How to Cancel an Extended Warranty on a Car

by Tim Plaehn

Dealerships sell extended warranties to boost their profits on car sales. Whether or not you need the extra coverage is up to you. If you bought extra warranty coverage and want to cancel it, you can get a pro-rated refund. Who to contact to cancel and ask for the refund depends on the terms of the warranty contract.

It's in the Contract

The written extended warranty service contract spells out the steps you need to take to cancel. There may be a no-cost cancellation period, such as 30 days after purchase. Otherwise, the amount you get back is based on the time the coverage has been in effect and the car mileage. Some extended warranties include a cancellation fee, which will further reduce the refund amount.

Put it in Writing

In all cases, an extended warranty cancellation must be in writing. The warranty contract states how to submit the cancellation. Most warranties require you to go back to the point of sale and complete a cancellation request form with the dealership finance department. The dealer can also verify the current mileage on your car. You can cancel directly with the warranty company only if the contract provides directions and a mailing address for your written request.

The Waiting Game

Expect it to take several months for the cancellation request to be completed and your refund to be issued. Check with the dealer's finance manager or contact the warranty company directly at least once a month. The dealership carries the responsibility to submit your cancellation request and follow up on the status. If you believe your request was not properly handled, you may need to consult with a lawyer or take your claim to small claims court.

Where Your Refund Might Go

If the extended warranty cost was part of the financing, you won't get a refund check. The money will be sent to the bank handling your car loan and applied to the loan balance. Your payment will remain the same, but it will take less time to pay off the loan.

About the Author

Tim Plaehn has been writing financial, investment and trading articles and blogs since 2007. His work has appeared online at Seeking Alpha, Marketwatch.com and various other websites. Plaehn has a bachelor's degree in mathematics from the U.S. Air Force Academy.

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