Pros and Cons

Pros

• Accessible Funds. Salary loans from the local social security system serve as a readily available financial resource for qualified members in Naga, addressing immediate monetary concerns such as emergencies or unexpected bills.
• Affordable Interest Rates. With an annual interest rate of 10%, calculated on a diminishing principal balance, the interest rates for these salary loans are competitively lower than those offered by commercial banks and other financial entities in Naga.
• Flexible Repayment Terms. Borrowers benefit from a 24-month repayment period with an initial two-month grace period before the commencement of monthly amortization, offering ample time to organize their financial responsibilities in Naga.
• Convenient Repayment Options. Loan repayments are seamlessly handled through payroll deduction for employed members, while self-employed and voluntary members in Naga have the liberty to pay at any local social security office or authorized payment facility.

Cons

• Limited Loanable Amount. The maximum loan amount available is determined by the member's total monthly salary credit, which may be insufficient for covering larger financial needs in Naga.
• Eligibility Requirements. Eligibility is not universal among members in Naga. For a one-month loan, a prerequisite of 36 monthly contributions is mandatory, with at least six of these contributions made within the last year prior to the loan application.
• Penalties for Late Payments or Defaults. Delayed payments are subject to a monthly penalty of 1% on the unpaid principal and interest. Defaulting on the loan can lead to the immediate demand for the full outstanding amount, and the local social security system may opt to deduct the due amount from any future benefits.
• Impact on Future Benefits. Opting for a salary loan can influence future entitlements. Unsettled loan balances might be subtracted from benefits related to retirement, disability, or death, making it crucial for members in Naga to contemplate the long-term implications on their financial strategy.

Ways to Receive the Money

• Local Social Security-issued Quick Card. The loan amount is credited directly to the borrower's card issued by the local social security. This method offers a secure and convenient way for members in Naga to access their loan funds.
• Enrolled Disbursement Bank Account. As an alternative, members in Naga have the option to receive their salary loan proceeds in a bank account they have registered for this purpose. This allows members the freedom to choose their preferred bank for the deposit of the loan amount.