Extended Warranty Refund Calculator
Estimate your pro-rated refund based on time and mileage used.
Days Used:
0 days
Miles Driven:
0 miles
Time Usage Percentage:
0%
Mileage Usage Percentage:
0%
Base Refund (Before Fee):
$0.00
Cancellation Fee:
-$0.00
Estimated Refund:
$0.00
How to Calculate Extended Warranty Refunds
When you cancel a Vehicle Service Contract (commonly known as an extended warranty) before the term expires, you are generally entitled to a prorated refund. This calculation typically considers two main factors: the time elapsed since purchase and the miles driven.
The Pro-Rata Formula
Most contracts use a "Pro-Rata" calculation method. This means you only pay for the portion of the warranty you actually used. The usage is determined by comparing the percentage of time used versus the percentage of mileage used.
The standard industry practice works as follows:
- Step 1: Calculate the percentage of the warranty term (in months or days) that has passed.
- Step 2: Calculate the percentage of the mileage limit that has been driven.
- Step 3: Identify which percentage is greater. This is the "Used Percentage."
- Step 4: Apply the used percentage to the original purchase price to find the used value.
- Step 5: Subtract the used value and the cancellation fee from the original price to determine your refund.
Understanding the Inputs
- Warranty Cost: The total amount you paid for the extended warranty, excluding taxes or interest if financed.
- Cancellation Fee: An administrative fee charged by the provider to process the cancellation, typically ranging from $25 to $75.
- Term (Months & Miles): The limits of your policy (e.g., 60 months or 100,000 miles).
- Odometer Readings: The mileage on the car when you bought the warranty versus the mileage on the car the day you cancel.
Calculation Example
Let's say you bought a warranty for $2,000 with a term of 60 months or 60,000 miles.
- You cancel after 15 months.
- You have driven 20,000 miles.
Time Calculation: 15 months / 60 months = 0.25 (25% used).
Mileage Calculation: 20,000 miles / 60,000 miles = 0.33 (33% used).
Since mileage usage (33%) is higher than time usage (25%), the refund is based on mileage.
Refundable Amount: $2,000 * (1 – 0.33) = $1,340.
After deducting a $50 cancellation fee, your total refund would be $1,290.