A Sneaky Fee Is Causing the Price of New Cars to Rise
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We’ve already covered how 2020’s pandemic has driven up the price of new cars, but it seems like prices just keep getting higher in the auto world. For those wanting to buy a new car, they might just end up finding a shocking hidden fee: something known in the automotive industry as a destination fee. If you’ve ever bought a new car, and needed it shipped to your physical address or the dealership, then you’ve paid an extra fee for it.
Though destination fees have always been pricey, Consumer Reports found evidence from one driver that these fees are rising far faster than the rate of inflation. With the automotive world still reeling after the setbacks caused by COVID-19, new drivers could end up paying the price for automotive manufacturer’s desires to increase profit margins.
If you’re hunting for a new car, or if you’re just using our helpful info to decide what your next vehicle will be, use Jerryfor everything from automotive tips to finding the most affordable rates in car insurance. You might not be able to lower the cost of your destination fee on that new car, but we can help you find ways to cut back on what you’re spending to insure your next purchase or your existing vehicle.
Dealerships are always trying to sneak in hidden fees | Twenty20
Why are destination fees so expensive?
New cars are expensive already—but picture paying another $1,000 just to have it delivered to you. Unfortunately, such a number is pretty realistic these days.
According to Consumer Reports, destination fees have risen 2.5 faster than the rate of inflation. The average cost to have your new car delivered to the dealership or to your home went from around $800 in 2011 to over $1200 in 2020.
What makes matters worse is that car buyers often aren’t warned, or even aware of destination fees, and some experts warn that this tactic is a stealthy way for automotive companies to jack up prices, while their consumers pay the cost.
Consumer Reports interviewed sources at Ford, who chalked up their own drastic rise in destination fee costs to changes in shipping logistics they’ve had to account for, related to freight companies.
How to avoid paying a high destination fee on your new car
For potential buyers, we’ve got a few tips on avoiding that high destination fee on your new vehicle:
- Beware of high fees tacked onto vehicles manufactured by Stellantis, the company behind Jeep, Chrysler, Ram, and Dodge. They’ve got some of the industry’s highest destination fees, and they’ve almost doubled in the past 10 years
- Truckscost more to ship. Because of consumer trends that are leaning towards SUVs and trucks as opposed to sedans and crossovers, shipping companies (by train and by boat) charge more to ship larger vehicles, as they take up more cargo space.
Lastly, pay attention to the fine print:
- Along with destination fees, “dealer prep” involves a secondary official inspection of the car before it’s handed over to you. It can easily cost you an extra $200-500.
- A “market fee” usually means that the car is a hot commodity—so expect to pay $300-500 more for it. It’s a great idea to try and negotiate if you’re looking to save several hundred dollars.
When it comes to new cars, dealerships can be sneaky about the ways that they incorporate hidden costs into your contract. But by being aware of some of the common terminology used in contracts to jack up prices, buyers like yourself can be better equipped to haggle at the sales lot.