A demand loan is a type of loan where a lending party has the right to demand full repayment of the loan at any moment. The option might be beneficial for both parties. For a lender, this is an opportunity to demand money back with the intention to make other investments or for any other purposes. For a borrower, it is an option to avoid charges for early repayment. This type of loan agreement is often used for investment loans, loans for new businesses, car loans, or when purchasing farm animals, used equipment, etc.