I agree that paying cash for a car is a more sensible approach, however some people are just not able to do that.
I'm with you on that one. Maybe it's one of the cons of living in a small town, but obviously the less people, the less range you have to choose from, and 'private sale' when it comes to cars either equals paying $5000 for a 20-year-old bomb that can't even be registered until you've poured another $3000 or $4000 into it to get it up to roadworthy (and even then you don't know how long it's going to 'live' for, it might be $8000 for about six months' use, kwim?) or some idiot who's bought a $40k V8, then promptly lost his licence for hooning and it trying to flog it off for $25k - in which case you're better off going to a dealer anyway!
There just aren't cars for sale under $10k around here (or, as I said, not ones that are suitable for a family and are going to last more than 12 months), and on $40k a year it would take us years and years to save that much money and pay cash. So a loan was pretty much our only option unless we wanted to use the Foot Falcon (which we also can't, as it's a spread-out town despite its small population, and no public transport is available unless you're catching school buses). It made economical sense to us as well because yes, we may be paying essentially double the 'cost' of the car by the time the loan is paid out, but the car will undoubtedly last for many, many more years after the loan is paid out and by taking on this debt and paying it back on time with no hassles, it will repair DH's bad credit rating so that when the time comes to replace this car, there will be no impediments and we can not only choose a lower interest loan, but also splurge and get a pretty flash car rather than one that just 'does the job' (although I'm not fussed on that, of course DH would like something a bit flashier in future, but I'm happy with a tidy-looking car that is good on fuel and gets me from A to B with working air-con lol).

So yes, loans aren't for everyone, but for some people they are quite literally the only option available to them, and of course they're an absolute rip-off, everything to do with finance is, but the benefits for families like ours far outweigh the downfalls.