Day Loan

Emma and Carrie are shopping at the Gap. Emma has $50, and she is buying jeans and a sweater totalling $48.00. While waiting in the checkout line, Emma sees a belt she wants that costs $10.00. She asks Carrie for a "Day Loan" of the $10, which she will pay back once they leave the Gap and can get to an ATM. It’s a same day repayment loan.

In investor speak, a Day Loan is when a client wants to place a buy order, but the margin account will only cover a portion of the new stock purchase. The Day Loan is arranged between the brokerage firm and its bank to front the shortfall of funds for the buy order, and the client arranges for the cash replacement to be deposited that same day. Simply put, it's a loan for a day. Yes, shocking.