A purchase money security interest automatically perfects the creditor's security interest at the time of sale.

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A purchase money security interest (PMSI) refers to a security interest taken by a creditor in collateral purchased by the debtor using the credit extended by the creditor. Under the Uniform Commercial Code (UCC), a PMSI in goods automatically has priority over other security interests in the same collateral, provided certain requirements are met. One of the requirements is that the PMSI creditor must perfect the security interest within a certain timeframe, either before or shortly after the debtor takes possession of the collateral. If the PMSI is properly perfected, the creditor's security interest will have priority over any other security interests or liens on the collateral, including those that may have been previously recorded. Therefore, a PMSI creditor's security interest is automatically perfected at the time of the sale, as long as the other requirements are met.

A Purchase Money Security Interest Automatically Perfects the Creditor's Security