Always use effective rate to compare, not flat rate.

Car loan/term loan use flat rate interest to quote and calculate, it is not an effective/real rate (EIR) to start with.
eg.

100K 5 years 3%.
Total interest would be 15K, means 3K each year.

The problem is not the 1st year, but later year.
After paying off for 4 years, you left with outstanding of principal balance of 20K,
But interest still 3K pa.

3K/20K = 15% <---- see where bank makes the most money from.

One is paying 15% interest rate without knowing...

EIR is the figure the average out (as first year it is really 3%) and real interest rate one is paying.

The main mistake many did, is they use FULL FD amount to compared. Eg.

100K 4% full FD 5 years = 20K interest earned
vs
100K 3.5% term/car loan 5 years = Interest paid 17,500

It seems taking loan can get extra 2,500.
But, it is wrong to start with, because one needs to pay off the term loan every month.

The apple vs apple comparison, you have 100K now, instead paying off cash, or taking loan 100K and slowly pay off the loan using the FD (not from other source, like your wages)
So FD amount needs to be drawn down every month to repay the loan.
You don't have 100K FD for the second months, and left less than 20K for the 4th years already, hence the interest earned calculation is flaw to start with.

The above calculation is only right, if one doesn't need to pay off the term loan every month, and only need to pay once in full after 5 years.