A demand loan can be a signature loan or a line of credit. Signature loans are loans made to you on your word alone. Your signature is sufficient to obtain the loan. Banks look carefully at your personal assets and liabilities before they will give you such a loan. A line of credit is a loan, often secured by collateral, which can be drawn upon at any time. A signature loan is generally a fixed amount while a line of credit is a revolving account similar to a credit card.
"Calling" a demand loan
Banks can "call in" your loan at any time they feel that you have become too high a credit risk. With demand loans, you usually pay the interest and service charges monthly. Your bank's exposure will always only be the original principal amount. Be sure that you go into these loans with your eyes wide open and armed with all the facts, especially regarding the risk and the cost involved if your loan is indeed "called".
Demand loans and your credit report
As long as the bank reports that you pay your demand loan well, it will help you credit report and increase your credit score. Ask the bank which credit bureau the demand loan will be reported to.
