Which method creates automatic perfection for a security interest in consumer goods when there is a PMSI?

Which method creates automatic perfection for a security interest in consumer goods when there is a PMSI?

• A. Filing a financing statement
• B. Possession of the collateral
• C. Automatic perfection for PMSI in consumer goods
• D. Notice to the debtor

Answer: (C)

Automatic perfection is created when a purchase-money security interest in consumer goods attaches. Once the security interest attaches, it is perfected instantly, with no need to file a financing statement, take possession, or give notice to the debtor. This feature helps lenders quickly and reliably protect their interest in consumer purchases, and it generally gives them priority over later claims in the same goods, subject to standard priority rules.

Automatic perfection is created when a purchase-money security interest in consumer goods attaches. Once the security interest attaches, it is perfected instantly, with no need to file a financing statement, take possession, or give notice to the debtor. This feature helps lenders quickly and reliably protect their interest in consumer purchases, and it generally gives them priority over later claims in the same goods, subject to standard priority rules.