Can You Cancel an Extended Car Warranty?

It is possible to cancel an extended car warranty provided that you follow the issuer's instructions.

Matt Keegan | 

Apr 15, 2022 | 4 min read

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Can you cancel a car warranty? You can if it is an extended warranty that you purchased. This type of warranty usually picks up where the manufacturer's warranty leaves off, supplying consumers with a measure of protection per the policy. But occasionally consumers decide that the cost, exclusions, and delay in implementation do not justify keeping one.

What is an Extended Warranty?

There are two types of extended car warranties offered. First, is one offered by the car manufacturer. This policy picks up where the standard warranty leaves off, but occasionally they overlap. Second, are the third-party plans offered by private companies. The dealership may back certain plans, while others are marketed and sold independently. Often, there are various coverage level plans available through the same provider.

Before canceling your extended car warranty, consider reviewing the policy to reacquaint yourself with what's covered. This is important, especially if you anticipate a major repair in the future, due to a slipping transmission or problems with the infotainment system. Canceling now would preclude coverage later.

Reasons for Canceling

There are several reasons why consumers cancel extended car warranties.

First, the cost is expensive

Car warranty costs average $2,500, although basic policies cost about $1,000. On the top end, a comprehensive policy may cost $4,000 or more. Usually, the expense is split into monthly payments. After determining what you're paying each month, it may be difficult to justify that cost.

Second, there are exclusions

As with any type of policy, there are exclusions to the coverage. This means that not every cost receives coverage. For instance, all wear items such as brakes, oil changes, shock absorbers, and spark plugs are not covered. Routine consumable items such as the battery and tires are also excluded. And cosmetic problems such as dents, scratches, and fading paint are not part of the policy. What you have left is coverage on certain major items with a deductible that's another consideration.

Third, coverage starts later

If you bought your extended car warranty when you purchased your new car, coverage does not begin for several years. Indeed, it may not start until the manufacturer's New Limited Vehicle Warranty expires after three years or 36,000 miles, whichever comes first. Therefore, you may be making payments on something you can't use. Further, if you plan to replace the vehicle in its fourth or fifth year, it may be difficult to justify continuing coverage.

Fourth, you do not recall opting for coverage

Let's face it: when you purchase a new vehicle, there are dozens of pieces of paperwork to review and sign. You may have heard the dealer pitch the extended warranty and agreed that it was a great idea at that time. But sometime after signing, you reviewed the documentation and uncovered the warranty. After a brief review of the policy, you decide you do not want it.

How to Cancel an Extended Warranty

"Can you cancel a car warranty?" is always a question that doesn't have an easy answer. Since extended car warranties (service contracts) differ based on the company backing the warranty or the issuer, the methods for canceling likely vary. We'll examine the general steps to accomplish this task.

Step No. 1 – Review the warranty

Pull out your extended car warranty and look for the section that outlines cancellation. Once found, follow the instructions carefully.

Step No. 2 – Write a letter

Certain warranty companies require consumers to put their cancellation requests in writing. If so, there may be a form to fill out. Write that letter, including the form, and keep a copy of the documentation. Take note of the date your letter went out.

Step No. 3 – Place a phone call

Instead of a letter, a phone call might initiate the cancellation process. Reach out to the company, explain that you want to cancel, and follow the instructions on how to accomplish that task. Expect the warranty company to attempt to retain your business. Your call may later be routed to a retention specialist whose job is to keep you as a consumer. Hold your ground. If canceling over the phone, obtain the contact's name and a cancellation number. Keep both for your records.

Step No. 4 – Follow up

After a few days, you should receive a cancellation confirmation. This may involve an email notification, text message, or mail receipt. If a refund is due, stay on it until receiving a credit.

Car Care Considerations

With the extended warranty in your rearview mirror, you have one less expense. However, maintenance and repairs happen, therefore it is a solid plan to consistently set aside cash consistently to cover those expenses. If you never use those funds, that money can serve as the down payment for your next vehicle.

Matt Keegan

Matt Keegan is a lifelong car enthusiast, having “driven” his first real car at the tender age of five while sitting on his father’s lap. As soon as he acquired his license, he began exploring the open road and tinkering under the hood to fix the inevitable leaky radiator, broken belt, or mess with a stuck fan clutch. It is those experiences that convinced him to stick with writing and make good friends with mechanics. Matt regularly reviews new vehicles, advises friends and families on their next car purchase, and keeps his pulse on the automotive industry. His bucket list drive is navigating Alaska’s Dalton Highway and finishing that trip with a dip in the Arctic Ocean. In July, of course.