[UncleMeat]

If what you are saying is true then this is literally the housing crisis with variable rate loans and a collapsing market putting everybody underwater. If the value of the item used as collateral sinks then you go from fine to broke in an instant.

[gh55]

The total being used as collateral can be seen here https://defipulse.com/defi-lending, and https://nexostatistics.com/loans/. A small proportion of market cap, and these loans have low loan to value ratios - typically 20%; no-one wants to risk liquidation.

[UncleMeat]

But then we are back at the original problem, which is that I have no ability to repossess a nontrivial amount of property to handle a default and this system is explicitly constructed to be outside of the bounds of things like credit scores.

[gh55]

Regarding the auto financing. Traditional lenders will typically have no ability to repossess secured assets themselves, they will send out a colourful letter and if that doesn't work, sell the debt to a collection agent. DeFi in the form currently available doesn't need a credit score as it is secured against collateral, but a credit score would likely be needed in this case. New cars sold in the EU are likely trivial to repossess; I believe they have built in location trackers.