It makes the money too cheap and people buy more car than they would of if they had to pay it all cash.  It also leads to trade in habits as people get used to a perpetual $400&#x2F;month car payment.<p>It makes people buy new cars at $35k when an equivalent used one at $12k would of done the same thing.<p>Loans also create an income dependency if you do not have reserves to pay the loan payment while you have no job.  While a cheaper fully purchased car is significantly cheaper as far as the monthly payment goes.  In the USA a car is pretty mandatory, so that can create a bad situation to be in.