Dear Driving for Dollars,
I bought a new car and paid $2,495 for an extended warranty. Now I’ve just received the complete agreement and I’m not happy with all the things that aren’t covered and the $50 deductible I didn’t know I had. Also, the documents say it is a service agreement, not an extended warranty. I don’t think I want this. What can I do?
— Adrienne

Dear Adrienne,
You purchased one of the many “add-on” products that dealers try to sell with every new car purchase to try to boost their profits.

An extended warranty isn’t really a warranty at all. It’s actually a service contract for providing repairs, maintenance or both on your car after the manufacturer’s car warranty expires.

It is fairly common for extended warranties to have a small deductible and to exclude certain items, so you may have actually been presented with a decent service agreement. It’s hard to know without seeing your contract.

Regardless, per the Service Contract Industry Council’s Model Act, which has been adopted in 35 states, you should have been shown a copy of the contract and told about the deductible and the excluded items before you signed the paperwork to buy it. Look over your contract carefully to understand what you’ve purchased and decide if you really want it. Read the Bankrate freature, “3 buyer’s tips on car extended warranties” for some insight.

These agreements can be canceled, but provisions vary from contract to contract. Read the section that explains the process and ramifications of canceling the contract and cancel it in writing, being sure to use a traceable method of your written cancellation. Track the dates you sent it and they received it.

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