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SSS Salary Loan vs Pag-IBIG Multi-Purpose Loan: Which is Better?

Rouselle Isla

Rouselle Isla

Last updated June 30, 2023

At some point, you’ll find yourself with an unexpected expense that won’t fit your budget. If you’re currently cash-strapped, two financing options may help: the SSS Salary Loan and the Pag-IBIG Multi-Purpose Loan. 

To help you decide which will work well for your current situation, here’s an SSS loan vs Pag-IBIG loan comparison guide that covers all you need to know about these loans.

SSS Loan vs Pag-IBIG Loan: An Overview

sss loan vs pag-ibig loan - overview

Let’s start this SSS Loan vs Pag-IBIG Loan comparison by discussing their similarities. Both SSS and Pag-IBIG loans provide short-term financial assistance to eligible members.

The Pag-IBIG Multi-Purpose Loan or MPL is a cash loan that qualified members may apply for to fund any immediate financial need.[1]

The SSS Salary Loan, on the other hand, is a cash loan given to an employed or self-employed/voluntary member to help them meet short-term credit needs.[2]

Here’s a list of situations where you can use your loan proceeds:

  • Minor home improvements
  • Car repairs
  • Additional capital for your small business
  • Education-related expenses, such as tuition fee
  • Purchase of furniture, electronic gadgets, or appliances
  • Payment of credit card bills and similar utilities
  • Other needs that require cash

Why Get an SSS Salary Loan or Pag-IBIG Multi-Purpose Loan?

While banks and informal lenders can loan borrowers some money, they may not be the best option for those who don’t have assets for collateral. Also, the payment terms may not be borrower-friendly, as the conditions can be quite strict. In addition, interest rates can be higher for private lenders.

Fortunately, loans from the Pag-IBIG and SSS are unsecured. This means you don’t have to put up collateral to avail of a loan. Interest rates are also lower than what many banks offer.

Furthermore, repayment is much easier, as it can be deducted from your salary if you’re an employed member. However, self-employed and voluntary members must repay their loans at a bank, online application, or payment center.

How Much Can I Borrow from SSS and Pag-IBIG?

sss loan vs pag-ibig loan - how much can i borrow

💰 SSS Loan Amount

Since you’re comparing the SSS loan vs the Pag-IBIG loan, you need to know how much you can borrow with the SSS personal loan. Your SSS first loan amount will depend on your number of posted SSS contributions.

You have two SSS loan options:

  • One-month loan: This is equivalent to the average of your latest posted 12 monthly salary credits (MSCs) or the amount applied for, whichever is lower.
  • Two-month loan: This is equivalent to twice the average of your latest posted 12 MSCs, rounded up to the next higher monthly salary credit or amount applied for, whichever is lower.[3]

The SSS also reminds borrowing members that the net SSS salary loan amount will be the difference between the approved loan amount and the outstanding balance of any existing SSS short-term loans.

What is the SSS 2nd Loan Amount

Suppose you plan to apply for your 2nd loan in SSS. The loan amount will be based on the average latest posted 12 monthly salary credits and the number of posted monthly contributions within the last 12 months of your SSS multi-purpose loan application. 

You must have at least 36 posted monthly contributions for a one-month loan. On the other hand, you must have at least 72 posted monthly contributions to be eligible for a two-month loan.

💰 Pag-IBIG Loan Amount

How much is the Pag-IBIG first loan amount? If you’re a qualified member, you can borrow up to 80% of your total Pag-IBIG Regular Savings, composed of your monthly contributions, your employer’s contributions, and the dividends accumulated over time.

Simply put, the more money you’ve saved through Pag-IBIG Regular Savings, the higher the Pag-IBIG salary loan amount (granted that you meet the eligibility and documentary requirements).

What is the Pag-IBIG 2nd Loan Amount?

If you have an outstanding Calamity or Salary Loan and want to take out a 2nd loan in Pag-IBIG, the amount you can borrow will be the difference between 80% of your total Pag-IBIG Regular Savings and the balance of your Calamity or Salary Loan.

Apply for a UnionBank personal loan via Moneymax

What are the Loan Interest Rates?

👉 SSS Loan Interest Rates

Interest rates are also among the factors you need to consider when checking the differences and benefits of an SSS loan vs a Pag-IBIG loan. The SSS charges an interest rate of 10% per annum; this is lower compared to what Pag-IBIG offers.

However, it’s worth noting that the interest rate computation is based on diminishing principal balance, which reduces interest as the SSS loan is repaid monthly.

The interest will continue to be charged on the outstanding principal balance until the loan is fully paid. When you pay more than your monthly amortization, the excess will go toward the payment of your principal balance.

👉 Pag-IBIG Loan Interest Rates

The interest rate of a Pag-IBIG personal loan is 10.5% per annum, which is higher than that of SSS but still considered relatively low. Pag-IBIG says that a significant part of the income they earn from the loan program goes back to the members as dividends.

What are the Requirements?

sss loan vs pag-ibig loan - requirements

👉 SSS Loan Requirements

When comparing an SSS loan vs a Pag-IBIG loan, you must also look into the requirements. That way, you’ll know which has a set of requirements that’s easier to fulfill.

Eligibility Requirements

  • If you’re applying for a one-month loan, you must have 36 posted monthly contributions. Six of these should fall within the last 12 months before your application.
  • If you’re applying for a two-month loan, you must have 72 posted monthly contributions. Six of these must be within the last 12 months before your application.
  • Updated contribution payments
  • Should not have been granted the final benefit, which includes total permanent disability, retirement, and death.
  • Must be under 65 years old at the time of your application
  • Should not have been disqualified due to fraud committed against SSS

Document Requirements

  • Member Loan Application Form[4]
  • Digitized SSS ID or E-6 (Acknowledgement Stub) with any two valid IDs; one of these must have a recent photo. Some of the valid IDs accepted include: 
    • Driver’s License
    • PRC ID
    • Passport
    • Tax Identification Number (TIN) Card
    • Seaman's Book
    • OWWA Card

👉 Pag-IBIG Loan Requirements

First, you should be an active contributing member with at least 24 months' worth of membership savings, as well as sufficient and valid proof of income.

If you have other loans with Pag-IBIG, such as a housing or calamity loan, your payment records must be updated. Otherwise, you won’t qualify.

Document Requirements

  • Original Multi-Purpose Loan Application Form[5]
  • Photocopy of valid ID (Passport, Driver’s License, PRC ID, Police Clearance, NBI Clearance, Voter’s ID, Postal ID, among many others)
  • Proof of income
    • For employed borrowers: Certificate of Net Pay section at the back of your application form (to be filled out by your employer) and photocopy of your latest pay slip validated by the company’s authorized signatory

    • For self-employed borrowers: Any of the following: Photocopy of ITR, Audited Financial Statements, and Official Receipt of tax payment from bank supported with DTI Registration Certificate and Mayor’s Permit/Business Permit; Original bank statements or passbook for the last 12 months (if your income comes from pension and foreign remittance); Certified True Copy of Transport Franchise issued by the government (LGU for tricycles and LTFRB for other PUVs); Original Certificate of Engagement from the business owner; Original Notarized Affidavit of Income

    • For OFWs: Employment Contract (one photocopy of the Employment Contract Between Employee and Employer or one original copy of the POEA Standard Contract), Original Certificate of Employment and Compensation (CEC) supported with a photocopy of the employer’s ID and passport, Original Income Tax Return filed with the host country or government

Requirements for Loan Release

  • For the release of loan proceeds via a payroll account: *Photocopy of the payroll account or disbursement card**
  • For borrowers who applied through their employer: Photocopy of payroll account* or disbursement card** duly certified by the employer.
  • For individual applications, present your payroll account* or disbursement card** for authentication.

*Payroll accounts using LANDBANK accounts for disbursement


How Can I Repay my SSS or Pag-IBIG Loan?

sss loan vs pag-ibig loan - how can i repay my loan

👉 SSS Loan Repayment Terms

The loan is payable within two years, meaning there will be 24 monthly installments. The monthly amortization starts on the second month following the loan approval date, due on or before the deadline.

Note that the SSS has loan payment schedules for both regular and voluntary members:


If the 10th digit of the 13-digit ER/HR number ends in:Deadline of Payment (following the applicable month)
1 or 210th day of the month
3 or 415th day of the month
5 or 620th day of the month
7 or 825th day of the month
9 or 0Last day of the month


👉 Pag-IBIG Multi-Purpose Loan Repayment Terms

You can pay off your Pag-IBIG personal loan in 36 months, but you still have the option to pay it in 24 months. It comes with a deferred first payment, meaning you can delay it for a month to prepare for the actual first payment. You must note this feature when comparing an SSS loan vs a Pag-IBIG loan.

Employed members can repay their loan amortization through salary deduction. If you fall under this borrower category, you must discuss it with your employer.

On the other hand, self-employed individuals, OFWs, and other individual payors can repay their loans through Virtual Pag-IBIG or online payment channels, or at any Pag-IBIG branch or accredited collecting partner outlet. 

What Happens if I Can't Repay my Loan?

sss loan vs pag-ibig loan - what happens if i can't repay

💸 SSS Loan Penalty

The SSS is quite strict regarding repayments, so be wary of the penalty. When you have a loan amortization that is not remitted on time, you’ll incur a penalty of 1% per month until the loan is fully paid.

💸 Pag-IBIG Salary Loan Penalty

For Pag-IBIG, the loan penalty is worth 1/20 of 1% of any unpaid amount for every day of the delay. So make sure to pay your Pag-IBIG loan on time to avoid a Pag-IBIG loan penalty.

Can I Renew My SSS Loan? How about My Pag-IBIG Loan?

When comparing the SSS loan vs the Pag-IBIG loan, you also need to know how the SSS loan will fare as far as renewals are concerned. The SSS will allow your loan renewal only after you have paid at least 50% of the original principal amount or at least 50% of the term has already lapsed.

According to the SSS, the renewal loan amount is greater than or equal to zero. This is as long as the outstanding balance of the previous loan is already deducted.

As for Pag-IBIG, members can renew their Pag-IBIG Multi-Purpose Loan after paying an equivalent of six monthly amortizations. Your loan renewal will be activated only when you meet all the qualifications listed by the Pag-IBIG Fund and submit all the necessary documents.

The outstanding balance of your first or existing loan will be deducted from the proceeds of your new loan.

Summary: SSS Loan vs Pag-IBIG Loan

To summarize, here are the key differences between an SSS Loan and a Pag-IBIG Loan:

sss loan vs pag-ibig loan - what are the differences

The Pag-IBIG Loan has easier eligibility requirements in terms of the number of required contributions. You can also enjoy faster loan processing and longer repayment terms. It also doesn’t charge a servicing fee. 

However, the SSS Loan offers lower interest rates and higher loan amounts, especially if you have made more than 72 contributions.  

Related reading:

Final Thoughts

You should thoroughly compare the SSS loan vs the Pag-IBIG loan before applying, so you’ll know which of the two can better match your needs.

The SSS Loan has a lower interest rate and is more flexible regarding valid IDs and documents. However, it has much stricter rules on penalties. It even comes with a service fee.

The Pag-IBIG Multi-Purpose Loan, on the other hand, may have several requirements and even a higher interest rate, but it doesn’t have a processing fee. The penalty for failure to pay the amortization is not as hefty as the SSS loan.

Each has its benefits and drawbacks, so carefully study its offerings and requirements. It all boils down to the number of contributions you’ve made. Make sure to keep your records updated.

Compare Personal Loans at Moneymax!

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Rouselle has over eight years of writing experience in the personal finance niche. She has written feature stories, articles, and how-to guides on various personal finance and trending lifestyle topics. Before that, she briefly worked in banking and was a licensed life insurance advisor. When not writing, Rouselle likes to read books and binge-watch films and series. Follow Rouselle on Linkedin.


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