Home Maintenance Understanding Destination Charges: Calculation and Meaning

### Understanding Destination Charges: Calculation and Meaning

Title: The Hidden Costs of Buying a New Car: Demystifying Destination Charges

Introduction:
In today’s technologically-driven society, car advertisements have become increasingly persuasive and enticing. We are bombarded with images of shiny new sports cars roaring down curvy canyon highways or rugged pickups conquering rough terrains. These advertisements promise incredible value for under \$30,000, leaving us in awe. However, the reality often differs from what is initially presented. One of the hidden costs that many car buyers fail to consider is the destination charge, also known as the delivery charge or handling charge. This article aims to shed light on the often-neglected destination charge and explain its significance in the overall cost of purchasing a new car.

The Story Behind the Destination Charge:
The destination charge is a mandatory fee that is included in the federally-mandated window sticker displaying the vehicle’s manufacturer’s suggested retail price (MSRP). Its purpose is to cover the transportation cost of the vehicle from the assembly plant to the selling dealer. While it is meant to reflect the actual cost of shipping a car, the calculation of the destination charge is more complex since cars are manufactured on various continents. A car may be assembled in the buyer’s hometown or even in a distant country, necessitating long-distance travel by truck, rail, and ship. Consequently, the destination charge can vary depending on the distance traveled.

Crunching the Numbers:
Different automakers have varying approaches to calculating the destination charge. For instance, Honda charges \$835 for cars and \$900 for light trucks, such as HR-Vs and Ridgelines. Honda plans ahead for the next model year by using the average shipping cost from the previous year and assuming a modest increase. Other automakers, like Ford, calculate the destination charge based on individual models. A Ford Fusion carries a destination charge of \$875, while a Ford Mustang incurs a fee of \$900. In the case of full-size trucks, such as those manufactured by major domestic truck companies, the destination charge is set at \$1,200 due to their larger size.