My Car Guru Podcast Oct 7, 2025

Why the monthly payment on your potential new car is the LEAST important number to know

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Term

finance office

The finance office is the place at a car dealership where you handle the money part of buying a car. This is where you decide how to pay for the car, whether through loans or other options, and where you might be offered extra services.

Term

negotiation

Negotiation is when you talk to the dealer about the price of the car and try to get a better deal. It's important because you can often lower the price or avoid extra charges if you know how to negotiate.

Term

negative equity

Negative equity means you owe more money on your car than it's currently worth. If you try to sell or trade it in, you might still have to pay off the remaining loan amount.

Term

refinance

Refinancing means getting a new loan to replace your old one, usually to get a better deal. It can help if you're struggling with payments or owe more than your car is worth.

Term

MSRP

MSRP is the price that the car maker suggests dealers sell the car for. It's like a starting point for how much you might pay for a new car.

Term

depreciation

Depreciation is how much a car loses its value over time. For example, a new car might be worth less as soon as you drive it off the lot.

Term

finance products

Finance products are extra services you can buy when you get a car loan, like insurance or warranties. They can help protect your investment but also add to the cost.

Term

dealer rebate

A dealer rebate is money the dealer gives you off the price of the car to help you buy it. Sometimes you can use this money to lower what you owe when you get a loan, but not always.

Term

down payment

A down payment is the money you pay upfront when you buy a car. It helps lower the amount you need to borrow from the bank to pay for the car.

Term

dealer assistance

Dealer assistance is help that car dealers give to make it easier for you to buy a car. This can include special deals or financing options, but not all of it can be used to lower your loan amount.

Term

rebates or incentives

Rebates or incentives are discounts that car makers offer to help sell their cars. They can lower the price you pay or make financing cheaper.

Term

manufacturer's suggested retail price

MSRP is the price that the car maker suggests dealers should sell their cars for. It helps buyers know what a fair price might be, but dealers can charge more or less than this amount.

Term

addendum sticker

An addendum sticker is a label that some car dealers put on a car to show extra costs or features that aren't included in the original price. It can make the car more expensive.

Term

dealer markup

Dealer markup is when a car dealer adds extra money to the price of a car beyond what the manufacturer suggested. This can make the car more expensive for buyers.

Term

invoice price

The invoice price is what the dealer pays to get the car from the manufacturer. It's usually less than the price you see in the dealership.

Car

Nissan Z

The Nissan Z is a new sports car from Nissan that is known for being fast and stylish. The 2024 model has a strong engine and many updated features.

Term

400 horsepower

Horsepower is a way to measure how strong a car's engine is. If a car has 400 horsepower, it means it can go very fast and perform well.

Term

taxes and fees

Taxes and fees are extra costs you have to pay when buying a car. They can include things like sales tax and fees for registering the car.

Term

selling price

The selling price is how much you pay for a car in total. It includes the car's price plus any extra costs like taxes and fees.

Term

trade value

Trade value is how much a dealership will pay you for your old car when you buy a new one. It helps reduce the price you need to pay for the new car.

Term

add-ons

Add-ons are extra features or services you can choose to include when buying a car, like warranties or special coatings. They can make the car more expensive.

Term

gap insurance

Gap insurance helps you if your car is stolen or totaled. It pays the difference between what you owe on your car loan and how much your car is worth now, which can be less than what you owe.

Term

extended warranty

An extended warranty is like insurance for your car that helps pay for repairs after the regular warranty runs out. It can save you money if something goes wrong, but you need to know what it covers.

Term

gap protection

Gap protection helps you pay off your car loan if your car gets stolen or totaled and is worth less than what you owe. It covers the gap between the loan amount and the car's value.

Term

prepaid maintenance

Prepaid maintenance is when you pay for your car's regular check-ups and services ahead of time. It can help you save money and ensure your car stays in good shape.

Term

paint and dent repair

Paint and dent repair is when you fix scratches and dents on your car's surface to make it look new again. It helps keep your car looking good and can increase its value when you sell it.

Term

extended service contract

An extended service contract is like an extra warranty for your car that covers repairs after the original warranty runs out. It helps you avoid paying for expensive repairs out of pocket.

Term

Ford ESP

Ford ESP is a special warranty plan from Ford that helps pay for repairs after the regular warranty ends. It works at any Ford dealership, so you can get help wherever you go.

Term

labor charges

Labor charges are the fees you pay for the work that mechanics do on your car. This can include fixing problems or doing regular maintenance.

Term

aftermarket warranty

An aftermarket warranty is like an insurance plan for your car that you buy from a company other than the car maker. It helps pay for repairs if something goes wrong, but the details can be very different from the original warranty that comes with the car.

Term

Chevy protection plan

The Chevy protection plan is a warranty option from Chevrolet that helps cover repair costs for your car. It’s like having insurance for your vehicle, so you don’t have to pay for everything out of pocket if something goes wrong.

Brand

Audi

Audi is a car brand from Germany that makes fancy and high-quality cars. They are known for their stylish designs and advanced technology features.

LIVE

Hey, folks, welcome to another edition of My Car Guru.

I am so glad to be here, and hopefully I can find some nugget of information that will help

you, I guess, enjoy or manage your car life a little bit better.

I haven't talked a lot about an important subject recently, and that's financing of vehicles.

I know it sounds a little boring, but you can really screw up here, especially if you are

not really paying attention to what you're doing, because there is more money made financing

cars for customers than on cars themselves.

Yes, that's the truth.

I am not kidding.

The average dealer in the United States makes approximately $2,000 per vehicle retailed in

the finance office.

That's a lot of money.

Where does that money come from?

Well, we'll get into that so that you understand how you can negotiate a little bit in the

finance office, because everything's negotiable, right?

Really even if a business says that, no, we don't negotiate, sorry, that's a negotiation,

because your counter offer is to leave the place, to turn around and walk out.

You'll be surprised how many times people will yell after you or come chasing after

you in the parking lot.

I'm just kidding.

Usually they'll just say, well, folks, don't just run off, maybe we can do something,

and you really don't know what that something is, but I'm going to empower you to

know what the somethings are in the finance office that you can negotiate and why you

should, because that's a lot of money, $2,000 per car financed.

That is some serious cash to the average consumer.

So how would that affect your monthly payment?

Well, if you financed it for 60 months at a going interest rate, it could affect

your monthly payment anywhere from $45 to $60 a month, just if you were able

to save that.

And then if you could find some creative way to eliminate some of the negative equity that

you have in your trade-in, that's how much more you owe on your vehicle than it's actually

worth.

You know, that amount doesn't just go poof into the stratosphere, no, it actually gets

tacked on to your contract to your amount financed and raises your payments there

as well.

I mean, I've seen people refinance or basically buy a new car, roll in $15,000 or more of

negative equity.

How can they do that, Lenny?

Well, because a lot of these banks, if you have a pretty good credit rating, good

beacon score, then there are many banks that will finance 130% of MSRP.

So on a $50,000 car, you could finance $65,000.

So the minute you drive off the lot, let's say the car depreciates $5,000.

So you're $20,000 upside down and you haven't even gotten home yet, you know, to show it

to your neighbors and your grandmother.

And I mean, you have the right to be excited about your car.

Was it a great financial move?

No, it was not.

And then you go to the finance office and tack on another $6,000, $8,000 worth of

finance products.

You know, you may not even have known they were there if you're a payment buyer.

They probably just used the four square negotiation technique and hit your payment target.

And so, you know, you bought all this extra stuff you didn't know you bought.

But in fact, it's adding a whopper amount to your monthly payment.

And like I say, and then you had the negative equity thing.

You wonder why people struggle, you know, with their finances in anywhere from six

to 18 months after they bought a new car.

Because the joy has worn off and reality has taken a firm hold.

And then what's even worse, you realize you bought the wrong car.

It just didn't fit your lifestyle and, you know, everybody's complaining about it.

They can't see out of it.

You know, you can't see out of it.

You can't park it right.

It doesn't have enough acceleration.

All the different reasons why you would become dissatisfied with a vehicle.

And then you decide you make the fatal decision rather than to live in the mess that you created

or that somebody helped create for you.

You decide to go trade again.

And somehow you come up with an enough down payment to convince some lender to do it

all over again.

And then you're $30,000 upside down.

You've bought more finance products and you have a much higher payment.

But at least you like the vehicle, right?

I'm always looking for the bright side of things.

Some things there just is no bright side.

And that's one of them.

Okay, I'll be back in just one minute.

Okay, I have been going to battle for all Tennesseans.

If you don't live in Tennessee, that would be in the United States if you happen to

be one of my foreign listeners.

If you don't live here, I'm sorry.

But if you do, hopefully the advertising rules will be changed because of me.

So I made a proposal to the Tennessee Motor Vehicle Commission to change the wording

as far as their advertising guidelines.

The advertising guidelines did say that no dealer shall state an advertised price which

includes any trade-in allowance, down payment, capitalized cost reduction, which would

be on the lease, or any funds which the consumer is expected to pay in order to reduce the cost

of the vehicle to the advertised price other than, now that's usually an important statement.

Whenever it says other than, that's when you start paying attention.

Other than rebates from the manufacturer or distributor.

And they have to be available to all consumers.

I had a dealer that was a competitor that was creating dealer rebates which really don't exist.

It's just a discount.

A rebate is something you can actually use as down payment to reduce the purchase price

of the car.

If it's a dealer assistance of some kind or some type of a dealer rebate, you can't

use that as down payment.

The bank will not like that if they find that out.

There used to be a problem back in the 80s and 90s.

I mean it was the Wild Wild West back then.

It's kind of the Wild Wild West right now, again with all this crazy advertising.

But anyway, I submitted what I thought that particular statement, or basically how it

needed to read.

And this is what I said.

Dealers shall not advertise any vehicle price, including but not limited to final price,

our price, or similar terms that reflects any deduction other than, see, there it

is again, other than.

The dealer's own price discount from the manufacturer's suggested retail price and rebates or incentives

provided directly by the manufacturer or distributor, I like saying it that way, that are available

to all consumers.

So basically, well not basically, absolutely this statement would eliminate the possibility

of these fake dealer rebates.

And it would make it a level playing field for all dealers because they would have to

start at MSRP, which is the, it's the best place to start.

I mean, you don't want to pay MSRP for a car.

But in some cases, if a vehicle is scarce, hard to come by, then you're just going

to have to pay it.

In many cases, it's over MSRP, especially like it was during the pandemic.

Because I mean I've got probably 450 new vehicles out there on my lot right now.

During the pandemic, I was lucky to have 20 and we couldn't survive if we didn't charge

more for every vehicle and people were paying it because they needed cars and that was the

only alternative.

I mean, we had to survive and I hated it, but that's what we had to do.

But MSRP is, is a fair place to start because it's, it's offered by the manufacturer.

It's actually there on the windows sticker.

Now sometimes you'll have the sticker beside the sticker.

Some dealers call it the addendum sticker or the add-on label or whatever.

You know, there's some dealers around here that will add on $5,000 and all that does

is give them extra markup and hopefully the consumer is savvy enough to look at the,

the sales contract that has the taxes and everything and see what they're actually

paying for the car.

But most people don't because they're not savvy.

They haven't been listening to my car guru, but every car has an MSRP and every car has

an invoice price, which is what the dealer pays for the vehicle.

Now you know, when it's all said and done, that's not the dealer's cost of the vehicle

because he gets some rebates from the manufacturer himself.

It's often referred to as dealer holdback and it can average on typical imported cars.

It's about a percent and a half and on domestic vehicles, why it's different, I don't know, but

on domestic vehicles it's anywhere from two to three percent.

So if a dealer sells you his vehicle for his factory invoice price, then all he's making

is his holdback unless there's some type of other dealer incentive that the manufacturer

is offering.

Sometimes they do that and sometimes they have special bonuses that they will pay

to dealers if dealers hit their objectives that are set by the manufacturer.

So for example, we may have an objective where we need to sell 50 Nissan's this month and

if we sell 50 Nissan's, they'll pay us $200, $300 per car if we hit that objective.

So that's pretty cool and it's pretty motivational for dealers to cut some real tight deals

in order to get that month-end bonus money.

But as I was saying, every dealer has an MSRP and an invoice price.

Any time, in my opinion, you can buy a vehicle unless it's just something that doesn't sell

very well at all or like a carryover model.

Like right now, if you're looking at a new 2024 model car, you shouldn't pay anywhere

close to invoice.

You should be able to get that thing way back of invoice, $5,000, $6,000 even,

maybe more than that because the dealer really shouldn't have that car in stock

and he doesn't want it in stock.

He's ashamed of it.

He's put all kind of bonus money on that vehicle to try to get his sales people

to focus on it and sell it and it just hasn't sold.

I mean, he even thinks it's almost sale-proof.

I've got one out there.

I'm not going to admit what it is.

It's a Nissan Z and it's a 2024 model, yeah.

That doesn't even want to come out of my mouth and the cars are just really slow sellers.

Fantastic car.

It's yellow.

It's a seven-speed, I think it's a seven-speed transmission, 400 horsepower.

Beautiful car.

It's just that there aren't a lot of buyers for them and if somebody were to call me

and say, would you take $8,000 off of invoice for that vehicle, I probably would

because it needs to go.

So on those types of cars, you don't want to pay invoice.

But if you can get just about any other car and you can pay the dealer invoice,

and I don't have a way to verify that it's the invoice,

is to get that information online because a lot of dealers will lie to you.

Can you believe that?

Where do they come off doing that?

But yeah, some of them will.

And they'll have some fake invoice.

You can tell a factory invoice when you see it because it looks like something from the factory.

I mean, I know that sounds weird, but it'll have the MSRP, all the options.

It'll have the retail price and the dealer price.

And at the very bottom, it'll have the full MSRP plus freight

and it will have the dealer cost plus freight or dealer invoice plus freight.

And yeah, if they sell it to you for that price, then they're going to make

a little bit of money, but they should, right?

I mean, it's not a not-for-profit business.

And they got bills to pay and they got to run their service departments.

It's okay for the dealership to make something.

And trust me, there'll be plenty of people that will come into the dealership

that buys the vehicle the wrong way that more than covers their bills,

especially in a lot of the shady stores.

I mean, they will absolutely knock people's heads off.

And occasionally they'll have to give one away because they get a savvy

buyer in there that isn't going to put up with all that crap.

So also, I want to continue on this rule change.

Also stated that no advertised price may include reductions resulting

from individual dealer programs, such as private rebates, allowances,

incentives, trade-in assistance, financing assistance, or any other offer

that is not uniformly available to all consumers.

I mean, that's basically what the rule states.

If you just go to Google and type in Tennessee Motor Vehicle

Commission Advertising Rules and go down to the Price Advertising Section,

it basically says that thing, but it's not clear enough and it needs to be clear.

So let's talk a little bit about the finance office and how can you save

money in there?

So let's say that you've followed my four steps precisely.

You haven't, they brought out the four square negotiation sheet where

they show you the selling price, the trade, the down payment, and

different payment options.

And you've told them to take that and make a paper airplane out of it and

fly it out the window.

Now bring me a sale contract that shows the complete breakdown of the selling

price of the car, the trade, and all the taxes and fees.

And shows any add-ons that you guys have in there.

Okay.

And then they'll, it may take a little fight, but they'll bring it out.

And then you'll look that over and you're, let's say you're satisfied with

the selling price and the trade value.

And they've not added anything else in there.

Then you're going to go into the finance office.

And you're going to sit down and they're going to quote payments to you.

It's very important at this point to say, what are you including in that

payment?

And typically they will have a menu of items.

Now we have an electronic menu.

The desk is actually a computer screen.

It's really cool.

And it shows everything from zero add-ons where you're not buying any

extended warranty, gap insurance, any kind of protection packages,

prepaid maintenance, that kind of stuff.

So you have no ads and then you have different combinations.

You can go full boat if you want to and have all the protection.

But at least it's all laid out there for you to see.

Some dealerships don't do it that way.

They'll say, well, your payment for 84 months is going to be $792 a month.

Sign here.

You sign, I'm not signing anything.

What's, give me a breakdown on that.

What's included in that?

Are there any aftermarket products included in that payment?

That's the phrase, folks.

Are there any aftermarket products included in that monthly payment?

And there'll just, there'll be a deathly silence.

And then the first one to talk loses.

It's usually going to be the finance manager.

Yeah, that's got an extended warranty and a gap protection.

It's got prepaid maintenance and what else?

Oh, yeah, this paint and dent repair.

Okay, take all that out and

give me a base payment with none of that.

I'm not allowed to do that.

Well, you better do it or I'm leaving.

So he does it.

And then you look at that payment.

Well, how much is it?

Well, it's $582.

Well, that's a monstrous savings right there.

Okay, Mr. Finance Manager,

tell me about the extended warranty

because that's something I might be interested in.

What does it cover?

Is it exclusionary coverage?

In other words, does it state everything

that's excluded from the warranty,

not everything that's included?

Because if you try to look at a list of stuff

that was included that was covered by the warranty,

I mean, how would you know if you're missing something?

There's a lot of parts on a car.

So you wanna know what's not covered,

not what is covered,

and what's the deductible,

and what's the term,

and what's the miles that are covered?

And does it start from day one?

If you're buying a used car,

you have to ask that question.

Does it start from today

or does it start from when that vehicle

was first put into service?

Because that matters, doesn't it?

I mean, if you're buying a five-year

100,000-mile warranty that started three years ago,

because that's when the vehicle

was first put into service,

then I'd wanna know that.

I want a warranty on a used car that starts today.

And then if it's a new car,

you know that it starts today,

as long as they report it to the manufacturer.

So he gives you a payment with that in it,

and you really don't care what the payment is.

What's the price of the warranty, sir?

It's $3,900.

Now, I'm not paying $3,900

for a five-year 100,000-mile warranty.

The car guru says I should be able to buy that

for around $2,200, $2,500.

Who's he?

Well, he's a guy that knows.

So get your pencil sharper, we'll go,

and I'll buy something online from somebody else.

I'm not, I know I sound like I'm being

a little hateful.

Maybe you can change the tone a little bit.

But I just do not like people

who try to bury stuff without me seeing it.

This is my money, your money.

And he's just trying to get more of it.

And so you can find out on each of the products

that he's trying to sell,

well, how much is the gap insurance?

I thought the credit union included gap insurance.

You know, sometimes they do, and you need to know that.

So you can imagine, if you will this down far enough,

then they're not gonna make that much money on you

and you'll get the benefit of the products that they have,

which are good products,

especially if it's a manufacturer-backed,

extended service contract slash warranty.

I mean, if you're at a Ford dealership

and it's a Ford ESP, then it's good

because you're covered in any Ford dealer.

There's not gonna be an argument

if you pull into a dealership

and ask if this particular thing is covered

because that dealership may not honor that warranty.

I'll tell you an example of that here in just a minute.

So I had a radio show listener, they called me,

they said, I'm at a dealership in Chattanooga,

and I've been listening to you about these warranties.

These people are trying to rip me off,

and I said, well, what's the problem?

Said, well, I have a, what was it?

A Malibu, transmission's out of it.

And my warranty is supposed to be bumper to bumper,

covers the transmission,

but they're wanting to charge me $600 extra in labor

that over and above what the warranty company will pay,

and they're wanting to charge me shipping

on this transmission, which is another $400.

And I said, well, that doesn't sound right to me.

What's the warranty company?

And she told me, so I made a few phone calls,

and it's true, that dealership is trying to rip her off,

and it's because it's an aftermarket warranty.

It's not Ford ESP, sorry,

it's not, she's going to Chevy store.

It's not the Chevy, whatever their protection plan is.

And so she's having a fight on her hands

to try to get the claim paid.

And if you think that one's bad,

you ought to try to get a claim paid

by some of these ones that you get in the mail.

This is that, warning, warning,

your warranty is about to expire

when you just bought the car two weeks ago,

and they're trying to sell your warranty,

you're supposed to take those

and make paper airplanes out of them as well.

And if somebody happens to have your cell phone number

or your home phone number

and call you trying to sell your warranty over the phone,

unless it's the dealership calling

or the manufacturer, which it won't be,

well, it could be the dealership,

maybe they have some type of follow-up program.

But if it is anybody else,

you don't want anything to do with those warranties.

They may sound cheap,

and all it makes you feel so good.

Now I've got protection.

I'm protected from bumper to bumper.

No, you're not.

Wait till you have a claim,

and you're in Savannah, Georgia at an Audi dealership,

and that's your only choice,

and they say, sorry, we don't honor this.

Because that's what's gonna happen.

But if you have Toyota's brand warranty,

Honda's brand warranty, Ford, GM, Audi, Porsche, whatever,

it's no problem if you go to one of those stores.

And really it's not a problem

if you go to another brand store

and try to get something covered

because they know that it's a manufactured back product

and you don't have to worry about it.

So let me ask you,

is it important to pay attention

when you get into the finance office?

It sure is.

But what happens is people are tired.

They've been trying to buy a car all day.

They think it's almost over.

Oh, we just gotta sign some paperwork now.

There's an extra sales job that's getting ready to happen.

And you just can't lay down.

You can't let your car down.

You know, it might be a good time.

Just say, you know, I want the car,

here's the deposit, we're gonna buy the car,

but I'm tired, I wanna go home,

and we'll do the paperwork tomorrow.

No, we gotta do the paperwork now.

No, we don't.

I'm gonna go home and I'll be back in the morning.

We'll do the paperwork when mine's a little bit fresher.

Fair enough.

And if you just get up, start walking out,

they don't really have any option.

And maybe that's what you need to do.

So where else are you gonna learn this kind of stuff?

Nowhere.

Trust me, I've looked.

There's nobody that talks to consumers like this,

car buyers.

And if you have friends, or I'm sure you do,

relatives, young, old, you need to tell them about the show

and you need to have them go to the podcast channels

like Apple Podcasts, Google Podcasts, Amazon, Spotify,

you know, all of those,

you just type in My Car Guru Podcast.

And the least you can do for them

is get a copy of the My Car Guru guidebook

because it summarizes these very points

and it might be just enough

to get them to save thousands of dollars

in a transaction.

Send me your email address to my only cell phone.

You had a customer question that the other day.

Are you sure that's your only cell phone number?

And I said, yes it is.

He says, you're crazy.

423-552-2020.

Or you can email me, Lenny Lawson, 2020 at gmail.com.

And I'll see you on the next edition of My Car Guru.

0:00

23:45

Why the monthly payment on your potential new car is the LEAST important number to know

finance office

negotiation

negative equity

refinance

MSRP

depreciation

finance products

dealer rebate

down payment

dealer assistance

rebates or incentives

manufacturer's suggested retail price

addendum sticker

dealer markup

invoice price

Nissan Z

400 horsepower

taxes and fees

selling price

trade value

add-ons

gap insurance

extended warranty

gap protection

prepaid maintenance

paint and dent repair

extended service contract

Ford ESP

labor charges

aftermarket warranty

Chevy protection plan

Audi

About this episode

Original notes