The United States government is providing $1.5 billion in loans to the financing arm of Chrysler to help it make car loans.

What? I understand that the credit markets are tight and that's making it tough for people with marginal credit scores to get car loans but here's the reality: People with marginal credit scores shouldn't be able to get new car loans.

There are plenty of used cars out there, and it's not in the long-term best interests of consumers to allow them to have large monthly payments on new cars that they don't need.

Recently GMAC relaxed its lending standards with the help of Treasury Department funds but as I wrote at the time, the standards were really not that outrageously high before the government aid. Of course lower standards are great for the industry because they'll spur sales, but at what cost to the financial health of working Americans?

Every personal finance expert on the planet will tell you that car loans because you can't afford to pay cash are bad news, and it's disappointing that our elected officials are providing the dry powder to let consumers get themselves in over their heads.

Toyota Motor Corp. (NYSE: TM), in an effort to help lagging car sales and reduce dealer inventory has decided to open loans to seven years [subscription required], expanding the repayment terms from the more traditional three or four year term. The longer amortization periods naturally reduce the car buyers' payments, but there is no mention of a bigger problem that is very likely and the reason this has not been done before -- cars depreciate rapidly!

George Borst, chief executive of Toyota Financial Services, said at a financial-services conference in San Francisco that the company started offering seven-year car loans in late summer. These loans, which carry slightly higher rates than 72-month deals, (the previous stretch) have risen to represent 4% of all cars Toyota Financial Services lends money on.

In one way, this could be looked upon favorably by Toyota car buyers. The company has a great track record for building quality products. This reinforces that notion of dependability. However, cautious buyers should understand that this may not play out to their advantage. It is possible that some time in the fifth year, the loan will be upside down, meaning it will have an outstanding balance higher than the value of the car. What happens then?

This could be another case of dealers charging more money (interest) to the poorest buyers, who are not aware of the impact these loans may eventually have. Reminds me of the mortgage mess. In hindsight, the government should have examined the mortgage industry and Wall Street's business practices and risk. Who's watching now?

Sheldon Liber is the CEO of a small private investment company and the design and research principal for an architecture & planning firm.

So are you part of the crowd that believes Treasury Secretary Henry Paulson when he says that the subprime mortgage slump has been contained? If so, maybe you should pay a little attention to what is taking place over at Bear Stearns (NYSE: BSC) where troubles there are pointing to signs that things are not only worsening, but are spreading across many areas of the market.

As Douglas McIntyre pointed out earlier this morning, Bear Stearns, which had two hedge funds collapse last month due to the subprime mortgage crisis, was forced to block investors from pulling out their money from a third fund today.

The subprime market has been creating a ripple effect of problems since the start of the year, but today's development is a big sign that these effects are working their way into other areas of the credit market as well. According to a Bear Stearns spokesmen, Russel Sherman, the fund in question today, The Bear Stearns Asset-Backed Securities Fund, has less than 0.5% of its assets ($900 million total) linked to subprime loans.

If we can believe Mr. Sherman that the fund is only exposed to the subprime market in less than 0.5% of its assets, then what seems to be the problem here? More than likely, we are seeing the signs of weakness leaking out of the subprime mess into car loans, credit card payments, and other forms of consumer debt.

If the American economy tanks, look for car loans to follow the same pattern as house loans, right into the dumpster. However, Sekurus Inc. may have a tool to help subprime car lenders such as AmeriCredit Corp. (NYSE:ACF) fight defaults, help the repo man reclaim the assets, and protect against car theft.

Sekurus' ON TIME system patches a legal wireless-controlled device into the car's electrical system. The consumer is given a wireless control that he must push before he can start the car, which sends a signal to Sekurus. The company verifies that financing is up to date before authorizing the car to start. The customer begins receiving a countdown three days before the vehicle is disabled.

The system also serves as a theft deterrent, since car thieves won't be able to start the car without the wireless remote.

The product is especially useful for sub-prime car loans, a $75 billion market. The company claims that, because lenders can depend on this system to increase pay rates and reclaim vehicles, it will result in more borderline drivers receiving financing that otherwise would not. ON TIME also can be used by new dealers who have problems with cars being stolen off their lots.