General Question

kelly's avatar

What is the difference/ benefits of a loan note being written as a "Demand Note" versus "Promissory Note"?

Asked by kelly (1905points) March 2nd, 2010

I am loaning money to a trusted friend and they will sign a note to make it OK for my accountant so she can deduct interest payments and I can claim them as income. I have two “stock” note formats one a Demand Note, the other Promissory Note. What are the benefits / risks for me.

Observing members: 0 Composing members: 0

5 Answers

njnyjobs's avatar

Demand note is a promissory note that is due when you demand the payment, say within 30 days notice.

Promissory Note basically states when repayment will occur, a fixed date is actually stated on the document, i.e. payable on April 15 . . . or every 1st of the month for the next 6 months beginning on April 1.

semblance's avatar

ninyjobs is almost right. Actually, “promissory note” is a broad category that covers both payment obligations which have a fixed due date or payment schedule as well as a note which is payable whenever the holder demands it. So, a “demand note” is a specifc subcategory of the general category of promissory notes. A true demand note is theoretically payable immediately upon demand, although as ninyjobs says there may be a provision which gives the person who has to pay a short period of time in which to do so.

kelly's avatar

Thank community. Kelly

thriftymaid's avatar

Demand for full payment may be made anytime after a certain date. Promissory notes generally have fixed terms for repayment.

Response moderated (Spam)

Answer this question

Login

or

Join

to answer.

This question is in the General Section. Responses must be helpful and on-topic.

Your answer will be saved while you login or join.

Have a question? Ask Fluther!

What do you know more about?
or
Knowledge Networking @ Fluther