The Destination Fee Keeps Car Prices High
Find out if you’re getting ripped off on your car insurance in less than two minutes.
No long forms · No spam · No fees
Buying a new car is usually an exciting experience. Upgrading to a new set of wheels usually means new car features, increased safety, and better gas mileage.
While driving a new car is fun, the car buying process can be a bit more stressful. One of the most dreaded things is hidden fees and costs, like the ambiguous “destination fee.” Here is what you need to know about this annoying surcharge.
Costs like the destination fee means buying a car can get even more expensive.
Destination fee not included in the MSRP
Most people expect there will be some hassle when buying a new car. Mainly negotiating financing and the final sales price. However, the destination fee is non-negotiable as a separate line item from the final MSRP.
Supposedly, the destination fee is the cost it took to deliver the new car to the dealership. This is what dealerships may tell you.
However, according to CNET, this may not be the case. Their report found that car buyers in Detroit and Alabama still had to pay over $1,000 in destination fees despite being only a few dozen miles from the manufacturing plant. It seems destination fees are little more than a trick to add more costs to consumers.
It’s getting more expensive
Unfortunately, this problem has only gotten worse in the past decade. According to Consumer Reports, the average destination fee in 2011 was $839. In 2020, it was $1,244. That’s about 2.5 times the rate of inflation.
Adding to the problem is that different dealerships will use different names for this fee. Sometimes it is described as a “destination charge” or “inland freight and handling fees.” Whatever the fee is called, there is little to no explanation of how these costs are calculated.
These fees haven’t gone unnoticed by consumer advocacy groups. David Friedman, the vice president of advocacy for Consumer Reports, was quoted as saying, “If they (automakers) 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.”
Consumer Reports has tracked data amongst major automakers to see which is the worst offender. While all domestic manufacturers are guilty of gouging destination fees, the worst offender is Stellantis. Stellantis is the parent company of Chrysler, Dodge, Jeep, and a few other brands. Stellantis raised destination fees by 50% in a three-year period.
What car buyers should do
There’s not much a consumer can do to avoid this fee. It is more or less mandatory and should be considered when factoring in the total cost of a car.
What a consumer can do is be prepared and know it’s coming. Whatever the fee may be called, it is typically viewable on the car window’s sticker. They are generally right below the total MSRP.
Destination fees are normally a little over $1,000. While the fee can’t be negotiated, the final MSRP can be. Try to haggle with the dealer on the MSRP to compensate for the destination fee.
One place you don’t have to haggle to get the best price is with Jerry. A licensed broker, Jerry does all the hard work of finding the cheapest quotes from the top name-brand insurance companies and buying new car insurance. Jerry will even cancel your old policy for you.
And to ensure you always have the lowest rate, Jerry will send you new quotes every time your policy comes up for renewal, so you’re always getting the coverage you want at the best price. This level of service is why Jerry earned a 4.6/5 rating on the App Store and made it the top insurance app in the country.