loan with no specific maturity date, but payable at any time. Only interest is paid until the principal is paid off, or until the lender demands repayment of principal. The borrower may, however, pay off the loan early, without incurring a prepayment penalty. If the funds are advanced to a broker, it is referred to as a call loan.
loan payable on request by the creditor rather than on a specific date.
loan with no set maturity date that can be called for repayment when the lender chooses. Banks usually bill interest on these loans at fixed intervals.
a loan that may be called by the lender at any time.
Example: Abel borrows $10,000 from a bank on a demand loan and uses the cash for the down payment on a parcel of land. The bank may call in the loan and Abel may be forced to sell the property at a distressed price to meet the demand loan.
