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Extended warranties are sold as protection against costly future repairs, but not everyone needs one — and some car buyers end up with one they’d like to cancel.
For those with buyer’s remorse, there’s good news: most warranties can be canceled, and you’ll get a prorated amount refunded.
The question then becomes, do I need that extended car warranty I bought? And, if not, how do I get my money back?
Reasons for canceling an extended car warranty
Although an extended warranty is portrayed as protection against costly future repairs, here are a few scenarios that might make you decide to cancel it:
- Nonagreement: Some buyers discover that an extended warranty was slipped into their car financing contract without their knowledge or agreement. Then, the term of the loan is extended to hide the extra expense.
- Cost: Warranties are often sold as a per-month purchase. Some buyers later total the cost of the warranty over the length of the contract and discover it’s much more expensive than they were led to believe.
- Exclusions: Extended warranties don’t cover everything that can go wrong. After reading the fine print, some car owners decide the coverage doesn’t justify the cost.
- Postponement: If you bought a new car, the extended warranty doesn’t kick in for at least three years. Some people would prefer to keep that money in their pocket — at least for now.
- Non-usage: According to 2026 data from Consumer Reports, only about 1 in 10 people who purchased an extended warranty have actually used it. For that one driver, the extended warranty may have been a lifesaver — but most customers end up only paying for peace of mind.
5 steps to get your money back
You can cancel an extended warranty at any time, and you’ll get a prorated refund for the unused portion of your policy. If the warranty was included in your loan, your car payment won’t drop, but you may pay off the car sooner after the refund is deducted from your balance.
Consider these tips to make the cancellation process as smooth as possible:
1. Read the contract. Find the paperwork for your policy to see who to contact and if there’s a cancellation fee. If you recently bought the extended warranty and don’t yet have the contract, call the finance manager who sold it to you. For third-party warranties, you might need to call or write a letter to the company.
2. Be firm. When you talk to the finance manager, keep in mind you’re taking away the commission they earned selling you the policy. It might be less confrontational and faster to contact the dealership’s office manager to process your request.
3. Just say “no.” When you call a warranty company, know that you’ll probably be transferred to a retention department where the staff is trained to pressure you into staying with them. Don't feel obligated to justify your reasons for canceling — just keep saying “no.”
4. Get it in writing. You may need to fill out a cancellation form, so be sure to get a copy signed by a dealership representative. Keep copies of your cancellation form or letter and any other relevant documents.
5. Follow up. Set a reminder to confirm that your cancellation was completed. You can check your loan statement or contact your lender.
How extended car warranties work
Extended warranties, often called “vehicle service contracts,” are sold by the finance and insurance manager while creating your sales contract. These warranties cover repair costs for varying lengths of time or miles driven after the manufacturer’s bumper-to-bumper warranty ends — typically 36,000 miles or three years, whichever comes first.
There are factory warranties, backed by the carmaker, with repairs made using original manufacturer parts, as well as third-party warranties that often require you to request a reimbursement and use aftermarket parts.
» Learn more about car warranty types and how they work
When you might not want to cancel your extended warranty
Not everyone should cancel their extended warranties. Many people agree with the often-used sales pitch that a warranty provides peace of mind — something that’s difficult to put a price tag on.
Although cars have become more reliable, when something does go wrong, “it tends to be a doozy,” says Scot Hall, a former dealership finance manager and executive vice president of Swapalease, a lease-trading site. This, he says, is largely because of the increased use of electronics and the computerization of vehicles.
An extended warranty can offset those emergency costs and give you the peace of mind to know that a breakdown won’t break the bank.
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