A more thorough explanation:

Definition: A purchase-money security interest (PMSI) is a type of security interest that applies to goods that are purchase-money collateral. This means that the security interest is created when a borrower uses the loan proceeds to purchase specific goods, and the lender takes a security interest in those goods to secure the loan.

Example: Let's say you want to buy a car, but you don't have enough money to pay for it outright. You go to a bank and take out a loan to buy the car. The bank takes a PMSI in the car, which means that if you default on the loan, the bank can repossess the car to satisfy the debt.

Another example: You want to buy a new computer for your business, but you don't have the cash to pay for it. You take out a loan from a lender, and the lender takes a PMSI in the computer. If you default on the loan, the lender can repossess the computer to satisfy the debt.

These examples illustrate how a PMSI works. The lender takes a security interest in the specific goods that are being purchased with the loan proceeds. If the borrower defaults on the loan, the lender can repossess the goods to satisfy the debt.