If your father dies, any debts he had are passed along with his assets. If he still owed money on his car, his heirs get the car and the loan balance. There are exceptions, like if insurance provides for payment of an outstanding debt on a loan in the event of death, but these are exceptions to an almost universal idea that all things of value in an estate as well as all outstanding notes and such are handed down as a package.
Think of it this way. If you loaned someone money for a car and that person passed on, you'd still be owed the money or have a "stake" in the car. Any who inherit the "goods" of the deceased will also take on any outstanding debt. You loaned the money for the car. If the person who borrowed the money dies, you still have an outstanding debt with the heirs of the departed. You'd expect to be paid, and law provides for this.
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