GenMath

• The most accessible way to acquire a financial product is bank.
• A bank is a licensed financial institution that offers various types of loans and receives deposits.
• LOAN – a sum of money that is borrowed from a lending institution with the promise

  to pay back with interest over pre-determined period of time.
• There are two types of loan namely the business loan and consumer loan.
• CONSUMER LOAN – is money lent to an individual for personal or family purpose.
• Types of Consumer Loan

  Home Loan

  Car Loan

  Personal Loan
• Home Loan - is a contract between a borrower and a lender that allows someone to borrow money to buy a house, apartment, condo, or other livable property.
• A home loan is typically paid back over a term of 10, 15 or 30 years.
• Car Loan - A car loan (also known as an automobile loan, or auto loan) is a sum of money a consumer borrows in order to purchase a car
• Personal Loans – a type of loan with no specific purpose. (Ex: credit card, educational purposes,etc.)
• BUSINESS LOAN – money lent specifically for a business purpose. It may be used to

  start a business or to have a business expansion.
• Identify:

  A) Collateral

  B) Guarantor

  C) Documentation

  D) Terms

  E) Follow up

  F) Business Loan

  G) Consumer Loan

  
• Mr. Cruz plans to have a bakeshop. He wants to borrow some money from the

  bank in order for him to buy baking equipment needed to start his bakery

  business.

  Business Loan
• For the purchase of an SUV worth P1,100,000.00, the bank requires a

  minimum amount of 25% down payment.

  Consumer Loan
• A house and lot has a cash value of P 800,000.00. The bank offers a minimum

  amount of 20% down payment.

  Consumer Loan
• Ms. Guting owns a siomai house business. Since her business is doing good,

  she wants to put another siomai house in the city . She decided to have a loan

  to establish the new branch of her business.

  Business Loan
• Mr. Santos obtained a condominium unit loan worth P2,500,000.00.

  He has a monthly payment of P28,100.00 for 20 years.

  Consumer Loan
• The gradual extinction of loan over a period of time by means of sequence of regular or equal payments as to principal and interest due at the end of equal intervals of time is known as amortization.
• Amortization Method – method oy paying a loan (principal and interest) on installment basis, usually of equal amounts at regular intervals
• Amortization Schedule - is a complete table of periodic loan payments, showing the amount of principal and the amount of interest that comprise each payment until the loan is paid off at the end of its term.
• Chattel Mortgage – a mortgage on a movable property (Example 2: Example of property used could be a boat, jewelries, paper properties such as stocks, bonds or a car title)
• Mortgage – a loan secured by a collateral, that the borrower is obliged to pay at specified terms (Example 1: Housing Loan: If a person wants to acquire a house and lot and plans to use the bank to finance it, the title of the house will not be given to the person, unless he will pay the bank in full with the interest)
• Collateral – assets used to secure the loan. It may be a real-estate or other investments. (In example 1, the house and lot is the collateral, that’s why the title of the house is not directly given to the borrower, unless he will pay the bank in full)
• Outstanding Balance – any remaining debt at a specified time
• Formulas

  
• More Formulas

  
• Consumer loans are for individuals, personal or family purpose
• Business loans are for business
• Consumer and business loans may require a collateral
• Consumer loans do not require a guarantor
• Business loans require the business owners to sign as guarantors
• guarantor - a person who agrees to guarantee the payment of a debt
• consumer loans - credit report, tax reports and company's financial statement
• business loans - credit report, bank statements, income tax return, certificate of employment and employee pay slips
• the term of the business loan is generally shorter than the consumer loan
• the interest rate for business loan is usually higher than that for the consumer loan
• A = time
• B = R / Periodic Payment
• D = B - C or periodic payment - interest
• C = PV(i) or E(i)