Thinking about buying a car in Costa Rica
The Basics:
What kind of car do you want to buy/import? Are the right parts available here for maintenance and repair? Is the car appropriate for Costa Rican roads, which are often unpaved, potholed and damaged during the green season? Will you need a vehicle with [fourbye]? Only you know your individual needs. Meeting them is the next step.
Driving Your Car to Costa Rica:
Obviously this is an option and an adventurous one at that. If you drive from the United States you will pass through Mexico, Guatemala, Honduras, El Salvador and Nicaragua. It is not within the scope of this article to go into detail about all these border crossings; however, there is a lot of information you should know if you chose to do this.
The Back & Forth:
Even if you’re just drifting about in a fairly non-committal way, it’s better to know the laws, instead of finding out the hard way. To renew your visa you must leave the country every 90 days, for 3 days. This is not the same for your car — your car has to stay out for 90 days before it can return. You must also carry with you the original import and visa documents while driving a United States registered car within Costa Rica (Beedle, 2008). Some people think they can leave the country for 72 hours and then bring the same car back in with a different license plate to get new permits. However this is illegal. If you are caught doing this, your car may be confiscated and you can be sent to jail, deported and banned from Costa Rica for a number of years (Charles Zeller, [email protected], personal communication December 24, 2008). Your car is allowed in Costa Rica for six months before you have to pay any taxes. It doesn’t matter which car the country is originally from, they will just put an extra stamp on your passport for your car. However, from January 1st 2009, Costa Rica will enter into the CAFTA agreement, so perhaps this rule will change (Marielos Meléndez, [email protected],personal communication, December 27, 2008).
Shipping:
There are many different shipping companies to choose from, so it’s definitely worth checking out your options to find the best deal. You can start fishing around by submitting quotes online at sites such as:
Remember to take into consideration costs such as storage, port fees, insurance, documentation, handling charges, customs inspections, demurrages (compensation you have to pay in case there is a loading or unloading delay), delivery, etc. Any vehicle you want to ship into Costa Rica must also pass a EPA Smog Test, approved by a Local Consulate from the country of exportation. It is important to find out what your quote includes and what charges will be outstanding. To read a case example of what quotes may entail, read Nicolas Ruggia’s article “Bringing in Your Four-Wheeled Baby”, The Tico Times, May 23 2008. For more information you can contact Charles Zeller by emailing [email protected] or by phoning (toll free from USA and Canada) 1-866-245-6923 or (506) 2258-8747.
For information and advice about how to avoid shipping scams see: www.autocarshippers.com/carshippingscam.aspx
Freight Charges:
From the United States, cars are shipped into Puerto Limon. If you drove your car into Costa Rica, or for some reason you don’t have a freight bill (a bill of lading), then freight will be calculated as 7% of the market value of your car. Be careful, because this calculation could produce a cost more expensive than what actual freight might have been. If you didn’t have freight insurance, customs will figure one out for you by multiplying the sum of the market value and freight by 110%, then they multiply that figure by 1.5% (Howard, 2008).
The Black Book:
To establish a value for the car being exported, you need to present the commercial invoice with the purchase value. If you don’t have a commercial invoice you have to declare a value. You can’t try and be sneaky by just making a value up, as Customs Officers follow a guide – The Black (or Blue) Book. Unless your declared value is within about 3% of what they’ve established, it will be rejected. The guide lists prices for new and used cars (used cars are defined as any car that is owned/titled). For examples of Canadian and United States evaluations you can visit www.blackbookguides.com. Also go to www.crautos.com and although this site is in Spanish, but don’t be put off by it. Simply click on the “Blue Book” tab at the top of the page, then click “INGRESAR” (“access”). This brings you to a form where you can enter specifications to get a price estimate. The estimate is drawn from a database of vehicles used in Costa Rica.
Despite these guides, the Costa Rican government often has the final say over car values and may assign higher values to cars than what is quoted in the Book (www.costarica.com/Retirement/Cost-of-Living/Auto-Expenses). “Costa Rican Market Values” are applied by the government by basing values on the selling prices of used vehicles in C.R. Depending on the year and model of your car, this price can be multiplied by between 0.432 – 0.502 to establish the import value. And this is what can make things pricey. For more detailed information and an example of how such calculations can produce high costs, see www.1costaricalink.com/elresidente/oo-3-4-2001.htm.
Costs & Calculations:
You can be stung with high import taxes and duties when importing a car. The Costa Rican government taxes at between 50-80% the value of the CIF (cost + insurance + freight) OR 50-80% the value determined by the Costa Rican Finance Ministry’s Car-Tica system (Ruggia, 2008).
Factors taken into consideration when establishing the value include not only the car purchase value and year, but also the model, cubic centimeters, and any vehicle extras. The older your car is, the less it will be taxed (old cars are roughly defined as 10 years or more). As of January 1st 2009, regardless of whether you drove your car into Costa Rica or had it shipped, models 2007, 2008 and 2009 will be charged 52.9% of the import value at Hacienda. Models 2006 and 2005 are charged 63.7% and anything older is charged 79.03% (Charles Zeller, [email protected], personal communication December 23, 2008).
To get a more accurate idea of what you might be charged, check the government website “Ministerio de Hacienda” at www.hacienda.go.cr/autohacienda/autovalor.aspx. At this site you enter the specifications of your car to come up with a cost. Caution: Sometimes Government websites are out of date and the best thing you can do is ask an expert or official. Another way to obtain an estimate of duties is to send a fax or email to the Association of Residents ([email protected] / www.arcr.net) detailing where you want to ship the car from, the car’s make, model, serial number (VIN), features, e.g. manual or automatic, air conditioning, power windows and any other non-standard equipment. You can also email Charles Zeller (contact details under “Shipping a car”) and you can contact the National Auto Research by writing to:
2620 Barrett Road
P.O. Box 758,
Gainsville, GA 30503.
Phone: (800) 554-1026
Fax: (770) 532-4792
(Howard, 2008).
Registration & License Plates:
After a new car has been brought into the country it’s supposed to be registered at the tax office in San Jose within two days. You can get the paperwork to register it from customs. The cost of registration depends upon the value of your car. Firstly, the papers need to be taken to the vehicle section of the Registro Público, or Public Registry, and then the Ministry of Public Works (Ministerio de Obras Públicas y Transportes). In time you are issued with a placa provisional (temporary paper license plate) by the Public Registry, which you display on your windshield. The paper will probably fade, so attach a photocopy to the windscreen and keep the original in the glove box. You have to watch the expiry date of the paper plates while you’re waiting for your permanent metal plates, as you can get a fine (from about 10,000 to 20,000 colones or $20 to $40) if they run out and you don’t renew them. You cannot renew your paper license until the day it expires. You have to go back to the Registro Público to have it renewed and there is no charge to do this (Administrator, 2008). Once the metal plates are ready you need to go to the Registro Nacional (National Registry), bringing with you:
- Your temporary paper plate,
- Title of ownership (título de propiedad),
- Yellow registration card (tarjeta de circulación) and…
- Your passport or Resident I.D. card (cédula).
- Insurance
You can hire somebody to take care of all these processes for you, or your dealer will do it.
Visit the National Registry’s website (available in English) at www.registronacional.com (Howard, 2008; Lytle, 2008a; Administrator, 2008).
Inspection (RITEVE):
Cars require general maintenance and safety inspections to ensure they are road worthy. In Costa Rica, this is known as the RTV, or RITEVE. In addition to brake, lights, indicator and wiper checks, exhaust emissions are also examined. Cars less than 5 years old have to be checked every 2 years while older cars are examined annually. The month you need to go for inspection depends upon the last numbers of your license plate, i.e. 1= January, 2= February and so on. Numbers ending in 0 are checked in October and November checks cars 1-5. It pays to book ahead, which you can do through phoning or visiting the website at www.rtv.co.cr. If you go to Google first, the website can be translated into English for you. From the website you can access information, such as the location of Inspection Centers, contact information, advice about how to pass the inspection, legislations, appointments, etc. Appointments cost about $20-$30/25,000 colones. It is possible to hire a trusted Tico to take your car to inspection for you. Once you have passed your RTV test, you get an inspection certificate and a sticker on the windshield — which is required in order to pay for the Marchamo.
The Marchamo:
The Marchamo is a permit you need to run your car every year. It includes some liability insurance. The price, once again, depends on your car. You can check prices online at portal.ins-cr.com/General/Marchamo. All you need to do is click on “Consulte su Marchamo aqua” (Consult your Marchamo here) and enter your vehicle type and license plate number.
You must renew this permit every year sometime between the first of November and the last day of December, but if you want to avoid a headache, don‘t wait till the last minute. If you have outstanding parking and traffic fines, you must settle these first and you also need to show proof that you’ve passed the RTV. When you pay, you get a sticker for the windshield. If you haven’t paid by the New Year, you risk getting a warning, a ticket, or having your car impounded. You can pay Marchamo at MOPT, banks and online with Banco Nacional at www.bncr.fi.cr. (For more information see Howard (2008), and Lytle (2008a & 2008b).
Advantages of Owning/Importing a Car in Costa Rica:
• Vehicles retain their value in Costa Rica much longer than they may in other countries. If you bring in an older vehicle and eventually decide to sell it, you can still get a good price to help redeem what you spent getting it here. Keep in mind that this also means if you buy a used car within Costa Rica, prices may be a bit darer than what you could be used to back home (Lytle, 2008b).
• Vehicle repair and maintenance are usually 10-15% cheaper than what you’d pay in the States. Prices vary among locations and workshops, so you can shop around.
Disadvantages of Owning/Importing a Car in Costa Rica:
• Gasoline can be pricey and you can’t shop around because prices are set by the government. Fuel was selling at between $4.40-$5.20 per gallon, late-2008.
• Import duties are not cheap. For example, a $20,000 used car, depending on the age, may cost you from $10,000 – $17,000 in duties (Lytle, 2008b).
• Costa Rica doesn’t have all the same makes and models that are available in other countries. You may wish to import a particular vehicle, but if you’re not going to be able to find a knowledgeable mechanic and the right parts for your car, you might have to think twice. (Unless, or course, importing the car parts will not be an issue for you).
• If your car was purchased in the United States (or elsewhere) your warranty and guarantee may not be valid in Costa Rica.
• You run the risk of your car being damaged during shipping.
Buying a Car:
If you are on a budget, rather than import, it is generally always more affordable to buy a car within Costa Rica. This can also work to your advantage, as second-hand cars already in the country may be specifically designed to suit the conditions, with appropriate engine tuning, tires, etc. If you want to buy something brand new, it may be more expensive than you’d pay overseas because of the import tax paid to ship it here.
Costa Rican newspapers such as La Nación, La Teja, Diario Extra, and The Tico Times (which is in English) are good places to start browsing for local prices. Also you can check out these two websites: www.crautos.com and www.wheelsCR.com.
Over four weeks during late-2008, most of the cars advertised for sale in The Tico Times were 4×4 vehicles, particularly Toyota Landcruisers. Apart from Toyotas, other popular brands in Costa Rica include Nissans, Hondas, Suzukis and Hyundais.
If you can’t pay for your car straight off and want to finance it, you need to provide proof of income, or a good credit record from within Costa Rica. If you don’t have a stable income, or haven’t been in Costa Rica long enough to establish good credit, you could try getting another resident or citizen to co-sign with you. Failing that, you’ll have to put up with higher interest rates (provided you find a dealer who’ll finance it for you).
It is imperative that before you sign any papers, you have the car checked out by a proper mechanic — and not the mechanic recommended by the seller. Plus you need to know the car can pass inspection — especially if you are participating in a private sale. After all, you don’t want the hassle of hidden costs. Read more at:
Car Insurance:
Apart from the liability insurance included in the Marchamo, auto insurance is not a requirement in Costa Rica. As a result, many people choose to remain uninsured because the worth of their car doesn’t justify paying the high fees. If that’s the boat you’re in, then don’t go causing an accident, or you will be responsible for damages.
The Costa Rican government has held a monopoly over insurance for the last 84 years. Cover is sold from National Insurance Institute offices (INS) and foreign insurance usually isn’t valid. In October, The Tico Times indicated foreign firms could provide cross-border insurance for shipping and air transportation services (TT, Oct 31, pg 15, “Auto Insurance Rates Could go up 14%”), but as for auto insurance The Tico Times reported in November that competition in the auto insurance market won’t open up until 2011 (The Tico Times, “Agency Rejects Request to Hike Auto Insurance” V.I. Garnica, Nov 21, pg 3).
In the meantime, visitors can get coverage from the INS as long as they have a valid drivers license, are at least 18 years old and haven’t overstayed their 90 days. If the car has foreign plates, only third party damage is covered for the time the car is allowed in the country. If you’ve financed your car through a dealer, chances are they’ll work out a policy for you and incorporate some kind of insurance fee into your re-payments (www.costarica.com/Retirement/Cost-of-Living/Auto-Expenses; Administrator, 2008; Lytle, 2008a & 2008b).
The Law:
All you need to legally drive in Costa Rica is a valid drivers license and passport. There is a law known as “The License Plate Rule” which applies in central San Jose. To help keep traffic under control, days from Monday to Friday are allocated numbers: Monday 1 & 2, Tuesday 3 & 4, Wednesday 5 & 6, Thursday 7 & 8, and Friday 9 & 0. Whichever day the last number of your plate matches is the day you must keep your car off the road (between 6 a.m. and 7 p.m.). If you’re caught breaking the rule, you can get fined approximately $10 or 5,000 colones. See a map for the restricted area at www.livecostarica.net/?q=node/183.
Recently the government cracked down on traffic violations by increasing fines substantiality. Although a judge reserves the right to replace jail time with community service, the new laws can potentially send drivers to prison for up to 3 years for racing other cars, speeding over 150 km/ph, or driving with a blood-alcohol content of 0.75 grams per liter (a 155 pound man could reach this level by drinking three-four beers over an hour). A merit system has been introduced, in which drivers initially have 50 points. Points are deducted as offenses occur. If you lose all your points, you also lose your license for two years. The crimes and their penalties are listed below (Gillers, 2008):
- Causing a fatal accident 6 months 8 years jail
- Causing a fatal accident while drunk 3 -15 years jail
- Racing against other drivers 1-3 years jail
- Driving drunk (BAC 0.75 g/l) 1-3 years jail
- Driving tipsy (BAC 0.5 g/l) $410 fine
- Driving faster than 150 km/hr 1-3 years jail
- Driving faster than 120 km/hr $410 fine
- Driving without a valid license or permit $410 fine
- Operating a pirate taxi $410 fine
- Driving 20 km/hr above speed limit $310 fine
- Not wearing a seatbelt $310 fine
- Holding a cell phone $310 fine
- Ignoring traffic lights or signs $310 fine
Recommendations:
Obviously everything talked about above screams “paperwork.”; however, it’s not so intense if you hire help along the way. Besides, if you’re working with dealers, they should be doing it for you anyways. If you believe importing a car is the right option for you, then it’s a very good idea to get a good customs broker/agent on your side. Once the car has arrived to the port, the agent will do the paperwork for you and calculate the taxes. Once you’ve paid up, you can than take your car. This usually takes about two days. You should also consider hiring a bi-lingual lawyer to guide you through the process (e.g. check out or email Marielos Melendez – who answered my questions – at [email protected]). If you’re not working with a dealer, you will still need the help of a Customs agent to help you plan and prepare… And above all, you need to have patience! (Lytle, 2008b).
editor’s note: A few of the referenced websites have changed hands since this original article was published. The sites’ addresses remain, but have been struck through; i.e. old website address for your convenience.
