First of all, buying a car so that you can drive your ass around is very different from sticking those borrowed money into an index.
Second, there exists no index fund that can reliably return 5%. Borrowing money to put it in a financial instrument is called leverage and is a quick way to get poor, not rich (and I know a bit about it because I work with financial risk for a pretty large, well known bank).
Third, for some reason (and, do explain this if you can), people are not storming banks to borrow at 3% to then go to a brokerage house to buy a supposedly reliable index. Please, show me ONE person who got rich this way... I guess not. You see, this is not how people get rich... people get rich mostly by earning a bunch of money and then not losing it. You know, not losing it is kinda important part of getting rich.
In fact, there is lots of people interested in how people actually get rich. And funny thing, nobody gets rich by repeatedly borrowing money and buying index funds. BECAUSE IT DOESN'T WORK.
Fourth, the act of taking debt changes how people think. I also know something about it because for large part of my life I had a lot of debt. Wonderful things happened to me after I paid it all. And while most of it might be in your head, the results are very real.
This sort of knee-jerk debt avoidance on principle is not smart.