Question

A business purchases an airplane from an airplane manufacturer. The business obtains a loan to purchase the airplane from a bank, which obtains a security interest in the airplane. The airplane manufacturer is paid for the airplane out of the proceeds of the loan. This is a(n) ________ transaction.

Answer 1

Third Party Secured Transaction or Simply a Secured Transaction

Step-by-step explanation:

A Secured Transaction

A secured transaction is a transaction that is based on a secured agreement between a borrower and a lender. The security of the lender (secured party) is based on the signed agreement that the lender may choose any specific asset owned by the borrower as specified collateral for the loan. This asset can be legally taken from the borrower if he or she defaults on the loan.

A third party secured transaction

It is called a third party secured transaction because, the loan is being taken by a borrower to obtain an asset. The same asset becomes the specified security chosen by the lender.

There are 3 parties involved

1. The Bank- This is the lender- secured creditor

2. The Borrower- This is the borrower and the buyer of the airplane also called the buyer-debtor

3. The Airplane manufacturer - This is simply the seller of the airplane.