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What Is a Destination Fee?

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Destination Charges Can Add Big Money to Your New Car’s Cost

Destination charges are an everyday fact of buying any new car, truck or SUV. Look at the window sticker of a showroom-fresh vehicle and you’ll spot the fee, which these days typically runs around $1,000 per vehicle.

So, what is this fee? And is there any way to work around it by driving a hard bargain at a dealership?

What Is a Car Destination Charge?

The answer here is straightforward: Your new vehicle’s destination charge is a government-mandated fee created to prevent unscrupulous dealerships from using fuzzy math to make their own, car-specific destination fees. The destination fee you’re paying on, say, a 2020 Honda CR-V is the same across the country, no matter how far you are from the final assembly point. They typically cost around $1,000.

When considering the destination charge tacked onto your vehicle’s window sticker, let’s take a moment to clear the air and understand some of the things this charge is not:

Destination Charges Are Not a Scam

The destination fee has been listed as a stand-alone item for years, unrelated to the car’s price or any options included. This is a federal government requirement, created to ensure customers are paying the same fee no matter what dealership it is, or where they live in the U.S.

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They Aren’t a Function of Distance

You can’t lower the destination charge by traveling to where your car is built. There used to be a time when people could make a trip to where their vehicle was built to avoid paying extra shipping costs. Those days ended decades ago, when automakers were tasked with creating one set charge to cover the average transport costs to every consumer.

Some European car companies do offer factory-delivery programs, which consist of air travel and hotel fees, among other services. These are intended more as vacation packages, rather than a cost-cutting means to trim money off the price of a luxury vehicle. The savings with these programs can be substantial, however, and could offset some of the money you spend on traveling to the vehicle’s faraway factory.

They’re Not Negotiable

Dealerships can’t waive the destination charge. You can haggle about a lot of things at the dealership, but the destination charge isn’t one of them. If you’re looking to save money, try to bargain over options and trim levels. But when it comes to destination charges, the cost you’re paying is the same as everyone else is.

They’re Not Different for Foreign Automakers

Cars built overseas don’t necessarily have higher destination charges. The destination charge does not factor in international shipping costs from, say, Japan or Europe. The destination charge on your car’s window sticker applies only to costs incurred during the vehicle’s transportation (by road or rail, or a combination of the two) within the continental U.S. Any international shipping costs are absorbed by the manufactured and baked into the vehicle’s total price.

Now that you have a firm understanding about what destination charges are, let’s look at them from purely a car buying perspective. You’ve chosen a specific make and model, and have a firm idea about the options you want included in the vehicle. Although destination charges are the same across the board and non-negotiable, here are some smart things to consider before you sign on the dotted line.

Destination Charges Vary Widely and Can Be Expensive

If the cost of that new car or truck you have your eye on is already at the top of your price range, adding in the destination charge could bust your planned shopping budget. That’s because charges vary from vehicle to vehicle, and sometimes add substantially to the overall cost.

Take that 2020 Honda CR-V we mentioned previously. At the time this story was written, the destination charge for Honda’s popular compact SUV comes in at exactly $1,120. Remember, this charge excludes taxes or additional registration fees. Honda isn’t alone in having a four-digit destination charge, of course. A 2020 Ford F-150, the most popular vehicle sold in the U.S., carries an even larger cost of $1,595 per truck. By comparison, a 2020 Toyota Camry presently has a destination fee totaling $995. When shopping for a new vehicle, be certain to leave space in your budget for a potentially pricey destination fee.

Haggle Where and When You Can

If the car you’re after does come with a hefty destination charge, consider some ways to lower the car’s total cost.

This could mean looking at one from the previous model year, which could be nearly identical to the vehicle you have in mind. Your desire to have the newest car or truck in the most up-to-date model year could blind you to some great deals. If the vehicle you want hasn’t received any major mechanical, safety, or cosmetic upgrades for at least 1-2 years, you could drop your outlay substantially by considering earlier model years.

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It’s also worthwhile to discuss any discounts on specific options and trim levels while visiting a local dealership, or while searching online. Special offers on trim-specific models could also help offset the cost of a pricey destination charge.

If you have questions about this story, please contact us at Editors@carfax.com