What are the Differences Between Pag-IBIG Multi-Purpose and SSS Salary Loans?

by Venus Zoleta, on category "Government Services,Money Matters"

December 19, 2017


Pag-IBIG Loans and SSS Salary Loans | MoneyMax.ph
For cash-strapped Pinoys, the Pag-IBIG Fund and SSS Salary Loans are among the top-of-mind choices when it comes to borrowing money. These government-issued personal loans offer low interest rates and convenient repayment methods. Getting a personal loan is also a great way to maximize your membership with these government agencies.
Pag-IBIG multi-purpose loans provide short-term financial assistance to more than 2 million members every year. They can be used to pay for a wide range of expenses, including education, home improvement, health, and livelihood.
On the other hand, SSS salary loans are cash loans designed to meet immediate financial needs of qualified SSS members.
Are you choosing between these two government loans to borrow money? It’s a good idea to compare them first to know their differences and find out which one suits you better.
To help you make the right decision, here is a quick look at the two government-issued personal loans based on their eligibility requirements and features.

What are the Pag-IBIG and SSS Loan Requirements?

loan application form

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The first thing you have to check is whether you qualify or not for a personal loan from Pag-IBIG or SSS. Of course, you have to be an active member to avail of a government loan. Also, you must have paid the minimum contributions and meet other conditions set by the loan provider.

Pag-IBIG loan requirements

You’re eligible for a Pag-IBIG salary loan if you meet the required minimum of 24 monthly membership savings. Also, you should have paid at least one monthly contribution within the last six months before your loan application date.
If you have an existing Pag-IBIG multi-purpose, calamity, or housing loan, make sure it isn’t in default before you apply for an MPL.

SSS loan requirements

The required minimum monthly contributions to qualify for an SSS salary loan is a bit longer than that of Pag-IBIG.
If you’re applying for a loan 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.
Even if you meet these requirements, you might be disqualified from the SSS loan if your employer isn’t remitting your SSS contributions on time. You can check the status of your contributions online by signing up for a My.SSS account at the SSS official website.
In addition, an SSS loan applicant may not be approved if he is over 65 years old, has received final benefits (e.g., retirement, total permanent disability, etc.), and has committed fraud against SSS.

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

Pag-IBIG loan amount

The amount you can borrow from the Pag-IBIG Fund will depend on your preferred loan amount, loan entitlement, or capacity to pay, whichever is the lowest.
In terms of loan entitlement, you can borrow 80% of your total accumulated value (TAV). The TAV consists of all your monthly contributions, employers’ contributions, and accumulated Pag-IBIG dividends.
But the Pag-IBIG loan amount is lower if you have an existing calamity loan. The Pag-IBIG Fund will deduct your calamity loan’s outstanding balance from the 80% of your TAV.

SSS loan amount

SSS members with at least 36 monthly contributions can 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.
SSS computes the actual loan amount by getting the average of the loan applicant’s monthly salary for the last 12 months of employment.

What are the Pag-IBIG and SSS Loan Interest Rates and Fees?

Interest rates

The Pag-IBIG Fund charges an interest rate of 10.75% per year throughout the loan term.
On the other hand, SSS imposes a 10% annual interest rate on the outstanding principal balance. The interest computation is based on diminished principal balance, which means the interest becomes lower as the loan gets paid over time.

Loan processing fees

The Pag-IBIG multi-purpose loan doesn’t come with a processing fee, while the SSS deducts a service fee of 1% of the total loan amount for each SSS salary loan processing.

Late payment penalties

Compared to personal loans issued by commercial banks, government loans charge lower penalties for delayed loan repayments. For Pag-IBIG multi-purpose loans, it’s 0.5% of the unpaid amount for every month of late payment. For SSS salary loans, the penalty is 1% per month.

How Long Does it Take for Pag-IBIG and SSS to Process Loans?

Aside from the benefits and fees, it’s also important to know the loan processing times. The sooner your personal loan is released, the better you can meet your immediate financial needs.
If you apply for a Pag-IBIG multi-purpose loan, you’ll have to wait for at least three to five working days. It might take several days longer if your loan will be released via check or if you have records with other Pag-IBIG branches.
SSS salary loans take longer to process at around 2 to 3 weeks, whether you apply online or at an SSS branch.

How Do Pag-IBIG and SSS Release a Loan?

pag-ibig multi-purpose loan
Instagram photo by @lovelovemajo
Pag-IBIG multi-purpose loan borrowers can choose from these loan release modes:

  1. ATM withdrawal using a prepaid or cash card (from Citibank, Development Bank of the Philippines, or Land Bank)
  2. Bank account via Land Bank’s Payroll Credit Systems Validation (PACSVAL) facility
  3. Check payable to the borrower

SSS salary loans

Instagram photo by @aprilramoscabel


SSS borrowers can choose either check or ATM withdrawal through their Unified Multi-Purpose ID (UMID) card. You need to have your UMID card activated for ATM functionality.

What are the Repayment Terms of Pag-IBIG and SSS Salary Loans?

The personal loans from Pag-IBIG and SSS have the same loan terms and grace periods. They require repayment over 24 months, starting in the second month from the loan approval date.
Both Pag-IBIG and SSS salary loans are generally paid monthly via salary deduction. For self-employed or voluntary members, monthly installments can be paid to any Pag-IBIG or SSS branch or any accredited banks and payment centers.

Final Thoughts

Which is the better personal loan to take: a Pag-IBIG Multi-Purpose Loan or an SSS Salary Loan? That depends on your specific needs and financial situation. To find out which one suits you better, check and compare the features of these salary loans.

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