Demand Loans and Term Loans are prevalent types of loans available today, each with distinct features catering to various customer needs. Understanding these differences is crucial before choosing a loan.

Demand loans generally require collateral, whereas term loans might not, depending on the specific offer. Typically, demand loans have shorter repayment periods, from days to months, contrasting with the extended repayment spans of term loans that can range from months to years. Borrowers have the advantage of early repayment without penalty in demand loans, unlike term loans where penalties may apply for early closure. Furthermore, demand loans typically provide lower loan amounts compared to term loans. They're often used for short-term business expenditures like acquiring working capital, raw materials, or covering payroll and rent. Conversely, term loans suit significant capital needs like purchasing land, costly equipment, or office space.

Specific Differences:

1. Loan Amount and Purpose: Demand loans are primarily for short-term business requirements with lower amounts. Term loans accommodate both short- and long-term expenses, varying based on need.
2. Repayment Terms: Demand loans come with shorter terms, whereas term loans span from a few months up to 30 years.
3. Flexibility: Demand loan borrowers may repay early without penalties, while term loans are usually paid via EMIs, potentially incurring penalties for early settlement.
4. Security: Demand loans require collateral; term loans can be secured or unsecured as per the type.

In conclusion, a demand loan, or Working Capital Demand Loan (WCDL), is provided for short-term needs without fixed repayment terms, allowing early repayment. A term loan from financial institutions serves both short- and long-term goals, with fixed or variable interest repaid through EMIs.

Borrowers should assess their specific needs and review all terms meticulously before deciding.