Book Opener

Example 2. When Jill bought the truck in Example 1, the dealertook a security interest in the vehicle. To protect the seller’s rightsin the vehicle, notice of the security interest would be written onthe back of Jill’s certificate of title to the truck.Using CreditCardsBefore Natasha left forcollege, her parentsgave her a MasterCardwith a $1,000 creditlimit for textbooks andsupplies for which theyagreed to pay. Natashaalso has her own VISAwith a $500 credit limitthat she uses for clothesand entertainment.Natasha pays the VISAbill. During her firstsemester, she chargedabout $375 for booksand supplies with theMasterCard. She alsoquickly reached thelimit on her VISA. NowNatasha wants to go toa concert. She knowsshe can’t charge it onher VISA, so she chargesit to her parents’MasterCard withouttheir permission. WasNatasha’s action ethical?Why or why not?Sometimes, creditors file a financing statement in a public officeto give notice of their security interest. Anyone can check the recordsthere to see if title is clear on items of personal property.Repossession If the debtor does not pay back the loan, the securedparty has the right to repossess , or take back, the goods. Repossessionmust be done without breaching the peace (i.e., without causing a disturbance).If the debtor refuses to surrender the goods, legal processmust be used to obtain them.After repossessing goods, a secured party may keep them (withexceptions) or sell them. The sale may be a public auction or privatesale. If the goods are consumer goods for which the debtor has paid60 percent or more of the price, the secured party cannot keep them—they must be sold. The debtor must be notified and is entitled to receiveany surplus of the sale after debts and expenses have been paid.486 Unit 5: Using Your Purchasing PowerSECURITY INTERESTWhen you buy a motor vehicle on credit, theseller will take a security interest in the vehicle.Why is notice of the security interest writtenon the back of the certificate of title?