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Hi Missy,

Yes there is a chip in the head of your 2004 Ford Mustang key. Here is a picture of the key and also a description telling you what you need to do to add extra keys to this vehicle:
 

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Yes It is in the key. But now you can get a new key at Home Depot for a LOT less than the dealership and they can program it there too as long as you have a key to copy from.
 
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