A processing fee is an extra charge the dealer adds on top of the vehicle price. It matters because it can make a “discounted” deal end up costing more than you expected.
“Cutting the margins” means reducing the profit spread between what a dealership (or supplier) pays and what they can sell for. When margins shrink, dealers may rely more on fees, add-ons, or financing products to make up the difference—making it important to scrutinize the full deal.
Suppliers are other companies that make parts for cars. The automaker then puts those parts together, so the cost of parts from suppliers affects the final car price.
General Motors (GM) is mentioned as an automaker that doesn’t manufacture all components itself. GM’s reliance on suppliers and negotiated component costs is part of the broader pricing pressure that can reduce dealer margins.
“Shipped to dealers” describes the distribution step where completed vehicles are sent from the automaker/assembly network to dealership lots. Dealer pricing and discounting strategies depend heavily on how much the dealer paid for the vehicle and what incentives are available.
“WeatherTech” is a well-known aftermarket brand that makes floor liners and other accessories designed to protect against rain, snow, and mud. When a dealer lists it as an add-on, it’s usually a tangible product you can verify.
A trailer hitch is a receiver-style mounting point that allows towing or carrying accessories like bike racks. As a dealer add-on, it’s a specific installed component that should be itemized and priced transparently.
Finance and lease are two different payment plans. Financing is usually buying the car over time, while leasing is paying to use it for a few years with extra rules.
Paint sealant is an extra protective product the dealer may add to the car. It usually costs extra, so it can make your “discount” feel smaller when you see the final bill.
Fabric guard is a protective treatment for seats or cloth surfaces. It’s an extra add-on that can add cost, even if the website made the deal look cheaper.
This means the dealer is counting either your cash down payment or the value from your trade-in as money you’re putting toward the purchase. That changes how much you have to finance.
The monthly payment is what you pay each month for the loan. It’s important, but you should also look at the interest rate and loan length to know the real cost.
A lease payment is the monthly amount you pay to drive the car for a few years. Instead of owning the car, you’re basically paying for the car’s “use” during the lease term.
“36 months” means the lease runs for about three years. Lease deals are calculated based on what the car is expected to be worth later, so the length affects your monthly payment.
A trade-in is when you use your current car to help pay for the next one. The dealer gives you a value for it, which can lower what you need to pay overall.
Principal is the original amount financed. Interest is the extra cost for borrowing it, and together they’re the core of what you’re paying each month.
A body shop fixes cars after crashes. The quality depends on how carefully they prep and repair the damage, not just how it looks afterward.
LIVE
Well, hello, and welcome back to another edition of my car guru.
I have been at Hobby Lobby this morning with my, well, he's sick officially,
but unofficially he's fine.
Bo, one of my grandchilds.
He, uh, wanted a new car or truck since he, a toy, that is.
Since he is sick and he has $10 that he worked for yesterday, helping Nanny do
something.
I don't remember what it was, but that pay level seems a little high to me.
But anyway, he wanted pop, pop to take him to Hobby Lobby to look for a car or
toy.
We found one Ford Bronco on a trailer being pulled by Ford F 100.
I said, great choice grandchild.
And so we brought it home and he's been playing with it and he's very happy.
Wouldn't it be great if buying a new vehicle could be that easy?
Well, it can be if you follow the four targets and you negotiate the Lenny
Lawson way, the car guru way, but most people don't do that because they've
never heard of me and they've never, well, I guess if you explain the four
targets to them, they understand it pretty well.
But if you just throw that out there like I just did, then what's he talking
about Eunice?
And so I don't know why I always use that example.
Her name is Eunice.
I think it came from Andy of Mayberry.
I think there was some woman on that show called Eunice.
But anyway, when you look at at a Bronco, I was looking at a Bronco yesterday
and I thought about trading my F 150 on a Bronco, not gonna do it.
No way that makes any sense for me.
So, but I was looking at the 2026 Ford Bronco Outer Banks on the Gateway
Ford Greenville website.
You can go to gatewayfordgreenville.com and green has an extra E in it.
G R E E E V I L L E.
So gatewayfordgreenville.com and you can follow along on this 2026 Ford
Bronco Outer Banks that we have listed online.
Now we do a unique thing at my dealership in Gateway.
We don't hide anything.
That is a unique proposition in today's internet world because a lot of dealers
have extensive disclaimers at the bottom of their ads.
Our disclaimer is not extensive.
We do have a processing fee.
When did that start, Lenny?
Well, let's see.
It started before I got into the car business.
My dad implemented a processing fee because he went to a meeting of a bunch
of dealers and all of them were doing it.
So he said, I'm going to do it.
You know what our first processing fee was?
$25 and people went nuts over it.
They said, what's that?
You know, it was because you could buy a Chevy Caprice for $36.95 or a Chevy
Vega for $19.95.
So that extra $25 was a big deal.
Well, processing fees really in the 80s and 90s became essential.
Now you're going to say, well, sure, you know, essential to dealer
profitability because the manufacturers kept cutting the margins.
And they did this to control pricing, I guess, and to make their products a
little bit more affordable.
You know, they squeezed the labor unions.
They squeeze the suppliers who supply parts and accessories for the vehicles.
You know, Ford, General Motors, Stalantus, they don't manufacture.
They don't make parts.
Well, they make a few, but most of the components that go into automobiles are
made by some company, not GM, not Ford, not Stalantus.
No, they're called suppliers.
Now Ford produces the vehicle in an assembly plant.
They put all those components together.
They're shipped to the factory just in time so that they don't have to carry
inventories at the factory.
They don't have any place to put them.
And so they assemble vehicles and then they ship them to dealers.
And so the margins have shrunk because of all this squeezing that's been going on.
And it's been going on to make the automobile companies more profitable.
So they take away from the dealers.
They take away from the suppliers.
They take away from the labor unions and from the workers.
And it's not fair, but I mean, what choice do we have?
We got to sell cars.
So we buy them.
And then when we sell them, we charge a processing fee because that makes
up a large percent of our profit.
So that's why you see that.
That's why you'll see processing fees from 4.95 up to 15.95 in larger cities.
It's crazy.
But that's why you have to scroll down on the website to see what their
processing fee is.
So there are other dealers who are really taking the game to a higher level
with their dealership addendums.
That's the sticker beside the sticker.
It's an additional charge.
And if you go to a dealership, you'll see it on the window.
You'll see the factory MSRP label.
And then right beside it, you'll see all these add-ons.
Some of them are legit, you know, like if they put a weather tech
format in it or what else, you know, luggage rack, trailer hitch, you know,
those are what we call hard ads.
Those are additions to the vehicle that actually have substance.
But then you have those crooks out there that will charge something like a marketing
margin or additional dealer profit ADP or ADM, additional dealer margin.
And so they put that on the window sticker.
I saw one from a Hyundai dealership out West that had, I mean, it was just
blatant, the things that they were adding on to this vehicle.
I saw it on Facebook.
Can you believe anything on Facebook anymore?
Goodness gracious.
I can't believe all the crazy ads and the claims about this going on with this
university or this particular company.
And then you have all the AI videos or AI generated videos.
It's really a wild, wild West out there.
But one thing that you can count on is when you come to my website, you're
going to see straightforward pricing.
So let's get into this just a little bit.
Let's talk about this Bronco that I've been looking at.
Okay, on my website at 2026 Ford Bronco Outer Banks.
You know what the outer banks are, right?
That's the barrier islands off the coast of North Carolina, where the
Wright brothers first flew their airplane at a place called Kitty Hawk.
There you go for the history lesson.
That's the history lesson for today.
So I was just looking at this Outer Banks Bronco, which is the Lux version of
the Bronco, and I wanted to see how we have it priced.
So cash price, you can click on cash, finance or lease.
So on the cash price, MSRP is $66,185.
I know that's a lot.
That's the top of the line.
Now there's a discount of $2,078 retail customer cash of $750 for a gateway
Ford price of $63,357.
Now you remember I was talking about the crooks.
So what they'll have, instead of having a $2,078 discount, they'll have an
an addendum on their Windows sticker and an extra charge at the very bottom of
the of the website.
So in the large print, they give you an additional $4,000 discount over what we
do, but then you scroll down to the disclaimer and they take it right back away.
Isn't that crazy?
So instead of showing a $2,078 discount, they'll show a $6,078 discount, which
looks better, $2,078 or $6,070.
Well, of course, the $6,078 looks better.
And then you take away the $750 rebate and I mean, they're at $59,357.
Oh, wow, I'm going there to buy my Bronco.
And then you get there and you're looking at the sale price and the discount.
Wait a minute, that discounts only $2,000.
I thought I was getting $6,000 off.
So, well, yeah, but you've got to add back the marketing margin and the paint
sealant and the fabric guard and the extra toolkit made in Bangladesh.
I don't need a toolkit made in Bangladesh.
I want $6,000 off.
Well, you get $6,000 off if you add all this other stuff back in.
No, I may have been born at night, but I wasn't born last night.
And then it all falls apart.
And then you come back to Gateway.
Hopefully.
Okay, I'll be back in just one minute.
Okay, I am back.
So we're trying to dissect this deal.
We're looking at Gateway Ford Greenville's website on this Bronco.
And the cash price is pretty straightforward.
$2,078 discount.
No, it's not $6,000 and 78 because we don't add any of that other stuff.
You got to watch out for that, folks.
I'm telling you.
Okay, so let's look at what other things we can see here.
Oh, yeah, so here's a finance price.
I click on finance.
I can see what my monthly payment would be with 20% down.
How can we use 20% down, Lenny?
Well, because most people have approximately that if they have a trade in.
Hopefully they have some equity.
They'll throw some cash down on it and they'll get to 20%.
We have to figure something.
We could do 10% down, but it's important for you to know that, you know, for you
to know what are the parameters and you just scroll down just a little bit.
Right here it is.
72 months at 5.77% APR with 13,237 down payment or trade equity.
And there you go.
What's the payment, Lenny?
825.19 a month.
Well, that's too much.
Well, you can pay more down.
Will we negotiate off of that price?
Probably.
But at least it gives you something to base it on.
And then there's another tab.
What's it?
It says lease.
Let's click it.
How much is the lease payment?
664.
So the finance payment is 825.
The lease payment is 664.
The finance term is 72 months plus tax.
The lease payment is 36 months plus tax.
What do you pay tax on on a lease?
Well, you don't pay tax on the full vehicle.
You just pay sales tax on each monthly payment.
That's a big advantage.
You know, when you buy a new vehicle and finance the whole thing,
you're paying a lot of sales tax, at least in the state of Tennessee,
you are about 7.5% to 7.75%.
And so that sales tax, if you don't pay it up front, then you are financing
that sales tax for 72 months.
That's a big chunk right there.
And so that's why, you know, most people have trade-ins,
so they get trade-in credit if you trade your car.
We have a lot of folks say, I'll just sell my car.
Well, okay, sell your car, but you better sell it for enough
to cover the sales tax savings.
What do you mean?
Well, if you trade your car, you only pay sales tax on the trade difference.
If you sell your car and come in and buy it,
you're going to pay sales tax on the full amount.
I know it doesn't seem fair.
You don't get any credit for it.
But on a lease, you only pay sales tax on each monthly payment.
This particular lease payment is based on $7,282.51, do at lease signing.
What's that?
It's optional.
You don't have to pay anything or you can pay 7,000 or you can pay 15,000.
I wouldn't recommend it.
Leasing is a great way to have a lower payment, get more car for the money.
There's all kinds of different options there.
It's always worth looking at, but so many people are just so close-minded.
I'm not leasing.
No way.
I want to own it.
Well, you don't own it when you buy it and finance it.
The bank owns it.
I mean, the title's in your name, but who has the title?
Not you, the bank.
And when you make your last payment, they'll be nice enough to, hopefully,
to send you the title.
Then who's is it?
It's yours.
You know, if you want to know who really owns the vehicle, just miss a couple
payments because the rifle owner will come and get it with a rollback and then
they'll take it to the auction and sell it and whatever the deficiency is in the
balance, they're going to come after you for it.
What happens if they sell it for more than an O on it, then you get to check.
But your credit is going to be destroyed, for sure, because you had a repo.
Doesn't matter if they sold it for more than what you owed on it.
You let it go back.
So that's never a good thing.
But some people can't afford it.
You know, their life circumstances change.
There's an illness in the family.
I understand and banks understand, but they're not going to forgive you.
You may have an easier time getting another car financed later on if you have
a good excuse or a logical reason as to why you quit paying for it.
So it's important to look at all these different numbers, but you have to know
what all of the particulars are.
For example, on financing, what's the term?
You know, how long is the loan for?
What is the interest rate?
Are there any prepayment penalties?
And are there any ads?
You know, what are they throwing into that monthly payment?
Like in this particular example, there's nothing being thrown in except
principal and interest.
That's it.
I mean, if you finance a vehicle and a lot of dealerships, they give you a
monthly payment, you better say, well, what's included in that?
Because they may, they may be some of those notorious payment packers and
you're buying gap insurance and an extended service contract, which is not a
bad idea to buy it, but you want to know it when you buy it.
And then all these other products that they sell that increases their margin,
all of that.
So you can, I don't know, I think a lot of people are safer on a lease because
if you normally trade every three years anyway, and they have a pretty good lease
program, meaning that they have a low interest rate that it's based on, you're
getting a vehicle that has a real high residual value, meaning that at the end
of the lease, it, it, it's still worth quite a bit and that the amount of
depreciation that you're paying for, which is what basically most of the cost
of the lease is you're paying for the depreciation on the vehicle.
But if I'm comparing a lease to a purchase, to a cash deal, I mean, that's
just, that's a lot to think about.
And you almost need a financial advisor to help you figure it all out.
Well, you really don't.
You can call me 423-552-2020, give me the facts, give me the vehicle that you're
interested in.
If, if it's a lease of like a Honda or a Toyota or some other brand, I need to
know the term and the money factor and the residual value.
And then I can calculate it for you.
All of that information is available from the dealership.
If it's a finance deal, I need to know what interest rate they're giving you
and what term, and then we can talk about monthly payments.
And if you're a cash buyer, it's pretty straightforward.
You still have to look and see what, what extras the dealership is charging for.
Is the discount that they're showing me either online or on a piece of paper
in front of me, is it legit?
If it's not based on the MSRP of the vehicle and it's a brand new vehicle,
if it's used, you've got to find a number that's reasonable, either from KBB
or Edmunds.com, or you've just got to do a lot of research or you've got to
call me 423-552-2020 and I'll tell you what a good retail value is on a
vehicle that you're looking at.
I don't care if you live in California or Australia.
Well, Australia might be a push.
But in the United States, I can tell you what a reasonable retail value,
which is what the typical consumer will pay for a particular vehicle if I
know what the facts are, mileage, condition, so forth.
You know, I'll just look at a car fax.
I'll look at an auto check.
I'll see how it was maintained, where it came from.
You know, a vehicle that comes from Michigan is not going to be worth as much
as one that lived in Alabama because of the salty roads in the wintertime.
It causes rust.
Sorry, Michiganers, but that's just the way it is.
So each of these different financing or payment options, whether you pay cash,
finance it or lease it, they all have little nuances and ways for dealers to
grab a little bit extra money.
You know, if a guy's reaching out and grabbing a little processing fee or
a documentary fee, at least they disclose it up front.
It's on the sales contract.
But if they're grabbing in other ways, which many of them do, if they're not
being straightforward, then it's a good way to end up, I guess, blowing a lot
of your vacation money.
You know, because I think that it's very reasonable for me to make this call
right here, that if you get ripped off good enough on just a regular every day,
let's say 30, $40,000 vehicle, and you're not watching the ball.
You're not looking at the numbers.
You could easily pay $5,000 to $10,000 too much over time.
Well, that pay for a trip to Myrtle Beach, several of them.
I'll be back in just one minute.
Here's a saying I just made up, begin with an open mind, but with a closed
pocket book.
You know, if most people would function from that mindset, they'd be a lot
better off.
You know, if a guy says, well, have you considered leasing?
Oh, no, I'm not doing it.
You know, just don't react that way.
Say, sure, show me the numbers.
Let me see what it's based on and then take it home and think about it.
You know, don't create a scene, you know, throw a chair across the showroom floor.
Just sit there and listen to them.
Sure.
Make me a proposal.
Make me a cash proposal.
Make me a finance proposal and make me a lease proposal and let me compare them
and base them all on the same starting number.
Don't be playing games with me on the capitalized cost of a lease.
If you say that to him, he'll say, how'd you know about that?
And of course you just tell him that you just know because you know.
And if you really want to save money every time and not have to worry about
calling me, get the copy of the My car guru guidebook, it's 32 pages long.
I wrote it and it answers a lot of questions for people when it comes to
making a wise purchase and hitting the four targets and being able to understand
what's going on in the service department when the service advisors say certain
things and when you wreck your car, what to say to the guy at the body shop to
make sure that you get a quality product out of what they're doing.
Because there's a lot of stuff that comes out of body shops that shouldn't come
out at all because they didn't prepare the vehicle properly.
And the my car guru guidebook helps you be aware of those types of issues.
Well, thanks for listening to this edition of my car guru.
If you want to copy the guidebook, send me your email address to
lindeylawson2020 at gmail.com or just send it or you can text it to me to
four, two, three, five, five, two 2020.
And I'll see you on the next edition of my car guru.
About this episode
The host breaks down how to use a dealer website to spot real discounts versus “discount” games. He explains why processing fees exist, then warns about addendums/ADMs that inflate the advertised markdown only to claw it back in fine print. Using a Gateway Ford listing for a 2026 Bronco Outer Banks, he walks through cash, finance, and lease tabs, emphasizing sales-tax differences, payment assumptions, and what to verify (APR, term, money factor, residual, and what’s included in the payment). He also pushes his guidebook and offers help calculating deals.
