Demand note definition

A demand note, or demand promissory note, is a debt that may be called (made payable) at the discretion of the lender (note holder).

This lack of a set time for repayment (no fixed term) provides the borrower some flexibility as long as conditions are such that the note holder is not inclined to ask for repayment. The downside is that if the note holder gets concerned about the level of risk, or finds a better use for the funds, the note can be called and the loan is due for payment within the agreed time frame (usually short).

See "promissory notes" for more details.