Looking at the line-item breakdown of what it actually costs to buy a car can sometimes be stressful. Cars are already expensive, and then there are hundreds of dollars in individual fees tacked on. Let's cover one that seems suspiciously simple: the destination fee.
What does the destination fee cover?
The destination fee, simply put, covers the cost it takes to get a car from the factory to the dealership. It's usually a flat fee, which doesn't vary by region. It's "equalized" – that is to say, the average cost to ship cars all over the country. If your dealer is right next to the factory that built the car, too bad – you have to pay, too, so folks a couple thousand miles away don't have a massive charge.
Is the destination fee regulated by the government?
It's also government-mandated, at least, the way in which it's calculated (that equalization thing mentioned above) and that it's broken out as an individual line item in the Monroney sheet – that window sticker with the MSRP and all the other options fees broken out.
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If you are worried that imported cars might have much higher fees, there's good news: it only covers the point it entered the U.S., so the international transportation fees are simply baked into the cost of the vehicle itself, which is subject to market forces.
Can you negotiate the destination charge?
You can't. It's a fixed cost. There are plenty of other things to negotiate over, like documentation fees. But this fixed cost, which is the same for anybody buying the same vehicle anywhere in the country, is not a negotiable fee.
What about other fees described as transportation or delivery charges?
Here's the wrinkle: sometimes there's another delivery-type charge added afterwards, in addition to the standard destination fee. This is kind of a sneaky move unscrupulous dealers might try to slip in. Basically, it's an extra and unnecessary charge. The dealer might try to tell you that it's the cost of getting the vehicle to this specific lot, being particularly far away from the factory, or something like that – but since you now know about "equalized" destination charges, you can tell the dealer you're only paying the charges listed on the window sticker. End of story.
So, to summarize: you must pay a destination charge when you buy a new car, but you do not have to pay it twice. Make sure you ask for all of the individual fees the dealer is asking you to pay are detailed to your satisfaction, and watch out for duplicated fees with slightly different names. This practice isn't common, but it's better to be safe than to pay a few hundred bucks you didn't need to.
Read more about new car buying and dealership terms at our Autoblog Car Buyer's Glossary.