Legal Definitions - consumer-goods transaction

A consumer-goods transaction is a specific type of financial arrangement where an individual takes on a debt primarily for personal, family, or household purposes, and that debt is secured by a legal claim (known as a security interest) on goods intended for personal, family, or household use.

In simpler terms, it's when you buy something for your home or personal life on credit, and the item you bought serves as collateral for the loan. If you fail to make your payments, the lender has a legal right to repossess that specific item.

• Example 1: Financing a Major Appliance

  Imagine a homeowner purchases a new refrigerator from an appliance store using the store's in-house financing plan. The financing agreement explicitly states that the store retains a security interest in the refrigerator until the full purchase price is paid. If the homeowner defaults on payments, the store could legally repossess the refrigerator.

  How this illustrates the term: The homeowner incurs an obligation (the debt for the refrigerator) for a household purpose. The refrigerator itself is a consumer good, and the store holds a security interest in it to secure the debt.

• Example 2: Furniture Store Installment Plan

  A young couple decides to furnish their new apartment and buys a complete living room set from a furniture retailer on an installment plan. The contract they sign specifies that the furniture company maintains a security interest in the sofa, loveseat, and coffee table until all monthly payments are completed.

  How this illustrates the term: The couple's obligation is for family/household purposes (furnishing their home). The living room set consists of consumer goods, and the furniture company's right to reclaim them if payments stop constitutes the security interest.

• Example 3: Electronics Purchase with Store-Specific Credit

  An individual uses a specialized credit card issued by a large electronics chain to purchase a high-definition television and sound system for their personal entertainment. The terms and conditions of this particular credit card state that the store retains a security interest in any items purchased with it until the balance for those specific items is paid in full.

  How this illustrates the term: The debt is incurred for personal use (entertainment). The television and sound system are consumer goods, and the store's ability to repossess them if the debt isn't paid represents the security interest.