An OFW’s Step-By-Step Guide To Borrowing Money And Repaying A Loan

11 min read By Cloey Mangali on October 19, 2018

Over 2.3 million Overseas Filipino Workers (OFWs) are spending their lives away from their homes to provide for their loved ones.

OFWs have a set of goals that they are working towards. They may be working to buy a new house, purchase a car, invest in a business, or fund their family’s day-to-day needs.

They struggle through the sadness of celebrating the holidays and special occasions away from their loved ones. They make this sacrifice to meet their financial needs.

Sometimes though, no matter how hard they work, they still need a little extra. If an OFW requires financial assistance, they should consider taking out a loan. But how do they do that and how can they make sure that they don’t end up in debt?

To answer those questions, we have created this step-by-step guide for OFWs on borrowing money and repaying a loan.

1. SSS Salary Loan

Who can get one?

If you are an OFW and a contributing member of the Social Security System (SSS), and you are in need of short-term credits, the SSS Salary Loan is perfect for you.

Only those members aged 65 years old and below and those who have at least 36 months of contributions posted are qualified for the loan.

Why get one?

It has an annual interest rate of 10% which will be based on the diminishing principal balance of your total loan. On top of that, members may choose their means of receiving their loans. It can be via the delivery from the post office or by a prepaid cash card from a partner bank of the SSS.

What are the different types?

1. One-month loan

The borrower must be an SSS member with a total of 36 monthly contributions posted. 6 months of these contributions must have been made within the year (the last 12 months) preceding the chosen month when they filed the application.

A one-month SSS Salary Loan is equal to the average of the latest 12 Monthly Salary Credits (MSCs) of the member-borrower, or the amount that he/she is applying for, either of which is lower.

The total amount of the loan application must be the difference between the approved loan amount and all of the outstanding balance of the short-term loans of the member-borrower.

2. Two-month loan

The borrower must be an SSS member with a total of 72 monthly contributions posted. 6 months of these contributions should have been made within the year (last 12 months) preceding the chosen month of the application filing.

A two-month SSS Salary Loan is equal to twice the average of the member-borrower’s 12 latest MSCs, rounded up to the next higher monthly salary credit, or the amount that he/she is applying for, either of which is lower. The total amount of the loan applied must be the difference between the approved loan amount and all of the outstanding balance of the short-term loans of the member-borrower.

This loan can be payable in 24 monthly installments (2 years). Monthly payment shall begin 2 months after the loan is applied.

Loan payments can be done at any SSS branch with payment facilities or at banks and payment centers that are SSS accredited. A 1% service fee will be deducted from the approved salary loan amount.

The following is a schedule of the deadline of payments:

• For regular and household employers:
  • If the 10^th digit of your 13-digit ER/HR number ends in:
  • 1 or 2 – every 10^th of the month
  • 3 or 4 – every 15^th of the month
  • 5 or 6 – every 20^th of the month
  • 7 or 8 – every 25^th of the month
  • 9 or 0 – every last day of the month
• For self-employed and voluntary members (except OFWs)
  • If the last digit of your SSS number ends in:
  • 1 or 2 – every 10th of the month
  • 3 or 4 – every 15th of the month
  • 5 or 6 – every 20th of the month
  • 7 or 8 – every 25th of the month
  • 9 or 0 – every last day of the month

*Note that unsettled payments upon due date will be charged with a 1% penalty fee.

(Read:  Financial Planning For OFWs)

What are the requirements for application?

If the filing is done by the member-borrower him/herself:

1. Bring 2 valid IDs (with card holder’s name, recent photo, and signature)

Valid IDs are the following:

• SSS ATM Card
• Driver’s License (must not be expired)
• IDs issued by a professional association (must be recognized by PRC)
• NBI Clearance
• Overseas Worker Welfare Administration (OWWA) Card
• Passport (must not be expired)
• Postal ID
• Professional Regulation Commission (PRC) ID
• Senior citizen’s card
• Tax Identification Number (TIN) card
• Voter’s ID (in cases of non-ID holders you may bring your affidavit or certificate of membership)

In the absence of these primary valid IDs, you may bring 2 of the following IDs:

• Alien Certificate of Registration
• Bank Account Passbook (with certification from the bank)
• Birth Certificate
• Baptismal Certificate
• Company ID
• Credit Card (with certification from the bank)
• Fisherman’s card issued by Bureau of Fisheries and Aquatic Resources (BFAR)
• Government Service Insurance System (GSIS) Card (in cases of non-ID holders you may bring
• your affidavit or certificate of membership)
• Health card
• IDs issued by Barangay, Municipal or City Local Government Units (LGUs)
• Marriage Contract
• Membership card issued by private companies
• Pag-IBIG member data form
• Permit to carry firearms issued by the Firearms and Explosive Unit of the Philippine National Police (PNP)
• Phil health member’s data record
• Police clearance
• School ID
• Seafarer’s Registration Certificate issued by Philippine Overseas Employment Administration (POEA)
• Seaman’s book
• Temporary Driver’s License (issued by LTO)
• Transcript of records
• Certificate from:
• Birth/Baptismal certificate of child/ren
• Certificate of Licensure/Qualification Documents/Seafarer’s ID and Record Book from Maritime Industry
• Certificate of Naturalization from the Bureau of Immigration
• Life Insurance Policy
• Office of Muslim Affairs
• Office of Northern or Southern Cultural Communities

2. Accomplished Member Loan Application Form.
3. SSS digitized ID or acknowledgement stub (SS Form E-6).

If the filing is done by an authorized representative:

1. Authorized Representative’s SS card or any two valid IDs (refer to the list of accepted IDs).
2. Letter of Authority (LOA) with signatures of both the member-borrower and authorized representative
3. Member-borrower’s duly accomplished Member Loan Application Form.
4. Member-borrower’s SS card or any two valid IDs (refer to the list of accepted IDs).

If filing is done by the employer or an authorized representative from the company:

1. Authorized Company Representative (ACR) card issued by SSS.
2. Letter of Authority (LOA) from employer and two valid IDs (refer to the list of accepted IDs).
3. Member-borrower’s duly accomplished Member Loan Application Form.

4.Member-borrower’s SS card or Application for SS card acknowledgment stub (SS Form E-6) and two valid IDs (refer to the list of accepted IDs).

What is the loan application procedure?

Proceed to the nearest SSS Foreign Representative Office (selected countries) and bring all the required documents.

If the country where you are currently deployed at doesn’t have an SSS foreign Representative Office, you can send all the needed documents to your relatives in the Philippines. You must include your authorization for them to be able to file it at any SSS branch. Note that documents which are issued from other countries must first be authenticated by the Philippine Consulate Embassy.

What if I have further questions?

For other questions you may visit the SSS websites or contact SSS at the following numbers:

SSS Call Center: 920-6446 to 55

SSS Trunkline No.: (632) 920-6401

IVRS : 917-7777

Local Toll-Free No. : 1-800-10-2255777

International Toll-Free Nos.:

Asia

Brunei: 801-4275

Hongkong: 001-800-0225-5777

Malaysia: 00-800-0225-5777

Singapore: 001-800-0225-5777

Taiwan: 00-800-0225-5777

Middle East

Bahrain: 8000-6094

Qatar: 00800-100-260

Saudi Arabia : 800-863-0022

UAE: 800-0630-0038

Europe:

Italy and UK: 00-800-0225-5777

2. Bank loans

Banks can also provide OFWs with different kinds of loans such as personal loans, automotive loans or housing loans.

Why should I get one?

Banks offer loans with appealing interest rates and adaptable modes of payment that can suit almost any budget.

The only negative side of acquiring loans from banks is the extensive assessment and process of requirements . Other than that, with loaning from a bank, you are 100% sure that what you are earning is safe and secured.

Who can get one?

If you are an OFW looking to take out a loan with a bank, you must be the following:

• At least 21 years old when you applied for the loan. You must also not be more than 60-65 years old by the time the loan matures.
• Been working abroad for at least 1-2 years .
• Be earning a minimum of P20,000 – P50,000 .

While these three are the general criteria, there may be slight variations month depending on the type of loan that is being applied for.

What are the available payment terms?

Depending on the loan being applied for and the bank you are applying with, payment terms can come at schedules of 3,6,9,12,18,24,30 or 36 months

What is the interest rate per month?

2-3% depending on the type of loan being acquired.

What are the requirements?

Banks have different kinds of processes and they also require different kinds of documents depending on the type of loan being acquired. These are the most common documents that banks require especially for OFWs:

1. Government-issued IDs : They may ask for one or more of the following (with card holder’s name, recent photo, and signature)

• Driver’s License (must not be expired)
• IDs issued by a professional association (must be recognized by PRC)
• NBI Clearance
• Overseas Worker Welfare Administration (OWWA) Card
• Passport (must not be expired)
• Postal ID
• Professional Regulation Commission (PRC) ID
• Senior citizen’s card
• Tax Identification Number (TIN) card
• Voter’s ID

2. If agency based: Latest POEA contract (must not be expired) or employment contract with boarding date

If direct hire: Proof of remittance, POEA OFW Information Sheet, POEA overseas

3. Employment Certificate and Work Contract

What are the different loan conditions?

• Some loans require collateral while some do not.
• Some require personal presence upon application of loan while some can be applied for overseas .
• Some require the presence of a co-borrower which should be an immediate relative with a stable source of income while some others do not.

For more information and to know more about the different types of loan offered by various banks, you can visit www.ecomeparemo.com.

(Read: Property Buying Guide for OFWs: 5 Steps To Buying Your Own Home)

3. Loans from private lending institutions

Aside from the different government offices and banks, there are also private lending companies who can provide OFWs with an easy and steady loan.

Keep in mind that different financial institutions have different kinds of terms and conditions that is why you must be attentive in every way before you commit into loan acquisition.

Also, make sure you find trustworthy lending companies which are accredited by the Securities and Exchange Commission (SEC).

Who can get one?

If you are an OFW looking to get a loan from a private lending institution, you must meet the following criteria:

• At least 21 years old when filing the loan application and not more than 60-65 years old upon maturity of the loan.
• Must have an employment contract for at least 3 months

Again, these are the general criteria, the specific ranges may vary according to the lending institution and the loan you are applying for.

What are the loan requirements?

Here are the most requirements most commonly asked for:

1. Valid IDs: Government-issued (with card holder’s name, recent photo, and signature)

• Driver’s License (must not be expired)
• IDs issued by a professional association (must be recognized by PRC)
• NBI Clearance
• Overseas Worker Welfare Administration (OWWA) Card
• Passport (must not be expired)
• Postal ID
• Professional Regulation Commission (PRC) ID

2. Beneficiary information form

3. Fully accomplished loan application form with ID picture and signature.

4. Proof of employment validated by the Philippine Embassy or Consu l. (includes work contract/certificate of employment and pay slips)

5. Special Power of Attorney (SPA) authenticated by the embassy if the loan is acquired through a representative. The attorney who will be providing the SPA and the co-borrower should be both based in the Philippines.

How can I know what sort of loan is best for me?

Here are a few essential tools you can use to figure out what type of loan you should get. They will also help you determine which type of loan and what loan payment scheme best fits your budget and lifestyle.

By choosing the right type of loan, loan terms, and payment scheme, you can ensure that you pay of your debt quickly.

1. Currency converter – If you want to get the best of your money, be sure to find the best institutions with the highest conversion before you make your remittances. Although most establishments will provide you with their own exchange rates and computations, it is still best to make your research beforehand so that prior to engaging to any transaction, you are positive that you will be able to cop the best of your earnings.
2. Loan calculators – For you to be able to manage your budget and repay your acquired loans on time, you can make use of loan calculators for you to be able to determine the amounts that you need to prepare in repaying your loans.

With a variety of loan choices, OFWs can now ease themselves that they will be able to provide a comfortable life for the people who they truly love. Surely then, with hard work and perseverance, after you have witnessed the fruit of your labor, you can now say that it is all worth it in the end.

SOURCES: SSS, eComparemo, GDFI