Regular warranties provided by auto manufacturers only offer a limited coverage that varies depending on the vehicle and the time limit. Extended warranties are attractive because they offer vehicles greater variety and prolonged coverage. A car owner with extended warranty will not have to pay for unexpected repairs. It’s also simple to get. Car buyers don’t even need to handle the paperwork; the dealership does it all for them.
Reasons to Cancel Your Extended Warranty
Extended warranties on one hand sound nice to have, but on the other, they can be awfully expensive – and you, as a car buyer, will be placing a lofty bet that something will go wrong. It’s true that being prepared and having peace of mind when buying your new vehicle is good, but it’s also worth knowing that extended warranties don’t always cover all repairs; there is an “exclusion list” within the contract’s fine print, omitting coverage for certain parts and damages.
On top of all that, if you think you’ll save a bit of money by getting an extended warranty from a third-party dealer, it might be worth reconsidering. Acquiring extended warranty from a company not backed by your auto manufacturer can cause some headaches when your car breaks down in a different region, and there are no approved facilities around.
In the heat of the car-buying moment, you might feel pressured to purchase an extended warranty. And perhaps after some time, you might feel that you simply don’t need it anymore. Either way, you’ve put some thought into it and decided you are going to cancel your extended warranty, but how?
Cancelling Your Extended Warranty
You can cancel your extended warranty anytime you want, but understand that the amount you’ll be getting back is based on a pro-rated refund or a partial refund, associated with time and distance driven. However, some contracts offer free refunds, or a flat cancel, if the cancellation was made before 30 days of the initial purchase.
The process of cancelling your extended warranty is not complicated, but there is a bit of waiting involved. First, you should reach out to the automotive dealership you bought your car from and let them (most likely you’ll be speaking to a finance manager) know that you want to cancel your extended warranty. Secondly, they’ll give you a cancellation form to fill out. Details will include the date and the vehicle’s mileage. Finally, be sure to not to leave without a signed copy of the form, ensuring the cancellation is being processed.
Disclosure: Dealerships make money from selling extended warranties, and the finance manager will receive a commission. So, whenever there is a cancellation, they will receive a chargeback, which ultimately cost them money and the commission. Don’t let their loss bug you too much, they shouldn’t have to pressure you into buying something you don’t need. You have every right to a refund!
But with that being said, processing your cancellation form and forwarding it to the warranty company may not be the dealer’s top priority. With this being the case, it may take months for the request to be completed. It’s not an ideal situation, but check in with your dealership or contact the warranty company after every month.
If you feel your claim is not handled properly by the dealership – which carries the responsibility of processing the cancellation – you should consult with a lawyer or even take it to a small claims court.
Alternatively, you can speak directly to the warranty company and they’ll get you set up with the paperwork. Once that is complete, the company will send the cheque to the issuing dealer. The majority of dealers are good at getting the refunds back to you, but you might have to check in if they don’t.
What Happens Once a Refund is Issued?
You would not receive a cheque if you’ve financed your vehicle – and the extended warranty was included in the total amount. The money you get will be sent directly to your bank. It’s unlikely that your monthly payments will go down, but the overall amount you’ll have to pay will be reduced by the amount of the refund.
If the vehicle has been paid off, and you have proof of it. The refund will come to you in the form of a cheque.