Demand Feature

Updated 2026-05-17

A demand feature in a loan permits the lender to require early repayment of the entire outstanding loan balance at any time, or under specific conditions outlined in the loan agreement. This feature gives the lender significant control over the loan's term.

Disclosure Requirements

Under the Truth in Lending Act (TILA) and its implementing Regulation Z, specifically 12 CFR § 1026.38, the presence of a demand feature must be clearly disclosed on the Closing Disclosure form.

On page 4 of the Closing Disclosure, the form includes a section titled "Demand Feature" where it explicitly states whether the loan:

• "has a demand feature, which permits your lender to require early repayment of the loan. You should review your note for details."
• "does not have a demand feature."

MLOs must ensure that borrowers understand whether their loan includes a demand feature and the implications it carries, as it can significantly affect the borrower's financial obligations and the stability of their loan.