<prompt> Human: Say I had a personal loan and applied my car against the loan as collateral to drop the interest rate. Halfway through the loan, my car is totaled. What happens then?  <response>: You still owe the debt, the lender just no longer has security of the collateral if you default. I dont know of a lender that would give a loan out in this fashion without requiring there be insurance to insure their interest in the collateral. 