How Is the SSS Salary Loan Amortization Calculated?

If you’re planning to apply for an SSS Salary Loanⓘ, one of the most important things to understand is how your monthly payments (amortization) are calculated. Knowing this will help you budget smarter, avoid penaltiesⓘ, and plan your finances better.

Let’s break it down in a simple way.

💡 What Is Amortization?

Amortization refers to the process of paying off your loan in equal monthly payments over a fixed term. In the case of the SSS Salary Loan, that term is 24 months.

Each monthly payment includes:

A portion of the principal (the amount you borrowed)
A portion of the interest (the cost of borrowing)

🔢 The SSS Salary Loan Terms at a Glance

Loan Termⓘ: 24 months (2 years)
Interest Rate: 10% per annum, based on the diminishing balance
Service Feeⓘ: 1% of the loan amount, deducted upfront
Payment Start: 2nd month after the loan is released

🧮 The Amortization Formula

The monthly amortization is calculated using the following simplified formula:

📌 Monthly Amortization = (Loan Amount + Total Interest) ÷ 24 months

But since interest is computed on the diminishing balance, your interest portion becomes smaller each month, while the principal portion increases.

✅ Step-by-Step Example: ₱20,000 Loan

Let’s assume you borrowed ₱20,000.

Loan amount: ₱20,000
Service fee (1%): ₱200 → You receive ₱19,800
Interest (approximate total over 24 months): ₱2,152
Total to repay: ₱22,152
Monthly amortization: ₱922 (approx.)

🧠 Tip: While the amortization is fixed, the breakdown of principal vs. interest changes monthly — more interest is paid upfront, and more principal later.

🗓️ When Do You Start Paying?

If your loan is released in August, your first payment is due in October.
You will pay monthly for 24 months straight, unless you pay it off early.

💼 Who Pays the Amortization?

Employed members: Your employer will deduct and remit your payments to SSS.
Voluntary, Self-Employed, and OFWs: You must pay directly to SSS every month.