When the SSS offers a Loan Condonation Program and you have an existing or past due loan with the SSS, you should take advantage of it.
Why? Because it will help you pay your loan much easier.
With the SSS Loan Condonation Program, your penalties will be waived. You will realize how helpful this program is especially if you have a long overdue loan.
To give you an example, a Salary Loan amounting to P20,000 in 2005 that has not been paid ever since has ballooned to P67,528.78 after 11 years.
To break it down, P18,485.58 was the principal loan or the net amount that the SSS member received when she took out the loan; P17,499.84 was the total loan interest in 11 years; and P31,543.36 was the total amount of penalty for not paying the loan in 11 years.
SSS Loan Interest
The SSS Salary Loan interest is 10% per year until it’s fully paid based on diminishing principal balance. The amortization period is over a period of 24 months.
If the loan is not fully paid at the end of the term or after 24 months, the interest will continue to be charged on the outstanding principal balance until it’s paid completely.
Effect of SSS Loan Condonation Program to the Outstanding Loan Balance
When the SSS member applied for SSS Loan Condonation Program last year, which is also known as the Loan Restructuring Program (LRP), her loan balance went down from P67,528.78 to P35,985.42.
How did that happen?
Well, it’s simple. The penalty has been waived or it was deducted from the total loan balance.
She saved nearly half of her loan balance because of the SSS Loan Condonation Program. What a huge help, wasn’t it?
This is exactly the reason why you should take advantage of the SSS Loan Condonation Program when the SSS offers it.
Unfortunately though, they don’t offer it yearly. The last time it was available was from April 2016 to April 2017 and the SSS has not announced yet as to when this program is going to be available again.
Also, when you avail of the SSS Loan Condonation Program, make sure that you pay it on the agreed schedule or payment terms. If you failed to pay it, your penalty will not be waived and you will have to pay it together with the principal loan amount and interest.
And the sad part is, you cannot avail of any future loan condonation program if you have already availed of it once.
Why should you pay your SSS Loan?
The SSS provides many benefits to its members and their beneficiaries. If you have unpaid salary loan, it will be deducted when you claim sickness, maternity, death, retirement, or total disability benefit.
In our example above, the member paid her overdue loan with the help of the SSS Loan Condonation Program because she will be retiring next year and she didn’t want her loan to affect or be deducted from her monthly pension.
Also, after you have paid at least 50% of the original loan amount and at least 50% of the loan term has lapsed, you can renew or reapply for SSS Salary Loan.
If you have past due loan with the SSS and you haven’t availed of any loan condonation or loan restructuring program in the past, just wait for SSS’ announcement on their next loan condonation program so you can pay your loan much easier.
We will also announce it here at SSS Answers once the next SSS Loan Condonation Program is already available.
Click here to read: SSS Benefits in Details