Purchase money security interest (PMSI)

BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED 2026-11-01

// THE SHORT ANSWER

A purchase money security interest is security taken by whoever financed the acquisition of a particular asset — the supplier selling stock on retention of title, the financier or lessor of a piece of equipment — over that asset and its proceeds. Under the personal property securities regimes of New Zealand and Australia, a purchase money interest registered in time can rank ahead of an earlier general security over the same goods, so a bank's charge over all of a company's assets does not reach the stock and plant that others financed. A desk reads the register for them, because they explain why security over everything can recover much less than everything.

BASIS  Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.