What is an extended auto warranty?

An extended auto warranty, also called a vehicle service contract, is a protection plan that covers repair costs for mechanical and electrical failures after your factory warranty expires. It typically covers major components like the engine, transmission, and drivetrain.

How much does an extended car warranty cost?

Extended car warranties typically cost between $1,000 and $3,500 depending on your vehicle's age, mileage, and the level of coverage you choose. Powertrain-only plans are more affordable, while comprehensive bumper-to-bumper coverage costs more.

Is an extended warranty worth it?

An extended warranty can be worth it if you plan to keep your vehicle for several years. A single major repair like an engine or transmission can cost $3,000 to $8,000. If your warranty costs $1,500 and covers even one major repair, it pays for itself.

What does an extended warranty cover?

Extended warranties typically cover major mechanical and electrical components including the engine, transmission, drivetrain, air conditioning, electrical systems, and more. Most plans also include 24/7 roadside assistance and rental car reimbursement.

How to Cancel a Dealer Extended Warranty If I Change My Mind

Extended warranties can be cancelled, and you're entitled to a prorated refund in most cases. Understanding the cancellation process and your refund rights helps you navigate this decision.

Your Right to Cancel

Most states require warranty providers to allow cancellation with prorated refunds. Some plans offer full refunds if cancelled within 30-60 days (check your contract's 'free look' period). After this period, refunds are prorated based on time or mileage used.

Cancellation Process

To cancel: locate your warranty contract and note the administrator's contact information, call or write to request cancellation, complete any required forms, and provide current mileage. Keep copies of all correspondence.

Refund Calculation

Your refund is typically calculated as: original price minus percentage of term used (by time or mileage, whichever is greater), minus cancellation fees ($50-$100 common), minus any claims already paid. If you financed the warranty, the refund goes to your lender.

Timeframe for Refund

Expect refund processing within 30-60 days. If you financed the warranty, the refund is applied to your loan - you won't receive cash. Monitor your loan balance to confirm the credit was applied.

Key Takeaways

You can cancel and receive a prorated refund
Full refunds may be available in the first 30-60 days
Refunds are reduced by claims paid and fees
Financed warranty refunds go to your lender

Frequently Asked Questions

Do I need a reason to cancel?

No reason is required. Cancellation is your right regardless of why you're choosing to cancel.

Can the dealer refuse to cancel?

No, if your contract allows cancellation (most do by law), it must be honored. If you encounter resistance, contact the warranty administrator directly or your state Attorney General.

What if I cancel after making a claim?

You can still cancel, but the claim amount will be deducted from your refund. Multiple claims may result in little or no refund remaining.