How Are Interest and Penalties Reflected in the SSS Salary Loan Statement?
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How Are Interest and Penalties Reflected in the SSS Salary Loan Statement?
If you’ve ever checked your SSS Salary Loan statement, you’ve probably noticed terms like interest, penalty, and principal balance. Many members ask: “Bakit parang lumalaki ang balance kahit nagbabayad naman ako?”
Understanding how SSS calculates interest and penalties helps you avoid surprises and manage your payments wisely — especially if you’re a new borrower or on maternity leave trying to keep your SSS account active.
💡 Quick Overview: How the SSS Salary Loan Works
The Social Security System (SSS) offers a Salary Loan to employed, self-employed, and voluntary members who need short-term financial help. It’s based on your Average Monthly Salary Credit (AMSC) and your total number of posted contributions.
Here’s how it works in simple terms:
Item
Description
Interest Rate
8% per year (based on diminishing balance)
Service Charge
1% of approved loan, deducted upfront
Term
12 or 24 months
Penalty for Late Payment
1% per month on the amount due
Loan Renewal
Allowed after 12 months and after paying at least 50% of the principal
Repayment Method
Salary deduction (for employees) or direct payment to SSS
So when you receive your SSS loan, the amount deposited to your bank is slightly less than what’s approved because of upfront deductions like the service charge and pro-rated interest.
🧾 What You See in Your SSS Salary Loan Statement
Your SSS Loan Statement (whether downloaded via My.SSS or received from your employer) shows several important details:
Principal Amount — The total loan approved by SSS.
Interest — Charged at 8% per year, computed monthly.
Pro-rated Interest — Deducted upfront before your first payment.
Amortization — Your fixed monthly payment.
Penalty — Added when payments are delayed.
Now, let’s break down how the interest and penalty parts actually appear — and how to interpret them correctly.
📈 How SSS Interest Appears in Your Loan Statement
1. Pro-Rated Interest (Deducted Upfront)
This is the first interest deduction applied before you even receive your loan proceeds.
SSS charges this amount to cover the interest between your loan approval date and the end of the following month, before your first amortization starts.
🧮 Example:
If your ₱20,000 loan is approved on March 12, 2025:
Days covered = March 12–31 (20 days) + full April (30 days) = 50 days
Annual interest = ₱20,000 × 8% = ₱1,600
Daily rate = ₱1,600 ÷ 365 = ₱4.38
Pro-rated interest = ₱4.38 × 50 = ₱219.18
So when your loan is released:
Approved amount: ₱20,000
Less service charge (1%): ₱200
Less pro-rated interest: ₱219.18
Net proceeds: ₱19,580.82
This deduction will appear in your loan voucher or initial statement as “interest (pre-deducted)” or pro-rated interest.
2. Monthly Interest (During Repayment)
After the initial month, SSS applies 8% annual interest based on your remaining principal — not the full loan amount.
That’s called a diminishing balance system.
🧮 Example: ₱20,000 loan for 24 months
Month
Beginning Balance
Payment
Interest (0.667%)
Principal
Remaining Balance
1
₱20,000.00
₱900.00
₱133.40
₱766.60
₱19,233.40
2
₱19,233.40
₱900.00
₱128.85
₱771.15
₱18,462.25
3
₱18,462.25
₱900.00
₱123.10
₱776.90
₱17,685.35
4
₱17,685.35
₱900.00
₱117.80
₱782.20
₱16,903.15
5
₱16,903.15
₱900.00
₱112.76
₱787.24
₱16,115.91
6
₱16,115.91
₱900.00
₱107.57
₱792.43
₱15,323.48
7
₱15,323.48
₱900.00
₱102.31
₱797.69
₱14,525.79
8
₱14,525.79
₱900.00
₱97.00
₱803.00
₱13,722.79
9
₱13,722.79
₱900.00
₱91.53
₱808.47
₱12,914.32
10
₱12,914.32
₱900.00
₱86.12
₱813.88
₱12,100.44
11
₱12,100.44
₱900.00
₱80.27
₱819.73
₱11,280.71
12
₱11,280.71
₱900.00
₱75.18
₱824.82
₱10,455.89
13
₱10,455.89
₱900.00
₱69.94
₱830.06
₱9,625.83
14
₱9,625.83
₱900.00
₱64.17
₱835.83
₱8,789.99
15
₱8,789.99
₱900.00
₱58.66
₱841.34
₱7,948.65
16
₱7,948.65
₱900.00
₱52.99
₱847.01
₱7,101.64
17
₱7,101.64
₱900.00
₱47.37
₱852.63
₱6,249.01
18
₱6,249.01
₱900.00
₱41.67
₱858.33
₱5,390.68
19
₱5,390.68
₱900.00
₱35.95
₱864.05
₱4,526.63
20
₱4,526.63
₱900.00
₱30.19
₱869.81
₱3,656.82
21
₱3,656.82
₱900.00
₱24.41
₱875.59
₱2,781.23
22
₱2,781.23
₱900.00
₱18.55
₱881.45
₱1,899.78
23
₱1,899.78
₱900.00
₱12.67
₱887.33
₱1,012.45
24
₱1,012.45
₱900.00
₱6.75
₱893.25
₱0.00
Each month, as you pay, your interest portion decreases and your principal portion increases, making your payment more efficient over time.
⚠️ How Penalties Are Computed and Shown
If your employer or you fail to remit payment on time, SSS imposes a penalty of 1% per month based on the amount due (not the total loan).
🧾 Example:
Your monthly amortization = ₱966.67 If you missed one month:
Penalty = ₱966.67 × 1% = ₱9.67 per month
If you delay 3 months, the total penalty = ₱9.67 × 3 = ₱29.01
This penalty will appear in your loan statement under:
“Add: Penalty” or “Interest on Arrears”
💡 Note: Penalties do not compound — they’re charged separately per month until you pay the missed amortization.
📊 How Interest and Penalties Affect Your Balance
Let’s say you stopped paying for 6 months due to unemployment.
Type
Description
Effect
Interest
Continues monthly on remaining balance
Increases total amount due
Penalty
1% per month on overdue amortizations
Adds to your statement under “penalties”
Loan Default
After several months of missed payments
SSS may deduct from future benefits or salary loan renewals
When you resume paying, your first few payments will often go toward unpaid interest and penalties first, before reducing your principal.
That’s why your balance might not drop immediately even if you’re paying again.
🔁 Loan Renewal and Interest Reset
Once you’ve paid at least 50% of your principal and 12 months have passed since your last loan approval, you may apply for a loan renewal.
Here’s what happens:
SSS computes your new eligible loan based on your updated AMSC.
The unpaid balance from your old loan (principal + interest + penalties) is deducted from your new loan.
The remaining amount becomes your net renewed loan.
If you previously availed of penalty condonation, the renewed loan interest may be slightly higher (up to 10% annually).
🧮 Try It Yourself: Estimate Your Interest Using the SSS Salary Loan Calculator
If you want to see how your monthly amortization and interest will look before applying, you can use the SSS Salary Loan Calculator.
You’ll instantly see:
Your estimated loanable amount
Monthly amortization
Total interest for your chosen term
This tool helps you visualize how your interest and penalties can change based on your loan size and payment consistency.
🧑💼 Eligibility & Requirements (Recap)
To qualify for an SSS Salary Loan:
Requirement
1-Year Loan
2-Year Loan
Minimum Contributions
36 total, 6 in last 12 months
72 total, 6 in last 12 months
Loanable Amount
1 × AMSC
2 × AMSC
Interest
8% per annum
8% per annum
Term
12 months
24 months
Other conditions:
Must have no existing overdue loan
Must be actively contributing
Must not have received final benefit (e.g., retirement, total disability)
💸 Early Repayment and Savings on Interest
You can pay off your SSS loan early anytime — and it’s actually a smart move.
SSS does not charge pre-termination fees. Paying early saves you the remaining months of interest and prevents future penalties if you lose your job.
Example: If you still owe ₱5,000 principal with ₱300 interest left, and you settle early, you’ll only pay the current due, not future interest — saving money.
💡 Real-Life Scenario: Late Payment While on Maternity Leave
Let’s say you went on maternity leave and your employer forgot to remit your SSS loan amortization for 2 months.
Missed payments = ₱966.67 × 2 = ₱1,933.34
Penalty = ₱1,933.34 × 1% × 2 months = ₱38.67
When you log in to your SSS account, you’ll see:
“Past Due Amount” = ₱1,933.34
“Add: Penalty” = ₱38.67
“Total Amount Due” = ₱1,972.01
Once the missed months are paid, your loan returns to normal amortization schedule.
🧾 TL;DR Summary
Interest rate: 8% per year, diminishing balance.
Pro-rated interest: Deducted upfront before release.
Penalty: 1% per month on delayed amortization.
Late or missed payments: Increases total due and may delay loan renewal.
