demand loan
C1Formal, Technical, Business
Definition
Meaning
A loan that is repayable in full immediately upon the lender's request.
A type of short-term financing without a fixed maturity date, where the lender can require repayment at any time, often used in commercial banking and brokerage accounts.
Linguistics
Semantic Notes
The term is a compound noun where 'demand' modifies 'loan' to specify its callable nature. It is a hyponym of 'loan' and is often contrasted with 'term loan'.
Dialectal Variation
British vs American Usage
Differences
The term is used identically in both varieties. The concept is standard in international finance.
Connotations
Neutral financial/legal term. Implies flexibility for the lender and potential instability for the borrower.
Frequency
Moderately low frequency, confined to financial, legal, and business contexts. Equally rare in general discourse in both regions.
Vocabulary
Collocations
Grammar
Valency Patterns
The bank issued a demand loan to the company.The loan is payable on demand.Vocabulary
Synonyms
Strong
Neutral
Weak
Vocabulary
Antonyms
Phrases
Idioms & Phrases
- “Payable on demand”
Usage
Context Usage
Business
Common in corporate finance for working capital; e.g., 'The firm used a demand loan to manage its cash flow fluctuations.'
Academic
Used in economics and finance textbooks discussing debt instruments and liquidity.
Everyday
Virtually never used in everyday conversation outside of specific professional contexts.
Technical
Precise legal/financial term defined in loan agreements and banking regulations.
Examples
By Part of Speech
verb
British English
- The bank can demand repayment of the loan at any time.
- They agreed to loan the money on a demand basis.
American English
- The lender demanded full repayment of the loan immediately.
- The funds were loaned under a demand agreement.
adverb
British English
- The money was lent demand.
adjective
British English
- It was a demand-loan facility.
- They have a demand-loan arrangement with their bank.
American English
- The demand-loan provision was in the contract.
- He reviewed the demand-loan terms carefully.
Examples
By CEFR Level
- A demand loan must be paid back when the bank asks for it.
- The small business took out a demand loan to cover unexpected expenses, knowing the bank could call it in at any time.
- Because the demand loan carried a lower interest rate than a term loan, the treasurer accepted the liquidity risk associated with its callable nature.
Learning
Memory Aids
Mnemonic
Imagine a banker DEMANDing immediate repayment of a LOAN. The loan exists only until they demand it back.
Conceptual Metaphor
FINANCIAL SUPPORT AS A REVOCABLE PRIVILEGE (can be taken back at any moment).
Watch out
Common Pitfalls
Translation Traps (for Russian speakers)
- Avoid translating as 'требовательный заём' (which implies a 'needy loan'). The correct equivalent is 'ссуда до востребования' or 'онкольный кредит'.
- Do not confuse with 'consumer loan' (потребительский кредит), which has fixed terms.
Common Mistakes
- Using 'demand loan' to refer to a loan that a customer is applying for (i.e., 'I have a demand for a loan').
- Confusing it with a 'payday loan', which has a very short but fixed term.
Practice
Quiz
What is the key characteristic of a demand loan?
FAQ
Frequently Asked Questions
Yes, it carries significant liquidity risk because the borrower must be prepared to repay the entire sum at any time without notice.
They are often used by businesses for short-term working capital needs or by brokers to finance securities purchases (as a 'call loan').
Yes, interest is charged on the outstanding balance, usually at a variable rate, until the loan is repaid.
Both are callable, but an overdraft is a pre-agreed facility linked to a current account for covering shortfalls, while a demand loan is a distinct lump-sum credit.