May 07

If you are a member of the Social Security System and the Home Development Mutual Fund or Pag-IBIG (HDMF), you have various privileges such as short-term loan applications, housing loans, educational loans, and retirement benefits.  You have the option to choose one from the other or maximize both.

Today we are going to feature the similarities and differences between one of the most common loan applications offered by both agencies – salary loan.  Both are popular among employed Pinoy members because both offer lower interest rates and light payment schemes.

If you are thinking of borrowing money from a bank or any other lending facility, it may help to read first on the following facts about SSS and Pag-IBIG salary loans.

What are the requirements when applying for a salary loan?

The primary requirements are that you have to be an active member of either Pag-IBIG or SSS and have paid the minimum contributions prescribed by the agencies.

  • Pag-IBIG requires the following in terms of membership:
    • 24 monthly membership savings;
    • Have paid at least one monthly contribution within the last six months before your loan application date.
    • Any existing Pag-IBIG multi-purpose loan, calamity, or housing loan must not be in default at the time of your new loan application.
  • SSS requires the following in terms of membership:
    • If you are applying for a loan that is worth your one-month salary, you must have paid at least 36 total monthly contributions and at least six monthly contributions within the last 12 months before your loan application date.
    • For two-month salary loans, the minimum requirements are 72 total monthly contributions and 6 monthly contributions within the last 12 months.
    • Make sure that your employer has remitted all your SSS contributions on time. You may check the updates on your contributions online by signing up for a My.SSS account at the SSS website.

How much can you borrow from Pag-IBIG and SSS?

  • Pag-IBIG
    • Amount of loan will depend on your preferred loan amount, loan entitlement or capacity to pay, whichever is lowest.
    • A qualified member borrower may borrow 80% of his total accumulated value (TAV) which consists of all his monthly contributions, employer’s contributions, and accumulated Pag-IBIG dividends.
    • If the borrower has an exsisting calamity loan, Pag-IBIG will deduct the calamity loan’s outstanding balance from the 80% of the TAV.
  • SSS
    • Qualified SSS member borrowers may borrow an amount equal to their one-month salary, up to P15,000.  Those with at least 72 monthly contributions are entitled to a two-month loan worth twice their salary up to P30,000.
    • To determine the loan amount, SSS shall get the average of the loan applicant’s monthly salary for the last 12 months of employment.

What are the loan interest rates and fees?

Interest rates:

  • Pag-IBIG imposes an interest rate of 10.75% per year throughout the loan term.
  • SSS charges a 10% annual interest rate on the outstanding principal balance.

Both agencies base the interest computation on diminished principal balance, which means that the interest becomes lower as the loan gets paid over time.

Loan processing fees:

The SSS deducts a service fee of 1% of the total loan amount; Pag-IBIG does not come with a processing fee.

Late payment penalties:

  • Pag-IBIG charges 0.5% of the unpaid amount for every month of late payment.
  • SSS charges 1% per month of late payment.

How long does it take for the agencies to process salary loan applications?

Pag-IBIG takes about three to five working days to be approved and released, while SSS takes about two to three weeks, whether applied online or over-the-counter at an SSS office.

Should the agencies find any discrepancy in your account, the approval and release of proceeds might take even longer.

 How will the loan proceeds be released to the borrower?

  • Pag-IBIG
    • ATM withdrawal using a prepaid or cash card (from Citibank, Development Bank of the Philippines, or Landbank);
    • Bank account via Landbank’s Payroll Credit Systems Validation (PACSVAL) facility;
    • Check payable to the borrower.
  • SSS
    • Check or ATM withdrawal through their UMID card (you need to have your UMID card activated for ATM functionality.

What are the repayment terms?

  • Both agencies offer a maximum loan term of 24 months, starting on the second month from the loan approval date.
  • Both are paid monthly via salary deduction.  If the borrower is self-employed or is a voluntary member, loan installment payments may be done at any Pag-IBIG or SSS branch or any accredited bank or payment center.

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References:

www.sss.gov.ph

www.pagibigfund.gov.ph

 

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