Advanced English Dialogue for Business – Acceleration clause

Listen to a Business English Dialogue About Acceleration clause

Paisley: Hi Isabelle, do you know what an acceleration clause is?

Isabelle: No, I’m not sure. What does it mean?

Paisley: An acceleration clause is a provision in a loan agreement that allows the lender to demand immediate repayment of the entire loan balance if the borrower violates certain terms or conditions of the loan.

Isabelle: Oh, I see. So, it’s like a way for the lender to speed up repayment if the borrower breaks the agreement?

Paisley: Exactly. It gives the lender the power to accelerate the repayment schedule and demand full payment if the borrower defaults on the loan.

Isabelle: That sounds serious. What kinds of violations could trigger an acceleration clause?

Paisley: Common violations include failure to make timely payments, breaching covenants, or defaulting on other obligations outlined in the loan agreement.

Isabelle: So, does the borrower have any recourse if the lender triggers the acceleration clause?

Paisley: It depends on the specific terms of the loan agreement. Sometimes, borrowers may have the opportunity to cure the default or negotiate a repayment plan with the lender.

Isabelle: I see. Are acceleration clauses common in all types of loans?

Paisley: They’re more common in certain types of loans, like mortgages and commercial loans, where there’s a significant amount of money involved and a longer repayment period.

Isabelle: That makes sense. It’s important for borrowers to understand the implications of acceleration clauses before signing a loan agreement.

Paisley: Absolutely. It’s a crucial aspect of loan agreements that borrowers should carefully review and consider before accepting the terms.

Isabelle: Thanks for explaining, Paisley.

Paisley: No problem, Isabelle. It’s always good to be informed about the terms of any financial agreement you’re entering into.