Tuesday, April 30, 2013

The Cost of Owning and Driving a Car in Costa Rica Can Be Daunting

We purchased our first car in Costa Rica, a 2006 Mitsubishi Montero Sport diesel 4x4, when we arrived to stay back in November, 2008. Those were the days when we were more flush with cash than we are now. It didn't seem a great luxury at the time even though the cost was nearly twice what you'd pay in the States, if you could find a diesel version there. That's basically the rule of thumb here for cars, new or used. Purchase prices are double that in the States. Here's a link as to the main reason why.

mitsubishi montero with motor missing
Oh, this can't be good!
That fact of life here is due to import duties, sales tax, and property transfer tax but also because the number of drivers in Costa Rica has been growing rapidly for years. Strong demand and weak supply play a big role in driving up asking prices.

If only the madness would stop there, it wouldn't be so bad.


Maintenance Costs

Maintaining a car in this country is greatly mitigated by an abundance of inexpensive, and talented mechanics. Sure, there are plenty of shade-tree mechanics, and they have their uses, but there are also many who have training from the manufacturers and many years of experience; some of it in the States.

The problems with maintenance, however, are 1) parts are often very expensive or hard to find, and 2) you need so much of it!

The latter is mostly the fault of the poor roads, but also because it's such a mountainous region. Our total annual mileage is about 60% of what it was in the States. Our local trips are typically about 70% paved road, 30% on rock roads, but that portion takes its toll.

parts in back of car from engine overhaul
Our 8 year old Montero is getting an engine overhaul
You're often driving in low gear, four-wheel drive, and the suspension (and all that's attached) takes a pounding even at low speeds. Tires have it especially bad. We've gone through several sets of new tires and they are never discarded because the tread is gone. It's the cord that wears out such that you can no longer patch the air leaks. The whole tire is leaking. 


Fuel Costs

Costa Rica doesn't have domestic oil sources, so they import crude oil and refine it here. That's all under one government monopoly, called RECOPE (ray-KO-pay). Fuel prices are fixed, so gas stations compete on service, which is nice. The price of gas and diesel is the highest here of any Latin American nation. Last I checked, diesel is about $4.80/gallon and gas over $5 per gallon, per the Colone/USD exchange rate. That, along with mountain driving, means a big fuel bill each month.


Insurance

Up until recently, auto insurance was also handled by a government monopoly, called INS. Compared to what we paid in Oregon, the premiums quoted were twice as much and provided about half the coverage. That's not a totally fair assessment, since health care costs are so much lower here, but it seems a bit much overall. Every car is required to carry a minimum of coverage for the driver and passengers, but not for third-parties. That's included in your Marchamo (we're coming to that). 

An alternative, which we've chosen, is that in addition to the mandatory insurance coverage (which is very low cost), we keep our cars in inactive corporations. Thus, if, god forbid, we were ever in an accident for which we were at fault, the most someone could sue us for would be the car itself, the only asset in the corporation. Neither option  for protection is appealing, so I drive very carefully. 


Taxes

Besides a transfer tax and lawyer fee when you buy or sell a car, the main tax is what's called Marchamo. It's an annual set of fees that you need to pay at the end of each year in order to maintain your car's registration, the proof of which is a new windshield sticker. Any unpaid traffic or parking fines will also show up on your Marchamo. You have the option of purchasing more insurance, too, when you pay your Marchamo. 

The cost of Marchamo varies greatly depending on the car, because the bulk of it is based on their value of your car. Until last year, those values were not at all in line with what you may have paid for your vehicle. The value was typically about half what you could sell it for. You could also expect your Marchamo to be slightly less each year as it depreciated. Now, however, they are upping their appraisal values, so our Marchamo actually went up this time. 

Just from our personal experience, we pay about $100 per year for a 1988 small diesel pickup, and $450 for the Mitsubishi Montero. A very new car could pay a couple of thousand a year. I know that many states in the U.S. pay value-based fees for registration, but in Oregon it was, and probably still is, about $35 per year for any car as long as you didn't get fancy plates.


Other Options for Car Ownership

Toyota Land Cruiser Hardtop 3.0 Diesel, Type B...
Toyota Land Cruiser Hardtop 3.0 Diesel (Photo credit: Wikipedia)
Right now, our Montero is in the shop for a complete overhaul of the motor and suspension, and recently it needed a transmission rebuild, also. So, we're feeling rather down on cars here after a bad run of luck. It's almost enough to make you want to move to the city where taxis and buses are ubiquitous. Well, not really. It's just a cost of country life we have to put up with for now.

Besides going without a car, a frugal car-owning strategy would be to buy an older 4WD car, preferably diesel, that is not so expensive to maintain. That means a model that is very common in Costa Rica, such as a Toyota Hilux pickup. They're not as complex, used parts are all over, and it will get good mileage. If you have a gasoline version, then, long-term, you could mitigate fuel costs by converting it to burn propane, which is about 40% cheaper than gasoline. The die-hards will buy an older (pre-83) Toyota Land Cruiser, which is tough to beat for ruggedness, but a bit uncomfortable as a daily driver. Even more frugal would be to get an ATV or a horse, or mooch rides from neighbors.

Despite the challenges, we feel a car is a necessity where we live, though I wouldn't mind extracting some of the capital from the Montero by trading it for something older and less expensive. We do tend to think harder about eliminating extra trips, more so than we did when living in the States, and I've learned to drive more slowly on the worst roads. In the end, the overall lowered costs of retirement here, the climate and the beauty of the place more than make up for increased transportation costs.

20 comments:

  1. Nothing quite like owning a car where they are not plentiful. I can see, logistically, why'd they'd be so hard to own. In the end, though, owning a car is definitely a necessity, almost now matter where you are.

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    1. Hi Dan,

      Yes, cars are just a painful necessity in so many ways. The legacy of the 20th century I guess. When they can fly, I'll feel better. :)

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    2. owning a car is a necessary evil unfortuantely. I would much rather go back to the old horse and buggy days but then you'd have vet expenses. Nothing is simple anymore. lol

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  2. After living in Florida for many years and paying over $1299/yr for insurance there, it is a pleasure to pay a small amount of $250/yr here. I did both here on vehicles, bought a used one here at a rather high price and had my pickup shipped here from Florida. I will say that the cost of buying one here was less than what it cost for shipping and import duties/taxes to bring my own. Other than the fact of knowing my pickup and having done all repairs and maintenance before shipping, the vehicle bought here is less expensive. Fuel cost are actually less overall than what I was paying since everything in Florida is a long distance to get there. I drive daily into town and spend $60-90/month for fuel here as opposed to $200-300/month in Florida. I just do not have to go as far here. The motorcycle drivers and cab drivers are the menace to me, very low on courtesy and drive too fast. Bus service is rather good, but a pain for shopping.

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    1. The motorcycles scare the bejeezus out of me here. They are always driving between the lanes, just coming out of nowhere. Also, since the roads are narrow and there are few sidewalks, you really have to look out for pedestrians.

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  3. Well, this just reaffirms our fondness for the buses and taxis - but then, we don't live so far out. Occasionally we wish we had a car but when we really need one, we rent one. Still seems cheaper than owning. Thanks for a very informative piece, Casey!

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    1. Hi Kat,

      If you don't need a car often, then renting is the way to go. Just simpler all around. We are actually only 8 Km from town and don't take a lot of road trips, but still the cars need a lot of care it seems.

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  4. Casey,
    Interesting to find you living in Latin America. I have been living in San Miguel de Allende, Mexico for 11 years. Cars here are US prices, gas a bit higher than US, repair labor cheap parts have 17% duty.

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    1. Hi Hal, nice to hear from you. Glad you found a great place to retire to. Pura vida!

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  5. Luckily the area I live in, even though it is in the country, has plenty of bus and taxi service. We would like a small vehicle for when we have to take our animals to the vet, can't take a German Shepherd on the bus. Plus, it would save time. We do a lot of walking and have lost a bunch of weight in the process.

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    1. Yeah, that's one thing missing in our immediate area, good bus service. Once the get the closest bridge finished (another month or two) then it's about a 20 min. walk to bus service, which is now hourly. Maybe you could do with a Geo Tracker. Rides like a wooden horse, but economical.

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  6. Great Article Casey. Just yesterday I had a mechanic come out to my house, diagnose the problem (a bobina de arranque), go to his junk yard to get the part and return to fix the car all for $60.

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    1. Hi Kimberly,

      Similar thing for my small truck a week ago. I had a leak in a radiator hose. The mechanic directed me to a large wooden box of old radiator hoses saved over the years. I found an almost exact match, the only one out of 20 or 30 pieces. No charge.

      p.s. give me a call if you know someone who can give Sean riding lessons.

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  7. Thank you so much for writing this. I have been following your blog for several years and had planned to ask you some questions about your auto decisions as regards CR.

    I did have a couple of follow up questions for you, though...

    What ever happened to your "Tracker" (or Sidekick, or Samurai..) that you were planning an diesel transplant? Was it just not cost effective?

    You had said you were planning to create a bio-diesel production area on your finca. Did you ever try to do this???

    What would you recommend for a gringo moving to CR in a year or two and knowing they'll need a 4wd? Buying a vehicle in CR after the move, or buying an old Samurai or Tracker? Or buying an old Land Cruiser, knowing the gas mileage is poor?

    Thanks. Love your blog!

    Jim Thompson
    Rome, GA

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    1. Hi Jim,

      Wow, you have a long memory. I'd almost forgotten about that Sidekick. I had to abandon the diesel conversion for that car as I ran out of time and there wasn't going to be enough space to ship it. In the end, we really needed a bigger car anyway. The biodiesel project has not gotten on the ground, just too many other things pending.

      I know your move is a ways off, but if you can, really evaluate your need for a vehicle in the first place. If you can live close to a busline or within a short taxi ride to a bus depot, you might find that to be the best choice and rent a car for those occasions you really need one.

      If you need a car, but not on a daily basis, then a smaller car is a good option as it will be economical. The Suzuki Vitara is popular here with gringos and there are lots of those around. Double cab Toyota PUs are also easy to find and reliable, most are diesel. Try to find a trustworthy mechanic (they do exist!) to evaluate the car's mechanical condition before buying. Cosmetics are not as important as body shops are cheap.

      I'd only bring in a car from outside if it had sentimental value and/or is older and in excellent condition. You'll pay the same duty for the same year/model, regardless of the condition.

      The old Toyota LCs are rugged, that's for sure, but you might want to try one out up there on rough roads to see if you like it or now. Glad to answer any other questions you may have.

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    2. We've already bought land in Uvita. Not far from the coast highway, but up the mountain from the highway, near La Terazas (sp?), so I know we'll need 4wd.

      I do understand about mechanics, though, I have been impressed with the experiences I've heard from the few local gringos I've spoken to.

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    3. Well, Jim, we'll practically be neighbors! That's a nice area and gives you easy access to the whole coast, now that the highway is done. Pura vida!

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  8. Hey, Casey. I'm IN Albany, OREGON! But I am moving to CR in June... Anyway, I was a big 4x4'er down in California -- here's a tip for reducing wear/tear: your tire pressure should be way lower on those types of roads. If you mount an onboard compressor, you can return the air if you end up on pavement (I'm not sure how south you actually are). Also, tires without "cords" are the ones that make that "wah-wah" sound on pavement. Every wonder why kids had these big monsters on their trucks? Now you know. Good luck getting your Mitsi back on the road, and thanks for the good articles.

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    1. That's indeed a good tip. Probably the biggest headache for us is the fact that the Montero is an auto-transmission. I've finally gotten my wife to come around to my point of view, however, so after the latest repair, it's going up for sale and she's driving a stick whether she likes it or not. :) I'm thinkin' Land Rover. Still a lot of those down here and lots of parts.

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  9. I had no Idea it would cost that much to own and drive a care in Costa Rica. It sounds like maintenance would need to be done often as well. I hope that they have good mechanics there.
    http://www.59autorepair.com

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Thanks so much for your comment! - Casey

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