What are the key differences between demand loans and term loans?

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Here are the key differences between the demand loans and term loans:

Aspect	Demand Loans	Term Loans
Definition	They are short-term loans that are repayable on the loan provider’s demand.	They are usually provided for a fixed period with a repayment schedule.
Repayment Tenure	There is no fixed tenure, which means repayment can be demanded at any time.	Typically, repayment is made over a predetermined time (1 year, 5 years, etc.)
Purpose	They are designed to meet short-term needs like working capital.	They are meant to fund long-term goals like purchasing assets.
Interest Rate	They work on a variable rate of interest depending on market conditions.	A fixed or variable rate is set at the start of the loan.
Repayment Structure	They are flexible based on loan providers' repayment demand.	Regular principal + interest payments
Collateral Required	They are riskier due to uncertainty of repayment timing.	They usually require long-term assets like property, machinery.
Risk Involved	Faster as collateral is involved	They are prone to less risk due to predictable payments.
Suitability	They suit businesses with fluctuating needs.	They suit businesses/individuals with long-term plans.

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