A demand note is a promissory note that becomes payable any time the holder of the note requests payment. This differs from notes that are due by a certain date or have a repayment schedule. Sometimes, banks are willing to issue demand loans to customers they have worked with for a long time and have favorable credit. Friends and family may also issue demand loans to a person they have a close relationship with.
The holder of the note can produce a demand note contract that both parties sign and may include details such as the loan amount, interest rate if any, and whether advanced notice is required before requesting full payment of the loan. These contracts are sometimes enforceable under the law, typically when the agreement is between a bank and another party.
[Last updated in June of 2021 by the Wex Definitions Team]