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By Randy Fisher
When selling or trading in your RV, it may be possible to save thousands of dollars by ending coverage on an extended warranty or service contract.
Experienced owners know that no matter how much is invested in an RV, they are all simply houses on wheels with thousands of parts and pieces that can and will fail over time. Many owners take advantage of purchasing “extended warranties,” or more commonly referred to as service contracts, to protect themselves from large costly repairs that may occur after the manufacturer’s warranty expires.
These coverages can extend out five to seven years from the date of purchase and can cost thousands of dollars. Some people will pay cash for the service contracts while many will include it in the financing of the RV. Just like most insurance policies, one hopes to never have to use it, but everyone is glad they have it when needed.
However, what happens when you decide to sell or trade in your RV that has years of coverage left? Good news. You have options to explore based on how you paid for the service contract and what company you purchased it from. You most likely can receive a pro-rated refund based on the remaining term of the policy.
Did you buy the contract from a dealer?
If you purchased your service contract from a dealer, then contact the dealership’s finance department and request a cancellation form to be emailed to you. Sign and return the form to the dealer. The dealer will process your cancellation and you will typically see a refund in four to six weeks.
If you paid cash for the service contract, you will receive a refund directly to you. However, if you financed the service contract, the refund will be sent to your lien holder and will reduce the principal balance of your loan.
If your current RV loan is paid off in full before the refund is processed, you will get the refund, not the lender.
If your refund is sent to the lien holder, your monthly payment will not likely change, however the principal balance of the loan will be lowered in the amount of the refund.
Did you buy the contract from a warranty company?
If you purchased your service contract direct from a warranty company or third party, then contact the company directly and request a cancellation. The firm will provide you with the necessary procedure to cancel and explain the details regarding your pro-rated refund.
Can you transfer your contract?
If you sell your RV to a private party and want to transfer your service contract to the new owner, look at the language of your service contract. Some policies are transferrable, meaning you can transfer the remaining coverage on your RV to the new owner.
However, as the seller, you would want to figure out what your cancellation refund would be compared to how much more the buyer would pay for the added benefit of coverage.
Typically, it is best to just cancel the service contract and let the new owners buy your RV “as is” and let them decide to add a service contract of their own, if they choose.
Whether you are selling or trading in your RV, make sure you don’t forget to address these important steps that can save you thousands of dollars. You won’t get all your money back, but, depending upon the time remaining on the contract and company policies, requesting a refund may be something worth asking about.