A purchase-money security interest (PMSI)is formed when a debtor uses borrowed money from an unsecured party to buy the collateral.

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A purchase-money security interest (PMSI)is formed when a debtor uses borrowed money from a secured party to buy the collateral.According to the Uniform Commercial Code,a PMSI exists when a security interest is retained or taken by a)the seller of the collateral to secure part or all of the purchase price or b)a person who gives something of value to the debtor so that the debtor can gain rights to or use of the collateral.

A Purchase-Money Security Interest (PMSI)is Formed When a Debtor Uses