What is the destination cost? And do you have to pay them?

This is part of our Car Buyer Glossary Series that breaks down all the terms you need to know if you’re buying a new or used car from a dealership.

Looking at the details of the cost of buying a car can sometimes be stressful. Cars are really expensive, and there are hundreds of dollars in individual fees that are incurred. Let’s cover one that sounds suspiciously simple: the destination fee.

What does the destination fee cover?

Destination fees are also known as destination fees, and theoretically cover the cost needed to move a vehicle from the factory to the dealership. It’s usually a flat fee, and does not vary by region. It’s “even” – the average cost of shipping cars across the country. If your dealer is next to the factory that made the car, that’s too bad – you have to pay too, so people a few thousand miles away don’t incur huge fees.

Are destination fees regulated by the government?

The way the destination fee is calculated (the tie thing mentioned above) is as mandated by the government as is the need to make it an individual item on the Monroney Sheet – this window sticker with the MSRP and all other options fee apportioned.

Do cars transported from far away have a higher destination fee?

It makes sense to think so, but that’s not the case. The destination fee for American-built Ram trucks can approach $1,700, while a German-built BMW costs just $994. While there are a myriad of reasons for this, in short, the destination fee only covers the point at which the car entered the US, so international transportation fees are simply factored into the cost of the car itself, which is subject to market forces.

Can you negotiate the destination fee?

You can not. It’s a fixed cost, which is why Autoblog and a few other auto publications add a destination fee to all new car prices. You have to push it, so why keep it separate? There are a lot of other things to negotiate, such as documentation fees. But this fixed cost, which is the same for anyone buying the same car anywhere in the country, is not a negotiable fee.

Are destination fees getting expensive?

For the most part, yes. As we documented in May 2021, destination fees have gone up in recent years. Although the destination fee calculations are technically regulated by the government, the contributing factors to each plant’s calculations are not clear. It’s hard not to view these increases with skepticism when some car companies raise their destination fees while others are holding them steady or increasingly by a much smaller margin.

What about other charges described as transportation or delivery charges?

Here’s the wrinkle: Sometimes other delivery type fees are added after that, in addition to the standard destination fee. This is the kind of subtle movement that unscrupulous traders might try to sneak in. Basically, it’s an additional and unnecessary fee. The dealer might try to tell you it’s the cost of moving the car to that specific lot, or being away from the factory especially, or something – but since you now know the “equivalent” destination fee, you can tell the dealer you only pay the fee listed on the window sticker . end of story.

So, to summarize: You do have to pay the destination fee when you buy a new car, but you don’t have to pay it twice. Make sure you ask for all of the individual fees the merchant is asking you to pay detailed to your satisfaction, and watch out for duplicate fees with slightly different names. This practice is not common, but it is better to be safe than to pay a few hundred dollars that you do not need.