What is 'Acceleration Clause'. 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.
Acceleration clauses are most prevalent in the real estate industry, where they protect the lender when the borrower defaults on interest payments or some other debt covenant Debt Covenants Debt covenants are restrictions that lenders (creditors, debt holders, investors) put on lending agreements to limit the actions of the borrower (debtor). .
It is also known as an " acceleration covenant. " 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.
- Acceleration is the rate at which the velocity changes. - Acceleration units include the following; m/s2, mi/hr/sec, cm/s2, km/hr/m. - An object which is slowing down has an acceleration. - An object that is accelerating will eventually (if given enough time) be moving fast.
The following are the circumstances in which acceleration clauses can be triggered: 1. Failure to meet interest payments. Interest payments are determined by the interest rate. Interest Rate An interest rate refers to the amount charged by a lender to a borrower for any form of debt given, generally expressed as a percentage of the principal. ...
What is an Acceleration Clause? An acceleration clause is a covenant in loan agreements that requires borrowers to repay the full principal amount upon breach of contract or failure to meet certain requirements set by the lender.
3. Due-on-sale clauses. A “due-on-sale” clause is a provision found in loan agreements, which allows the lender to demand full repayment of the principal amount if the borrower sells the property that is mortgaged for the loan. In a way, due-on-sale clauses are very similar to acceleration clauses and can be used to trigger an accelerated loan ...
The lender provides the money, provided the borrower agrees to all the loan stipulations. Credit Analysis. Credit Analysis Credit analysis is the process of determining the ability of a company or person to repay their debt obligations.
With an acceleration clause, Graceland can now demand the full $400,000 immediately. If the $400,000 cannot be paid in the given time frame, Graceland can take possession of the land without returning the $600,000 that it already received.