How to Cancel an Extended Service Contract You Don't Use

It happens all the time. You purchase a car at a dealership and they say they’re willing to give you an outstanding offer for it, but you have to buy an extended service contract or extended service warranty. You don’t want to buy it. You think it’s useless. It most likely is since the bumper to bumper warranty is 36 months / 36,000 miles and the powertrain warranty is 60 months / 60,0000 miles.

But you still buy it since the dealership is forcing you to and you figure you’re paying for it over the life of the car loan.

But now you want out of it. And, in California, that’s very possible.

California Civil Code 1794.41 says:

1794.41:  (a) No service contract covering any motor vehicle, home appliance, or home electronic product purchased for use in this state may be offered for sale or sold unless all of the following elements exist:

(4) The contract shall be cancelable by the purchaser under the following conditions:

(B) Unless the contract provides for a longer period for obtaining a full refund, after the first 60 days after receipt of the contract, or with respect to a contract covering a used motor vehicle without manufacturer warranties, a home appliance, or a home electronic product, after the first 30 days after the receipt of the contract, a pro rata refund, based on either elapsed time or an objective measure of use, such as mileage or the retail value of any service performed, at the seller’s option as indicated in the contract, or for a vehicle service contract at the obligor’s option as determined at the time of cancellation, shall be made by the seller to the purchaser if the purchaser provides a written notice of cancellation to the person specified in the contract. In addition, the seller may assess a cancellation or administrative fee, not to exceed 10 percent of the price of the service contract or twenty-five dollars ($25), whichever is less.

That’s the easy way out! Just find your purchase / financing documents from the time of sale (or, alternatively, contact the dealership if you can’t find them - they may have a copy), contact the extended warrantor and say you want out! You won’t get the full amount of the contract (unless its been fewer than 60 days when you purchased the vehicle), but you will receive a pro-rated amount of the the contract that you haven’t used yet. Considering some of these extended service contracts can cost upward of $3,000.00, we’re talking some serious money here.