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

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.

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.

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.