Can a car dealer really relate to a car owner....this GURU can...and how much is too much for an extended warranty?

Can a car dealer really relate to a car owner....this GURU can...and how much is too much for an extended warranty? My Car Guru Podcast · Jul 1, 2026

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Person

Lenny Lawson

Lenny Lawson is the host of this radio show and podcast. He has worked in the car dealership business for a long time and uses his insider knowledge to help everyday people avoid getting ripped off when buying or fixing cars.

Car

1950 MG

This is a classic, vintage British sports car from 1950. It is very small, has a classic look with big round headlights and a folding fabric roof, and is loved by collectors despite requiring a lot of hands-on maintenance to keep running.

Part

valve seals

These are tiny rubber seals inside the engine that keep oil where it belongs. If they get old and crack, oil leaks into the area where fuel is burned, causing the car to blow blue smoke out of the tailpipe.

Term

spark plug fouling

This is when a spark plug gets dirty or coated in oil or carbon, which stops it from making the spark needed to run the engine. When this happens, the engine will shake, lose power, and run very poorly.

Car

Ford Model T

This is the famous 'Tin Lizzie' built by Henry Ford starting in 1908. It was the first car that regular working-class families could afford, and its hood opened from the sides rather than lifting up from the front like modern cars.

Car

2026 Ford Bronco

The Ford Bronco is a rugged, boxy SUV built for driving over rocks, mud, and rough trails. You can take the doors and roof off to enjoy the outdoors, similar to a Jeep Wrangler.

Term

extended service contract

This is an optional protection plan you can buy that promises to pay for car repairs if your vehicle breaks down after the original factory warranty runs out. It is basically an insurance policy for mechanical breakdowns.

Car

Jeep Wrangler

The Jeep Wrangler is a famous, boxy off-road vehicle where you can take off the doors and roof. Owners have a unique culture, including a trend of placing little rubber ducks on each other's dashboards.

Concept

payment buyer

This is a car buyer who only cares about how much they have to pay each month, rather than the total price of the car. Dealerships love this because they can easily hide expensive extra fees and products by just raising the monthly payment by a few dollars.

Car

Subaru Forester

The Subaru Forester is a popular, family-friendly small SUV that comes standard with all-wheel drive, making it great for driving in snow, rain, or light off-road trails.

Term

exclusionary warranty

This is the best kind of extended warranty you can buy. Instead of giving you a confusing list of parts they will fix, the contract only lists the few things they won't fix (like tires or oil filters)—meaning everything else on your car is covered.

Car

Nissan Altima

The Nissan Altima is a common, mid-sized four-door family sedan designed for comfortable daily commuting and good fuel economy.

LIVE

Hey folks, Lenny Lawson, the Kar-Guru, and thanks for tuning in.

You know, I think about this sometimes, people say, well, you don't really know what it's

like.

Well, I can tell you, I do.

I sat on the side of a road yesterday for about an hour, and a 1950 MG, and the lady

that sold it to me is probably listening right now, and I'm not as angry as I sound.

I'm just joking around, but anyway, it sidelined me on the 11E highway.

I tried to get back.

I'd made it 10 glorious miles.

It was running fine, and then all of a sudden, it wasn't.

It started missing.

Now, my technician who had been working on it said, Lenny, we're ready to go.

He had fixed five or six different problems, put new spark plug wires on it, gave it pretty

much a major tune-up.

We replaced the valve seals because it was leaking oil into the cylinder and actually

fouling the spark plugs and blowing blue smoke out the tailpipe.

We solved that.

We thought we were good to go.

It's 99 degrees outside, and I'm pulling a hill in the country, and all of a sudden,

it's like it's running on two cylinders, maybe one and a half.

I had to stop, raise the half of the hood if you know how those things look 1950 MG.

It doesn't raise like a normal hood.

It comes up from the side like a Model T Ford.

Raised it up, wiggled the spark plug wires, got back in it, which is a major chore.

I'm 6'3", the car is made for people that are 5'2".

And it fired right back up, running fine.

I go down the road maybe half a mile.

It starts missing again.

And then I was able to limp it to the four lane, and probably not as safe a place to

be as these big tractor trailer rigs are blowing past me, messing up my quaff.

That's my hair.

And that's okay too, but I'm glad I had my cell phone because I called my man.

He came and he wiggled the spark plug wires, and I limped it forward another half mile.

I said go get my Bronco, I've got a toe strap in the back.

I'm not calling a record company again to come rescue me.

I've had enough of that because it seems like lately, every time I go out in one of

my old cars, I'm having to call A-1 towing.

It's me again, you know, they see my number, they don't even say, hello A-1 towing, no,

they just say, where are ya?

And I tell them, and they come rescue me, so I wasn't going to do that again, no.

So we got the toe strap, and so he pulled me about four miles to the dealership.

And so I'm drenched in sweat and not in a, well I say the mood was not great, but then

I got back to the dealership and we were really busy and there's nothing like having a real

busy car dealership that puts a smile on my face.

Oh, I also got a final notice, I just wanted to tell you about it.

You know, whenever you get something in the mail that says final notice, what's the first

thought?

That's right, you got a bill you didn't pay.

And so this is the hype that these warranty companies use now, warranty solicitation companies.

And it says final notice, immediate response needed, so open up the envelope, here it is,

my name, my address, my brand new Ford Bronco that I've had a month and a half.

And it says, this notice is to inform you that we have been trying to contact you and

have not been able to, oh that's in capital letters, regarding your vehicles warranty

for your 2026 Ford Bronco, please contact us immediately to verify your information

and make sure everything is current.

Our records indicate that you have not called us yet, called us yet is in capital letters

and bold print, like this was a moral obligation of mine.

And the reason I needed to call was to verify that my factory warranty is still in place.

Now if you got this in the mail right after you bought a new vehicle, would you do what

you're supposed to do, which is just tear it up and throw it in the garbage, or would

you call the dealership in a panic state saying, my warranty is about to expire?

Well, if you listen to this program very often, you know that you're going to get these.

I got another one, same mail drop, immediate action requested, this is our final attempt

to notify you, plus they've got this thing here that looks like a check.

It says it has 199 with a dollar sign in front of it, looks like all I have to do is sign

it, pay to the order of, no it doesn't say that, it says to the order of, it doesn't

say pay to the order of, and then it has 199 dollars, which they call an allocated waiver.

Isn't that interesting to phrase it like that?

What is that?

Well, they're probably going to quote me an extended warranty price and then they're

going to subtract 199 as a discount if I sign up for their warranty or their extended service

contract that does not pay any claims.

You know, a warranty is only as good as who's backing it up and whether or not they pay

claims.

It's just like if you have a homeowner's insurance and your house burns down, are they

going to live up to replacing, you know, your duck collection?

You know, those rubber ducks that they put on the dashboards of Jeeps, Jeep Wranglers?

Maybe you have all you can get on the dash of your Jeep and you've got thousands more

in your house and they all melt when your house burns down and all your contents are

supposed to be covered, but no, they won't cover your ducks.

This is what happens when you buy an insurance policy and you don't read what's covered

and what's not.

And so I'm going to talk about here in just a minute how to validate whether or not an

extended service contract commonly referred to as an extended warranty is worth buying.

I'll be back in just a minute.

OK, so let's dig into this extended warranty slash service contract question.

Number one, a warranty is a promise, basically, from a manufacturer like Ford.

And they say that if your vehicle breaks down, has a failure in material or workmanship,

which would be like a part component or the way that part component was installed.

If there's some problem there, then they will fix it at no charge to you.

As long as you have not abused the vehicle, there are certain caveats in every warranty.

And one of the biggest ones is if you don't take care of your vehicle, they can deny a warranty claim.

So a warranty, by definition, is something offered by the manufacturer.

A dealer, in other words, can't offer a warranty.

He can offer a service agreement and that's basically a contract between you and the dealer.

Or you can buy one from the manufacturer like from Ford or Toyota or Honda.

Or you can buy a service contract from an insurance company like Assurant or Zurich.

These are big insurance companies. They got plenty of money.

And they sell service contracts to compete against those sold by Ford, by Toyota, by Honda.

So why would you buy one from them as opposed from the manufacturer price?

The ones sold by these other companies often cost less.

Now, unfortunately, well, unfortunately for you is that as a car buyer, you go into a car dealership,

you want to buy any extended service contract.

The dealer has the ability to mark that contract up.

It's a product that they have a cost that is associated with whatever warranty that you want.

Now, let's say you want a five-year, $100,000 warranty.

Well, that particular one with a $100 deductible cost the dealer $1,800.

If he wants to sell it to you for $5,000 and you're not paying attention and you're a payment buyer,

then he can do that.

Is it illegal? No. Is it unethical? Yeah.

But you know that dealer that's doing it doesn't think it's unethical because that puts food on his finance manager's table.

So he doesn't think it's unethical.

It's like jousting.

Remember that? When the knights and their armor and stuff and they have the jousting poles and they get on horses and run at each other.

And one guy gets knocked off his horse.

Well, if you pay $5,000 for a warranty, you got knocked off your horse.

He's still up and running and he's happy. They're having a party.

So what you have to make sure of is that they're not gouging you on those products.

One of the best ways to do that is to contact me before you buy an extended warranty.

Before you go in even to shop for a car, you can say,

hey Lenny, I'm thinking about buying a brand new Subaru Forester.

And this is the VIN number.

Would you tell me what I should pay for an extended service contract on this?

Because I'm going to keep it a long time.

And I'll say what term do you want?

And you'll say five years, 100,000 miles or six years, seven years, 150,000 miles.

And I'll tell you what that warranty costs.

And then when the dealership prices it to you at double that, you'll say, no, no.

No, I'm not paying that.

Well, you have to pay it. No, I don't.

Because I can call the car guru and get one from him. Who's he?

None of your beeswax.

So I'll do that for you.

I mean, if you want to buy an extended service contract and that dealer won't work with you,

he's trying to charge you $4,000 for a warranty you should be able to buy for $2,200,

then just don't buy it.

Now, the problem with that is if you can't come up with the cash plus the sales tax on an extended service contract

and have to finance it in the monthly payment, then you're out of luck trying to get it from me.

But if you're a cash buyer and they price it too high,

I'll tell you what you can buy one for and then you compare it to what they're pricing it.

And you say, no, I'll just, I'm just going to go home.

Then you call me, I'll sell you an extended service contract and it will be backed by a very large insurance company.

That being said, if you want the best protection, you need to buy it from the manufacturer back to plan.

You need to buy, if you buy Honda, you need to buy the Honda plan.

If you buy Ford, you need to buy the Ford plan.

That's the most convenient.

It's not going to give you any more coverage as far as the, you know, the different components on the vehicle

and the claims process will be just as good.

What's different is if you buy an aftermarket warranty and you travel a lot

and you go, let's say you live in Tennessee and you break down in Texas, you go to a Ford dealership

and, you know, you're not covered by the manufacturer's warranty.

And you say, I have an extended service contract.

If it's a Ford extended service contract, they call it Ford ESP, no problem.

They'll process you right through.

If you have an aftermarket warranty, it's a few more steps you'll have to do.

You'll have to call it 800 number.

That dealership may even say, no, we don't honor those.

If they don't, they're silly because all they have to do is call the warranty company

and they'll get a credit card number and they can charge all the repairs on that credit card,

not your credit card, the warranty company's credit card.

It's just a few more extra steps.

But, you know, if you plan on sticking close to home and you have a breakdown

and you buy an aftermarket warranty, you're fine.

Especially if you take it back to the dealer where you bought your vehicle,

which I always recommend anyway.

I mean, I do not recommend defecting and going to another dealership

unless there's some big price advantage when you buy the vehicle

or you just don't like their service.

You think they don't appreciate you as a customer.

And you've talked to the service manager and he's indifferent about it.

And you've talked to the general manager and he can't even remember your name.

Then it's okay to go someplace else.

But go to another Honda dealer if you're driving a Honda.

Go to another Toyota dealer.

Don't go to Joe Blow's independent shop even though some of them are very good.

I always recommend going back to the dealership because they know your car better than anybody else does.

But back to the warranty question slash service contract.

Buy the factory one if it's affordable.

If you can get a big discount on a aftermarket warranty, that's okay.

Who's backing it up?

That's what I want to know.

What's a claim like?

And what is covered and what is not covered?

Now what I would want to buy is an extended service contract that is of the exclusionary type.

Meaning that they tell you everything on the document.

Don't rely on what the salesperson or the finance manager says.

Read the contract.

See what components or systems, maintenance items are excluded.

Those are listed.

Everything else is covered.

Imagine trying to buy a warranty or an extended service contract and looking at the document and it's got page after page of all these things that are covered.

What's not on there?

What did they leave off?

Did they leave off the alternator, the radiator, the brake calipers?

It's easy to overlook something.

So it's far better to buy an exclusionary policy that lists what is not covered and everything else is.

Everything else that isn't listed on that piece of paper is covered.

What's the deductible?

What's the claims process?

Do they have an 800 number that you can call?

Do they have roadside assistance?

All of these things add value.

And so those are the important factors.

Now, again, most of these products are based on time and miles.

So you need to look at how many miles you drive a year and just make a decision.

Is it better for us to take a five-year 75,000 or pay extra for a five-year 150,000?

Well, if you only drive 75,000 miles or less in five years, then that's going to be the cheaper one to take, the better one to take.

What's the finance guy going to push?

In most dealerships, the one he can make the most money on because, again, he's going to mark it up.

Now, one of the things I like to say or I would recommend that you say is you're trying to hit the four targets as found in the MyCarGuru guidebook.

You've got a good sale price.

You've got a good trade allowance.

You understand what the terms of the loan are.

Now they're presenting these aftermarket products and they price you an extended service agreement.

And you say, well, sir, that's too much.

I'm not paying that.

Now, you can make them an offer.

You know, if they price you one for 4,000, I said, I'm not giving any more than 2,000.

They try to cut back on the coverage in order to fit in that price.

No, no, no, no.

No, I want that warranty for $2,000.

And then he'll go talk to his manager.

He'll pretend like he's going to talk to his manager.

But what he's doing is he's going back in the conference room, taking a swig of his Coke, waiting a few minutes, maybe checking his Facebook page.

And then he'll come back in there and say, I'm sorry, I wish I could sell it here for that price.

But good news, I was digging around in a drawer back here and I found a coupon where you can get $800 off.

And if we apply that, this is what the price will be.

And you're sitting there.

You look at your wife and she looks at you and, you know, you don't believe him and he's lying and say, no, 2,000.

Well, they'll come down.

They'll come down even more.

It's a negotiation.

If you want to do that, if you don't want to do that, then just call me 423-552-2020.

I'll give you a price on a very high quality insurance backed extended service agreement that will protect you and not give you nightmares when you have a claim.

That's the most important thing.

All right, I'll be right back.

Lenny, I didn't know you're going to sell stuff on this show.

I am not trying to sell anything.

I'm just trying to give you an alternative to getting ripped off.

And that's part of my mission.

And if that works for you, then that works for me.

It doesn't matter where you live.

You can be anywhere in this USA.

I'm sorry, I can't help you if you're in another country.

But if you're in the continental United States, then I can provide you with an extended service contract.

Find out what they'll sell you one for.

Try to buy it from them.

Give them a shot.

But it's kind of tough.

You're sitting there buying a car.

You're paying for it.

You're at the very end of a very long day and then all of a sudden they throw this extended service contract price at you and it's too much.

And you need to finance the vehicle.

You can't afford to just pay cash for the extended service agreement.

You have to roll it in to the financing in order to, you know, it'll just increase your payment.

I don't know, $25, $30 a month.

You can handle that, but you can't handle, you know, $2,500, $3,000 for a service contract.

But you really want it.

You really think you need it.

What do you do?

First, you try to negotiate the price.

Second, you tell them to just hold the paperwork.

You'll decide on the extended service contract in the morning.

But they'll put pressure on me.

So what, you know, you've got to be resilient.

Say, no, I really need to do a little research because, you know, you're talking about making a thousand of $1,500 mistake, maybe more.

I had a gentleman come in that had bought a new Nissan from another competitor and he didn't even know he had purchased an extended service contract because they put all of his paperwork on a flash drive and handed it to him and he didn't even know what that was.

He wasn't not smart.

He just, not computer literate.

And so I stuck that flash card in my computer and I said, sir, did you know that you paid $5,000 for an extended service contract?

What?

You know, I thought he was going to have a heart attack.

He was like 76 years old.

Oh, he was distraught.

You don't want that to happen.

I mean, you're talking about, well, that was on a Nissan Altima.

He could have easily bought that same extended service contract for the same term for half of that price.

What could you do with an extra $2,500?

You could do a lot.

That'd pay for a really nice weekend at Myrtle Beach rather than, you know, handing it over to a dishonorable salesperson or finance guy.

So you have to pay attention.

You cannot afford to go to sleep in the finance office.

I believe in the products that they sell.

Extended service contracts add value, especially when headlight assemblies cost $2,500.

And the infotainment screen is $3,500.

And an engine is $15,000.

Yeah, I can see paying $3,000 maybe for a pretty elaborate extended service contract that covers everything, but not $5,000.

And I'm not going to let them roll it into a payment until I see the breakdown on the numbers.

See, what people do is they go into finance office and it's all based on the monthly payment changes.

They don't even ask, well, how much is it costing?

Some people do.

The savvy people do.

The finance guy said, well, it's only $25 a month.

Yeah, what's 25 times 84 months, which is how long you're financing the vehicle?

That's a lot of money.

And it could buy a lot of groceries.

So don't let your guard down in the finance office.

You're still a consumer.

They're still the seller and they're still selling.

The sale did not end out there with the salesperson.

There's another sale that's getting ready to take place if you want those products, but you've got to know what they are, what you're buying, and is their value there.

Please pay attention.

Don't let your guard down.

Well, thanks for listening to this edition of My Car Guru.

Again, if you're interested in finding out what you should pay for an extended service contract before you pay it, then feel free to send me the information 423-552-2020.

That's what we do at My Car Guru.

Hey, I like that.

I'll see you next time.

0:00

22:57

Lenny Lawson

1950 MG

valve seals

spark plug fouling

Ford Model T

2026 Ford Bronco

extended service contract

Jeep Wrangler

payment buyer

Subaru Forester

exclusionary warranty

Nissan Altima

About this episode

Original notes