SSS Salary Loan Interest Rate Is Not As Low As You Think

Updated 2012:  

Finally, the SSS improved its salary loan program! Go to our article on the improved SSS salary loan program.


January 23, 2011:

The SSS salary loan interest rate is not as cheap as we think.

It’s important that we remember this so we don’t take our SSS loan lightly, and so that we don’t borrow just to buy things we don’t really need.

In my previous workplace, some of my co-workers borrow money from the SSS thinking the loan is a pure benefit. They spend it all to celebrate their birthdays or to buy fancy gadgets/appliances.

At first glance, the 10 percent annual interest rate is low, that it’s not even 1 percent a month. But if you actually compute the total cost of the SSS loan, the total interest taken from the borrower is higher than 10 percent.  And there’s still the 1 percent service fee to be considered.

Why? It’s because SSS does not give you the total amount of your loan, as posted in the Loan Amount box. SSS deducts immediately the total interests for the first 12 months.

For example, pag ang loan amount mo ay 20,000 pesos payable in 2 years, SSS doesn’t give you the whole 20,000. It deducts the first-year interest and the one-percent service fee, so you get only about 18,228 pesos. In reality, the total interest you pay would be nearly 4,000 pesos.

I-compare natin sa Credit-to-Cash loan ng BPI Classic Card. (I use BPI as an example, but there are others with similar or lower rates.)  If you borrow 20,000 pesos, you really get 20,000 pesos, and the total interest you would pay for 24 months is about 3,840 pesos.

What I’m really trying to say is:

Although the SSS salary loan interest rate is lower than many others such as pawnshop rates and other bank personal loan rates, hindi pa rin siya ganong kababa.

So, we should not take SSS loans lightly, thinking that they’re super low-cost loans.  We should use them for very important things.

Related Article:   Low Interest Personal Loans in the Philippines


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  1. Hi, what if I lost the voucher needed to be given to our hr department. Had no idea it should be given to hr. Didn’t read it. What’s the alternative that I can give to hr so they can deduct my loan payment through payroll. thanks!

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