ]

Conclusion: Thus, the amount of loan is .

Example 5
During his STEM high school years, Albert was fond of
experimenting on RC motors. In his engineering years in
college, he creatively thought of experimenting about
perpetual motion that could provide energy to machines.
However, he was short of finances to start this project which is
primarily Filipino-made. AG Resibo Company approached
Albert and offered to lend him a capital of ₱2,000,000 to be
paid in 5 years with 10% monthly interest. Moreover, there is
an outright deduction of ₱100,000 from his applied loan. How
Present payment?
much is his monthly Value of Simple
What isAnnuity
the total amount of
Answer
Monthly payment
Given P = ₱, r = 0.1, m = 12, j = 0.008333333, t = 5, n = 60
: 1 −(1+ �)−� � ��
Formula: �=�

[ �

]
�=
1 −( 1+
�
� )
−�

�=
1 −(1+ �)
−�
Solution:
Conclusion: Therefore, the monthly payment is .

Answer
Total Amount of
Given Interest
�� =₱1,900,000�� =₱ 40,369.38

: ��=5 years �� =60

Formula: ��
��=(Monthly payment )(Number of payments)
�� =Total Amount − Mortgage Amount
Solution: Total Amount

Amount of Interest

Conclusion: Thus, the total amount of interest is .

Practice Time!
Read the problem carefully and answer the question to solve the
problem.
1. PC Yaw Inc. approached Rudy and offered to lend him a
capital for his computer business amounting to
₱300,000 to be paid in 3 years with 12% monthly
interest. How much would be is his monthly payment?
2. Solenn decided to venture in an online business and
decided to go to a financing institution to borrow
₱50,000. If her monthly payment is ₱1,500 on a 5-year
mortgage, how much is the total amount of interest?
Thank You
&
Happy

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GENERAL

General Mathematics Business and Consumer Loans

individual or an organization) to another entity at

an agreed interest rate.

 Business loan is money lent specifically for a

 Consumer loan is money lent to an individual for

General Mathematics Business and Consumer Loans

 Guarantor is a person who will guarantee the

borrower’s payment of the loan.

 Term of loan is the time to pay the entire loan.

General Mathematics Business and Consumer Loans

Guarantor Optional Guarantor is required

with regular payments made over time.

 Mortgage is a loan from a bank or other financial

institutions that help a borrower purchase a home

 Fixed-rate mortgage is a type of mortgage

General Mathematics Business and Consumer Loans

General Mathematics Business and Consumer Loans

downpayment. How much is the mortgage?

General Mathematics Business and Consumer Loans

s: ��������� ������= Amount of loan applied − Downpayment

Conclusion: Therefore, the mortgage amount is .

a condominium. If her monthly payment is

₱29,750 on a 5-year mortgage, find the total

General Mathematics Business and Consumer Loans

Solution: Total Amount

Conclusion: Thus, the total amount of interest is .

expansion of his business. The rate of interest is

12%. The loan is to be paid in full after three years.

How much is to be paid after three years?

Future Value for Compound

Conclusion: Therefore, Mr. De Guzman should have paid after

General Mathematics Business and Consumer Loans

to pay for a loan at 10% compounded quarterly.

Find the amount of the loan.

Present Value of Simple Annuity

General Mathematics Business and Consumer Loans

Conclusion: Thus, the amount of loan is .

General Mathematics Business and Consumer Loans

Conclusion: Therefore, the monthly payment is .

General Mathematics Business and Consumer Loans

: ����=5 years ������ �� ��������=60

Conclusion: Thus, the total amount of interest is .

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s: �� = Amount of loan applied − Downpayment

: ��=5 years �� =60