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Her and her son would just drop by and pick him up and take dad with them to go eat. Dad would pay for everyone's dinner. He finally got tired of doing that so he called her and told her he's not gonna pay for her sons and grandkids and whomever else she dragged along. He told her he'd gladly pay for her but he said she always talked to her son and didn't visit with her. Now he don't speak to her. Guess she got mad. She liked having someone buying lunch all the time. He seems ok with it now but has become more demanding with me. Lol. Which is fine. I'll take care of him as long as I can.
Sell the car and get some money for it. He will get over it, in time.
Maybe he is losing money elsewhere [ie: card game, casino, horse racing, or hiding it somewhere, remember he has dementia] and telling you he is giving this money to this woman.
As jeannegibbs had mentioned above, ask your Dad if you could drive him to church, and see what his answer is..... if he starts making excuses, maybe he's not really been going to church.
If your Dad doesn't need his car, maybe it time to sell it and get a good price. One less thing to worry about.