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Simple English definitions for legal terms
broker call loan
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A quick definition of broker call loan:
A broker call loan is a type of loan where the lender can ask for the money back at any time, usually with 24 hours' notice. This means that the borrower needs to be prepared to pay back the loan quickly. It is also sometimes called a demand loan.A more thorough explanation:
A broker call loan is a type of loan that can be demanded by the lender at any time, usually with 24 hours' notice, because there is no fixed maturity date. It is also known as a call loan or demand loan. This type of loan is often used by brokers to finance daily transactions.
For example, a stockbroker may take out a broker call loan to purchase stocks for a client. If the value of the stocks increases, the broker can sell them and repay the loan. However, if the value of the stocks decreases, the lender may demand repayment of the loan, which can be risky for the broker.
The broker call loan is a short-term loan that is used to cover costs until more permanent financing is arranged. It is important to note that this type of loan is not suitable for long-term financing needs.