The number on the sales form is rarely the whole story. Before you agree to any total, look for every line that is not the contract itself: sales tax on the contract, a documentation or processing charge, a filing fee, and any surcharge the seller adds because the contract is sold with the car or financed. Each of these is a cost, and each may or may not come back if you cancel.
Find the taxable base
Ask whether sales tax applies to the service contract at all. The answer depends on where you live and how the product is classified, so do not assume the rule from a neighbor's deal. Then ask what amount the tax is calculated on. If the tax is figured on the full total of the contract plus other add-ons, you are paying tax on products you may decide to drop. Get the calculation in writing, line by line.
Separate the fees from the product
A processing or administrative line is often presented as if it were part of the product price. Ask what it pays for. Some lines are the seller's own charge for handling the paperwork, and some are passed along to the provider. Neither one is coverage. Ask whether the line is refundable, and if it is, the contract should say so in the cancellation section, not only on the sales form.
Ask what comes back on cancellation
Taxes and fees are often treated differently from the contract price when a cancellation is calculated. Some contracts return the tax and fees in full, some return only the unused product portion, and some keep the fees entirely. Read the cancellation clause and the refund formula together. If the text says the refund is based on the price paid, find out whether that price includes the tax, because that one word can change the amount you receive.
Questions to ask before you sign
Ask the seller, in this order: what tax applies to the contract and on what base; what each fee line pays for; whether any fee is kept on cancellation; whether the tax is refunded on cancellation and on what schedule; and whether the same charges would appear if you bought the contract from a different seller or directly from a provider.
Compare on the same base
When you compare two offers, convert both to the same basis. A total that includes tax and fees cannot be compared directly with a product price that excludes them. Our provider tables list the published figures for each company, and our scoring method explains how we read published terms. Use those figures as a starting point, then check the numbers in the contract you are actually being offered, because a seller's total may differ from a published base price.
Stop if the paper is vague
If the seller cannot tell you what a line is, or the contract does not state whether it comes back, treat the total as unfinished. Ask for a revised sales form that separates the product from the tax and fees, and keep both documents. The paper that binds you is the signed contract, not the quote.