Can You Cancel Extended Warranty From Dealership

Can You Cancel Extended Warranty From Dealership

When buying a new or used car from a dealership, high pressure sales tactics often push extended auto warranties as an “add-on” product. These plans that stretch your coverage beyond the factory warranty period can cost upwards of $2,000. But is it possible to cancel an extended warranty you regret purchasing from the dealer?

Canceling an unnecessary dealership extended warranty restores money wasted on premiums back to your pocket. Let’s examine extended warranty basics, cancellation rights, how to cancel, reimbursement rules, and when keeping coverage is advisable over cancellation.

How Extended Car Warranties Work

An extended warranty, also called a vehicle service contract, extends auto repair coverage beyond the factory bumper-to-bumper and powertrain warranties. Coverage length can range from 1-10 years or more and/or up to 150,000 miles. They cover repair costs for vehicle components once the original warranties expire.

Dealers market these plans as giving peace of mind against expensive repair bills. But they also generate massive profits for the dealership – often their most lucrative add-on. Extended warranty companies contract with repair facilities to perform covered work. You pay a deductible per visit, typically $100-$250.

But not all repairs are covered – expensive ones like bearings, sensors, and gaskets are often excluded. Carefully reading the contract is key. You also must use authorized repair shops and strictly follow maintenance requirements. Violating provisions can invalidate the coverage.

Do You Have a Right to Cancel?

With most dealer-sold extended warranties, you have a period after purchase where you can cancel and receive a full refund, typically 30-60 days. This window is required in most states. After the initial cancellation period, whether you can cancel and how much you get refunded depends on the contract terms.

Some plans allow cancellation anytime and refund unused months, minus claims paid and an administrative fee. Others only permit cancellation after year 1 or if the total repair claims do not exceed premiums paid. Read your contract carefully to understand cancellation and refund rights.

Do You Have A Right To Cancel?

Steps to Cancel Your Extended Warranty

If still within the initial cancellation window, here are the steps to canceling with a full refund:

  • Review your contract and identify the cancellation process required. There may be a physical cancellation form.
  • Contact the warranty administrator – this is the third party company providing the actual coverage, not the dealer.
  • Inform them in writing that you are cancelling under the refund provisions and request confirmation. Send letter via certified mail.
  • If you financed the warranty cost into your auto loan, ask the administrator to notify your lender of the cancellation so payments stop.
  • Follow up persistently via phone and writing if your refund is not received within 30 days. File complaints as needed.
  • Consult your state’s insurance commission if the warranty company refuses to cancel and refund after following proper procedures.

Getting Your Money Back

Once you confirm cancellation, expect your refund in 2-6 weeks. Refund methods include:

  • Check mailed to you directly from the warranty company
  • Credit on your credit card if one was used to purchase the warranty
  • Payment sent to your auto financing lender, reducing the loan principal

By law, no cancellation or administration fees can be deducted from the refund. Ensure you get back the full amount paid. Persistently follow up if the refund does not arrive or appears less than expected.

Getting Your Money Back
Getting Your Money Back

When Keeping the Extended Warranty Makes Sense

While canceling to recoup unused premiums often makes sense, there are some scenarios where keeping the extended protection is advisable:

  • You drive high annual mileage increasing repair likelihood as the car ages.
  • You keep vehicles beyond 100k miles when major issues emerge.
  • Repair costs on your model are known to be very high.
  • You want peace of mind given an unreliable vehicle prone to repairs.
  • Manufacturer warranties are very limited on your particular vehicle.
  • Cost to purchase separately down the road would be significantly higher.

Think hard about your driving needs and car’s reliability before deciding to cancel. While extended warranties are notoriously profit-driven, for some vehicles and owners they provide valuable protection.

common fees, deductions, and refund policies

Cancellation fee – Some contracts allow the provider to charge a cancellation fee, such as $50-$150. Review terms. Claims paid deduction – Any repair claims already paid under the warranty may be deducted from the refund amount.

  • Time pro-rated – Refund may be based on the amount of time remaining on the warranty, paying back the unused portion.
  • Mileage pro-rated – Refund may be prorated based on the remaining mileage left on the warranty coverage.
  • Deductible retained – If you already paid the deductible, this is usually non-refundable if you cancel.
  • Finance charges – If the warranty was financed with the car loan, finance charges may not be refundable.
  • Restocking fee – Some dealers may attempt to charge a restocking fee on a cancelled warranty, but most states prohibit this.
  • No refunds – Cheaper warranty plans may have a blanket no refunds policy after the initial cancellation window.
  • Proof of payment – You may need to provide proof of what you originally paid for the warranty to get the applicable refund amount.
  • Administrative fees – Some providers deduct an admin fee for processing the cancellation, usually $50-$100.
Common Fees, Deductions, And Refund Policies
common fees, deductions, and refund policies

Steps for Transferring an Extended Warranty to a New Owner

If you sell your car to a new owner instead of cancelling the extended warranty, most contracts allow you to transfer coverage. However, specific steps must be taken to ensure the warranty seamlessly continues.

  • First, closely review your warranty terms for the section explaining how to transfer to a new owner. This outlines requirements like transfer fees, paperwork, and notification time limits. Many contracts mandate notifying the administrator within 30 days of sale or coverage will be voided.
  • Contact the warranty provider to begin the transfer process. Submit any required forms and proof of sale documentation. Provide the administrator with the new owner’s contact details so they can reissue the contract in their name.

A transfer fee, usually around $50, is typically the responsibility of the seller. Obtain written confirmation from the provider that the warranty was successfully transferred with no lapse in coverage.

Clearly disclose warranty details like coverage, expiration, and claims process to the buyer. Transfer any warranty manuals and maintenance records. Have the new owner sign transfer forms if required.

Common Fees, Deductions, and Refund Policies for Canceling Extended Auto Warranties

  • Cancellation Fees – Some warranty providers charge a cancellation fee, typically ranging from $50-$150. Always review the contract terms.
  • Claims Deducted – Any repair claims already paid under the warranty may be deducted from the refund amount.
  • Time Pro-Rated – The refund may be pro-rated based on the remaining time left on the warranty coverage.
  • Mileage Pro-Rated – The refund may be prorated based on unused mileage left on the warranty.
  • Non-Refundable Deductible – If you already paid the deductible, it is usually non-refundable if canceling.
  • Finance Charges – If you financed the warranty, any associated finance charges are generally non-refundable.
  • No Refunds – Cheaper warranties may have a blanket “no refunds” policy after the initial cancellation window expires.

Administrative Fees – Some providers deduct a processing fee for canceling, typically $50-$100. Proof of Payment – You may need to provide proof of what you originally paid to get the correct refund amount. Restocking Fees – Dealers may try charging restocking fees but most states prohibit this.


Q: Can I cancel the extended warranty I bought from the dealer?

A: Most extended warranties can be cancelled, but the refund depends on the contract terms. There is usually a 30-60 day initial window for a full refund.

Q: How do I cancel the extended warranty on my car?

A: Contact the warranty administrator in writing to cancel. Follow any required steps outlined in your contract. The dealer does not handle cancellations.

Q: Will cancelling my extended warranty hurt my credit?

A: No, as long as you are within the cancellation provisions, there is no credit impact. The refund process does not involve credit reporting.

Q: Can the dealership charge me fees if I cancel the extended warranty?

A: Dealers cannot impose fees, but the warranty provider may charge administrative fees per the contract. Review terms closely.

Q: How long does it take to get my refund after cancelling my car’s extended warranty?

A: You should receive your refund within 30-60 days after proper cancellation. Follow up if it takes longer or the amount seems incorrect.

Q: What if I am past the initial cancellation window?

A: You may still be able to cancel and receive a prorated refund depending on your contract terms. But fees and deductions often apply.

Q: Are there reasons I should keep my extended car warranty?

A: If your car has high mileage or repair history, keeping the coverage may make sense for added peace of mind and protection from big repair bills.


In conclusion, most extended auto warranties sold by dealerships can be cancelled – you just need to take the proper steps. Carefully review your contract for the cancellation provisions and follow them accordingly.

Contact the warranty administrator directly in writing to cancel, not the selling dealer. Request written confirmation once processed. If you financed the warranty, ensure the lender is notified to stop payments.

Be aware of any fees, pro-rated amounts, or other deductions that may reduce your refund. Persist in following up if the expected reimbursement is not received. Consult your state insurance commission if improperly denied.

While canceling an unnecessary extended warranty can recoup wasted premiums, also consider if keeping the coverage aligns with your long-term ownership plans based on the vehicle’s reliability. An informed buyer makes the best financial decision.

Do your homework upfront before purchasing extended protection. But if it no longer fits your needs, cancelling through the proper channels can unlock savings on your auto expenses.

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