Day Loan

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DEFINITION of 'Day Loan'

A temporary transfer of funds from a bank to an individual broker or a brokerage firm that is made early in the day for the purchase of securities that same day. The securities serve as collateral for the day loan, which must be repaid by the end of the day.


Also called a "morning loan".

BREAKING DOWN 'Day Loan'

A day loan is a source of very short-term funding. Once the securities have been purchased, the loan becomes a regular broker call loan, and may become due at any time. Brokers must pay a daily interest rate, known as the "call rate", on these loans.

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RELATED FAQS
  1. What is the interest rate offered on a typical margin account?

    Interest rates on margin accounts vary according to the size of the loan and the brokerage firm being used. Generally, interest ... Read Full Answer >>
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    When investors purchase shares of stock, the price paid includes two components: the price of the stock and the fee charged ... Read Full Answer >>
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    The difference between a fee-based adviser and a commission-based adviser is that the former collects a flat fee for investment ... Read Full Answer >>
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    Custodian banks and mutual fund custodians, commonly known as mutual fund corporations, perform very similar roles for different ... Read Full Answer >>
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    An insurance broker makes money off commissions from selling insurance to individuals or businesses. Most commissions are ... Read Full Answer >>
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