If you’re planning to apply for a SSS Salary Loan, one of the most common questions you might have is: “How much interest will I pay?” Knowing this helps you prepare your budget and ensures you can handle the repayment schedule.
🔢 What is the Interest Rate?
The Social Security System (SSS) charges a 10% interest per year on the diminishing principal balance of the loan.
Interest rate: 10% per annum
Type: Diminishing balance method (interest decreases as your loan balance decreases)
📘 What Does “Diminishing Balance” Mean?
This means interest is computed only on the remaining balance, not the original loan amount throughout the entire term.
✅ Result: As you pay monthly, your interest goes down while the principal portion of your payment goes up.
🧮 Sample Interest Computation
Let’s say you borrow ₱20,000 and choose the standard 24-month payment term.
Here’s how your loan might break down:
Loan amount: ₱20,000
Annual interest: 10%
Monthly interest rate: 0.833%
Monthly payment: Roughly ₱929.17 (will vary slightly month to month)
💡 Total estimated interest over 24 months: around ₱2,300 – ₱2,500 (Depending on exact amortization scheduleⓘ)
You can use the SSS Salary Loan Calculator for a more accurate estimate based on your loan amount and term.
🧾 Other Deductions to Know
Besides interest, expect the following:
Service feeⓘ: 1% of the loan amount is deducted upfront.
Penalty for late payment: 1% per month on unpaid balance.
📌 Tip: How to Minimize Interest
Pay on time – Avoid additional penalty interest.
Pay in advance – Prepayment reduces the principal earlier, meaning less total interest.
Avoid re-loaning too soon – Re-loaning resets your balance and increases the overall interest paid.
🔚 Final Thoughts
You’ll pay about ₱2,300–₱2,500 in interest on a typical ₱20,000 SSS Salary Loan over 2 years—but this can vary depending on your exact loan and payment behavior.
Always check your loan details and use an online calculator to make informed borrowing decisions.
