A borrower obtained secured loan of $12,000 to purchase a car and put down $2,000. Today, the outstanding balance on the loan is $9,000 and the car is worth $8,000 if sold. In case of default,

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BIn case of default and subsequent sale of the car for $8,000, the lender can still ask the borrower to pay the remaining $1,000 balance after applying the sale proceeds against the outstanding loan balance of $9,000. This is because the loan is secured against the car, and any shortfall after the sale of the collateral can still be pursued by the lender. Therefore, the lender will not necessarily lose $1,000, as they can seek to recover the remaining balance from the borrower.

A Borrower Obtained Secured Loan of $12,000 to Purchase a Car