What Is A Destination Charge And Can You Avoid Paying It?

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When you buy a new car, the many additional fees can be daunting, and while some can be avoided, others can't.

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What Are Destination Charges And Are They Legitimate?

In the United States, vehicles for sale are advertised with a Manufacturer's Suggested Retail Price (MSRP) - but this isn't the only cost you are liable for when purchasing a new vehicle. The total price you pay at the end of the day includes an additional cost called the destination charge or fee. What is a destination charge for, exactly?

Essentially, this is the price of the transportation fee assigned to the particular make and brand of the vehicle, which is why it is often called freight fees. It is a delivery fee for transporting the vehicle from the factory to the dealership. This is entirely legitimate and is actually mandated by the government. Every new vehicle sold in the US includes such a charge over and above the base price, or MSRP.

Destination Charge unsplash.com

How Much Should a Destination Fee Be?

While there are some regulated factors when it comes to calculating a destination charge on a new car, it ultimately comes down to the manufacturer. Destination charges are supposed to cover the costs of getting the car to the dealership, so fuel costs and how many vehicles can be transported in one go, will affect the figure decided on. In this way, large, heavy vehicles, such as a Chevrolet Silverado pickup truck will have a higher destination fee than a smaller car like a Honda Civic Sedan ($1,695 versus $1,095 in 2022, respectively). It follows that sports cars and other high-end luxury vehicles will then cost more than a mainstream brand since they are handled with even more care, sometimes even transported exclusively for a buyer. For example, a Ferrari Roma has a destination charge of $3,950, while a Kia Seltos tacks only $1,175 onto the final price for freight.

Freight or Delivery Charge unsplash.com
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Is There Any Way to Avoid Paying a Destination Charge?

In the old days, it was possible to get a built-to-order car directly from a factory, thereby forgoing the delivery to the dealership. Naturally, this meant avoiding the destination payment. However, this is no longer possible. Now, the additional cost of the destination fee is something you simply have to factor into the purchase, just like other admin fees such as registration and licensing.

However, while these other costs can be negotiated in order to get a slight discount, the destination fee cannot. It is set in stone, so the number you see listed on the Monroney sticker and labeled as 'Destination' or 'Freight' is exactly how much you are going to pay additional to the MSRP. This applies only to new vehicles, and there is no destination fee when you lease a car.

Destination Fee Tesla

FAQs

How much is the average destination charge?

Every manufacturer has its own formula for determining the destination fee. This takes into account such things as the number of dealerships, the average distance of each from the factories, as well as the rates of their preferred service suppliers. The type of vehicle being transported will also be factored in - naturally, more mainstream vehicles can be transported in greater numbers, which brings costs down. High-end luxury vehicles are given a more exclusive treatment, which will cost more. There is no concrete average, but you can expect to pay between $1,000 and $2,000 for mainstream cars, and even $4k or higher for top-end supercars and the like.

Does MSRP include the destination charge?

Manufacturers list the destination charge of their vehicles separately from the MSRP, and dealers are required to do the same on the Monroney label. However, it is worth mentioning the freight delivery charge for international imports like BMW and Mercedes-Benz is added to the MSRP as destination charges only apply once the vehicle is officially within US territory.

Do you pay a destination charge on a used car?

While there is no way to avoid the destination charge on a new car, the same is not true for used vehicles. Pre-owned cars are not sent from a factory to the dealership, so don't let anyone stick you with a destination charge on a used car. A seller may ask you to pay for a car to be delivered to you if you stay far away, but you can avoid this by traveling there yourself and driving the car home. This will usually be a lot cheaper.

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