An acceleration clause is commonly invoked after which event?

An acceleration clause is commonly invoked after which event?

• A. After a default event occurs
• B. After the borrower asks for more time
• C. After the loan reaches 90% of balance
• D. After borrower misses one payment

Answer: (A)

An acceleration clause lets the lender demand full repayment of the loan if the borrower defaults. The event that triggers this is a default on the loan terms—such as missing payments, breaching covenants, or insolvency/bankruptcy. Because acceleration is tied to the occurrence of a default, it’s described as being invoked after a default event occurs. It isn’t about asking for more time (that would be forbearance or modification), and reaching a specific balance, like 90%, isn’t a standard trigger on its own. Missing a payment is a form of default, but the broad concept is that any default can activate acceleration.

An acceleration clause lets the lender demand full repayment of the loan if the borrower defaults. The event that triggers this is a default on the loan terms—such as missing payments, breaching covenants, or insolvency/bankruptcy. Because acceleration is tied to the occurrence of a default, it’s described as being invoked after a default event occurs. It isn’t about asking for more time (that would be forbearance or modification), and reaching a specific balance, like 90%, isn’t a standard trigger on its own. Missing a payment is a form of default, but the broad concept is that any default can activate acceleration.