Loose wires under load will cause heat to build up because of the load demand and a connection that can't supply that need. It is like a bottle neck where the current can't get to the demand. You say cause a fire, that is why there are fuses in your car or anywhere there is a current flow. That kind of connection will cause the supply side to go to very high demands and that should blow any fuse that is there to protect from these thing happening. That would be if no damn fool has been in there doing wiring with no idea of the consonances.
As said heat build up. Also loose wires can cause a spark as they make and lose connection. One spark with the right conditions and you have fire.
several loose wires can rub against eachother causing friction that can one cause a fire and your engine under that hood is very flammable which could cause an explosion
it shorted out and over heated and started to burn
How would that playout?
