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Paul Tracy

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Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers. While there, Paul authored and edited thousands of financial research briefs, was published on Nasdaq. com, Yahoo Finance, and dozens of other prominent media outlets, and appeared as a guest expert at prominent radio shows and i...

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Updated August 5, 2020

What is a Call Loan?

A call loan is a loan that the lender may force the borrower to repay at any time.

How Does a Call Loan Work?

Also called a broker loan or demand loan, a call loan is granted to a brokerage house that needs short-term capital for financing clients' margin portfolios. It may be called by the lending bank at any time. Likewise, the brokerage house may fully repay a call loan without prepayment penalties. Call loans are collateralized using securities, and interest accrues on a daily basis at an unsecured adjustable rate.

Why Does a Call Loan Matter?

Used to provide capital for margin trading, call loans are a risky financing method for brokerage houses vis-à-vis clients. In addition to quickly accruing interest, call loans may be taken back by the lender at any time, possibly using proceeds from the sale of client securities in the event the brokerage house is not solvent enough to repay the loan with its own cash.

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At InvestingAnswers, all of our content is verified for accuracy by Paul Tracy and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Call Loan.
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