What does the Acceleration Clause in contract provisions allow?

The Acceleration Clause in contract provisions is designed to protect the lender's interests in the event of default by the borrower. When this clause is activated, it allows the lender to demand immediate payment of the entire outstanding balance of the loan rather than just the minimum payments or current dues. This provision is particularly important for lenders because it grants them the ability to mitigate losses swiftly if the borrower fails to comply with the terms of the contract.

In contrast, the other choices do not accurately reflect the purpose of an Acceleration Clause. Increasing the interest rate pertains to a different kind of contractual adjustment that would generally require separate terms or conditions. Extending the payment term would provide additional time for the borrower to fulfill obligations, which is contrary to the intent of an acceleration clause. Waiving the final payment implies a reduction or elimination of debt, which again is not aligned with the nature of this clause that seeks to collect what is rightfully owed upon default.