In general, who has priority rights to collateral used for securing a loan?

The correct answer is that the first secured lender to file a financing statement has priority rights to collateral used for securing a loan. This principle stems from the Uniform Commercial Code (UCC), which governs secured transactions in personal property. Under the UCC, a lender's priority in the collateral is generally determined by the order in which they file their financing statements.

When a secured lender files a financing statement, it provides public notice of their interest in the collateral, effectively establishing their claim. If multiple lenders have security interests in the same collateral, the first to file or perfect their security interest typically gains priority. This means that in the event of default, the first secured lender can claim the collateral before any subsequent lenders can assert their claims.

The emphasis on the order of filing is crucial in a secured lending environment, as it establishes a clear hierarchy of claims and protects the rights of the lenders involved. This system encourages lenders to promptly file their financing statements to secure their interests effectively.