Buying a car is a process that involves many decisions. Before you even start looking, you have to decide on a budget, and even then, that’s not all. You also have to narrow your make, model, mileage preferences, and other details like color, trim, and safety features. But once you make your choice and move forward with the purchase, you’ll face one final decision: Do you invest in an extended car warranty before driving off the lot? In hindsight, your choice may not be what you want, whether it’s the provider you pick or the plan itself. But can you get a refund on an extended car warranty?
In most circumstances, you shouldn’t have an issue getting your money back. But the process you take to get it will depend on a few factors. Let’s explore a few reasons why you might want a refund and how you can remedy the situation.
Understanding Buyer’s Remorse
Spending money on something you don’t want or need can be a frustrating realization. Unfortunately, it is not uncommon for a car buyer to add additional services to their sales contract before driving off the lot. In fact, one of the jobs of the dealership’s Finance and Insurance Manager’s office is to present buyers with several car products and services, including extended car warranties. Maybe this is what happened to you. Or, perhaps you want a refund because
- You checked the contract’s fine print details after buying the car and discovered the plan doesn’t cover what you want,
- You had an unfortunate experience with your service contract provider and want to switch companies,
- You can no longer afford to pay the policy’s monthly payments due to a change in financial circumstances, or
- You want to wait to pay for coverage until your car’s original factory warranty expires.
Whatever the reason, the first step to getting your refund is to read your agreement’s cancellation policy. How you proceed will depend on the terms.
Reviewing the Fine Details
When you buy an extended car warranty or a vehicle service contract (VSC), your policy will expressly state the cancellation process in its terms. Most contracts include a 30-day money-back guarantee, so nullifying the agreement within that timeframe will be the most straightforward process. In fact, you’ll likely receive 100% of your money back as long as you haven’t filed a claim. Some providers may even grant a full refund within 60 days if the warranty was never used.
However, the provider will likely calculate your refund on a prorated basis if you terminate the contract after the 30-day guarantee and/or file one or more claims. How much money you get back will depend on the mileage you’ve put on your vehicle and how much time has passed since signing the contract.
Making the Cancellation Request
The process you take to cancel your extended car warranty depends on your contract. To start, read the cancellation section of your agreement to see who you need to notify of your decision. Be aware that your contract’s administrator may differ from the company that sold you the policy. Some companies that sell extended car warranties are resellers only.
Therefore, if the company that sold you the contract is not the direct administrator of claims, you will have to send your request to the company that processes the claims. This information will be listed within your policy’s details. If you can’t find your contract or the cancellation policy, the finance manager who sold the warranty can help. Contract that person and ask for help identifying the contract administrator so you can submit your request.
Per the agreement, the administrator may require you to submit a written cancellation request with the following information:
- Your agreement number,
- Reason for cancellation, and
- A notarized statement of your car’s current mileage
Also, you may need to pay a processing fee to complete the request. The amounts will vary between contracts, but you can expect to pay between $25-$50. The provider may subtract the fee from your refund instead of requesting a direct payment from you. Still, contacting your provider may be the best way to streamline the process. This way, you can ask questions and get answers to ensure you take the necessary steps to complete the cancellation accurately.
Getting Your Money Back
Once you submit your cancellation request and the provider approves it, the refund may not go directly to you unless you paid the total in cash. For example, suppose the price of your policy was included in your car’s purchase agreement, and you financed the purchase. The provider may issue the refund to the lienholder and agreement holder in that case. Accordingly, they will remove the refund amount from your balance. Keep in mind that this will not change your monthly payment. However, you will likely pay off your vehicle sooner once the refund amount is removed from your balance. Also, expect to wait 30 days or more for the refund process to be completed.
Standing Your Ground
Sometimes, initiating a cancellation drives the company to pressure you to stay with them. Remember, you don’t have to justify your reasons for canceling. That said, the customer service representative’s next move may be offering you discounts or a better deal. How you proceed will be up to you. If you do move forward with the request, get a copy of the cancellation form and confirm when the process is complete.
Choosing the Right Provider
Having an extended warranty can be a helpful way to deter high repair costs as your vehicle ages. But the peace of mind you gain does come at a price. The best way to prevent buyer remorse is to research vehicle protection providers and coverage options to get to know each company.
Request a free quote and ask about payment plans and discounts. Some providers are more flexible and may offer specific deals to help make a policy fit your budget. If the company wants your business, it will find a way to work with you, delivering an affordable and worthwhile contract.