What happens under a car title loan?
A) A default results in the debtor's loss of ownership in the car
B) That no interest is paid until the default
C) That as long as the creditor holds the title, the debtor has time to pay without the creditor being able to sell the car
D) None of the above

Question

Quizplus · Accepted Answer

Under a car title loan, the debtor uses their car as collateral for the loan. If the debtor defaults on the loan, the creditor can legally repossess the car and sell it to recoup their losses. This means that the debtor will lose ownership of their car in the case of default. Option B is incorrect because interest is typically charged from the beginning of the loan, regardless of default. Option C is also incorrect because the creditor may sell the car at any time after a default, even if the debtor is actively working on repaying the loan.

What Happens Under a Car Title Loan