Purchase-Money Security Interest
- A security interest in goods is a purchase-money security interest:
- to the extent that the goods are purchase-money collateral with respect to that security interest;
- if the security interest is in inventory that is or was purchase-money collateral, also to the extent that the security interest secures a purchase- money obligation incurred with respect to other inventory in which the secured party holds or held a purchase-money security interest; and
- also to the extent that the security interest secures a purchase-money obligation incurred with respect to software in which the secured party holds or held a purchase-money security interest.
"purchase-money collateral" means goods or software that secures a purchase-money obligation incurred with respect to that collateral; and
"purchase-money obligation" means an obligation of an obligor incurred as all or part of the price of the collateral or for value given to enable the debtor to acquire rights in or the use of the collateral if the value is in fact so used.
You have to have an obligation to use the money in that way.
TL;DR: Someone gave you money to buy something, and you used the money to buy it.
Purchase-money security interests in goods other than inventory or livestock take over previously-filed security interests as long as the PMSI perfects within 20 days of the purchaser taking possession. UCC § 9-324(a).
Sellers with PMSIs prevail over lenders with PMSIs.