TODAY COSTA RICA – Where to used cars in Costa Rica come from? Interesting question, no? Costa Rica does not manufacture cars. Many of the used cars were once a new car import. But many come in as used cars from the United States mostly, with a good number from the southern states such Texas and Florida.

Buying a used car in Costa Rica is so easy, as long as you keep in mind that, like many things in Costa Rica, easy is not that easy.

Let start with the premise that not all used car dealers in Costa Rica are unscrupulous. And not all used car buying stories are all bad. But some people have had bad experiences. Let’s look at some of the things that can make your used car buying experience a not so pleasant one.

But some people have had bad experiences. And not all used car dealers are up front with potentila buyers. So, let’s look at some of the things that can make your used car buying experience in Costa Rica a not so easy one.

A couple of things that are important when buying a used car is that the Marchamo (annual registration & mandatory insurance) and Riteve (vehicular inspection) are current. Without these two, the vehicle cannot ‘legally’ be on the road. And buying a used vehicle without the Marchamo and Riteve is, well, a nightmare, meaning you, the buyer, will then have to go through the process of registering and licensing the vehicle. Not a task for uninitiated.driving a vehicle without the current Marchamo and Riteve will earn you a fine or three and even having the license plates confiscated, which is by far worse than having the entire vehicle impounded.

Once you’ve found the right car for you and negotiated the price, you will need a notary public to check that the vehicle is properly registered, make sure there are no liens (embargo in Spanish) or traffic fines. If it all check out, the notary is will complete the paperwork to register the vehicle in your name. In Costa Rica a notary can be a lawyer, but a lawyer is not necessarily a notary. Confused? Only part of the ‘easy’ experience.

But, before all of the foregoing you should take note of the actual physical state of the vehicle itself.

Having a mechanic you can trust is the first step. Don’t take the word of the used car dealer’s mechanic, or one he/she recommends. Get your own.

A good and honest mechanic should be able to tell the general state of the vehicle beyond the spit and polish. He/she should be able to spot items like major body work, reconstruction and maybe flood damage. There are tell tale signs of things like the vehicle imported in parts and then rejoined, and the extent of any work done in Costa Rica.

Let’s say by now you have done all your due diligence, the paperwork is good, the mechanic gives you the green light, but how do you know if the car was a “Harvey”, for example? You may not.

What? Wait? What, again?

It is estimated that more than one million cars were damaged from the flooding caused by Hurricane Harvey along the Texas Gulf Coast?

Some believe they went directly to junk yards. And they are correct if places like Costa Rica is the junkyard they are referring to.

I am not saying that every Texas flood will be in Costa Rica, but, it can be safely assumed that a certain number will be.

As part of the clean up process of Harvey, insurance adjusters, two truck drivers and representatives of auction houses are all involved in the getting the cars off the streets and to the hands of new buyers.

Many cars have already ended up in nearby states. “3,000 cars that were previously in other storms are now in Arizona and are on the road,” says Azfamily.com. “Cars once reported with flood damage and then re-sold is a big problem. In fact, thousands of cars that were submerged 12 years ago during Hurricane Katrina were later re-sold to unsuspecting buyers.”

In Houston, the the flood damaged vehicles hooked to the tow truck will go to a yard managed by one of two major auction houses, either Copart or Insurance Auto Auctions, that have multiple yards around Houston. The IAAI Mexico website says it is a leader and unique in this type of auto sale.

Provided by Univision Interactive Media, Inc. One such car, up for auction after Hurricane Harvey

By now you are thinking, there has to be some type of protection for me as a buyer? It all depends.

Luckily, insured cars damaged by the flood are processed through insurance adjusters and will go through multiple reportable points. Most of these events should show up on a vehicle history report.

However, since owners of cars without comprehensive insurance have no recourse, many will try to dry them out and repair them without ever reporting that they were flooded. There will be no record that they were flooded. Thus non-insured car, the ‘flooded’ car, would not have been reported to the auction house.

The Auction
Once the paperwork is in order, buyers at the auction will go on site or bid virtually from all over the world. The buyers for these vehicles include salvage yards, metal recyclers, used car dealers and exporters, who will send them to another country, like Costa Rica, for example, where used car values are much higher than in the US.

One website Salvage Cars for Sale to Costa Rica offers “export only” cars that they claim have been selected by insurance adjusters to only be sold and shipped outside of the US, ready to ship to countries like Costa Rica.

Anyone can take part in these auctions, including Costa Ricans looking for some great cars, cheap, to import to the country.

Once in Costa Rica, these cars are repaired or flipped as is by the importers to used car dealers, who will then repair them and put them on their lot. The cost of the repairs in Costa Rica, especially when most of the work is labor instead of parts intensive, is a fraction of what it would cost in the US.

Buyer Beware
Inspect your used car purchase closely because good chance there will be no record that the vehicle had been flooded, nor is the importer or dealer under any obligation to tell you.

Using a service like Carfax.com to check a car’s history online helps, but does not necessarily give you the entire history, like if it had been flooded or even it if came from a Hurricane flooded zone like Texas. Remember earlier I mentioned the Texas cars were showing up in Arizona? As a buyer, you may not want a car coming from New York or Chicago, for example, but Arizona, California or Florida (before Irma) is OK. No winters there.

Provided by Univision Interactive Media, Inc.

Earlier I mentioned Riteve and Marchamo. All cars, new and imported, have to have certificates, but that only covers items like brakes, lights, and other mechanical and safety features, certifying the vehicle’s roadworthiness in Costa Rica. It does not dig deep into or even care if the car was flood damaged or a “write off” repair. The Riteve inspection is the first step in obtaining title and Marchamo for the vehicle. Again, not important the prior state of the vehicle.

At this state, it does not matter if the car was flood damaged or had extensive repairs. A “write off” car in another country.  Article 5 of the Ley de Tránsito (Traffic Act) in effect since 2013 allows for sanctions against importers of cars “declared a total loss”, among other things, but that is if the write off is on the foreign title.

That protection is for purchasing an imported vehicle that yet to clear customs and/or being registered in Costa Rica. There is no way of knowing if the importer fudged the paperwork.

Despite the purchase of a used car comes with a 30 (business) day warranty, buying a used car is on an ‘as is basis’. The warranty that is enforced by the Ministry of the Economy if the consumer complaints cover only the obligation to repair any problems. The dealer is under no obligation to replace or refund.

The warranty is only if buying through a dealer. Buying privately – directly from an individual or company that is not a car dealer  – does not come with the warranty.

 

The Case of the Used Car Dealer
In most cases, the used car dealer knows what is wrong with the car. probably even it was a flood damaged vehicle, especially if the dealer is also the importer and buyer at the auction, but is unlikely to fix the problems prior to sale.

A Q reader who recently purchases a used vehicle from a dealer in Grecia began to have problems with the automatic transmission. At first, the dealer was very attentive in his response, asking that the car is brought in for a check.

Days later the car ran fine, for a few days and the problem reappeared. This time the dealer was not as forthcoming, but after pressure agreed to have his mechanic look at it again. A week goes by, the car is ready. The dealer says it was a minor adjustment.

The car ran fine for a few days and then the problem returned, getting worse with each kilometer driven. Calls weren’t returned right away. On visits, staff said the boss was not in. It was now at almost the 30 warranty period. The threat of a consumer protection action and an actual complaint filed got the dealer, fearing an investigation, got the dealer to respond quickly and within less than a week the car now had a brand new (rebuild) transmission.

Not all cases are that successful.

Last Word
Earlier I spoke about the Riteve and Marchamo and the protection those certificates offer to car buyers, in that the vehicle is duly registered and licensed and meets the roadworthiness requirements. In the above, I spoke about ensuring the Riteve and Marchamo is current, what is also important to note that a new inspection is not required to transfer the vehicle from one owner to another. That is, any problems, unless visible, do not have to be fixed until the car comes up for the Riteve inspection, which could be in 11 months.

But, vehicle transfers only require the documents be current. That is, if the vehilce was inspected in January and has the current year Marchamo (all Marchamos are payable by December 31 of each year) and it now November, the vehicle title can be transferred to the buyer, but the inspeciton is not due until two months later, in January, and the Marchamo and all its costs, in December.In the above, I spoke about ensuring the Riteve and Marchamo

That is, the paperwork tells you that the vehicle was road-worthiness 11 months ago and there may be traffic fines accumulated against the vehilce since then. And there could be traffic tickets that do not appear on the Marchamo in December, but may be your responsibility in the future when they are resolved. A check on the Cosevi website, with the license plate in hand, is important to see if there are any traffic offences registered against the vehicle that are in the ‘challenge’ ( in Spanish) stage, a process that can be from a few months to up to 2 years or even more.

ALWAYS try to be part of the car buying process if you can and NEVER buy sight unseen.

 

 


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