Which statement best describes PMSI priority in consumer goods?

Which statement best describes PMSI priority in consumer goods?

• A. Filing the security interest correctly is essential for PMSI priority; in consumer goods it may be automatic in some cases.
• B. PMSI has no effect on priority.
• C. It is unnecessary to file for PMSI priority in consumer goods.
• D. PMSI priority ignores consumer goods.

Answer: (C)

In consumer goods, a purchase-money security interest (PMSI) can be perfected automatically. When the secured party finances the purchase and the debtor takes possession, the security interest attaches and is perfected without filing. This automatic perfection gives the PMSI priority over other secured interests in the same consumer goods, without the need to file a financing statement. Filing would be necessary in other contexts (like PMSI in inventory or equipment), but not for consumer goods in typical situations. So the statement that it’s unnecessary to file for PMSI priority in consumer goods is the best description.

In consumer goods, a purchase-money security interest (PMSI) can be perfected automatically. When the secured party finances the purchase and the debtor takes possession, the security interest attaches and is perfected without filing. This automatic perfection gives the PMSI priority over other secured interests in the same consumer goods, without the need to file a financing statement. Filing would be necessary in other contexts (like PMSI in inventory or equipment), but not for consumer goods in typical situations. So the statement that it’s unnecessary to file for PMSI priority in consumer goods is the best description.