Every car owner prays a car breakdown never happens to them. Still, with 69 million vehicle breakdowns occurring in the US each year, at least one in three of us are affected by vehicle repairs – and the resulting bills – every 365 days. Unless you’re Jeff Bezos, Bill Gates, or Elon Musk, chances are you aren’t made of money, so that an unexpected repair could hurt your wallet. AAA statistics have also shown that another one in three Americans don’t have money put aside to pay a mechanic in an emergency.
It’s no wonder then that extended car warranties are such a big deal for many of us. While almost all brand-new cars come with some repair protection in place, the average duration is just 36,000 miles, after which you’re out on your own. For a fee, most manufacturers allow you to extend that coverage (known as an OEM extended warranty), and there are plenty of third-party companies that offer warranties too.
The most common types of extended warranties are:
- Powertrain warranty: For those who only want to cover the most expensive parts of their vehicle, a powertrain warranty looks out for your engine, transmission, and drivetrain.
- Bumper-to-bumper warranty: A bumper-to-bumper warranty includes all the above and (almost) everything else between your bumpers for those who want comprehensive coverage.
We can say pretty objectively that investing in a warranty is always better than paying for repairs outright, but if you wanted to, can you cancel a car warranty? The answer is ‘yes,’ but we should go over a few things first.
Reasons Why You Might Want to Cancel Your Extended Car Warranty
Let’s take a look at the top scenarios where canceling might be a genuine consideration:
You Didn’t Know You Bought It in the First Place
It isn’t uncommon for vehicle buyers to discover that a policy has been added to their financing contract without their knowledge. Once they find out their car has an extended warranty that they didn’t ask for, they may seek to cancel it.
An unexpected extended warranty isn’t necessarily a bad thing, though. As long as the coverage is reliable and you haven’t paid over the odds, it’ll keep you protected against manufacturing errors once your factory warranty expires.
You Felt Pressured Into Buying It and Found Something Better
We all know how pushy some salespeople can be and how they don’t take ‘no’ for an answer. The pressure can be too much for some people, and they end up signing a contract before they’ve had the opportunity to look around for other options. Once they’ve checked out third-party providers, however, they may find better coverage at a much lower price.
The Coverage Isn’t as Comprehensive as You Thought
If you’re unfamiliar with extended warranties and industry-known terms like powertrain or exclusionary coverage, then it’s hard to know what exactly your protection plan covers. There may have been a situation where you thought you were getting total protection, only to find out you have stated component coverage.
Most protection providers work with you to provide personalized coverage that fits your needs and budget. By contacting their customer service, you can work with them to adjust your plan and get it just right.
You Bought It Ahead of Time
Sometimes you’re encouraged to purchase an extended warranty at the same time as your new car. But if it doesn’t kick in until the manufacturer warranty expires (generally about three years later), there’s little point in paying for it upfront. Many people in this situation would rather cancel the extension for now and put the money back in their pocket.
Remember, third–party providers often offer considerably better value than manufacturers do. By shopping around when the time comes, you may be able to keep some of that cash you saved for yourself.
How Can You Cancel Your Extended Car Warranty – and Should You?
If you’ve found a better option, canceling your current extended warranty is a relatively simple and straightforward process. Just check the terms of the contract and see who you need to notify of your decision. Most warranties come with a money-back guarantee, so if you’re still within the cooling-off period, things should be even easier. However, before you do, take a moment to check whether you could leave with a big problem.
An extended warranty is an almost essential investment for vehicle owners, and we don’t recommend getting left without one. Any lapses in coverage could leave you stranded at the roadside and liable for costly repair bills if your vehicle encounters a problem.
If you’re considering canceling your warranty, think about the following:
Cost vs. Savings
Boiled down to the basics, a warranty is an up-front fee that saves you serious money in the long run. With statistics showing that even a new car’s annual repairs and maintenance cost an average of $1,186 per year, a good–value warranty could be great news for your bank account. If you’re paying more than your warranty’s worth, however, it could be time to find a new policy.
Do You Have a New Plan in Place?
If you’re canceling one warranty plan to move over to another, you’ll need to have your new provider ready to pick things up as soon as the old one waves goodbye. It’s the law of the universe that breakdowns always happen at the worst possible time, and any gaps are opportunities for something expensive to go wrong.
Is It Because You’re Selling?
You may want to cancel your extended warranty because you’ve decided to sell your vehicle, but there are several reasons why that may not be the best idea. Firstly, you don’t want to cancel before the car has changed hands. Imagine if a significant part failed the day before you’re due to hand over the keys? Secondly, some warranty policies are transferable, so potential buyers will be happy to pay more for the added peace of mind if you keep yours going.
Find the Right Protection for Your Vehicle
Putting an end to an extended warranty that doesn’t suit your needs is understandable, but not having a contract altogether is a risky business. While OEMs tend to charge a lot for very little coverage, third-party plans are often much better value for significantly less money.
Before you cancel your current warranty, do your research and find a better alternative. Then switch over, so you aren’t left stranded if the worst happens. Saving money in the short term is all well and good, but you can’t put a price on peace of mind.