What happens if someone (say Joe) gets a 1k personal loan and puts up a car (Joe's moms) for collateral but Joe's mom had no idea of the loan and Joe isnt on the title
What happens is that Joe goes to jail for fraud.
when collateral is required by a bank, they usually want a way to make sure that the item can't be sold without their permission, and they want to make sure the borrower actually owns the property.
When getting a mortgage or a car loan, the lender makes sure that either they are explicitly listed on the car title, or their lien is filled with the local government. This prevents the borrower from selling the item without the lender and the buyer knowing. The lender will only lend money to the owner or owners of the item.
Getting around the title and lien would involve some level of deception or fraud, and they could likely face civil or criminal punishment.
Now if the loan came from a non-standard source, for example an auto title loan in the United States, the lender will hold the title document and file a lien with the DMV, which will limit your ability to sell the car until you pay the loan. In some jurisdictions they may have provisions in place that forbid a lender from making a loan when there is already a lien on the vehicle. But all will require that the borrower must be the owner.
The law will determine what punishment a borrower may face if they commit fraud in relation to the collateral on a loan.
What happens if someone (say Joe) gets a 1k personal loan and puts up a car (Joe's moms) for collateral
It does not happen because the bank will want the car title and a signature from the owner. Which is not joe. Now, if Joe's mom agrees - then she actually enters into a contract with the bank to provide the guarantee and the question makes zero logical sense (beauuse she owns the collateral).
The only way this works is if higher crime is involved- i.e. Joe FORGING DOCUMENTS. Which means jail time. Because thsoe crimes come with ciminal penalties that are quite severe.