Demand Promissory Note

A demand note is a type of promissory note or loan note without any specified time for the repayment of the loan and is held by the lender that he can use it any time and call the borrower for the repayment of a loan.  These notes are provided by the lender in a flexible manner and usually based on a long term in which the lender never asks for the repayment of the loan to borrower unless he needs his money. When the demand notes are created by the loan parties, there is no kind of payment terms and conditions and the note does not contain a due date like other loan notes. In the note it is clearly stated that the borrower is bound to repay the amount of loan along with the applied rate of interest whenever the lender demand it. The interest rate of the demand note is determined on the organization of the loan. It is also known as call loan. If the borrower fails to repay the loan amount within an appropriate period of time, the lender can take any action against the borrower.

For a borrower, it is important to specify a period within which a lender cannot ask or demand for the repayment. It can be long term and short term and can charge high interest rate or a moderate interest rate. If the interest rate is high, the borrower should try to pay off the loan amount collectively. Demand notes if used for a mortgage loan, then there is no need to ask the borrower for making payment. Demand notes can be transfer to another person and a new holder of the demand note can any time call for the repayment of the loan.

A Sample Demand Note

Amount $__________

Date ______________

I  (Borrower)              promise to pay on demand the undersigned, for the value received in the order of  (Lender)__________ the sum of ______$ write amount  along with the interest rate from the date of receiving loan to the date of payment at the rate of ______% per annum.

In case if the note is not paid within 10 days of the demand, the undersigned will then pay all attorney’s fees and reasonable amount of all the costs of collection.

Executed at _______ on ________ 20____

Signature of the promissory _____________

Permanent address ____________________

Signature of the lender ________________

Permanent address ____________________

Tips to create a Demand Note

  • Write the date and the principal amount of the loan in dollars at the right top of the sheet.
  • Then write a promissory note including the name of the borrower, the name of the lender, the unpaid amount of the loan together with the interest rate per annum.
  • Include terms and conditions of the demand note like payment method, due date after demand note, and the penalties if the borrower fails to pay off the loan amount.
  • At the end of the promissory note, write the name of the borrower and lender, their signatures and permanent address.

Related Notes

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