Definition of Acceleration clause:
A provision in a loan agreement, mortgage, etc., that stipulates the immediate repayment of a debt to the lender upon breach of contract.
It is also known as an "acceleration covenant.".
Provision normally included in loan documents, mortgage agreements, and other debt instruments (such as bonds and notes). It gives the lender the right to demand the entire loan amount (principal plus interest) to be paid at once, in case the borrower fails to make payments (defaults) or gets into serious financial difficulties. A loan document details (often in fine print) which actions or events can trigger the acceleration clause. Some banks include unspecific terms such as if the bank otherwise deems itself insecure to widen the scope of default. Also called call clause. See also act of bankruptcy.
An acceleration clause is a contract provision that allows a lender to require a borrower to repay all of an outstanding loan if certain requirements are not met. An acceleration clause outlines the reasons that the lender can demand loan repayment and the repayment required.
How to use Acceleration clause in a sentence?
- An acceleration clause or covenant is a contract provision that allows a lender to require a borrower to repay all of an outstanding loan if specific requirements are not met.
- The acceleration clause clearly outlines the reasons that the lender can demand loan repayment and the repayment required, such as maintaining a certain credit rating.
- An acceleration clause helps to protect lenders who extend financing to businesses in need of capital. .
Meaning of Acceleration clause & Acceleration clause Definition