Let's get one thing out of the way right away: Nearly all brand-new automobiles come with a limited warranty that protects you for the first three years or 36,000 miles that you own the vehicle, whichever comes first.
An extended warranty might be right for you if you are ready to shell out more cash in exchange for the peace of mind that comes with knowing that the cost of unforeseen repairs will be covered for longer. However, it wouldn't be quite accurate to refer to it as a "warranty."
An extended warranty is only an additional insurance policy that shields you from the financial burden of paying for costly repairs for a certain period or up to a predetermined number of miles driven. The typical duration of the coverage provided by these extended warranties is increased by a couple of years.
Extended warranties provided by the original equipment manufacturer (OEM) are known as policies like this one. If your extended warranty is covered by a well-known brand that also happens to be the manufacturer of your car, for example, Ford, Honda, or Audi, then it is likely that you have an original equipment manufacturer (OEM) extended warranty. There are two more kinds of extended warranties offered by the manufacturer:
- Any problem with the craftsmanship that results in your engine or gearbox not working correctly will be covered under the terms of a powertrain warranty.
- A limited warranty will cover pretty much everything else, including your vehicle's technological elements or infotainment system. Still, it will not cover normal maintenance or components that readily wear out, like tires or windshield wipers.
What Good Could Come of Canceling My Extended Car Warranty?
The most compelling argument in favor of their warranty is that car dealerships are eager to sell extended warranties to customers. It is hard to escape this pressure, and it is simple to focus more on the potential negative rewards of not acquiring the coverage than on the potential positive outcomes.
Despite this, most of the time, purchasing an extended warranty is not prudent from a financial standpoint. Most customers don't end up using it, and those who do wind up spending more on the insurance than they would have if they had paid for the repairs out of pocket. The typical cost of an extended warranty was reported to be over $1,500 by Consumer Reports in 2018.
If you made a hasty decision to buy an extended car warranty, you may wish you could take back your purchase and put the money in a more advantageous investment instead.
How Much Money Do You Get Back?
In most cases, you have up to 30 days after making an impulsive buy to cancel extended warranty without incurring any fees or other penalties. If it has been longer than that, you will typically be able to cancel your coverage and receive a refund in the form of a prorated amount that is calculated according to the amount of time that has passed since you initially purchased the policy and the amount of mileage that you have put on your vehicle since then. Please refer to the particular contract you have for more details.
Canceling Your Extended Automobile Warranty
Regrettably, car dealerships who offer you an extended warranty do so to earn a fee; hence, they are not likely to be too eager to assist you in canceling the policy. When you go back to the dealership or phone to cancel, it may be helpful to bring a buddy who is aggressive and demanding with you. This is especially true if you have a fragile constitution.
To terminate your extended auto warranty, you will be required first to fill out a form that details your vehicle's final mileage and the cancellation date and then get a copy of the form from the dealership that an authorized representative has signed.
Do Not Repeat This Mistake
Before determining whether or not to acquire the extended warranty, you should wait until your initial OEM warranty is getting close to its expiry date before making a decision. You should research the make and car of the car you want to buy before going to the dealership, even though it's unlikely that the salespeople there would tell you that.
Peace of Mind
This is not to suggest that everyone just terminate their extended warranties. The often-used sales pitch that a warranty gives peace of mind, which is tough to place a price tag on, is supported by many individuals.
