It seems that you can't pick up a newspaper, go to a finance site like Bankrate.com or turn on a TV news show without hearing a lot of discussion about the subprime mortgage meltdown.

Now, the auto loan industry is reacting to spillover from that crisis in ways that might surprise you. Rather than cutting back on loan terms, lenders are lengthening their car loans as a way of avoiding defaults.

Toyota Financial Services is the latest lender to lengthen its car loan terms. Toyota announced this month that qualified buyers can get loans of up to 84 months -- seven years of car payments.

Toyota says it extended the length of some loans to compete with online lenders and credit unions already offering 84-month loans. On some luxury or exotic cars, the company has gone so far as to offer 96-month loans.

From an industry standpoint, these longer loans put manufacturers in a Catch-22. As car prices rise and buyers want vehicles with luxury appointments, the only way to make the deal attractive is to offer lower monthly payments. This is especially true in today's marketplace, where new vehicles sales are spiraling downward.

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But lenders also know that the default rate on these longer loans is higher than on loans of 60 months or less.

Even if you restrict these longer-term loans to people with credit scores of 700 and above, a lot can happen over seven years. Buyers can lose their jobs, get sick, get divorced or experience another life event that prevents them from making the loan payment.