Banking problem

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MO
Can a bank use collateral for a loan that does not belong to the borrower?

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Can a bank use collateral for a loan that does not belong to the borrower?
State of MO

What do you mean--what happened?

They can if the actual owner allows it?

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To get to the point of my initial question, you will need to read the whole story.

Bank made me a loan. I was to put the pmt in a cking acct they set up with overdraft protection, in the event the loan pmt was not made on time, the cking acct would charge me a fee, but would cover the pmt. The reason for this was that my kids were going to make the payments, and should they be late or not make a payment, the cking account would protect my credit. Problem...they forgot to attach the Overdraft protection. Now I have an OD charge, AND my credit history is blemished because the checking acct refused to cover. To add to the mix...the pmt WAS made on the loan due date. However, the bank stops their daily business at 2:00 & the payment was made at 4:00. Same bank has the loan, same bank has the cking acct. It would seem to me that it is only right that if the pmt is in the banks possession they should honor the deposit, or collect the loan pmt the following day....since they know their own bank policies. The cking account was short of the loan pmt by $1.31, even considering they did not recognize the deposit on the day the pmt. was made. (Kids have been paying extra). I have asked the bank to consider the circumstances and remove the overdraft charge, since they too have made an error. They refuse. So, since they seem to be within their "legal" rights in this matter, I am looking at what might not be legal on their part.

The loan they made me was so my son could buy a car. (I know, bad move). I asked for the loan proceeds to be given to me. And that the title to the car be in both my son's and my name. I signed the loan papers and when I asked for the proceeds, I was told they had already sent to check to the dealership which was next door. (Guess I should have been an ass like they are being, and insisted they get that check back and give a check to me, but I didn't) I went to the dealership and found that the purchase had been made without my name on any of the paperwork. Not on the purchase agreement. I didn't sign for receipt of the vehicle, and the title did not get my name on it. So...I have a loan with this vehicle listed a collateral, but I have no control over the vehicle.

I have been fair with the bank for their mistakes (forgetting the overdarft protection, and for sending the money to the dealership, and for using collateral that ended up not being mine) so I expect them to remove an overdraft charge that did not protect my loan history.

Long story for the initial question. Any advice?