What are destination fees?
If you’re preparing to buy a new car from a dealership, you should also be prepared to pay a few fees before you can drive your shiny new car off the lot. You probably expected to pay sales tax and registration fees... but what are destination fees? Essentially, a destination fee (or destination charge) is a fee you pay to cover the cost of getting your new car from the manufacturer’s factory to the dealership you purchased it from.
How much is a destination fee going to cost?
The amount you’ll pay may change depending on a variety of factors, including the distance between the factory and the dealership you’re purchasing the car from and the type of car you’re looking to purchase. While it varies, you may expect to pay at least $1,000 to cover your new car’s destination fee. Luxury or exotic cars made with rare, expensive materials typically cost more for manufacturers to safely transport, which often translates to higher destination fees.
Can destination fees be negotiated?
Generally, you’ll have a hard time negotiating a destination fee. That’s because the dealership almost always pays the destination fee upfront to get the car onto the lot. That fee may then be passed on to you, the consumer, into the asking price.
Does MSRP include destination fees
As you’re shopping for a new car, you’ll typically see window stickers present the manufacturer’s suggested retail price (MSRP), along with some information that helps explain the price. Upon examining that sticker, you’ll typically see that the MSRP does include destination fees, which should be listed right above the total MSRP.
The same may be true if you’re buying a car online, with the small exception that you're probably not looking at a physical sticker. While it can depend on the company, many car dealerships have built their websites to include an itemized “summary” of the cost of any car they have available for purchase. Clicking into that summary will likely show the itemized MSRP including the cost of the destination fee (sometimes referred to as a delivery, processing and/or handling fee).
Dealer conveyance fee vs. destination fee
Besides a destination fee, you might also encounter a dealer conveyance fee when you’re buying a new car from a dealership. The two fees cover different costs. A destination fee basically covers transportation of the vehicle, and a dealer conveyance fee is for the cost of any administrative work related to selling you the car.
Between the two, you’ll likely pay less on a dealer conveyance fee, which may cost around a couple hundred dollars. Unlike a destination fee, you may be able to negotiate your car price by lowering (or eliminating) the dealer conveyance fee.
In summary
Destination fees are essentially a charge consumers pay to cover any shipping costs to get a new car from the manufacturer’s plant to its dealership destination. Though dealerships typically pay this cost upfront to acquire the car, it’s generally passed on to the customer at time of purchase.
As you’re shopping for a new car at a dealership, you can check any car’s destination fee by looking at the last line item on the bottom of the sticker, above the total MSRP. And, while you’ll likely strike out trying to avoid paying a destination fee, you may have more luck negotiating a dealer conveyance fee.
