Consumer Reports: Car buyers beware of the "destination fee"

PHILADELPHIA (WPVI) -- Purchasing a new car can be stressful, especially when inventory is low while demand is high. But now there's an increasing fee to worry about on your bill of sale.

Prices on both new and used cars are skyrocketing due to COVID-19 pandemic-related issues.

And now a Consumer Reports investigation reveals another reason why you should prepare to pay more for a vehicle.

Do you pay an extra fee for those eggs you bought to get from the farmer to the grocery store? Of course not. But you likely have paid a similar fee the last time you bought a car called a 'destination fee.'

"Also called delivery, processing, and handling or inland freight and handling fees," said Consumer Reports car expert Mike Monticello.

These non-negotiable fees appear as a line item on car window stickers.

"We know destination fees have something to do with getting a car from the factory or U.S. port to a car dealership, but there's not a lot of transparency beyond that," he said.

They are rarely disclosed in ads or on automaker websites, so they often take unsuspecting buyers by surprise.

Consumer Reports' investigation found automakers have increased destination fees from an average of $840 in 2011 to $1,240 in 2020.

That's almost a 50% increase and more than two and a half times the rate of inflation.

"Many consumer advocates suspect these fees are just a way for automakers to boost the bottom line without officially raising prices," he said.

CR says to negotiate the bottom line for the vehicle, not the destination fees - since the dealer won't budge on those.

Insist on discussing your "out the door" all-in price, and don't be shy about asking for a reduction.

If you don't get it, consider walking away. Car dealers expect you to haggle, and they just might match your price to make the sale.

CR adds the best way to haggle for a car is over email. Not only is it COVID compliant, but it's also a great way to get the deal in writing before you even step foot in the dealership.
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