SSS Salary Loan vs Pag IBIG Multi-Purpose Loan

There will come the point in our lives that we'll wind up with an unforeseen expense in the household that will negatively impact our budget plans. If you're a breadwinner, you will definitely be the one to take action in producing the needed amount to settle that extra cost. Assuming you're right now desperate (but you're currently employed!), there are two funding choices that could help you — the Social Security System (SSS) Salary Loan and the Pag-IBIG Multi-Purpose Loan.

To assist you in choosing which will admirably work for your ongoing financial situation, here's the comparison guide between SSS and Pag-IBIG loan offers that will surely educate you about their benefits.

Loan Overview and Objectives

Let's first discuss the similarities between the SSS Salary loan and the Pag-IBIG loan. Both SSS and Pag-IBIG loans offer short-term financial assistance to qualified members. The Pag-IBIG Multi-purpose Loan (also called MPL) is a cash loan that eligible members can avail of to meet their sudden financial needs.

On the other hand, SSS salary loans are cash loans available to employees or individuals/volunteer members to attend to their short-term credit needs. SSS has specified the events where their eligible members can use the loan proceeds. These situations are as follows:

- Small home repairs/ improvements

- Car repairs and maintenance

- Additional business operating fund

- Educational expenses, such as tuition fee, miscellaneous fee

- Acquisition of new furniture, electronic gadgets, and/or appliances

- Payment for credit card, utilities, and other bills

- Extra funds for immediate funds

Pag-IBIG Multi-Purpose Loan or SSS Salary Loan: Which is the Better Option?

Although informal lenders and banks can lend money to borrowers, they may not be the best choice for borrowers who lack assets as collateral. More so, the conditions of these financial institutions may be quite stringent, making the payment terms less favorable to the borrower. Private lenders may also charge higher interest rates.

In contrast, Pag-IBIG and SSS loans are both considered unsecured loans. As a result, you can get a loan without providing collateral. The best part of it — the interest rates are the lowest in the market, even those offered by many banks.

In addition, being able to deduct it from your monthly salary if you are an employed member makes repayment much simpler. Self-employed and voluntary members, on the other hand, are required to pay back their loans at a bank, SSS or Pag-IBIG online application, or payment centers.

Allowable Amount for SSS Loan and Pag-IBIG Fund

SSS Loan Amount

You need to calculate how much you can borrow with the SSS personal loan in order for you to compare it to the Pag-IBIG loan. To start, you need to know the number of your posted SSS contributions as this will determine the amount of your SSS first loan.

There are two SSS loan options:

1. One-month loan: This means that you can receive the average of your most recently posted 12 monthly salary credits (or MSCs) or the applied amount, whichever of the two is lower.

2. Two-month loan: This is calculated as two times the average of your 12 most recent MSCs, aggregated to the next higher monthly salary credit or the amount you applied for, whichever of the two is lower.

The SSS also advises members who are taking out loans that the net SSS salary loan amount would be the sum of the approved loan amount less any outstanding short-term loans from the SSS.

What is the Total Amount for 2nd SSS Loan?

Let's say you want to apply for your second loan through SSS. Your SSS multi-purpose loan application's average last 12 posted monthly salary credits and the number of posted monthly contributions will be used to calculate the loan amount.

For a one-month loan, you need to have at least 36 posted monthly contributions. For a two-month loan, on the other hand, you need to have at least 72 posted monthly contributions.

Pag-IBIG Loan Amount

For your initial loan at Pag-IBIG, you can apply to borrow up to 80% of your total Pag-IBIG regular savings, which includes employee contributions, your employer's contributions, and dividends accumulated over time. This is if you are a qualified member.

The amount of your Pag-IBIG salary loan will be higher. If you meet the eligibility and documentation requirements, and the more money you have saved through Pag-IBIG Regular Savings, the higher it will be.

What is the Total Amount for Pag-IBIG Second Loan?

Should you have an outstanding Calamity or Salary Loan and need to take out a second loan in the organization, the sum you can get will be the difference between 80% of your Pag-IBIG contribution funds and the balance of your Calamity or Salary Loan.

How much is the Loan Interest Rates?

SSS Loan Interest Rates

Interest rates are also one of the factors that must be considered when checking the differences and benefits of the SSS loan compared to the PAG -Big loan. SSS yielded an interest rate of 10% per year. This is smaller than what Pag-IBIG offers. However, you need to take note that the calculation of the interest rate is based on diminishing principal balance, which minimizes interest as the SSS loan is repaid monthly.

Interest will continue to be charged for the unpaid balance until the loan is completely settled. If you have extra funds and plan to pay an extra amount on top of your monthly amortizations, the excess will directly go as a payment to your principal balance.

Pag-IBIG Loan Interest Rates

A Pag-IBIG personal loan has an annual interest rate of 10.5%, which is higher than the SSS rate but still considered to be considerably low. Pag-IBIG claims that dividends are distributed to members as a significant portion of the loan program's revenue.

SSS and PAG-IBIG Loans Requirements

SSS Requirements

While listing the differences and respective benefits of a SSS loan and a Pag-IBIG loan, you should likewise take a look on the requirements to avail the loan. By doing so, you can also say which of the two is more convenient and easier to process.

Eligibility

• If you choose to apply for a one-month loan, you should have 36 consecutive posted monthly contributions. The remaining six (6) months should be within the last 12 months prior to your application.

• If you choose to apply for two-month loan, you should have 72 posted months contributions. The remaining six (6) months should be within the last 12 months prior to your application.

• Updated monthly contribution payments.

• Should not have been awarded the final benefit (e.g.: total permanent disability, retirement, and death).

• Should be under 65 years of age when filing a loan application.

• Should not have been recognized as ineligible to avail the loan due to fraud committed against SSS.

Required Documents

• Filled-out Member Loan Application Form

• Digitized SSS ID or Acknowledgement Stub (Form E6) with any two government-issued IDs; one of these must have latest photo. The organization honors the following IDs:

  - Driver's License

  - PRC ID

  - Latest Passport

  - Tax Identification Number (TIN) Card

  - Seaman's Book

  - OWWA Card

Pag-IBIG Requirements

The topmost consideration here is that you must be an active paying member with at least 24 months of membership savings as well as sufficient and valid proof of income. If you have other existing IBIG-Pag loans, such as a housing or calamity loan, your membership monthly contribution must be updated. Otherwise, you can't avail this loan program.

Required Document

• Original, accomplished Multi-Purpose Loan application form

• Duplicate copy of valid ID

• Copy of proof of income

1. Borrowers who are employed:

Copy of Certificate of Net Pay section attached at the back of your application form (must be completed by your employer) and a photocopy of your most recent pay slip with company's authorized signatory.

2. For self-employed borrowers:

One of the following: duplicate copy of ITR, Official Receipt of tax payment from bank, Audited Financial Statements, Original bank statements/passbook for the last 12 months; Certified True Copy of Transport Franchise; Original Notarized Affidavit of Income; Original Certificate of Engagement from the business owner.

3. For OFWs:

Original Certificate of Employment and Compensation; Employment Contract; photocopy of the employer’s passport/ID, Original ITR filed with the host country or government.

Requirements for Loan Release

- Photocopy of the payroll account (Landbank) or disbursement card (Landbank, United Coconut Planters Bank (UCPB), or Development Bank of the Philippines (DBP)) is required for the release of loan funds through a payroll account.

- Certified by the employer a photocopy of their payroll accounts (LANDBANK) or disbursement card (LANDBANK, UCPB, or DBP) is required for borrowers who applied through their employer.

- For individual applications, present your payroll account (LANDBANK) or disbursement card (LANDBANK, UCPB, or DBP) for verification.

Repayment Process of SSS and Pag-IBIG Loan

SSS Loan

The loan is payable in two years or 24 months in regular monthly scheduled payments. The month-to-month amortization begins the subsequent month following the advance endorsement date, due at the very latest the cutoff time.

Pag-IBIG Loan

Your Pag-IBIG personal loan can be paid off in 36 months, but you can also pay it off in 24 months. It has a first payment that can be deferred, so you can wait a month to get ready for the first payment. When comparing an SSS loan to a Pag-IBIG loan, this feature must be taken into account.

Members who are employed can repay their loan amortization through salary deduction. If you fall into this category of borrower, you must discuss it with your employer. Self-employed people, OFWs, and other individual payors, on the other hand, can repay their loans using Virtual Pag-IBIG or online payment methods, or at any Pag-IBIG branch or approved collecting partner outlet.

What if I Cannot Repay my Loan?

Penalty for SSS Loans

The SSS is very strict about how much it pays back, so be careful about the penalty. If you don't pay your loan's amortization on time, you'll pay a penalty of one percent per month until the loan is fully settled.

Penalty for Pag-IBIG Loan

To avoid a Pag-IBIG loan penalty, make sure to pay your Pag-IBIG loan on time. The loan penalty for Pag-IBIG is 1/20 of 1% of any overdue amount for each day of delay.

Possibility of Loan Renewal

You should also consider how the SSS loan would do in terms of renewals when you are starting comparing the two loan options. The SSS will only allow your loan to be renewed if you have paid at least half of the original principal amount or if at least half of the period has already passed.

The renewal loan amount is larger than or equal to zero, according to the SSS. This is true as long as the previous loan's outstanding sum has already been removed.

Members who have paid the equivalent of six monthly amortizations can renew their Pag-IBIG Multi-Purpose Loan, on the other hand. Only when you meet the requirements will your loan renewal be processed.

Apart from Multi-purpose loans, Pag-IBIG Fund is also a government agency that helps Filipinos own their house and lot in the Philippines. It offers affordable financing terms and partners only with legitimate real estate developers in the country, such as Lumina Homes, in offering affordable house and lot to almost all social classes. Hence, if you're a Pag-IBIG member who is wanting to purchase your real estate investment you can contact us now so we may assist you in finding the affordable house and lot for sale that meets your requirements. On top of that, our accredited sellers could also give you expert advice on how to apply for Pag-IBIG housing loan.