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Simple English definitions for legal terms
PMSI
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A quick definition of PMSI:
A PMSI, or purchase-money security interest, is a type of security interest that is created when someone borrows money to buy something and immediately gives the lender security. For example, if someone borrows money from a bank to buy a boat, the bank will have a PMSI in the boat to secure the loan. It can also refer to a security interest taken by a seller to secure all or part of the price of the item being sold.
A more thorough explanation:
Definition: PMSI stands for purchase-money security interest. It is a type of security interest created when a buyer uses a lender's money to make a purchase and immediately gives the lender security. It can also be taken or retained by the seller of the collateral to secure all or part of its price or taken by a person who gives value to enable the debtor to acquire rights in or the use of collateral if that value is in fact so used.
For example, if a buyer's purchase of a car is financed by a bank that loans the amount of the purchase price, the bank's security interest in the car that secures the loan is a purchase-money security interest.
PMSI is abbreviated as PMSI and is also known as a purchase-money interest.