Can you cancel the extended warranty after 2 days and if so will your payment drop?

You can always cancel the extended warranty. Usually they will return any portion of the money for the contract that you did not use. In your case it should be at least 95% of the amount of the extended warranty. In some states there is a fee for canceling the warranty and some/all states have a grace period where you get a full refund without any fees. They will return your funds instead of lowering your monthly payment because the warranty is paid to a separate company than the car dealership. Even if the payment does drop, you should generally keep your payments as high as possible, since the interest is basically the same thing as getting charged extra for not having money.