Complete Guide to Canceling Dealer Add-Ons

Extended warranties, technically called Vehicle Service Contracts (VSCs), cover repairs after your manufacturer's warranty expires. While they can provide peace of mind, dealers often mark these up 100-300% from the actual cost.

• Key facts:
• Average dealer markup: $1,500-$3,000 over actual cost
• Can be purchased later from third parties at lower prices
• Many repairs are excluded in the fine print
• Cancellable for pro-rata refund at any time

GAP (Guaranteed Asset Protection) insurance covers the difference between what you owe on your car and what it's worth if it's totaled or stolen. This can be valuable if you're underwater on your loan, but dealers typically charge $500-$1,000 when your own insurer may offer it for $20-$50/year.

• Key facts:
• Dealer price: $500-$1,000 one-time
• Insurance company price: $20-$50/year added to your policy
• Only needed if you owe more than the car's value
• Cancellable for pro-rata refund when you pay off or sell

Tire and wheel protection covers damage to your tires and wheels from road hazards like potholes, nails, and curbs. Coverage and exclusions vary widely between providers.

• Key facts:
• Typical cost: $500-$1,500
• Many exclusions (cosmetic damage, wear, improper inflation)
• Check if your credit card or auto insurance already covers this
• Cancellable for pro-rata refund

Paint protection (clearcoat sealants) and fabric protection (scotchgard-type treatments) are among the most overpriced dealer add-ons. Dealers charge $300-$1,000 for products that cost them $20-$50 to apply.

• Key facts:
• Extremely high markup (up to 2,000%)
• Similar products available at auto parts stores for $20-$50
• Modern car paint has excellent factory protection
• Cancellable for pro-rata refund

Key replacement coverage pays for new keys and fobs if yours are lost, stolen, or damaged. Modern car keys can cost $200-$500 to replace, making this seem appealing.

• Key facts:
• Typical cost: $200-$500
• May have low coverage limits or high deductibles
• Check your auto insurance policy - it may already cover this
• Cancellable for pro-rata refund

Most states mandate a "free look" or "cooling off" period during which you can cancel for a full refund. This period typically ranges from 30 to 60 days from purchase.

• During the free look period:
• You receive 100% of your money back
• No cancellation fees allowed (in most states)
• No proration - you get the full amount

Example: California law requires a minimum 60-day free look period for service contracts. If you cancel within 60 days, you get a complete refund minus only any claims you've made.

After the free look period, you're still entitled to a pro-rata refund - meaning you get back the unused portion of your coverage.

• How pro-rata refunds work:
• Refund = (Remaining Coverage Period / Total Coverage Period) x Purchase Price
• Some states cap cancellation fees (e.g., $50 in Texas, $0 in Wisconsin)
• Refunds must be issued within 30-60 days (varies by state)

Example: You paid $2,000 for a 5-year warranty. After 2 years, you have 3 years remaining. Your pro-rata refund would be: (3/5) x $2,000 = $1,200, minus any applicable fees.

Your rights vary significantly by state. Some states offer exceptional consumer protections:

Check our state-specific guides below for the exact laws that apply to you.

Before starting the cancellation process, collect:

• Original purchase contract showing the products you bought
• Product agreement/contract for each add-on (extended warranty agreement, GAP insurance policy, etc.)
• Proof of purchase date (usually on your sales contract)
• Current odometer reading (for warranties that calculate refunds by mileage)
• Loan payoff information (refunds often go to your lender if there's a balance)

Tip: If you can't find your product contracts, contact the dealership or the product administrator directly. They're required to provide copies.

Know what you're owed before you contact anyone:

Free Look Period Refund: Full purchase price minus any claims filed.

1. Pro-Rata Refund Formula:
2. Determine total coverage period (e.g., 60 months)
3. Calculate time used (months from purchase to now)
4. Calculate remaining time (total - used)
5. Refund = (Remaining / Total) x Purchase Price - Fees

• Example:
• $1,800 warranty, 60-month term
• Purchased 18 months ago
• Remaining: 42 months
• Pro-rata: (42/60) x $1,800 = $1,260
• Less $50 fee (if applicable): $1,210 refund

Submit your cancellation in writing. Most products can be canceled by contacting either:

1. The selling dealership - Often the easiest route
2. The product administrator - The company that actually provides the coverage (listed on your contract)

• Your cancellation should include:
• Your name and contact information
• Vehicle information (VIN, make, model, year)
• Contract number(s)
• Purchase date
• Current odometer reading
• Clear statement that you're canceling
• Signature and date

Important: Send via certified mail with return receipt, or get written confirmation if submitting in person. Keep copies of everything.

After submitting your cancellation:

• Timeline expectations:
• Acknowledgment: 7-14 days
• Refund processing: 30-60 days (varies by state)
• Refund delivery: To you directly, or to your lender if you still have a loan

1. If you don't receive confirmation within 2 weeks:
2. Call the dealership/administrator for status
3. Document the call (date, time, who you spoke with, what they said)
4. Send a follow-up letter referencing your original request

• If your refund is late or denied:
• Reference your state's refund deadline law
• File a complaint with your state Attorney General's consumer protection division
• Consider small claims court for amounts under your state's limit

Problem: The dealership says you can't cancel, or they ignore your request.

1. Solution:
2. Go directly to the product administrator. Your contract lists the company that actually provides the coverage. They're legally required to honor cancellation requests regardless of what the dealer says.

1. Put it in writing. Send a formal letter citing your state's cancellation laws. This creates a paper trail and demonstrates you know your rights.

1. Escalate if necessary:
2. - Contact your state's Department of Insurance (for GAP)
3. - File a complaint with the state Attorney General
4. - Report to the Better Business Bureau
5. - Consider hiring an attorney for larger amounts

Problem: It's been weeks (or months) and you haven't received your refund.

1. Solution:
2. Know your state's deadline. Most states require refunds within 30-60 days:
3. - Texas: 46 days
4. - California: 30 days
5. - Florida: 45 days

1. Send a demand letter. Reference the specific statute and deadline. State that you'll file a regulatory complaint or pursue legal action if the deadline isn't met.

1. File complaints:
2. - State Attorney General Consumer Protection
3. - State Department of Insurance (for GAP/insurance products)
4. - Federal Trade Commission (for patterns of abuse)

1. Pursue penalties. Many states allow you to recover additional damages:
2. - California: 3x damages for willful violations
3. - Some states: Statutory damages plus attorney fees

Problem: You received a refund, but it's less than you expected.

1. Solution:
2. Verify the calculation. Request an itemized breakdown showing:
3. - Original purchase price
4. - Coverage period
5. - Time/mileage used
6. - Pro-rata calculation
7. - Any fees deducted

1. Check for violations:
2. - Was the cancellation fee higher than your state allows?
3. - Did they use an unfavorable calculation method?
4. - Did they deduct unauthorized charges?

1. Dispute in writing. Send a letter with your own calculation and documentation. Cite the applicable state law.

1. Escalate as needed. If they won't correct it:
2. - File a state AG complaint
3. - Pursue small claims court
4. - The cost of fighting may be more than they owe, making settlement likely