How to cancel an extended car warranty

Save money by scrapping a policy you'll probably never use.

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Also called vehicle service contracts, extended warranties cover repair costs after your manufacturer warranty ends. But because many come with a deductible and may end up being worth more than the actual cost of repairs, these warranties are rarely worth it.

The cost of an extended warranty often falls anywhere between $800 and $5,000 depending on the length and scope of coverage as well as the type of vehicle. While this includes both high and low estimates, the average cost of an extended warranty is more likely to fall between $1,500 and $2,500.

How to cancel an extended warranty

Extended car warranties aren’t set in stone. Most dealerships and third-party companies allow you to cancel it at any time to receive a prorated refund. Follow these steps to get started:

  1. Review your policy. Your policy should list information on how to cancel and any fees you might have to pay. If not, contact the customer service team of the company you purchased the warranty from to ask what the process is.
  2. Stay patient and stand your ground. When you cancel an extended warranty, the company you bought it from stands to lose money. Because of that, you often have to jump through hoops to reach the right person and confirm that you want to cancel multiple times. Stay patient and stand your ground — you don’t have to stick with a policy you don’t want.
  3. Save a copy of your cancellation form. You’ll likely need to fill out an online cancellation form or submit a request in person. Keep a copy of this so you can check up on the status and ensure you get your prorated refund.
  4. Follow up with the company. Confirm that your cancellation has been processed and follow up if you haven’t received your refund after a few weeks.

3 reasons to cancel an extended warranty

If you’re still on the fence about your extended warranty, here are three reasons why you might want to pull the plug:

  • Adds to the total cost of your loan. If you wrapped your extended warranty into your car loan, you’re paying interest on something you may never use. Canceling can help you avoid that extra cost.
  • Multiple exclusions. An extended warranty can be limited. If yours only cover minor repairs — but requires a large deductible — it may be worth canceling and saving up for potential repairs yourself.
  • You have to wait to use it anyways. An extended warranty on a new car won’t kick in until after the manufacturer warranty ends. And since extended warranties can be purchased at any time, you could save yourself hundreds of dollars by canceling it now and renewing it when you need it.

How much does it really cost to own a car?

Why you may want to leave it in place

An extended warranty does have one benefit: peace of mind. Sales teams bank on this by offering a low monthly payment in exchange for potential savings on repairs down the road. It could be worth it if you’ve bought a used vehicle or one known for mechanical problems.

Although many people may not end up using their extended warranties, there may come a time when you need an expensive part replaced. In this case, an extended warranty could make the difference between paying a small deductible and being out-of-pocket thousands of dollars for a repair.

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Bottom line

If you’ve decided to cancel your extended warranty, stick to your guns and don’t let up. But if you’re on the fence, check out our guide to extended warranties and car loans to help you make an informed decision.

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