Question
What is the difference between Term Loan and Demand Loan?
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S.No.
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Basis
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Term Loans
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Demand Loans
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1.
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Meaning
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These loans are extended by the banks to their customers for fixed period.
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These loans are provided by the banks against the security of Fixed Deposits Receipts (FDR), Government Securities, Life Insurance Policies, etc.
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2.
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Purpose
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To purchase machinery, trucks, scooters, houses, etc.
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3.
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The borrower repays these back in monthly/ quarterly/ half yearly/ annual installments.
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These loans are called demand loans because bank can demand them at anytime, by giving notice to the customer.
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