Wrett Purchases a New Four-Wheeler with a Loan from His

Multiple Choice

Wrett purchases a new four-wheeler with a loan from his bank. The bank requires that he use his car, which is paid off, as collateral for the loan he secured from the bank. The value of the 4-wheeler is $2500.00. The value of the car is $15,000.00. Wrett defaults on his loan for the 4-wheeler and thus is forced to sell his car to repay the loan. Which statement below is true regarding this secured transaction?

A) Wrett must dispose of his car and apply the proceeds to the loan and if there is any surplus the money belongs to Wrett.
B) Wrett must hand over physical possession and title to the car.
C) Since the value of the car far exceeds the value of the 4-wheeler, the bank must accept an alternate good closer to value of the 4-wheeler.
D) The bank will sell the car for the value of the loan of the 4-wheeler, not the actual fair market value of the car.