How To Calculate Extended Warranty Refund?

How To Calculate Extended Warranty Refund

Purchasing an extended car warranty is useful for saving car servicing costs for a certain period. However, it turns out that around 50% of people who buy an extended warranty hardly use it or do not use it at all.

So, canceling the warranty and getting a refund is the only best option. And that is why it is essential to understand how to calculate extended warranty refund.

Warranty refunds work based on the number of years and miles purchased. To calculate the refundable amount, the usage time and the miles spent will be deducted, along with the administration fee. But if you haven’t used the extended warranty, you can claim a full refund if you cancel sooner.

Remember that getting a refund is not the easiest process. But how do you deal with it, or how can you cancel the extended warranty to make the full refund claim? I will discuss more on these topics in this article.

How To Calculate Extended Warranty Refund?

Car warranty refund works more like proration. When you purchase an extended warranty, you purchase service and repair coverage for a specific time. And it adds extra mileage to your car. This extended warranty usually begins after your vehicle’s warranty ends, and sometimes they overlap.

But when the car owners choose not to use the car anymore, sell the car, or do not want to use the extended warranty, getting a refund is the best way to get back the money they will not need to spend. Now, the question is, how do you calculate the refund amount?

The calculation is not tough because the amount will depend on how many times or how long you used the warranty service and how many miles are left. For example, let’s say you purchased a 5-year extended warranty and 100,000 miles for $2,000. But you want a refund after using the service for 2 and a half years and have 50,000 miles left. How much do you get?

Well, since you have used up 50% of the warranty, you will receive a 50% refund, minus a $50 administration fee. It means your refund amount will be $950.

But what if you have not used the warranty at all? In that case, you can claim a full refund from the dealers. However, getting a full refund can be pretty hectic. So if you think you will not use the extended warranty, you can claim a full refund within 30 days. Remember that the sooner you claim, the better.

What Does The Extended Warranty Cover?

Before you purchase the extended warranty, it is essential you know what the warranty will cover. Different manufacturers or insurers have different policies regarding it. Nevertheless, you can expect them to cover the following.

  • Bumper To Bumper Coverage

The bumper to bumper extended warranty covers many major engine or transmission-related repairs. These repairs are pretty expensive and can happen after your car purchasing warranty expires.

Moreover, this type of warranty often covers the car’s electronics parts, such as the power seats, navigation systems, onboard computers, etc. That is why getting these expenses covered can save a good amount of money.

  • Wear And Tear Coverage

It is the most basic warranty coverage, and I am sure you understand this part well. Under this coverage, the warranty provider will repair any wear and tear on your car parts. But you should know that it will not apply to damages caused by reckless driving or negligence.

  • Old And New Car Mileage

Some warranty providers offer coverage based on your car’s mileage. So if your car does not fall into their category, you will not be eligible to receive the warranty coverage. So how does it work?

Most car manufacturers or dealers require a warranty-seeking car to have 75,000 miles on it to receive a warranty under a new car policy. But if the mileage is 75,000, you may receive the coverage under a used-vehicle warranty. It means the coverage options will be limited.

  • Inclusionary and Exclusionary Coverage

Finally, there are two types of coverages such as inclusionary and exclusionary. In an inclusionary coverage, you will get a list of what the warranty covers. On the contrary, the exclusionary list will tell you what the insurer does not cover, making it more comprehensive and expensive.

  • Extras

This one is not very usual, but some insurers cover a few extras for their customers. If the car has broken down miles away from your residence, they will carry your food and lodging expenses. They may even offer 24-hours roadside assistance and complimentary towing.

What Else Do You Need To Be Aware Of?

Are you getting a reliable extended warranty deal? While many dealers ensure the highest service for their customers, some are there to make you pay and go through unnecessary expenses. Avoid getting an extended warranty from dealers who do the following.

Hidden Conditions

Did the dealer provide you with a contract paper? You should read it through and through before you come to an agreement. Everything the company does and does not cover with the warranty will be mentioned in the contract. But it is best to know if there is any hidden condition that might cost you later.

Excludes Major Repairs

Your car’s extended warranty is supposed to cover most major repair services. Since you will get a list of things the insurers cover, it will be easier for you to understand their service. However, if you notice the dealer has excluded major repairs and services, you are probably dealing with someone looking for a way to get away without paying enough for what you need.

Asks The Owner To Pay Percentage

It is not uncommon for car owners to pay a small fee during any repairs, even if it is done under warranty. In most cases, the fee does not exceed $100. However, if the company asks you to pay a specific percentage of the repair cost, you must move on and find a better dealer.

Why Should You Get An Extended Warranty?

Many people do prefer to use this warranty and get high benefits from it. If you are wondering why you should get an extended warranty for your car, here are some good reasons.

  • Manufacturer Warranty Is Expiring

If you are still using the manufacturer warranty that will expire soon, getting an extended warranty is good. It can help you get repair services for a long time. And it would be best if you got the extended warranty before the manufacturer warranty expires because your car is still considered new.

  • Vehicle Requires Frequent Repairing

You never know when your car will show up with problems. On top of that, it is expected to get wear and tear issues over time. So getting an extended warranty keeps you free from worries of sudden car repair problems.

  • Your Car Is Getting Old

You see how people get old and spend more money on hospital bills than on food. Well, that is pretty much the same case with old cars. They spend a lot of their time in car repair shops due to their frequent old age problems. You can save some repair costs if there is an extended warranty for your car.

  • Other Assistance

Many warranty providers offer roadside and travel assistance for their customers. So if your car breaks down unexpectedly at a remote location, you can receive transport and lodging benefits from the company.

Why Should You Cancel The Extended Warranty?

There must be some reasons why you want to cancel the extended warranty. But the reason has to be valid enough for you to cancel and ask for a refund.


Sometimes, you will not know that your dealer has slipped the extended warranty deal into your finance contract. And they end up extending the loan period to cover this unethical act. So if you realize that your insurer has done the same, you can cancel the warranty and ask for a refund.


Some companies sell extended warranty as a monthly purchased system. So the overall cost often seems too expensive for users. If that is the case for you, you can cancel the warranty.


If you have just bought a brand new car, you will not need the extended warranty for the next few years. So canceling the extended warranty and keeping the money is a wiser decision.


An extended warranty might not cover everything you want. Some even cover only minor repairs, but that might be enough compared to the cost. So you can cancel the warranty and get a refund if you do not like their coverage offer.

How To Cancel Extended Car Warranty And Get Refund?

After you realize you no longer want to use the extended warranty, prepare yourself to go through the cancellation process. You need to know that some companies would make excuses and even refuse a refund. But here is what you need to do to ensure getting back your money.

Review The Policy

When you purchase an extended warranty, you are provided with a policy paper. You will find the information on who to contact.

If you have purchased the warranty but still haven’t read the policy papers, you can contact the finance manager or the person who sold it. However, if you bought it from a third party, you need to write a cancellation letter to the company.

Stand Your Ground

Things will get a little complicated after you request cancellation. Remember that all the people involved in the warranty service earn commission through it, and they would not want to lose it. So the finance manager might try to convince you not to cancel the warranty.

And if you contact the insurer company, they will tell you to contact the company’s retention department’s staff. They will also try to tell you why you should stay with them. You have to be patient and say no if you really want to cancel.

Save Cancellation Form’s Copy

There is always a form waiting to be filled. You need to get things into writing by filling up a cancellation form that you can find online. Then you have to submit the form in person to make the official request. But make sure to keep a copy of the form in your possession.

Follow Up

After submitting the cancellation form, you need to check for follow-ups. Contact your dealer or insurer if you do not receive the refund amount in the next few weeks.

Frequently Asked Questions

Q. Do I Need An Extended Warranty?

When you purchase a new car, you already get a warranty that includes repairs and other services. So, it is not necessary to purchase an extended warranty right away or on impulse. You can purchase it when you realize your car’s performance has become unreliable and requires frequent repairs.

Q. What are the voids in an extended warranty?

You must know that the extended warranty will not cover all sorts of damages. Suppose the car suffers from any damage due to off-road or reckless driving, racing, etc. In that case, the warranty provider can refuse to repair the vehicle under the insurance cover. They can also refuse it if you make any vehicle modifications.

Q. How long does it take to get a car extended warranty refund?

Depending on the manufacturer and the seller, the refunding time will vary. Nevertheless, most companies issue refunds 4-6 weeks after the client requests it.

End Note

Getting an extended warranty for your car is not a wrong decision as it can help you at the right moment. But if you do not intend to use it, getting a refund is the right decision. And knowing how to calculate extended warranty refund can come in handy to understand how much you are likely to get back.

But you should also know the voids because car dealers aim to make money, not return it. So it is not uncommon for them to tell you that you cannot get a refund. That is why it is mandatory to read your contract properly and check what it says regarding the warranty coverage and refund.

M Monerujjaman

I am M Monerujjaman. I’m a professional blogger and the Founder of this blog – I have an entrepreneurial spirit, looking for an opportunity to utilize my diverse Knowledge, high skills, and managerial work experience. I love to write tips, tricks, helpful guides article and publish on this blog. I’m Automotive Technology, Auto News enthusiast. I’ve been reviewing Automotive Tools, Automotive Parts and Automotive Engine & Performance for over many years. And I like nothing better than to be exploring new places in a great vehicle.

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