A Loan Type is where you can define various loan types and their properties like rate of interest, loan account details, etc.
To access the Loan Type list, go to:
Home > Loan Management > Loan > Loan Type
Is Term Loan: Specifies whether a Loan is a Term Loan or a Demand Loan. If this is unchecked any loan of this type will be considered as a demand loan and an automatic repayment schedule won't be generated for that loan.
Demand Loans are open ended loans which do no have a fixed repayment schedule or a fixed repayment amount.