Demand Note Law and Legal Definition
A demand note is a note payable on demand from the lender. It has no fixed term or set duration of repayment. It can be recalled upon the lenders request, anticipating that the notice requirements of the loan are satisfied. Usually a demand note does not require a show-cause notice to be given to a delinquent borrower. A demand note provides flexibility for the borrower, as long as the lender does not wish to call back the loan. However, a demand note can be a poor choice for a loan, if the lender does not have enough resource and ability. It is also called as a demand loan or a call loan.
Demand notes can be used for short or long term loans. The interest rate is determined at the time the loan is initiated and it can be adjusted by the lender periodically.