What characterizes a demand loan?

A demand loan is characterized by the lender's ability to call in or demand repayment of the loan at any time, as per their discretion. This means the borrower does not have a predetermined timeline for when the loan must be repaid, and the lender can ask for the full repayment without prior notice. This flexibility can be beneficial for lenders, but it introduces a level of uncertainty for borrowers, who might need to be prepared to repay unexpectedly.

In contrast, a loan that offers secure collateral emphasizes the backing of an asset, but it does not specifically denote a demand feature. A loan with fixed payment terms indicates a structured repayment schedule and does not align with the concept of repayment being solely at the lender's discretion. Lastly, a loan that does not have to be repaid would not be considered a loan in traditional terms, as the essence of a loan inherently involves the obligation to repay within agreed terms. Therefore, the defining feature of a demand loan is its nature of being payable on demand by the lender.