Thursday, July 30, 2009

Buying a Car in Costa Rica

Buying a car is considered to be one of life’s big stresses; take this fact and add a different country with different laws and a different language, and you have the recipe for a nightmare. For the last few days, it has been truly a “growth” experience (a different adjective would be suitable but offensive to some) trying to buy a car - a used one to make it even more challenging.

Up until this point, we have been renting a car. Before we moved to Costa Rica, we even thought that renting might be a potential option for a whole year since the advertised prices from the big rental car companies list monthly rentals as low as $300 a month. Of course, once you contact them, you find out that when you factor in their exorbitant insurance, the price goes up to over $1000 a month. Clearly, renting long-term was not an option.

A small minority of people buy new cars in Costa Rica because they have a 25%-50% premium over what we would pay back in Canada. Most people end up buying used cars and therefore there’s a huge industry bringing old cars from the United States over to Costa Rica. But, even the taxes on used cars are insanely high. Vehicles from zero to 3 years old are assessed over 50% import tax. From 4 to 5 years the rate is over 65% percent. Anything over 6 years old pay a whopping 80%. In the end, even used cars are super-expensive here.

On Saturday, we packed up the kids and headed out to Grecia, a town around 20 minutes from us. Everybody who we asked about buying a car simply told us, “go to Grecia”, but with no further details or information. Nobody ever even told us about a specific dealer in Grecia. For Montrealers, that is like saying, “go to Pointe-Claire”, or for people from Victoria, BC, it is like saying, “go to Duncan”. But, nonetheless, we headed out with the kids and figured we would just find a place.

Once we got to Grecia, we understood what people were talking about. There are many used car lots for the size of the town. Someone in Grecia told us that at last count, there are as many as 21 lots in just a few kilometers. The lots range from professional establishments to others that literally look like someone dumped some cars on the front lawn of a house.

I won’t bore you with the details of the following 5 grueling hours; in the end, we did find a car that we liked and provided them with a deposit of $400 until we could transfer the remainder of the money when the banks opened on Monday.

Now, a little bit about the car that we found. It isn’t really, truly in the car category… it is more like a truck. It fits 7 passengers, and even has a diesel engine. It is a Hyundai Galloper (a popular vehicle in Costa Rica) from 1996 with only 75,000 KM.

We were very happy with our purchase until we reported our score to a friend. “I am sure that the odometer was tempered with”, he stated pretty confidently and explained that the practice of “clocking” was very prevalent in Costa Rica. This news really stung. It had never occurred to us that this would ever be the case since the practice of rolling back an odometer is a federal offense in the US and Canada.

I hit the Internet to research the fraudulent practices that are common in Costa Rica. Some in the used car business in Costa Rica appear to be feeding on the innocent. Used car lots are everywhere. This was not true several years back, so apparently it has been a profitable enterprise for many. The economics are easy enough for shady operators. Buy a salvage vehicle in the United States with gazillions of miles on it, ship it to this country, turn back the odometer, wash it up a bit and sell it to an unsuspecting buyer as almost new. Reading all these details on sites like this one just made me panic more.

We quickly called the bank to ask them to reverse the wire transfer. We didn’t even know if this would be possible once the money left the country, but somehow, they were able to pull the money back out of the bank account in Costa Rica and back into Canada. At this point, we still weren’t 100% sure if we wanted to back out of the transaction (since we weren’t certain that the claims on the car were even true) but we wanted to protect ourselves in any case.

One of our friends in Atenas recommended a mechanic that I was able to bring with me to evaluate the car. How I was able to explain the situation to him and organize the road trip is still a mystery since he doesn’t speak a word of English and my Spanish is really just a few dozen nouns at this point. Despite the language barrier, I was very relieved that the mechanic found the car to be in great shape and based on the condition, didn’t see any reason to suspect that the mileage of the car should be significantly higher.

In the end, we decided to go ahead with the purchase of the vehicle after receiving the good review from the mechanic and the lot that we purchased from, Autos Grecia, really provided amazing  service. They spent a fair number of hours with me at the lawyer’s office to deal with the paperwork and even organized the car insurance for us.

The kids are liking our big truck, especially the ladder on the back!