What a demand loan or call loan is
A demand loan has no fixed term. The lender can demand repayment at any time and the borrower can usually pay at any time, so the question is how much interest has built up to a given date. A call loan is the same thing under another name. Simple interest is charged on the balance outstanding and is not added to the balance. For US tax purposes, section 7872 of the Internal Revenue Code defines a demand loan as one payable in full at any time on the demand of the lender.
Worked example: $20,000 at 7% with two payments
$20,000 is lent on 2 April 2026 at 7% a year. $100 is paid on 19 May and $3,000 on 17 June, and the loan is paid off on 5 August. Interest charged over 125 days is $453.05. The $100 is less than the interest built up by 19 May, so the balance does not move; the $3,000 on 17 June clears the interest and leaves $17,191.50 owed. The payoff amount on 5 August is $17,353.05, which is the balance plus $161.55 of unpaid interest.
Textbook examples reproduced
The eCampusOntario business mathematics text works demand loans with the same rules, using days divided by 365. Its $20,000 example with these payments pays off at $17,353.05, and this calculator gives $17,353.05. Its rate-change example, $10,000 from 17 March at 3.1%, 2.3% from 29 May and 2.7% from 31 July to 3 September, charges 62.00 + 39.70 + 25.15 = $126.85.
Its repayment schedule lends $8,000 from 15 July at 5.25%, takes $1,500 on the 15th of each month from August to December, moves the rate to 5.75% on 29 September and pays off on 15 January. The final payment is $618.25 and the interest in total is $118.25.
Days in the year and how days are counted
Interest for a day is the yearly rate divided by the days in the year. The default is 365. Some lenders use 360: $20,000 at 7% for 47 days is $182.78 on a 360-day basis, against $180.27 on 365 days. The calculator also offers the actual days in each year, and either counting the days between the dates or counting both the first and the last day. Check your loan contract for which applies.
Interest for each stretch is rounded to the cent, as in a repayment schedule. A payment pays the interest built up so far first and then reduces principal; a smaller payment leaves the shortfall as unpaid interest.
For a loan with a fixed term, use the simple interest loan calculator.
For a margin loan on investments, use the margin loan interest calculator.
Tax and what this does not cover
A demand loan with an interest rate below the market can be taxed on imputed interest. Section 7872 tests a below-market demand loan against the Federal short-term rate compounded semiannually, and exempts gift loans between individuals of $10,000 or less. This calculator does not compute imputed interest or any tax; take advice on that. It uses simple interest only, with no compounding, and does not cover margin loans, which are secured on securities, or whether a state law limits the rate.
Use the right country page
This page uses dollars and US-style dates. For a UK demand loan, in pounds, choose United Kingdom above the form to open the UK page. Inputs reset and amounts are not converted. Looking for a car loan instead? See the car finance calculator.
For a car loan, use the car finance calculator.
Inputs for the US demand loan calculator
Amount borrowed and interest rate
The balance on the start date and the simple note rate. Choose whether it is per year, month, week or day.
Days in the year and counting days
365, 360 or actual days; days between the dates, or counting the first and last day as well.
Loan start date and settlement date
Interest runs from the day after the start date up to the payoff date.
Part-payments
How many payments you make before paying off, each with a date and an amount.
Further advances
Extra money lent after the start, each with a date and an amount.
Rate changes
Dates when the rate changes, each with the new rate for the same period as the rate above.
CALCULATOR QUESTIONS
US demand loan calculator questions
How is interest on a demand loan calculated?
Simple interest on the balance outstanding: balance times yearly rate times days, divided by the days in the year, worked out for each stretch between events and rounded to the cent.
How much do I owe if I pay off the loan on a given date?
The principal still owed plus unpaid interest. In the example, $17,353.05 on 5 August.
Does a payment go to interest or principal first?
Interest first. A payment smaller than the interest owed leaves the balance unchanged and carries the unpaid interest forward.
What does a 360-day year change?
It raises the daily interest. For $20,000 at 7% over 47 days, $182.78 instead of $180.27.
Is the interest taxable?
A below-market demand loan can have imputed interest under section 7872, with exceptions such as gift loans of $10,000 or less. This calculator does not work out tax.