When personal property, such as a car, is offered as collateral in a loan, we say that the loan is "secured" by the car. In this example, the lender has a "security interest" in the car. The lender does not own the car, but if the loan obligation is not paid, the lender has rights in the car as defined in the loan agreement and as governed by the Personal Property Security Act (PPSA).
There are many types and forms of security interests in PPSA and in the Personal Property Registry System (PPRS). Most PPR registrations are for consumer financing, like a car loan, but certainly not all of them. Business financing is extremely important. For example:
- A company borrows to purchase equipment with the equipment as collateral.
- A company establishes a line of credit with the company’s accounts receivable as collateral.
- A farmer finances seeds and fertilizer with the resulting crop as collateral.
- A movie producer finances a new film with the licensing rights to the film as collateral.