How to Cancel Your Extended Car Warranty: A Step-by-Step Guide (2024)

Last updated Nov 14, 2023

Canceling your extended car warranty may seem like a daunting task, but it can be a wise decision if you no longer need the coverage or if it’s no longer cost-effective. In this step-by-step guide, we’ll explore the reasons you might consider canceling your extended warranty, walk you through the cancellation process, and share tips on what to expect afterward. By following these guidelines, you can navigate the cancellation process with confidence and potentially save money in the long run.

Ready for help? Schedule a Consult call with one of our Car Coaches!

How to Cancel Your Extended Warranty

Scenario #1: Did I really pay that much for an extended warranty?

You’ve bought the car, only to realize that the price of the extended warranty you just purchased is way higher than you remembered. How could this be? The salesperson likely included the extended warranty in your monthly payment quote, and probably glanced over the total cost. Although you’ve already signed on the dotted line, not all hope is lost.

Step One: Look At Your Contract

Every extended warranty product has a ‘flat cancel’ period detailed in the contract. If you opt to cancel the extended warranty within the flat cancellation period, you will get a FULL refund. Typically, the extended warranty flat cancellation period is 30 to 60 days after the date of purchase.

Note: If you choose to cancel your extended warranty product, you will NOT receive a check in the mail. Your monthly payment remains the same unless you refinance. The refunded amount will be applied directly to your auto loan. While this isn’t ideal if you’re looking to rake in some cash, this does mean that you will eventually pay off your auto loan early, as the refund reduces the principal on the loan by that amount.

What if I’m outside of the ‘flat cancel’ period? No worries. You will receive a prorated refund applied to your auto loan’s principal balance.

Step Two: Contact the Dealership

The most direct way to cancel your extended warranty is to contact the accounting department at the dealership. The accounting department is usually responsible for processing the cancellation and refund paperwork, so this is the quickest way to complete the cancellation of your extended warranty. Be sure to take note of the name and phone number of the associate who assisted you. You’ll need that later.

Note: If you solely contact the finance manager at the dealership, there’s a decent chance that they will ‘sit on it’ to continue making money off of the extended warranty product that they sold you. This is why it’s best to contact the accounting department instead.

Step Three: Verify Cancellation

One week after contacting the dealership’s accounting department, call back to get a status update. Have they processed the cancellation? Can they email you proof of cancellation? If they haven’t gotten around to it yet, tell them you’ll be calling back in a few days to get another update.

Scenario #2: It’s time to sell or trade in, but I still have extended warranty coverage

Maybe you’ve owned the vehicle for a few years, but now it’s time to say goodbye. You’re selling your vehicle, and you remember that you still have extended warranty coverage. Could you get a prorated refund now that you’re selling? Yes!

Step One: Provide the Purchase Order

After you’ve sold or traded the car, make a photocopy of the purchase order. The purchase order has the information that the dealer needs to process your extended warranty cancellation.

On the purchase order, either circle or highlight the following information:

• Your name and address
• Proof of no lien (balance owed should be zero)
• VIN number (of the car with the extended warranty, not your new car)
• Mileage on the vehicle

Step Two: Put It In Writing

You’re going to want to type (or write) a brief letter detailing your instructions for the cancellation. The letter should have the following essential information:

• Your name and contact information
• VIN number
• Approximate purchase date (month and year)
• Your request (immediate cancellation of the remaining extended warranty coverage with a prorated refund)

Step Three: Submit and Follow Up

Submit the purchase order and letter to the dealership where you purchased the vehicle. Be sure to find the contact information for the accounting office to ensure that your cancellation is expedited.

Follow up the next week to verify that the cancellation request has been received, and to find out if it has been processed. If the dealership hasn’t gotten around to it yet, call back until you receive verification that the cancellation has been processed.

How Refunds Work When Canceling Your Extended Car Warranty

If you decide to cancel your extended warranty, it’s important to note that you will not receive a check in the mail. Instead, the refunded amount will be applied directly to your auto loan, meaning your monthly payment will remain the same unless you refinance. While this may not be ideal if you were hoping to receive cash, the benefit is that the refund will reduce the principal on your loan, helping you pay off your auto loan earlier.

If you’re outside of the ‘flat cancel’ period, don’t worry. You will still receive a prorated refund, which will be applied to your auto loan’s principal balance. This ensures that even if you’re canceling your extended warranty later in the coverage period, you can still benefit from a reduced loan balance and a potential earlier payoff.

Use This Template to Cancel Your Extended Warranty

This template is for canceling a warranty for a vehicle with a loan in place.

ABC Dealership

Attention Accounting Department

Attention Finance Manager

DATE

Please cancel my Vehicle Service Contract on VIN number ___________.

It is a(year make model) that I/we purchased from your

dealership in (month/year) under the name(s) of ______________________.

The odometer on my vehicle currently reads: _________.

I understand that the amount will be sent to my lender to be applied to the principal balance.

Please call should you have any questions _ _ _ – _ _ _ – _ _ _ _

Please email should you have any questions ___________________.

I/we will follow up on this within a reasonable amount of time. Thank you for your immediate attention to this matter,

Your Signature

Download this template here.

Template For Trade-Ins

This template will help you cancel the extended warranty when you trade in your vehicle.

ABC Dealership

Attention: Accounting Department

Attention: Finance Manager

DATE – (the date you traded your vehicle on your new Purchase/Buyers Order)

This is a written notice to cancel my/our Vehicle Service Contract on

VIN number ________________.

It is a (year make model) that I/we purchased from your dealership in (month/year) under the name(s) of ________________.

I/we have traded this vehicle and have attached the information you need for cancellation to this written request.

Please call should you have any questions _ _ _ – _ _ _ – _ _ _ _

Please email should you have any questions ________________________

I/we will follow up on this within a reasonable amount of time. Thank you for your immediate attention to this matter.

Your Signature

Download this template here.

Free Car Buying Help Is Here

Ready to outsmart the dealerships? Download your 100% free car buying cheat sheets today. From negotiating a deal to leasing a car the smart way, it’s all available for instant download. Get your cheat sheets today!