MBNA, Apple Loans, and Purchase Money Security Interests

Does anybody know if MBNA holds a PMSI (purchase money security interest) in goods purchased through Apple Loan financing? Many store credit cards - such as Best Buy, Circuit City, and Sears - do claim this kind of security interest in durable goods and electronics. They usually have an explicit (if extremely tiny and hard-to-understand) statement in their credit agreements that detail this. I cannot find any such statement in MBNA's credit agreement, and under Truth in Lending, they would have to disclose security interests, but I wonder if I am just missing something.

PMSI is something most consumers do not even know exists. It is not like a regular security interest (car, house, etc.). It can occur when a creditor lends money specifically for the purchase of a particular item in a particular store. But MBNA's Apple Loans are also revolving credit lines, and they can be used at other merchants and accessed with cash advance checks, so I am not sure where they fall ... Thanks in advance.

good question

wdlove said:

I have never heard of this PMSI before. What is the actual purpose?

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There are a variety of reasons a creditor may claim a PMSI. The first is that it provides less risk to the lender, since defaulted accounts can be threatened with repossession. Repossessions are rarely sought, but the threat alone is enough to make most people pay. It also prevents the debt being completely wiped out in bankruptcy (which is when many people first learn of PMSI, when they are served with proofs of claim to a security interest.) Bankruptcy filers end up reaffirming the debt, surrenduring the goods, or redeeming the property by paying fair market value.

Wonderously joyous, eh? 😉

seamuskrat said:

I have one of thee MBNA Apple accounts. What I can tell you is that I do not think they do.

I can use the Apple account at Apple, Macwarehouse, Macmall, etc. Basically any APple retailer affiliated with MBNA.\

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Yeah - that is exactly what made me wonder, too. It seems to work like a regular credit account, which would imply (as you point out) that there is no security interest at all.

seamuskrat said:

I do not have a copy of my last agreement handy but I do not recollect that type of security. They do report to the Big 3 credit bureaus and they report like a credit card, not a car loan, mortgage, etc.\

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Yes - many PMSI lenders do report this way. For example, Best Buy takes a PMSI in purchases on its cards. So does Circuit City and Sears, and those report like regular credit cards. One computer loan program famous for claiming PMSI is Dell. Another is Gateway. (Have seen them file proofs of claim in bankruptcy cases.) So it can get confusing.

But I am thinking you are right. I just cannot get ahold of anyone at MBNA who will help with this question (no surprise there). It's not urgent. Mostly curious. But it could be important for a lot of people to know.

seamuskrat said:

I will say its a lousy way to purchase a Mac, as they often have high interest. I got a 0% for 6 months, so i took advantage of it, but once it was paid off, I now have a nice credit line at some ungodly interest that I will never use again. And unlike an MBNA Visa, they will not lower your rate if you ask. They will convert your acct to a regular VISA however.
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Thanks for the advice and information!! 🙂