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Tips on How to Cancel an Extended Warranty

If you have an extended warranty on your vehicle and you're interested in canceling it the following tips will help you through the process:
  • You have the right to cancel an extended warranty any time you want to. You must remember however, that the amount you get back is pro-rated based on the length of time you have had the warranty and the amount of mileage accrued since you purchased it.

  • There may be a cancellation fee charged by the extended warranty company. You'll have to read the fine print in the warranty contract to determine if there is a fee or not.

  • if you financed your vehicle, and the extended warranty was included in the total amount financed, then the refund will go directly to your bank until the loan is paid off. Your monthly payments will not change, but the total amount you owe will be reduced by the amount of the refund.

  • In order to start the cancellation process of the extended warranty you must go to the car dealer where you purchased the warranty, and you'll probably deal with the Finance Manager. They will have you sign a cancellation form with the current date and the mileage currently on your vehicle. Don't leave without getting a copy of the signed form.

  • If you purchased the extended warranty online or from a company other than the dealer where you bought the vehicle you will have to contact them to find out what their canellation process is.

  • You must keep in mind that the car dealership made a profit on the extended warranty - probably a substantial one, and the Finance Manager made a fat commission selling it to you. Now, when the warranty is canceled there will be a charge-back to the car dealer for the profit earned and there will be a charge-back to the Finance Manager for his or her commission. The charge-back will be pro-rated based on how much of the warranty is left, but it will cost them at least some of their commission. If the warranty was just sold they will lose their entire commission!

  • Due to the charge-back situation, the car dealer and/or the Finance Manager may stall on sending the cancellation forms to the warranty company. If you don't get a copy of the signed cancellation form, and they do wait on sending the forms in, your refund will get smaller and smaller as they wait. This is why it is important to get a dated copy of the refund cancellation form. It will protect you if they drag their feet.

  • Even under normal conditions a refund may take several months to complete. You will have to keep bugging the Finance Manager until the transaction is complete. You may also want to find out who the dealership Office Manager is, because this person may ultimately be the one who handles the transaction with the warranty company. By dealing with the Office Manager you might save yourself a lot of aggravation.

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