                                 CODE OF VIRGINIA

ACCELERATION CLAUSE IN NOTE EVIDENCING INSTALLMENT LOAN; EFFECT OF ACCELERATION
(§ 6.2-401)

A. Any note or other contract evidencing an installment loan or other
installment sales obligation with add-on interest may provide that the entire
unpaid loan balance, at the option of the holder, shall become due and payable
upon default in payment of any installment without impairing the negotiability
of the note, if otherwise negotiable.

B. Upon such acceleration, the holder of the contract of indebtedness shall not
be entitled to judgment for unearned interest, but the balance owing shall be
computed as follows:

   1. On loans payable in equal periodic installments with an initial maturity
   and corresponding amortization period not exceeding 61 months, the accelerated
   balance shall be calculated as if the borrower had made a voluntary prepayment
   and obtained as of the date of acceleration an interest credit based upon the
   Rule of 78 rebate method as defined in &#xA7; 6.2-403; and

   2. On other loans, the accelerated balance shall be calculated under a method
   at least as favorable to the borrower as the actuarial method.

C. The accelerated balance shall bear interest at the rate shown, or that should
have been shown as the annual percentage rate under a truth in lending
disclosure pursuant to federal law if the transaction was a consumer credit
transaction.

HISTORY: 1987, c. 622, § 6.1-330.89; 1990, c. 338; 1991, cc. 171, 365; 2010, c.
794.