What to Do if a Dealer Refuses to Cancel Extended Warranty
Photo by Erik Mclean on Unsplash
Car buying can sometimes come with unexpected frustrations, especially if you’re going through a dealership. We might not always fully understand what we’re getting ourselves into when signing on the dotted line. Unless you’re the kind of person who loves reading every word before agreeing to the terms and conditions, car-buying paperwork can get very convoluted quickly.
Some disreputable dealers may even bank on you not reading everything in your contract and can tack on unexpected costs or policies which may hurt you in the long run.
For example, a sleazy dealer might sell you warranties you didn’t ask for. Or, if you did buy one, they may refuse to cancel it. This is an unfortunately common problem that many car-buyers have to deal with. Today, we will talk about what to do if a dealer refuses to cancel an extended warranty on your new vehicle.
How Do Extended Warranties Work?
The first thing to know is that a car warranty isn’t really a warranty. Standard warranties are quality guarantees from companies that promise to replace or repair a product if any unforeseen damage or malfunctions happen. The warranty cost is usually included in the price of the product.
On the other hand, Extended vehicle warranties are more like insurance policies. They promise to repair and maintain the vehicle for an agreed-upon time period, but for an extra cost to the buyer.
You might encounter two kinds of extended warranties when purchasing a new or new-to-you vehicle from a dealership.
- OEM or “original equipment manufacturer” warranties come straight from the maker. For example, if you’re buying a new Toyota, Toyota will be the responsible party for issuing and honoring your warranty. Typically you are charged a deductible, just like insurance, which will be applied to any repairs you need the dealership to make. This excludes routine maintenance, like oil changes and tire replacements.
- Third-party or “after-market” extended warranties are similar, except for those issued by external insurance or warranty companies. They usually offer the same types of coverage for a similar deductible; however, they may come with additional limitations or rules which OEMs don’t have. They may limit where you can have your repairs performed and may not guarantee that make-specific parts will be used. Additionally, Third-party extended warranties may require that you pay for the repairs up-front and then file a claim later.
In both cases, you should be able to cancel your extended warranty within a pre-agreed upon timeframe. But dealers can sometimes make this difficult. We’ll talk about your options in the following few sections if a dealer refuses to cancel your extended warranty.
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Why Would I Want to Cancel My Extended Warranty?
The biggest reason car shoppers buy extended warranties is that dealerships are good at selling them.
We’ve all been there.
We’ve all encountered the salesperson Todd and how he puts the pressure on you and explains the risks of not getting extra protection for your car and how it will cost you down the line. Plus, he encourages you even more by saying it’s cheaper to get a warranty now because the price will go up if you wait too long.
That would be fine and all if it wasn’t because extended warranties cost a lot of money.
Most of the time, buying an extended warranty isn’t a wise financial decision. In 2022, the median extended warranty cost is $2,458, according to MarketWatch. Then, according to Consumer Reports, most extended warranty buyers don’t get to use it. Those who did use the warranty still ended up paying more than they would have if they paid out of pocket.
The most significant reason you want to cancel your warranty is that you were put in a spot while in the dealership, and you impulsively bought it.
Why Would a Dealer Refuse to Cancel Extended Warranty?
You wouldn’t be able to cancel an extended warranty if you waited to do so until after the cut-off point. Some warranty providers stipulate a strict time period, usually between 30 and 60 days, in which you are allowed to cancel your extended warranty without being charged any fees.
However, even in this case, you should still be able to cancel your warranty unless your contract explicitly states otherwise. If you paid for your warranty in full and choose to cancel after the cut-off period, you should still be able to receive a prorated refund.
If you are genuinely unable to cancel your warranty, you may need to follow your warranty through to the end of your contract.
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What Are Your Options If a Dealer Refuses to Cancel Extended Warranty?
A quick google search of this question will show how many people have dealt with slippery financial officers at dealerships, either squeezing in an extended warranty or telling bald-faced lies about contract stipulations to keep them on board.
If a dealer refuses to cancel your extended warranty, you can follow a few avenues to make sure they honor your wishes.
Make sure you understand your contract
Whether you’re about to purchase an extended warranty for the first time or looking to cancel, you should read and re-read the cancellation policy in your warranty contract.
The dealership told one man who attempted to cancel an extended warranty that he had to make three payments before withdrawing. However, his contract said he could cancel at any time. The stipulations legally bind the dealership in the contract, and it will serve you to know yours going in.
Try multiple channels
Many car buyers report that they are met with dismissal, resistance, or even aggression when they try to speak to the financial officer who made a commission off the extended warranty sale.
If you have tried speaking to them to no avail, it may be in your best interest to talk to the general manager or another official at the dealership.
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Get it in writing
Most dealerships will have you fill out a physical cancellation form, which you can either mail in or bring straight to the dealership for faster processing. If you are within driving distance of your dealer, we recommend bringing it in yourself to quickly obtain a copy of the letter for your records that has the dealer’s signature on it.
Speak to a lawyer
If your efforts continue to fail, it may be necessary to take legal action. You will rarely need to involve an attorney in cases like these; however, it can be helpful in extreme cases.
This is especially the case if you find yourself the victim of warranty fraud, wherein a dealer hides a warranty you did not ask for in your contract.
Use an alternate service
Because this is a not-so-rare issue car buyers face, there are specialty services that can help you get out of a sticky warranty situation if your dealership refuses to budge. Organizations like DoNotPay.com are there to help consumers when all other options have been exhausted.
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