117777

General
Mathematics
Quarter 2 –Module 5
Business and Consumer
Loans
General Mathematics – Grade 11
Alternative Delivery Mode
Quarter 2 – Module 5: Business and Consumer Loans

First Edition, 2020

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Published by the Department of Education

Secretary: Leonor Magtolis Briones
Undersecretary: Diosdado M. San Antonio

Development Team of the Module

Writers: Sheryl B. Muring
Lorna B. Abellana

Editors: Marlon L. Jala Ph D

Elvira I. Jabonillo Ph D
Pureza V. Galagar

Management Team: Bianito A. Dagatan EdD, CESO V

Schools Division Superintendent

Casiana P. Caberte PhD

Assistant Schools Division Superintendent

Felix C. Galacio Jr. PhD

EPS, Mathematics

Josephine D. Eronico PhD

EPS, LRMDS

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Illustrating Business and Consumer Loans
 1

Learning Competencies: Illustrates business and consumer loans. (M11GM—IIf-1)

Distinguishes between business and consumer loans
( M11GM-IIf-2)
Solves problems involving business and consumer
loans (amortization, mortgage) ( M11GM-IIf-3)

At the end of the lesson, you are expected to:

 illustrate business and consumer loans
 distinguish between business and consumer loans
 solve problems involving business and consumer
loans (amortization, mortgage)

What is it

 Loan is a financial obligation of paying someone a certain amount for the

use of his or her money.
 Business Loan is a money lent specifically for a business purpose. It may be
used to start a business or to have a business expansion.
 Consumer Loan is a money lent to an individual for personal, family or
household purposes.
 Collateral is an assets used to secure the loan. It may be real-estate or
other investments.
 Term of the Loan refers to a particular time to pay the entire loan

EXAMPLES: Identify whether the following is a business or consumer loan.

1. Mr. Baldemore 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.
Answer: Business loan

2. Mr and Mrs Menesis wants to borrow money from the bank to finance the
college
education of their son.
Answer: Consumer loan

3. Mr. Bulala renovated his house for P80,000. This was made possible because of an
approved loan worth P75,000.
Answer: Consumer loan

4. Lilian has a computer shop. She owns 10 computers. She decided to borrow
some money from the bank to buy 10 more computers.
Answer: Business loan
 What’s More

Directions: Identify whether the following statements illustrates a business or

a consumer loan.
1. Mr. Lim wants to have another branch for his cell phone repair shop.
He decided to apply for a loan that he can use to pay for the rentals of
the new branch.
2. Mr. Trillas runs a trucking business. He wants to buy three more trucks
for expansion of his business. He applied for a loan in a bank.
3. Mrs. Alonzo decided to take her family for a vacation. To cover the
expenses, she decided to apply for a loan.
4. Glenn decided to purchase a condominium unit near his workplace.
He got a loan worth P2,000,000.

Lesson
Distinguishing Business and Consumer Loans
2

What is it

Consumer loans are loans given to individuals for personal or family purpose
while business loans are loans for businesses. Consumer loans and business loans
may require collateral. The collateral for both loans may be real estate or other
investments. For business loans, they can use equipment, fixtures or furniture as
collateral. Consumer loans do not usually require a guarantor.

Business loans require the business owners to sign as guarantors. For

consumer loans, the bank or the lending institution may require a credit report,
bank statements, and an income tax return, and if the lendee is employed, a
certificate of employment and employee pay slips. For business loans, the lendee
has to submit a credit report, income tax returns and company’s financial
statement. The term of the business loan is generally shorter than the consumer
loan. The interest rate for the business loan is usually higher than that for the
consumer loan

What’s More
Directions: Differentiate business loan from consumer loan. In terms of the
following
Business Consumer
1. Terms of loan
2. Interest rate
3. Basic Requirement
4. Collateral
 Lesson Solving Problems involving Business and Consumer
3 Loans

What is it
DEFINITION OF TERMS

 Amortization Method is a method of paying a loan (principal and interest)

on instalment basis, usually of equal amounts at regular intervals
 Collateral is an assets used to secure the loan. It may be a real-estate or
other investments
 Mortgage is a loan, secured by a collateral, that the borrower is obliged to
pay at specified terms.
 Chattel Mortgage is a mortgage on a movable property
 Collateral is an assets used to secure the loan. It may be a real-estate or
other investments
 Outstanding Balance is any remaining debt at a specified time

EXAMPLES ON AMORTIZATION PROBLEM

1. Mr. Garcia borrowed P1, 000,000 for the expansion of his business. The
effective rate of interest is 7%. The loan is to be repaid in full after one year.
How much is to be paid after one year?
SOLUTION:
Given: P = 1,000,000; j = 0.07; n=1
Find: F
F = P (1+ j) n = 1,000,000(1+ 0.07)1 = 1,070,000
Therefore, an amount of P1, 070,000 must be paid after one year.

2. A consumer loan worth P80,000 is to be repaid in 12 months at 8%

convertible monthly. How much is the monthly payment?
SOLUTION:
i 12 0.08
Given: P = P80,000 i(n)= 0.08 j= = =0.0067 n =
12 12
12
Find: the regular payment R
P 80,000
R=
1−(1+ j) = 1−(1+ 0.0067)−12 = 6,961.04
−n

j 0.0067
The monthly payment is P 6,961.04

EXAMPLES ON MORTGAGE PROBLEM

Solve the following problems
1. If a house is sold for P 3,000,000 and a bank requires 20% down
payment, find the amount of mortgage.
SOLUTION:
Down payment = down payment rate x cash price
= 0.20 (3,000,000)
= 600,000
 Amount of loan = cash price – down payment
= 3,000,000 – 600,000
= 2,400,000 Thus, the mortgage amount is
P2,400,000.

2. Xandrea borrowed some money from a bank that offers an interest rate of
12%
compounded monthly. His monthly amortization for 5 years is P11,122.22.
How
much is the outstanding balance after the 12th payment?
SOLUTION:
Given: P=11,122.22
12
i =0.12
i 12 0.12
j= = =0.01
12 12
k =12
n−k =48 since only 48 payments remain
Find: present value of 48 future payments
( since there are 48 payments left)

[ ] [ ]
−(n−k)
Bk = R 1−( 1+ j ) 1−( 1.01 )−48
= 11,122.22 = 422,354.73
j 0.01
The outstanding balance is 422,354.73

What’s More

Solve the following problems then show your solution.

1. A business loan of P2, 500,000 is to be repaid in full after 3 years. If

the interest rate is 5% per annum. How much should be paid after 3 years?

2. Mr and Mrs Dialel purchase a house and lot worth P4,000,000. They pai
a down payment of P800,000. They plan to amortize the loan of P3,200,000 by
paying monthly for 20 years. The interest rate is 12% convertible monthly. How
much
is the monthly payment?
P
R= −n
Hint: use 1−(1+ j)
j

3. Suppose that a condominium unit is purchased for P2,800,000 and the

bank requires 30% down payment, how much is the mortgage amount?

4. Lyzanette and her family acquired a loan amounting to P2,000,000. Her

monthly amortization is P21,064.48 for 25 years. The interest rate is12%
convertible monthly. Find the amount of interest.
 Hint: use Bk = R
[ 1−( 1+ j )−(n−k)
j ]

Assessment

Directions: Read each item carefully, analyse each problem/situation and choose
the correct answer among the given choices. Write your solution if necessary.
1. Loans given to individuals for personal or family purpose.
a. Business Loans b. Consumer Loans
c. Collateral d. Outstanding Balance

2. Identify which of the following situations show a business loan.

a. Roan has a computer shop. She owns 6 computers. She decided to borrow
some money from the bank to buy 10 more computers.
b. Glenn decided to purchase a condominium unit near his workplace. He
got a loan worth P2,000,000.00.
c. Mr. Galang purchased a renovated house for P80,000.00. This was made
possible because of an approved loan worth P75,000.00
d. Mr. & Mrs. Craig wants to borrow money from the bank to finance the
college education of their son.

3. Mortgage on a movable property.

a. Chattel mortgage b. Fixed- ratemortgage
c. Collateral d. Balance
4. Mr. Yuson obtained a 20-year mortgage for P2,200,000. If his monthly payment
is P18,500 , how much is the total interest? 1.
a. P2,420,000 b. P2,240,000 c. P2,400,000 d. P2,400,200

5. If a house is sold for P3,000,000 and the bank requires 20% down payment,
find the amount of the mortgage.
a. P2,400,000 b. P2,600,000 c. P2,800,000 d. P3,000,000

6. Amelia borrowed P1,200,000 for the purchase of a car. If his monthly payment
is P31,000 on a 5-year mortgage, find the total amount of interest.
a. 600,000 b. 660,000 c. 660,600 d. 666,600

7. A loan of P200,000 is to be repaid in full after 3 years. If the interest rate is 8%

per annum. How much should be paid after 3 years?
a. P521,942 b. P251,942 c. P215,492 d. P512,492
8. A car dealer offers a 15% down payment for the purchase a car. How much is
the mortgaged amount if the cash value of the car is P1,500,000?
a. P1,752,000 b. P1,572,000 c. P1,257,000 d. P1,275,000

9. If a condominium is purchased for P5,700,000 and the bank requires 30%

down payment, how much is the mortgaged amount?
a. P3,990,000 b. P3,099,000 c. P3,909,090 d. P3,990,090

10. A family obtained a P1,000,000 mortgage. If the monthly payment is P38,000

for four years, how much is the total interest paid?
a. P842,000 b. P842,200 c. P824,000 d. P842,200

Answer Sheet

Name: ______________________Grade & Section: ________ Score: _______

Quarter 2 – Module 5
Lesson 1
What’s More
1.
2.
3.
4.

Lesson 2
What’s More
1.
2.
3.
4.

Lesson 3 Assessment
What’s More 1.
1. 2.
2. 3.
3. 4.
4. 5.
6.
7.
8.
9.
10.
 Answer Key

Quarter 2 - Module 5

Lesson 1

What’s More

1. Business loan
2. Business loan
3. Consumer loan
4. Consumer loan

Lesson 2

What’s More

Business Consumer
1. Terms of loan commonly shorter usually longer
2. Interest rate higher interest rate Lower interest rate
3. Basic Requirement Principal owners of the Usually does not
business serve as the require a guarantor
guarantors of the loan
4. Collateral Equipment, fixtures, or Real estate or other
furniture as collateral investments

Lesson 3 Assessment

What’s More 1. B 6. B

1. P 2,540,991 2. A 7. B
2. P 35,234.76 3. A 8. D
3. P 1, 960,000 4. B 9. A
4. P17,551.28 5. A 10. C
References

General_Mathematics_Learners_Material_De.pdf
Gen%20Math%20TG.pdf

Fernando B. Origenes, et al. 2016. Next Century Mathematics. Quezon City:

PHOENIX PUBLISHING HOUSE, INC.

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