Paying for a Vehicle if You Don’t Have a Costa Rican Bank Account

Sexy, eh? Could be trouble though ...

Jeep Wrangler Close-up

Many of our clients for the car buying assistance service are in the process of relocating and have not yet established a bank account.  But they would prefer not to wait to buy their vehicle until they get an account.  There are a number of ways to arrange for payment of the auto, but the best one for you may depend on your budget (the amount to be transferred to Costa Rica), and also where (or who) you intend to buy the car from.  For example, currently a wire transfer to the dealer’s account is the best option in most cases.  But if you are buying from a private party or a dealer you’ve just met, then it wouldn’t be wise to wire the money into their account and expect to pick up the car a few days later.  They will probably be in Rio spending your money on wine and loose women!

Traveler’s Checks – Good for amounts around $3000 or so

This form of payment is not as common as it used to be.  In Costa Rica most businesses now accept cards for payment, so visitors don’t need to bring as much cash anymore.  Not to mention that ATMs are much more plentiful.  However bringing traveler’s checks is a possible option.  The trouble now is that banks are less and less likely to cash them, particularly for amounts over $500.  If you do decide to bring the traveler’s checks as a part of your overall strategy, then probably not more than $3000 would be workable   You pay 1% or so at your bank in the US and pay another 1% at the bank here. There can be a surcharge when taking the money away in $, often 1 colon per dollar. Be careful when cashing checks, you must specify to the cashier that you are getting cash, which is then to be deposited into the dealer’s account. Otherwise the teller may flag it as a direct deposit, which will freeze the funds for 12 to 45 business days and which obviously would delay the transfer of ownership!

Wire transfer

Wiring money costs $35 service fee in the U.S., and the banks here charge $7 to $25 to the account receiving the money, some dealers charge you that fee as well. This is much better for large amounts, like over 10 or 15 thousand dollars. You have to check with your bank before you leave to see what their procedure is, many require a PIN number to be set up personally that you can then use to authorize transfers on the Internet or by telephone. Very few dealers, but some, have US bank accounts that could also be used.

You also want to know what information they require regarding the person receiving the money according to the location of the receiving account.  The banks here in Costa Rica have intermediary accounts, so transfers may be made to any account at any local bank.  They may also be into an account that is not US dollars. (see the section on Exchange Rate)

Purchase with Credit Card

Dealers are not able to accept credit cards, because merchant accounts here have 7% fee ! Neither the dealer or most clients are willing to take that kind of a hit. See the debit card section for more specifics.

Debit Card & Cash Advances on Credit Card – good for small amounts

A debit card used to be a very good option that a number of clients used successfully.  For small amounts, under $2000 it works pretty well.  However because of new restrictions intended to counter-act money laundering activities, banks will not perform the service for large amounts unless you also have an account there. You can go to the bank and deposit into any account using a debit card and there is only a small fee. You have the option of taking cash from the bank, or also purchasing a bank manager’s / cashier’s check. A cash advance on the credit card is also feasible, you may fund your credit card by paying in advance and circumvent cash advance limits in some cases.

If it is in the Cirrus or Plus network, that is ideal, bank cards that are not in these networks will normally have problems for this purpose, even though they do work at many ATMs here. At a minimum using a VISA or MASTERCARD is necessary.  The fees vary, your “home” bank will charge a fee, as will the local bank.  Here the charge will be from $1 to $15.

If you think you would use this option, it is imperative that you discuss your intentions with someone knowledgeable at your bank. You ideally would be able to get a direct number to the international or credit / debit card department that you could call in case of problems with the “advance”. You will need to temporarily increase your advance limits on the debit card, normally this only works for a few hours or days, so having a ready way to call your bank and talk directly to the right person is important. It is much better to have the procedure unique to your bank worked out in advance, since it is less than ideal to try to sort through this after a long day of car shopping.

Exchange Rate

The prices of the vehicles are generally stated in colones.  So be aware that the fluctuating exchange rate may come into play. For example, you were quoted a price in colones of 7.5 million and converted that to $15,000 at 500 colones to the dollar for reference. The following day you initiate a wire transfer, which gets into the dealer’s account 2 business days later.  In the meantime, the dollar has dropped 3 “points” to 497.  So the $15,000 you transferred is now worth only 7455000 colones. You will have to make up the difference of 45,000 colones in this case.

Escrow Account

The escrow account is a good option. Some of our clients that have purchased real estate have already established an escrow account with a local attorney.  We can also recommend a reputable San Jose based escrow company that our clients have been using successfully since 2016, the fees start at $250 and vary according to the total amount of the escrow account.

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2 thoughts on “Paying for a Vehicle if You Don’t Have a Costa Rican Bank Account
  1. cyarbrough says:

    Can’t one simply pay cash?

    • Russ Martin says:

      Cash is acceptable, depending on the amount of the purchase many people don’t feel comfortable carrying high amounts of cash around.

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