How To Cancel An Extended Warranty (2024)

Sometimes called “vehicle service contracts,” extended warranties are optional service contracts sold either by the automaker, licensed dealer or a third-party. These warranties are designed to cover the costs of repairs after the manufacturer’s new-vehicle warranty expires.

Less regulated than the automotive industry at large, these warranties can be factory-backed and guarantee repair of original parts or as a part of a third-party structure that uses licensed dealers and service professionals that use a combination of factory-recommended and after-market parts. Prices, terms and coverage vary wildly across the industry and can range from a few dollars a month to more than several thousand per year for a service that may or may not be used in the manner intended.

Changing needs and unexpected costs are just a few reasons that a buyer might decide to cancel an extended warranty. Other reasons include:

“This is more expensive than I thought.”

Often sold as an extra monthly expense, some consumers later discover that the total cost of the extended warranty is more expensive than they originally anticipated and that the cost now is more than the cost of future expenses. Others realize that the current structure does not meet their needs, while others are disappointed to realize that the cost is spread across the length of the loan and that the terms of their loan are longer than they expected.

“It doesn’t cover enough.”

To put it simply, no warranty covers everything and it can be a rude awakening to realize that your current circ*mstance falls outside the coverage range. It can also be disheartening to discover that due to life circ*mstances or an act of God that the repairs needed are not covered, regardless of paying the “monthly” expense. Other buyers discover that the expense does not nullify or justify the costs of the extended warranty.

“I don’t actually need this.”

There are as many reasons to purchase a vehicle as there are to cancel a policy. You may decide that you are ready to swap vehicles or that the price is too high before the extended warranty is set to kick in—which can be three years or more down the road, depending on the brand.

Longevity can be rewarded, but in this case, it may not be to your benefit. Many extended warranties do not go into effect until the original factory warranty expires, and some buyers realize that they are unknowingly paying double for coverage.

Explore the Fine Print

Start by reading your contract. Find the administrator of your policy. There will be language in the fine print that tells you who to contact and where they are located. It will also let you know if there is an early termination fee or cancellation fee associated with your plan. Follow the steps listed in the contract to the letter.

If you newly purchased your extended warranty and haven’t yet received the contact, reach out to the finance manager at the dealership where you purchased the vehicle and let them know of your change of heart. If you purchased from a third-party, separate from your dealer, the name and contact information also should be listed in the contract.

Document Your Process

For most extended warranties, your request will be sent to a client retention department whose sole mission is to ensure that you do not cancel your policy. Should you decide to cancel your plan, you will need to hold fast, keep stating that you would like to cancel your plan and most likely, complete a cancellation form. Be sure to submit the signed (and sometimes notarized) document to complete the process of your cancellation. Keep copies of any correspondence that you send and the documentation needed to support your request.

Close the Loop

Once your document is submitted most companies require that it takes a certain amount of time for “processing.” Don’t assume the process is complete. Check your loan statement or call your lender at the end of the processing time period to double check that the cancellation and processing was completed as requested.