What is a purchase money security interest?

A purchase money security interest (PMSI) allows a security interest to achieve perfection automatically upon attachment. This approach is most commonly used if financing for property is provided at the point of sale. Use of PMSI is limited to tangible goods and, sometimes, new software. To qualify, the secured party must provide new value, and said value must allow the debtor to purchase (or acquire rights for) the collateral.

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