Is it Better To Buy or Import a Vehicle in Costa Rica?

Costa Rica is a beautiful country with lots to explore and many places can only be reached by car, so many new arrivals soon find themselves trying to decide if it makes more sense to buy or rent a vehicle here.

Buy a Car vs Import a Car

Whether you buy or rent a car in Costa Rica, the cost will likely be higher than you expect. There are no manufacturing companies in the country, so all cars must be, or have been, imported. If you are entering the country with the type of residency that allows you to import a vehicle that they already own, you may think of this as a way to save some money. There are instances where this is a viable option, particularly if the car is new, or fully electric because there are incentives available in the form of lower taxes and insurance rates for hybrid and high-efficiency vehicles.

Why Are Cars So Expensive?

There are no car manufacturing companies in the country. Every car is an import and the more vehicles enter, the more they have to eventually dispose of.

Assigning a high duty to imported vehicles serves a dual purpose; it limits the number of cars imported and helps cover the cost of their disposal.

So, What is the Duty on a Car?

The actual amount of the duty is determined according to the age and value of your vehicle, because of this, importing a new car will cost much less.
It breaks down like this: 

• Cars less than 3 years old will have a duty of 52.29% of the value of the car.     
• Cars 4-5 years old will have a duty of 63.91% of the value.     
• Cars 6 years or older have a 79.03% duty added to them.

Determining the Value of the Car 

The Costa Rican Customs Department uses 2 sources to determine the value of the vehicle.
1.     Cost + Insurance + Freight (CIF)- This quite literally means that they add up the amount on the bill of sale that you provide and add up the amount of insurance and shipping that you paid to bring it into the country and the total is the landed cost of the vehicle.

2.     Database Valuation- If the vehicle was not purchased recently and there is no bill of sale to refer to, the customs department will use a database referred to locally as the cartica/autovalor. It is officially known as the Valuation Database of the Ministry of the Treasury. If the Customs Department has access to both methods (i.e.) if you have your bill of sale, they will choose whichever valuation is higher.

As you can see, this means that the cost of vehicles in Costa Rica is much higher than in North America, and the method in which the value is determined can have a huge effect on how much duty you pay, and is the main reason many expats decide to buy cars here instead.

Buying a Car in Costa Rica

Buying a car requires a lawyer to complete the transfer of ownership, and all official documents must be done in Spanish. If you don’t speak Spanish, it is best to find a lawyer that you can trust who can translate the paperwork for you.

Once the lawyer determines that the car is clear of debts, they will take it to the National Registry and register your ownership. 

The transfer cost is typically about 3.5% of the fiscal value of the car. 

Where Can I Buy a Car in Costa Rica?

As with most places, the highest concentration of car dealerships is in the metropolitan area around San Jose, however, there are dealerships scattered around the country in many of the larger towns, but much of the research can be done online.

One dealer in Parrita has tailored his business towards the needs of expats and will sell you a car for a 6-month period, with the understanding that he will purchase the car back at a price already agreed upon. This allows snowbirds who only remain in the country for six months of each year to avoid the need to store their vehicle while they are away.

What Kind of Vehicle Do I Need?

In a country as rugged as Costa Rica, there are some things to consider when choosing a car. If you plan to settle into the city and enjoy an urban lifestyle, many of those won’t apply to you, but if you plan to explore the countryside, they can make a huge impact on your decision.
Such as:

1.     Ground clearance- There are several reasons that people who like to explore may need extra ground clearance. Rural areas can have many rough and unpaved roads which, during the rainy season can have deep ruts and potholes, or even river crossings.

2.     Tires- rough terrain can also mean that smaller, low-profile tires can bring your car’s bodywork closer to the road and those dangerous potholes. Steep dirt or gravel roads can be a challenge for regular road tires.

3.     Snorkel- as I mentioned above, driving in certain areas can occasionally mean crossing water. Most cars cannot (and should not) try to ford a stream or river that is higher than the car’s bumper. This can cause a breakdown. However, cars- or more commonly- SUVs fitted out with a snorkel can traverse deeper water without damage to the engine.

4.     Size- Urban areas can be quite tight. In these areas, space is at a premium, roads can be narrow and crowded and parking spaces may be small. If you plan to be an urbanite, it might be wise to consider a smaller vehicle. 

On the other hand, explorers who plan to hit the beach, ride the waves, or just discover, will likely find a larger vehicle more convenient. If nothing else, ensure you have plenty of space for your cooler of water, your mandatory safety kit and emergency supplies, and a basic set of tools.

5.     Parts- Costa Rica seems to have a higher concentration of Toyota, Kia, Suzuki, Hyundai and Mitsubishi cars. If you buy or bring in a car that isn’t common, you may find yourself waiting for the garage to order parts and having to pay a premium for the shipping costs.

Once you have decided what type of vehicle will work best for you, and you have picked up your lovely new wheels, you should know a little about what your responsibilities are as a car owner in Costa Rica.

 
Our next post will discuss your responsibilities as a car owner in Costa Rica, such as registration, vehicle safety, and insurance