Is there any remaining value on my car's extended warranty to cash out?

January 18, 2016 2:59 PM

I bought an extended warranty with my new Honda back in 2007, and the contract expired in 2013. Is there any remaining value to cash out, and how much might I be owed?

I foolishly bought a Honda Care vehicle service contract at a San Francisco bay area Honda dealership, along with my 2007 Honda Civic. (Consumer Reports recommends against this, so I won't be doing that again.) I fully own the vehicle, so any amount I may be owed from the contract is owed to me directly. Before I contact the dealership's finance department to attempt to cash this out, I want to determine what I'm owed, if anything.

I have the Vehicle Service Contract booklet and all of the sales documents. Inside the front cover of the service contract booklet are these terms:

• Contract effective date (a date in 2007)
• Contract expiration date (a date in 2013)
• Contract expiration mileage: 120,000
• Contract purchase price: (the price I paid)

Even though this contract is expired (“DATE or MILEAGE...whichever occurs first” on page 2), am I still owed money? I used the included roadside assistance a few times for jumpstarts, so it’s possible those incidents will be billed against the contract.

I’m looking at section V. B. which states “After sixty (60) days following the commencement of the CONTRACT period, YOU may cancel this CONTRACT. The refund will be the lesser amount calculated as:

• A time pro-ration based upon the time expired; or
• A mileage pro-ration based upon the number of miles driven

There's also explanation of a $25 fee for a cancellation request.

I assume from the above that I am entirely at their mercy to determine how much I am owed, if anything. “Based upon the time expired” could allow them to expire 100% of the value as of the expiration date, in which case I’m owed nothing. If I contacted them after 99% of the coverage had passed, it looks like these terms allow them to keep 99% of the contract purchase price. Since I'm past 100%, should I expect no refund?

If I am owed something, does that include interest? If so, how is that calculated? As a percentage in addition to the amount I am owed, or a percentage of the original value?

posted by germdisco to Work & Money (5 answers total)

If your contact is expired, either through time or mileage, you are owed nothing.

The whole point of a Vehicle Service Contract (not an extended warranty) is that you're betting that something HUGE will go wrong, that won't be covered under the manufacturer's warranty. If you've owned your car for 7 years or 120,000 miles and nothing went wrong. You bet wrong. If something huge DID go wrong, you hit the jackpot.

In addition to roadside assistance, you probably got some other crap with your contract, Etch (where they put the vin number on the windows to deter thieves,) key loss and tires.

My source? Husbunny works for a VSC company. As an actuary.
posted by Ruthless Bunny at 3:03 PM on January 18, 2016

The contract ended in 2013, they owe you nothing, it is of no value..
posted by HuronBob at 3:04 PM on January 18, 2016

I'm quite confused about where you would get the idea that you might be owed anything on a two-year-plus expired warranty. Its value is zero.
posted by Sternmeyer at 3:33 PM on January 18, 2016

Can you explain why you think you are owed anything? I think that will help with answers. As it is, what you've included in your post about the contract seems super clear -- when either a certain date in 2013 OR 120,000 miles hits (whichever comes first), the contract is expired. Obviously it is now after 2013, so I don't understand where you're seeing any wiggle room.
posted by rainbowbrite at 4:05 PM on January 18, 2016

I think the bit that's the source of confusion here is this:

I’m looking at section V. B. which states “After sixty (60) days following the commencement of the CONTRACT period, YOU may cancel this CONTRACT. The refund will be the lesser amount calculated as:
- A time pro-ration based upon the time expired; or
- A mileage pro-ration based upon the number of miles driven

I'm wondering if your situation is that you're past the expiration date but under the mileage limit, and so wondering if you are owed any refund on the pro-rated mileage? Because my read is that that pro-rating idea is based on the assumption that you are within both of those ranges: that you haven't reached the end of the contracted period and that you haven't driven the contacted number of miles. Not just one or the other.

If that were the case—if it were prior to (some date in 2013) right now and you'd driven some number of miles less than 120,000, you could be eligible for a partial refund based on what proportion of each of those terms you'd passed.

So if it was a six year contract starting in 2007, and you'd decided in 2010 to terminate it, and you'd driven, say, 80,000 miles in that period, you'd be entitled to a partial refund based on whichever is smaller: the proportion of the time left on the contract, or the proportion of mileage left on the contract. In this hypothetical, you've got 50% (three out of six years) left on the time term, and 33% (40,000 out of 120,000 miles) left on the mileage term, so you'd be entitled to a pro-rated refund at the lesser of those two rates, or 33% of the contract minus fees and yadda yadda.

But because it's the lesser of those two terms, if you've exhausted either term then you're owed zero refund. If you hit the expiration date, no refund. If you drive the mileage limit, no refund.

As you've exhausted the time term, it's value is zero, which means it doesn't matter what your mileage is: you're not entitled to any refund.
posted by cortex at 4:20 PM on January 18, 2016