Alex wants a new hybrid car but can't afford the high price. She goes to the local credit union and gets a loan to buy the car. She gives the credit union an interest in the car as collateral. The credit union's interest in the car is a security interest. This creates a secured transaction. If Alex defaults on the loan from the credit union, the credit union is able to take possession of the hybrid car and sell it. Alex is the debtor and the credit union is the secured party.
Security interest
Interest in someone else's property, created by contract or by law. A mortgage is one type of security interest created by contract. A garnishment is one type of security interest created by law.
See Collateral and Secured transaction.
Definition from Nolo’s Plain-English Law Dictionary
A claim against property that secures a debt.
Definition provided by Nolo’s Plain-English Law Dictionary.
August 19, 2010, 5:24 pm
