Who owns the cars in debt consolidation?

[Randomsaver]

Let's say one wants to consolidate debts -- mortgage loan, 2 car loans.

When the debt is consolidated, the cars are effectively paid full and the title is released to the debtor or borrower. Is that how it is? It seems something's off. Otherwise, old people will just be amassing a fleet of cars and then consolidate it to a debt. Then they transfer ownership of cars to relatives. When they die, the debt for those cars are extinguished, right?

[StormRichards]

I am certainly not an expert on this, but I would suspect that any debt consolidation involving a home would be dependent on that property appraising high enough to cover the other debt.

I can't imagine any finance company converting collateralized debt into non.

[disneysteve]

I can't imagine any finance company converting collateralized debt into non.

Exactly what I was thinking. When you consolidate the car loans, the new lender becomes the title holder, not you. Same for the mortgage. They aren't going to lend you the money to pay off your house without having the house as collateral.

[StormRichards]

I have a friend that refinanced his house and pulled out equity to pay off auto & credit card debt. In that scenario, he gained the title for his car and basically switched what the collateral was for the portion previously attributed to the vehicle.

[Petunia 100]

If you take out an unsecured loan and use the money to pay off a car loan, yes, you have effectively eliminated the lien on the vehicle.

What would stop "old people" from financing a fleet of cars, taking out unsecured debt, then paying off the cars, giving them away, and letting the debt extinguish when they die? Well, first they would need a lender to lend them enough money unsecured to do so. It's pretty tough to borrow that kind of money unsecured. But if they could manage it, it will probably be because they have a lot of assets. When they die, the lender has a claim on their estate.

[disneysteve]

But if they could manage it, it will probably be because they have a lot of assets. When they die, the lender has a claim on their estate.

Yep. So even an "unsecured" loan is secured by your assets. Of course, if you die broke, then the lender is out of luck.

[greenskeeper]

Let's say one wants to consolidate debts -- mortgage loan, 2 car loans.

When the debt is consolidated, the cars are effectively paid full and the title is released to the debtor or borrower. Is that how it is? It seems something's off. Otherwise, old people will just be amassing a fleet of cars and then consolidate it to a debt. Then they transfer ownership of cars to relatives. When they die, the debt for those cars are extinguished, right?

The cars or anything else that was consolidated are effectively paid off and clear, however the balance of the loan is now tied to the real estate mortgage.

[Randomsaver]

The cars or anything else that was consolidated are effectively paid off and clear, however the balance of the loan is now tied to the real estate mortgage.

That's exactly what happened to some people I know. I could not believe they have the title of their cars to themselves when they had perhaps only paid off less than 10% to their principal from the consolidated debt, the past 10 years, certainly way less than the amount of the cars that have been fully paid and titled to their names.

I guess I'm gonna buy (indirectly) my kids Lamborghinis and a new house for me and consolidate those into a 30 year debt when I'm 75.. the bank can have the house

[StormRichards]

That's exactly what happened to some people I know. I could not believe they have the title of their cars to themselves when they had perhaps only paid off less than 10% to their principal from the consolidated debt, the past 10 years, certainly way less than the amount of the cars that have been fully paid and titled to their names.

I guess I'm gonna buy (indirectly) my kids Lamborghinis and a new house for me and consolidate those into a 30 year debt when I'm 75.. the bank can have the house

Good luck with that plan

[greenskeeper]

That's exactly what happened to some people I know. I could not believe they have the title of their cars to themselves when they had perhaps only paid off less than 10% to their principal from the consolidated debt, the past 10 years, certainly way less than the amount of the cars that have been fully paid and titled to their names.

I guess I'm gonna buy (indirectly) my kids Lamborghinis and a new house for me and consolidate those into a 30 year debt when I'm 75.. the bank can have the house

The debt is still there, except now if they default they will lose the house and possibly the cars as well.

As for your plan at 75, you need to have equity in the house to consolidate other debts to the mortgage.

[Randomsaver]

The debt is still there, except now if they default they will lose the house and possibly the cars as well.

As for your plan at 75, you need to have equity in the house to consolidate other debts to the mortgage.

The house will be lost due to default but the cars are already fully paid and titled to the owners (debtor) who then sold or gifted them to other people.

Banks are greedy especially if you agree to a high interest rate and you have a great credit score, they will loan you the money. And you can only pull this once in your life.

Of course I'm just kidding about me doing this since I'm a straight shooter but I feel no empathy to the banks who charge high rates to poor people just because of good credit score.

[greenskeeper]

The house will be lost due to default but the cars are already fully paid and titled to the owners (debtor) who then sold or gifted them to other people.

Depending on how far in debt and if bankruptcy is an option the cars are fair game as well, with more lawyering of course