A 2003 Chevy Malibu is a regular, everyday kind of car from Chevrolet. The host is basically saying you can bring cars like that to park and show them off at the event.
This is the dealership the host works at. It matters because the story is about how the buyer got a warranty elsewhere and then came to this dealership for help.
This is extra coverage you buy after the regular warranty. It can help pay for repairs, but in this case the buyer didn’t realize she bought it, so she ended up paying a lot for something she didn’t understand.
Look through your car’s paperwork (often in the glove box) to find the warranty documents. It’s a simple way to confirm whether you bought an extended plan.
This is the core “ripped off” concept of the segment: a buyer pays a large amount for an add-on without realizing it was included. It highlights why careful review of the sales contract and line items matters.
GMAC is an example of a car brand’s lending company. It’s used here to show that the dealer may not be the lender—another company often provides the loan.
Gap insurance helps if your car is totaled or stolen. It pays the difference between what your loan still says you owe and what the insurance company says the car is worth.
Instead of negotiating everything as one big bundle, you negotiate each part separately. That makes it harder for the dealer to hide extra costs by swapping discounts and markups between line items.
It’s like an extra warranty plan you buy after the original coverage runs out. If something covered breaks, the plan helps pay for the repair, sometimes with a small deductible.
Prepaid maintenance means you buy future service visits ahead of time, like oil changes. The question is whether the upfront price is a real deal or just a financing add-on.
They’re saying you might be paying interest on the cost of oil changes. Instead of just paying for service when it’s due, you’re adding it to the loan and paying extra over time.
An extended warranty is extra insurance for your car repairs after the original warranty ends. Dealers sometimes sell it because it can add a lot of cost to the deal.
“Packing payments” means tucking extra charges into the monthly payment so you don’t clearly see what you’re buying. The concern is that it can make the deal misleading.
Rising gas prices can increase the perceived cost advantage of EVs, since electricity may be cheaper per mile than gasoline for many drivers. That can influence buying decisions and dealer inventory strategies.
Paying cash means buying the vehicle without financing, avoiding interest charges and often reducing the total cost. The speaker suggests many buyers are financing, which can make monthly payments feel affordable while still costing more overall.
The Chevrolet Tahoe is a large family SUV. The speaker is saying you could get similar everyday use for less money than a luxury option.
LIVE
Hey folks, welcome back to another edition of My Car Guru.
Just a reminder, this coming Saturday is the second Saturday of the month, which means
it's time for the second Saturday Cars and Coffee at Gateway Ford and the AMC Theatres.
We have a really big parking lot that we can fill up with cars, well, cars, trucks, SUVs,
whatever is special to you. Well, not whatever is. I mean, so you've got this, this like,
I don't know, 2003 Chevy Malibu in the driveway. Don't bring it. Just come and park it and then
come look at the really cool cars and get some free coffee and some unhealthy donuts.
Yeah, I tried to figure out if there's some way to get whole wheat donuts or donuts made out of
oatmeal or something, but no, nobody makes that. Nobody wants it either. So we're just doing the
glazed donuts. Maybe you get some cinnamon maybe or some powdered, powdered could be a mess because
we'd end up getting a lot of white fingerprints all over the car. So there won't be powdered donuts.
But one of the things I'm going to be doing at the Cars and Coffee, oh, by the way,
it starts at 8am this coming Saturday, the 11th, and we'll go until about 11. You know,
it's not like these one of these car shows where you have to come and sit there all day in the
hot sun. No, this is a morning thing. It's brief. You can still get to the house and take care of
all those honeydews. So I know how important that is. So come see us down at Gateway Ford,
Gateway Nissan, and we'll be hopefully covering up the AMC Theater Parking Lot. I don't, you never
know who's going to show up for this. I mean, we've had as few as 30 cars and as many as 300.
So I would like to have 300. So if you're in the Tri-Cities and you have a vintage car or
something real interesting, it doesn't have to be a car. It could be a, like I say, a truck.
Motorcycles even. Rice burners. I think that's what they call these little Honda Civics and
Subaru's that are all souped up. You know, they have superchargers on them and special types of
fuel injection and it's just really something the kids are into. You know, if it's got four wheels
or two wheels and is driven by a motor, bring it on to cars and coffee. And I'm going to do my
podcast from the lot of cars and coffee. I'm going to be interviewing people. I'm also giving away
cash. 10 $50 bills will be issued to the 10 fan favorite vehicles that show up for cars and coffee.
And I don't want it to sound like I'm bribing people to show up. But when I did that last year,
that was my big show. That's when the most people showed up. They liked that cash. Okay,
what am I talking about today? Well, my daughter, Abby, she had an encounter yesterday with a
customer. Well, they weren't a customer of ours, but they want to be. They bought a new, well,
I'm not going to say what it is, but it's a brand that we sell at my dealership at Gateway Ford
and Gateway Nissan. And so they bought it at another Nissan dealership, not too far from here.
And she wondered if she could bring her vehicle down to have it serviced at our
dealership. And my daughter, Abby said, well, of course, it doesn't matter where you bought it,
bring it down. We'd love to earn your business. And she had some kind of an issue. And we always
ask a group of questions, you know, what, what is the problem? Obviously with your vehicle,
what are you trying to address? Do you have an extended service contract? And so for them,
when Abby said that, she said, no, I didn't buy anything. I just bought the car. And Abby said,
well, just check your glove box and bring your paperwork. Well, she came down, pulled the paperwork
out of her glove box. Nope, she bought an extended warranty slash service contract. She didn't know
she bought it. And that's bad. What's really bad, though, is she paid $3,900 for a warranty
that I would sell for about 1800. Do you see the problem here? Somebody pays almost $4,000
for something that they don't know they have or didn't know that they bought. How does that happen?
And I'm going to explain how that happens. And I'm going to enlighten you on why it happens.
I'll be back in just one minute.
Okay, I am back. How and why? Those are the questions that I want to answer. So let's talk
about how first. How does somebody spend $4,000? And really, if you add sales tax to that, it was
$3,900 plus sales tax, which is about, let's see, I think it was $4,192, $4,192 that was somehow
hidden from her when she bought her vehicle. How does that happen? Well, the easy answer for me is
is that they're not watching the four targets or one of the four targets. When I talk about the four
targets, they are the four targets that you have to hit when you're buying a vehicle.
Really, to simplify it, it's four separate negotiations that are taking place if you are a
financing person. You're not paying cash for the car, you're financing it, because those are the
people that this happens to. It's the payment buyer. If you are a payment buyer, you are vulnerable
to this happening to you, especially by a dealership that does not follow the rules of the Federal
Trade Commission of the Tennessee, well, if you don't live in Tennessee, the Motor Vehicle Commission
in your state and state law, as far as disclosures are concerned. Now, a little background, car
dealers cannot finance cars. Well, I guess they could have. They had enough money in the bank
and they wanted to fund car loans, but that doesn't happen unless it's a buy here, pay here lot.
A buy here, pay here lot is where somebody buys a car and they finance it right there at the lot.
That particular dealership or whatever you want to call it, car lot has enough money
that they can fund these loans and then take monthly payments until the loan is paid back
plus interest. That doesn't happen in the retail new car business, but you can finance a car through
a dealership. In other words, the dealership facilitates the paperwork for either a bank
or a credit union or a captive finance company like, well, what used to be called GMAC or Ford
credit or Toyota credit, Hyundai credit. They're basically the, they call them captives. So they
are owned by the vehicle manufacturer, but they also operate kind of like a bank. They do
loan money and service those loans, but the car dealer, no, he is not a bank. He is just a facilitator
of the loan. So what happens is you, you finally bought the car where you think you have, you've,
you've committed to buy the car and you sit around and wait until it's time to go into the finance
office. This is where you have to negotiate the fourth target because you are getting ready to be
presented, not only the payments on the, on the vehicle, but the payments on additional
products that you choose to, to buy like an extended service contract. Gap insurance, guaranteed
asset protection insurance. That's insurance that if you wreck your car, total it or it's stolen
and the insurance company where you have your insurance, your car insured does not pay off
enough money to completely pay off your loan. Gap insurance will step in and pay the, the difference.
It's a good thing to have for people on a tight budget. Gap insurance cost anywhere from,
I don't know, six to $900 for a long-term loan. So, and then there are other products like
paint protection, tire and wheel, key replacement, maintenance. You know, if you want to go prepaid
maintenance, you can do that. See, cram all this stuff into a monthly payment and let's say your
monthly payment was 450. Well, by the time they get done cramming all that stuff in there,
after you've agreed to it, you know, maybe your payments 600, but that's still within your budget.
So you go ahead and you, you knew that you bought all that stuff at some dealerships at the bandits.
They close the loan basically on the sales floor because you're, you're saying, yeah,
I'll pay $600 a month. And then when you get into the finance office, that crooked finance manager
says, oh, by the way, we're including in this monthly payment, gap insurance and extended service
contract, monthly maintenance, all of that is included in that same 600 payment that you agree
to out there on a floor and you're sitting there, what nice people. I cannot believe they're doing
this for me. They're giving me all that stuff. But then what they're hoping is that you don't even
read the contract and they don't do the required federal and state disclosure of that contract by
reading pretty much every line. Nope. They do something called the five finger disclosure.
That's where they cover up all those other numbers with their five fingers. And the only thing that's
still exposed is the signature line because they really charged you for all that stuff.
And you thought all of those products were a gift from the dealership. And the final scenario
is where you agree to the $600 a month payment, which could have been 450 and you go into the
finance office and that finance manager doesn't say a thing. You don't know what you bought.
He doesn't print out any paperwork. He puts it on a flash card of some kind and hands it to you.
You've never seen one of those things and you say, what's this for? Well, that's got all your
information on it. And so you leave and you don't know that you have an extended warranty. You didn't
know that you paid a gap insurance. You paid for $6,000 worth of extra stuff without even knowing it
because you didn't follow my instructions. You didn't get the my car guru guidebook
by sending me your email to 423-552-2020. If you had gotten that book in your hands,
read it before you went to the dealership, you wouldn't have paid $6,000 too much. Or if you did,
you knew it because you negotiated the four targets, the selling price, the trade,
the terms of the loan and those products, those insurance policies, four things negotiated separately.
Now, I don't mean to be hard on you, but you know, those guys are dishonest. Somehow they've
learned how to live with it. But you are being negligent by signing something that you haven't
read. You know, one of the things that I recommend people do, if they're not that familiar with
financing, you know, and the dealership doesn't do a full disclosure, you know, it's just like they
skip over it and it goes really quickly and they say, sign here. But you haven't read anything.
Just say, sir, could we just stop just a minute? Could you just print out that contract for me?
And I'm going to take it out here into the customer lounge and I'm going to read it.
Now, what's going to happen is his face is just going to, he's going to lose all color
in his face because he knows that you figured things out and you may have been listening to
that guru guy. He's either his podcast or the radio show. He's not sure which,
but he knows that he's in hot water. So while you're in the customer lounge, digesting,
you know, two feet worth of documents, you know, he's in there sweating bullets because they're
not going to buy that warranty. I just know they're going to not buy that warranty. They're
going to think I'm charging too much. They're going to see what I'm charging for it. And then
you come back in there and you say, sir, I didn't know anything about these other charges.
Could you please explain them to me? And he'll start hymning and hawing and you're going to say,
well, I just don't want that or I'm not paying $4,000 for a warranty that the car guru said I
should be able to buy for half that price. He said, well, let me talk to my manager. And so he leaves
and comes back and said, it's your lucky day. We're having a 50% off sale. You know, at that point,
I would just have to leave because I now I know who I'm dealing with. But please understand,
I am not against people buying an extended service contract or an extended warranty
because I recommend it, especially if you're on a tight budget. You know, if you can get a policy
that that will cover you for the next six or seven years and 100 to 150,000 miles and you don't have
to worry about anything but paying $100 deductible. If your engine blows up as long as you've maintained
it properly, then that's a pretty good thing because cars are very expensive to repair.
And gap insurance isn't a bad thing. You know, the odds of your car getting stolen or totaled
aren't great. But if you finance a vehicle for 84 months or even 60 months and don't pay
much or anything down or you're upside down going into the car loan and that negative equity is
carried over to the new loan, I mean, if you do total your vehicle, you're going to be in a world of
hurt. You're going to have to come up with a bunch of money to pay off that loan because the
insurance company that's settling with you is only going to pay the market value of that vehicle.
They don't care how much you owe on it. So gap insurance can be a good thing.
You know, some of these policies that they sell and they're not really insurance policies,
they're not guaranteed, they're not refundable. But if you buy key replacement, you know,
they bundle these things together like they call it tire and wheel. And that's if you,
your wheels get damaged or if you have a tire blowout, they'll replace it. If you have, if you
lose your very expensive keys and they can cost from 300 to $1,000 on some cars, then they'll
replace that. If you get door dings or you have a paint issue or you get some stain on your fabric
that, you know, you can't get out, they'll pay to replace that. Some of those are decent products,
but I mean, what are you going to pay for that? And prepaid maintenance, do the math. I mean,
are they charging you more to do six or seven oil changes, however many they're selling you,
than what you would pay out of pocket if you just made an appointment, came in there and
paid for them? I mean, I just soon pay for them when I need to pay for them. What you're doing
is you're financing oil changes. If you add that to your sales contract and you're still paying for
those oil oil changes long after you've had them all. To me, that just doesn't make a lot of sense to
buy prepaid maintenance unless you're buying it at an extreme discount versus, you know, say,
let me save 25%, then maybe it's a good deal then, but I'd rather just pay cash for that than finance
it for 84 months. Okay, so we talked about how they're doing it. Let's talk about why. Well,
that's pretty obvious. It's a profit motive. I mean, that's one of the reasons they're doing it.
Uh, sometimes dealerships want you to buy extended warranty contracts and prepaid
maintenance and things like that because, you know, you'll come back for service and it's kind
of like a customer retention tool. And I get that. I mean, we sell service contracts, we sell
gap, we sell all that stuff, but by golly, the people that buy it for me, they know they're buying
it and they're not presented that before they get into the finance office. It's not added on
to the payment or to the price when they're negotiating that because we follow the four
targets as well in my dealership. I will not let them bundle things together. You know what it's
called, don't you? You probably heard this term. It's called packing payments and it's illegal.
There have been a lot of dealer groups and small dealers that have gotten in trouble
and prosecuted for packing payments because to me, it's no different than stealing.
I mean, if I take somebody's $4,000 that they don't know anything about, how is that not stealing?
A lot of dealerships will say, well, you know, it's us against them.
You know, they're supposed to read their paperwork. Well, they can't read the paperwork
if your hand is covering the numbers and they can't understand the paperwork if you don't
explain it like you're required to by federal law. You crook. Okay, I'll be back in just a minute.
Who would have ever thought that somebody screwing around with the straight of horror moves
could ever affect gasoline prices in Greenville, Tennessee? You know, that's where
macroeconomics affect microeconomics and it's a short-term situation. Yet I read in automotive news
all they're expecting a big surge in EV sales because of rising gas prices.
Well, just wait till they start going down, which probably be in a couple of weeks.
And everything changes and they're saying, why did we buy this electric thing? People just amaze
me sometimes. You know, sometimes I like to look also at what drives people's purchase decisions.
Is it price? If it is, you need to rethink things. Price is important. Don't get me wrong,
but it's not the main thing. I think people need to look at reliability. They need to look at quality.
I think they need to look at their dealer and the dealer that they're going to be doing business
with because they're a part of their car life, whether they want it or not. You know, a dealer
that retains your business because, you know, you both respect each other and they do a good
job for you. And that's a relationship worth preserving. If you have a dealer that goes the
opposite direction, then you defect. You go somewhere else and establish a relationship
someplace else. But to me, those are important things. Reliability, design. Some people buy
because it's prestige. You know, I see these people riding around these young people. I'm talking
about people in their 30s and 40s driving around in these big Cadillac Escalades. I just wonder
how much their monthly payments are. I doubt that many of them pay cash. I think that's a prestige
purchase. Otherwise, why wouldn't you just buy Chevy Tahoe? Does exactly the same thing. Exactly.
And it does it for $40,000 less. You know, is that a prestige thing? I guarantee that it's not a
reliability or necessarily quality. Prices is not the driver because they're ignoring price for the
sake of something else. And these are the kind of decisions that people make that destroy their
budgets and their livelihood. And then they end up at 65 years old and wanting to retire.
And they can't because of all the silly decisions they made their entire life.
Save what you waste and you will never have a problem with money again. Well,
thanks for listening to this edition of My Car Guru. If you have any questions,
text me 423-552-2020 or send me an email to Lenny Lawson 2020 at gmail.com. I'll see you next time.
About this episode
A Cars and Coffee announcement kicks off the show, then the host dives into a real-life ripoff story: his daughter helped a customer who bought a Nissan elsewhere and later discovered she’d unknowingly purchased an extended warranty/service contract for about $3,900 (plus tax), far more than it would cost elsewhere. The discussion explains how “payment buyers” get trapped in the finance office through bundling, hidden disclosures, and “packing payments,” including gap insurance and prepaid maintenance. The host argues these products can be worthwhile when fully understood, and closes with advice to prioritize reliability and dealer trust over prestige or monthly-payment games.
