When buying a new car, it’s important to remember that the “for sale” price is never the final amount because dealer fees and destination charges usually get added to the invoice.
We break down dealer fees, destination charges, and other line items that show up on your window sticker and the final sales invoice. Not sure what a vehicle will cost? Check out our research, car reviews, and payment calculator.
What is a Destination Charge?
A destination charge, often called a freight fee or freight delivery charge, ensures that new car buyers pay equally to cover the cost of delivering a vehicle to a dealership. Regardless of whether the dealership is nearby or far away from the vehicle assembly plant, this amount gets charged.
According to United States law, car delivery — transporting the vehicle from port or assembly plant to dealer showroom — always gets listed as a separate line item on a new-car window sticker. Automakers may use different names to describe it, but it always works the same way, with buyers covering the cost.
How Much Should Destination Fees Be?
Destination fees range from about $995 to around $1,700. The charge depends on the car manufacturer and the vehicle’s make and model.
So how do you find out what the destination fees will be? The charges vary depending on the brand or even the model. Dealers will not negotiate on destination fees set by the manufacturer, and most times, these charges do not get waived. The MSRP, or the manufacturer’s suggested retail price, does not include the fee.
To find the destination fee for the vehicle you like, check the window sticker. Some automobile manufacturers like Chevrolet, GMC, and Honda, make the research easy for you by listing destination charges on their websites.
For example, destination fees for a 2022 Chevy Malibu cost $995. GMC set its 2022 Sierra 2500 HD Denali fees at $1,695. A 2022 Honda CR-V buyer pays the $1,225 destination charge — whether they’re in Seattle or in Indianapolis, which is thousands of miles closer to the Greensburg, Indiana, plant where the CR-V gets built.
Larger, heavier, or more expensive vehicle models, such as the GMC Sierra 2500 HD Denali, can be more costly to move for the automaker. A high-end luxury vehicle may also require more careful protection before making a trip by rail or truck. The destination charge for an exotic Lamborghini model can add nearly $4,000 to a price that already exceeds $200,000.
Wrapping the car in protective film or transporting it in a closed truck adds costs, which result in a higher destination fee. Imported vehicles don’t necessarily have higher delivery fees than domestic models. The fee covers only delivery inside the U.S. — foreign automakers usually cover the cost of getting their vehicles to dealer showrooms.
Although there’s no getting around a delivery charge at the negotiating table, new car shoppers can prepare for it — and avoid surprises — by considering it when researching vehicles.
Before purchasing your vehicle, be sure the destination charges on the sticker price match the ones in the final sales price.
TIP: Dealers sometimes add a second destination and delivery fee. If you request car delivery to your home, that’s the only time you should have a charge for a second delivery fee. If you see this in your final invoice price and did not request delivery, ask to remove the charge. This applies to used cars, too.
List of Common Dealer Fees
Check dealer fees carefully, especially unusual acronyms. See our list below of typical dealer fees, defined, plus which ones to avoid.
- Tax: Whether it’s called a sales tax, vehicle tax, or ad valorem tax, all buyers must pay a mandatory tax to buy a car. It’s also confusing because some states will ask for sales tax plus additional types of tax. In California and Virginia, you can expect to pay a vehicle tax in addition to sales tax. In Virginia, for example, the vehicle sales and use tax is 4.15% based on the vehicle sales price or $75, whichever is greater, according to the Virginia Department of Motor Vehicles. One exception to the state sales tax collection is Georgia. This state changed its laws in 2013. Instead of sales tax, car owners pay a one-time Title Ad Valorem Tax as the vehicle gets titled. According to the Georgia Department of Revenue, owners must pay this even when vehicles change hands or move into the state. On sales tax, another item to note is that dealers calculate sales tax before deducting incentives and rebates. Bottom line: Make sure to research your state’s regulations on taxes before buying a car and understand how the collection affects your final sales price.
- Title and registration: Dealers pay these fees to process the title and registration of the car. It’s a standard fee and saves car owners a trip to the DMV. However, if you trade in another vehicle, sometimes you can transfer tags to the new car. Find out how much title and registration costs in your state before buying a car. Then, make sure the charges seem reasonable for the dealer to handle this paperwork. If these get lumped in with documentation fees, ask for a breakdown of the charges.
- Destination: As described above, the destination fee is fixed, but dealers sometimes adjust the amount based on ever-changing costs of transporting vehicles from the port or plant to the dealer.
- Delivery: If you see a delivery fee in the final charges for the vehicle, you can ask to remove it unless you need the car to be delivered.
- Documentation: Sometimes known as a “doc” fee, these fees cover the sales documentation preparation costs. Some states regulate these fees.
- Reconditioning: When you buy a used car, dealers often detail and deep clean the vehicle. They’ll also top off all fluids and generally get the car in shape to sell. The reconditioning fee covers this service. Dealers like to pass this on to consumers. However, the sales price takes this into account. This is a fee you don’t need to pay.
- Vehicle preparation: A dealer prep fee covers the costs of car washing and other preparations to get the car ready to sell. It also includes removing all the plastic wrapping on the seats. Do you need to pay for it? No.
- Advertising: Generally, buyers need to pay advertising fees. Dealers pay advertising fees to participate in regional or national advertising programs. The expenses get passed on to consumers legitimately. However, you can compare the final price to other dealers in the area. If the cost is listed in the final price, the dealer could be attempting to pass off additional charges. So, pay attention and ask questions if fees seem excessive. If the dealer provides advertised manufacturer cash back incentives of $1,000 and your advertising fees on the final price are $1,000, consider it a red flag.
- Additional Dealer Mark-Up: Sometimes seen as ADM or ADP (additional dealer profit), this cost does not need to be paid by you. It’s just one more acronym you don’t need to pay for — so don’t.
- VIN etching: Many dealers will tell you that VIN etching is a theft-prevention tool. The dealer will etch your car’s VIN into a corner of the vehicle’s windows. This is a common sales tactic. Etching prevents thieves from stealing your vehicle because law enforcement can readily identify it as stolen. This claim isn’t necessarily untrue. VIN etching can be a theft-prevention measure. Some insurance companies even give discounts to drivers who have it. The problem here is cost: Most dealers charge hundreds for the feature, while do-it-yourself kits cost less than $30. If the car you want already has VIN-etched windows, insist that you won’t pay the retail cost for it.
- GAP insurance: If a dealer attempts to charge you for GAP insurance (guaranteed asset protection) and your insurance policy covers your new car, just request that it be removed.
- Factory holdback: A manufacturer holds back a specific dollar amount from the dealer until a vehicle gets sold. But the holdback varies by manufacturer. This holdback gets accounted for on the invoice. If it shows up as a line item in the final price, ask to remove it.
All charges and fees for options and aftermarket equipment already installed by dealer must be included in the price.
Tips for Negotiating Car Fees
- Question everything. When negotiating any car fees, just ask lots of questions to find out what gets included, and why, in the final price for the vehicle you plan to buy.
- Don’t discuss financing. Until you arrive at the final vehicle price with the dealership, never talk about whether you plan to finance the car or not. Get the price first, then start those conversations.
- Keep calm. It’s not worth it to lose your cool in light of negotiations. Just stay the course. Maintaining your cool will help you negotiate better deals.
- Be prepared to walk away. Remember that many other dealerships offer the same car. Don’t become too attached at one dealership. You can always walk away from a deal and find it elsewhere.