Please subscribe to Coach Vaillant newsletter for new exclusive content
Jump back to Chapter V – Nicaragua
Financial analysis
I bought my 2012 Honda CRV on May 10th, 2023 during a 5 hour transit in Houston on my way to Costa Rica for a total sales price $10,493. I had to pay an additional sales tax of $655.81 and another $110 related to various dealer fees. Let’s add $60 of Uber fees to go in and out the airport on that day.
I drove 2,672 miles (4,300 km) which is about 20% over the direct road but the goal was to do some sight-seeing along the way to enjoy the trip. I spend just under $500 of gasoline or about 100 gallons. As we shared costs for quality hotel, I only spent on average $30/night of about $600 for the trip. Food cost was about the same as we crossed over countries where life is less expensive than the USA or Europe. Crossing the 6 borders costed about a total of $400 for me and my vehicle. Highway tolls in USA and Mexico were about $150. Let’s add another $300 for fun activities along the way such as entrance fees of museums, national parks and various activities. Then the total cost of registering my car in Costa Rica including all legal fees was $4,130 as you will see in the description below. So, after all was done and set, almost 9 months after the purchase of the vehicle, I had spent a total of $18,000.
What is my vehicle worth in Costa Rica? According Encuentra24, it is worth about $22,000. So this is still a $4,000 net gain even after deducting the entirety of my trip. But what would have been the import taxes if I did not use the new law that waives vehicle tax fees for a new resident? According the “hacienda”, the value of a 2012 Honda CRV is 7,800,000 colones and the related import tax fees are 3,705,000 colones or $7,100! So basically, this whole trip was only worth it financially because I was using this law favoring new residents. Otherwise, it would have been much more cost-effective simply to buy my vehicle directly in Costa Rica.
How time-consuming and complex was the whole process of legalizing the car in Costa Rica?
During our return to Costa Rica, I embarked on the task of legalizing my car in compliance with the new law to circumvent taxes for imported vehicles for new residents. My personal lawyer, while skilled in her own right, lacked familiarity with the recent legislation, prompting me to seek assistance elsewhere. Through a friend, I was introduced to an attorney who did her residency and expressed a willingness to tackle this new challenge.
Interestingly, this endeavor was uncharted territory for him as well. However, his eagerness for business drove him to educate himself thoroughly on the intricacies of the new law. After a month of research, he finally knew enough to initiate the process, and he requested an initial fee of $200 on August 14th for the time he had spent so far.
While I assumed I had ample time at my disposal thanks to the 3-month tourist visa granted to my car when I crossed the Costa Rica border, time continues to pass without much progress. On September 13, however, he communicated to me that he had to go to “minister de hacienda” to enter my residency number so that they generate a code to apply to the new law of exoneration of import tax fees for the vehicle. Then I received an unexpected invoice from the attorney, amounting to $1300 in legal fees. It was then that I felt compelled to seek clarity on the total expenses associated with car registration.
My rationale was simple: the prospect of saving on import tax fees should not be outweighed by exorbitant legal costs, particularly considering the attorney’s inexperience with the new process, which resulted in a less-than-efficient progress.
After some negotiation, we reached an agreement – I would make an initial payment of $650, with the remaining $650 due upon successful completion of the process. He consented to this arrangement. Yet, as the process lingered beyond expectations, I began applying pressure, acutely aware that my 3-month car visa neared its expiration. I had a trip planned to Panama mid September so I decided to use this opportunity to get another 3 month visa for my car. Unfortunately, when I entered back Costa Rica on September 19, they explained to me that the car has to be out of the country for a minimum of 3 months before I could request another 3 month car tourist visa!
Finally, on October 17, just as the car visa was about to expire, we managed to navigate the vehicle through customs, and I promptly paid the outstanding $650 to my attorney. Initially, we were informed that the process would conclude in a week, but, in true Costa Rican fashion, it proved to be a protracted ordeal. It was not until November 25th that we were able to retrieve the car from customs.
To my surprise, customs imposed a substantial fee of $1677. The attorney’s response was somewhat underwhelming, insisting that without the exemption, the situation would have been considerably worse. I discovered later that I was only responsible for administrative charges at customs and the cost of storing the car for one month. It appeared that their lack of urgency in releasing the vehicle was partly due to this unforeseen expense. The additional $7,000 of import tax fees had been completely waived. I had to allocate an additional $760 for the official registration of the car in my name. Finally, on December 7th, I received a temporary driving permit, allowing me to use the vehicle until the license plates were issued. It wasn’t until January 22nd, 2024 that we obtained the plates and concluded the paperwork at Dekra and INS, ultimately legalizing the car. The entire ordeal resembled the legendary labors of Hercules, but this is what navigating bureaucratic procedures in Costa Rica had always felt like.
Car quality
Costa Rica has its fair share of subpar used cars, so the old adage “Caveat Emptor” holds true – let the buyer beware. It’s a common scenario where sellers are motivated to offload their vehicles due to mechanical issues. In contrast, in the USA, sellers often have the financial means to upgrade their cars.
Therefore, it’s imperative to exercise caution and have a trusted mechanic conduct a comprehensive inspection before purchasing a vehicle in Costa Rica. While I’d apply the same principles when buying a used car in the USA, the average quality of cars there tends to be higher, and the risk of being taken advantage of is lower. Shopping for a car in the USA offers a smoother experience with a wider range of options, especially in states like Texas.
Adventure, adventure, adventure…
This incredible journey took us through seven different countries in just three weeks, creating unforgettable memories that will last a lifetime. While I wouldn’t necessarily suggest turning this into a full-time business endeavor, I highly recommend it to new Costa Rica residents, especially those who already own a vehicle in the USA.
While Mexico is very vast, it’s essential to note that the entire Central American region is smaller in size than France. This presents a unique opportunity to immerse oneself in a variety of cultures within a short timeframe while also saving money by importing a reliable vehicle.