Skip to main content

Why Should I Pay a Destination Charge?

As a car salesman (of American cars & trucks) I know things most consumers don't. I hope to help the buyer by passing on some helpful tips.


What Is a Destination Charge?

Just about everyone buys a car at one time or another. It is part of the American way of life. Just 60 years ago, most homes had only one car. Now, large families have four or more. People buy cars more than ever—new car sales alone are over $5 million a year in the US alone. Unfortunately, even though buying a car has become a regular part of life, most people do not really understand the ins and outs.

Just the other day someone asked me why they should have to pay a destination charge. They were looking at an expensive SUV and the destination charge was not cheap. It was $1295.00.

Why Should I Pay It?

So, why should a customer pay a destination charge? That is a good question. The usual complaint is that I don’t pay a destination charge for my groceries or my appliances, why should I pay one on a car?

That requires a two-part answer. First, you are paying a destination charge on everything you buy. You don’t see it because it is included as part of the sales price. Think about it. No one is selling something based on a price that does not include the cost of getting it to the store. So, it is in the price, it is just not listed out as a separate item. Also, most products are sold in a number less than full shipping quantities. If you received 40 cases of apples, how much transportation cost would you assign to one apple? Not very practical. So, why are cars different?

They are different because the government requires them to be. The government requires that the destination charge be set forth separately and clearly stated on the window sticker. The government does not consider it to be a “cost” of making the vehicles, so it can not just be hidden in the sales price.

Scroll to Continue

Read More from AxleAddict

It Is for US Transportation Only

Keep in mind that the destination charge only has the cost of transportation within the United States. An import car, for example, will have import or transoceanic transport fees, but those are figured into the cost of the import vehicle. They will have a destination fee as well, but it will only have the ground transportation costs incurred between the port of entry and the dealership.

If you are as old as me, you might remember people that would drive to the factory and pick up the vehicle to save the cost. Those days are gone. That practice stopped about 30 years ago. Well, if I can’t go to the factory, it should still be cheaper if I buy near the port or factory, right? Unfortunately, no. I carry Chevrolet Tahoes and Suburbans and they are manufactured 130 miles away in Arlington. They should have less of a destination charge—but they don’t

Manufactures all use a system called “equalized delivery.” That means they add up all the transportation costs for the nation and divide it up by the number of units. That way a car sold anywhere in the country bears the same transportation cost.

It makes sense to do it this way. Otherwise, a Suburban would be cheaper in Texas and an Expedition would be cheaper in Kentucky, simply because of where the manufacturing plants were located. Trucks might be cheaper here and cars cheaper there. Ford cars would be cheaper here but Chevrolet cars would be cheaper over there. That would be a mess.

The only good thing is that most car manufacturers use the same system of carriers and charge pretty much the same rate. So, although you hate to see it, it should not really figure into your car buying decision. A similar car elsewhere will have about the same destination fee.

So, there is no getting around that fee. But at least understanding it is part of becoming an educated customer. The more you know the better your car buying experience will be. That is not to say you should not rely on your salesperson. Hopefully you have a good one and they will take the time to make sure you understand every step. But if you have a question, ask! It really does make it easier on both you as a customer and on the salesman.


That Adds Up!

Just a crazy side note. If there were 5.3 million cars sold in 2017 and there was a destination fee of $500 on each one… that is $2,600,000,000 in destination fees. Thank goodness we don’t have to pay that bill.

Related Articles