A purchase-money security interest in consumer goods is automatically perfected.

Question

Quizplus · Accepted Answer

This is true under the Uniform Commercial Code (UCC), which governs commercial transactions including sales and financing of goods. A purchase-money security interest (PMSI) arises when a seller or lender provides financing to a buyer to purchase specific goods, and the security interest attaches to those goods. As long as certain requirements are met, such as proper documentation and notice to other potential claimants, the PMSI is automatically perfected upon attachment, which means the lender has priority over any subsequent creditors or buyers of the goods.

A Purchase-Money Security Interest in Consumer Goods Is Automatically Perfected