Complete Guide
Dealer Add-On Cancellation Laws by State: 2026 Guide
State-by-state guide to dealer add-on cancellation rights. Learn your state's laws for canceling extended warranties, GAP insurance, and F&I products.
Key Takeaways
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Understanding State Cancellation Rights
Every state has laws governing the cancellation of dealer add-on products like extended warranties and GAP insurance. While the federal FTC CARS Rule (effective July 2024) sets baseline requirements, state laws often provide stronger protections.
Key Point: Your cancellation rights depend on your state of residence, not where you purchased the vehicle. Understanding your specific state's laws can significantly impact your refund amount.
Federal FTC CARS Rule Baseline
The FTC Combating Auto Retail Scams (CARS) Rule, effective July 2024, establishes federal minimums:
- Key Provisions:
- Dealers must provide itemized pricing for all add-ons
- Cancellation rights must be disclosed in writing
- Refunds for canceled products must be processed within 20 days
- Dealers cannot misrepresent that add-ons are required for financing
Important: State laws can provide stronger protections, but cannot offer less than the FTC baseline.
Common State Law Provisions
Most state cancellation laws include:
- Free Look Periods:
- 30-60 days to cancel for full refund (no questions asked)
- Varies significantly by state and product type
- Pro-Rata Refund Requirements:
- After free look period, refund based on time/mileage remaining
- Calculation methods vary by state
- Processing Timeframes:
- States require refunds within 30-60 days of cancellation request
- Penalties for dealers who delay refunds
- Contract Disclosure Requirements:
- Cancellation terms must be clearly stated
- Some states require specific cancellation instructions
States with Strong Consumer Protections
These states have particularly robust dealer add-on cancellation laws:
California
California Civil Code §1794.4 and Vehicle Code provide strong protections:
- Key Provisions:
- 60-day full refund period for service contracts
- Pro-rata refunds required after 60 days
- 10% cancellation fee cap
- Refund must be processed within 30 days
- GAP insurance: full refund within 60 days, pro-rata thereafter
Enforcement: California Department of Consumer Affairs actively enforces violations.
Texas
Texas Occupations Code Chapter 1304 governs service contracts:
- Key Provisions:
- 30-day free look period for full refund
- Pro-rata refunds after 30 days minus reasonable admin fee
- Admin fee cannot exceed $50
- Refund within 45 days of cancellation
GAP Insurance: Regulated by Texas Department of Insurance with separate refund requirements.
Florida
Florida Statute 634.121 and related laws:
- Key Provisions:
- 60-day free look period
- Pro-rata refund based on time remaining
- Refund within 45 days
- Strong disclosure requirements at point of sale
Notable: Florida requires dealers to provide cancellation form at time of purchase.
New York
New York General Business Law Article 28-B:
- Key Provisions:
- Service contracts must include cancellation terms
- Pro-rata refunds required minus reasonable admin fee (max $50)
- GAP regulated separately under Insurance Law
- Attorney General actively prosecutes violations
Tip: New York consumers can file complaints with AG's Consumer Protection Bureau.
How to Cancel in Any State
Follow this process regardless of your state:
- Step 1: Review Your Contract
- Find the cancellation clause
- Note any deadlines or requirements
- Identify where to send cancellation request
- Step 2: Calculate Expected Refund
- Determine if you're within free look period
- Calculate pro-rata amount if applicable
- Account for any allowable fees
- Step 3: Submit Written Request
- Send via certified mail with return receipt
- Include: name, contract number, VIN, purchase date
- State: "I am canceling this contract effective immediately"
- Step 4: Follow Up
- Track your refund timeline
- If financed, refund goes to lienholder
- Document all communications
Frequently Asked Questions
Does my state's law or the contract terms control?
State law sets minimum protections that contracts cannot waive. If your contract offers better terms than state law, the contract controls. If state law offers better terms, the state law overrides conflicting contract provisions.
What if the dealer refuses to process my cancellation?
File complaints with your state Attorney General, state Department of Motor Vehicles, and the FTC. Many states have penalty provisions for dealers who fail to process timely refunds, including statutory damages.
Do cancellation rights apply to used cars?
Yes, state cancellation laws typically apply to add-on products regardless of whether the vehicle is new or used. The same free look periods and pro-rata refund requirements apply.
Can dealers charge a cancellation fee?
Many states cap cancellation fees, typically at $50. Some states prohibit fees during the free look period. Check your state's specific law—fees exceeding state limits are unenforceable.
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