You’re at the car dealership, excited about the new car that’s about to be yours. You’ve researched makes and models, picked out options and extras, and finalized your financing. All that’s left to do is sign the paperwork and drive the car off the lot – until you see the final price, including what seems like an exorbitant destination fee.
What are destination fees?
Destination fees have long been a part of buying a car, but what exactly are they? That’s a question without a definitive answer. Car manufacturers say they’re a way to recoup the cost of shipping a car to its new destination, but it’s largely unclear how exactly they’re calculated and what they include. That leads consumer advocates to believe that a destination fee is just another way to make money off selling cars.
Destination fees are on the rise
Adding to the mystery of destination fees is their recent rise. According to Consumer Reports, destination fees have increased from $839 in 2011 to $1,244 in 2020 without any real explanation from car manufacturers as to why. “If they had a valid reason beyond just driving up the price, they would actually be able to point us toward specific examples of costs that have gone up within the shipping process,” said David Friedman, CR’s vice president of advocacy.
Why do some car companies charge more than others?
While some automakers like Audi and BMW have managed to keep destination charges relatively in line with inflation, Stellantis brands Chrysler, Dodge and Jeep costs have jumped by 90% since 2011. So why does it cost more to transport some brands than others? Consumer Reports tried to get to the bottom of it, but they were met with vague answers that didn’t exactly clear things up.
Big cars may cost more
According to Autotrader, larger, heavier vehicles tend to have higher destination costs, likely because they take up more space on transport trucks and cost more in fuel to ship. Think you can save money if you live near a factory? Think again. Costs don’t vary based on the dealer’s distance from the factory, either; every destination charge on every car of the same make and model is fixed.
Destination fees are a fixed cost, but there’s wiggle room
What can the average consumer do about this often-hidden charge? Consumer Reports wants automakers to have to disclose their destination charges in their advertised prices. This would make the car buying process easier, as shoppers would be aware of additional costs beforehand.
In the meantime, consumers will have to do a little digging on their own. Unfortunately, there’s not a lot to be done about the charge itself, but that doesn’t mean you can’t offset the costs in other ways. Look to negotiate other fees, such as dealer documentation or advertising fees. Try asking for extras like fabric protection or preventative maintenance vouchers.