Loan at sight – What is it, definition and concept | 2022

A demand loan is a type of loan characterized by the non-inclusion of a maturity date in its clauses.

Among the different existing types of financing, a sight loan stands out for the possibility of demand at any time by your creditor.

In this sense, the non-inclusion in the previously signed conditions of a certain expiration date implies the following: The amount lent may be demanded together with interest at any time.

Although it is common to agree on different examples of extensions or partial settlement of loans, the most common practice is to satisfy the repayment commitment acquired at once.

Relevance of a sight loan

In the field of investment, there are all kinds of financial operations carried out under the “at sight” scheme.

One of the most widespread examples is that of sight loans, which can be claimed at any time. That is, they do not have an expiration date defined as such.

The main importance of this credit practice is not subjecting borrowers to a payment schedule or schedule.

In this sense, loans made at sight are often identified with small and medium amounts with easy repayment when the time comes. Thus, a large part of its beneficiaries are entrepreneurs and SMEs.

This is so because these credits are commonly based on commercial and economic relationships of trust. These facilitate the continuous rush of loans and returns between the parties.

Main features of a sight loan

As conceptually indicated, this type of loan bases its importance on the non-existence of a fixed maturity date.

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However, a sight loan has some other details to take into account:

  • Passive character. The debtor or borrower is summoned to the decision of the creditor or lender regarding the time and conditions of the settlement of the loan.
  • Partial or total expiration. The returns do not always have to suppose the total compensation of the loan. Sometimes they can translate into early partial repayments of the same.
  • Nature of participants. As with other credit modalities, these loans may involve the participation of a bank or be made between private lenders.
  • Payment calendar. This type of loan is not usually accompanied by a forecast of pre-established installments, generally assuming that the compensation of the principal and interest will be made according to the request of the creditor.

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