Sold a car? You may be owed a refund on the extended warranty

If you recently sold or traded in a car, you may be owed a refund on an extended warranty and not even know it.  

Consumer advocates say it's the law, but dealerships don't always notify you. It could put hundreds of dollars back in your pocket.

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We're talking about extended warranties. This is not the manufacturer's warranty that comes with new cars.  An extended warranty is a service contract you may have purchased for when the manufacturer's warranty expires.  

"In my experience, 25% of the people that have the service contract traded, sold, or totaled the vehicle prior to expiration, with approximately 40% of the contract remaining," said Jeff Petrone with Cancel My Warranty LLC. "That's seven million people.  So far, our average refund is $1,312."

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But Petrone said the dealership that sold you the warranty may not notify you that you're entitled to a refund.

"They know you have an extended warranty, but the cancellation means they have to return the remaining portion of their profit that ties to what was unused," said Petrone.

You can also cancel a warranty if you still own the car but no longer want the coverage and haven't met the mileage limits.

"The vast majority of those contracts are cancellable at any time for any reason, and the way it works is you get a prorated refund of the unused portion," said Petrone. "Generally, there’s a cancellation fee, usually $50."

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If you're still paying the vehicle note, the refund will go to the lienholder and count toward your payments.  

You can ask for a prorated warranty refund yourself, or hire an attorney or a service, such ‘Cancel My Warranty,’ which charges a percentage of the refund.

"It caps out," said Petrone. "But on average, it's going to be a few hundred dollars."


Here are the steps to cancel an extended warranty:

  • Find the paperwork.
  • Contact the warranty administrator, dealership finance manager or office manager.
  • Keep a copy of the cancellation form or letter you submit.
  • Follow-up in a few weeks.