Buying a Car in Mexico With Cash or Credit

Buying a car in Mexico is nothing like the United States. In the States, the process takes an afternoon. In Mexico, it can take weeks. We’ve bought two cars in the last four years, one brand new and the other used. Here are our experiences buying a car in Mexico with cash and on credit.

This post was updated when we bought our second car. To tell you the truth, not much has changed since we bought that first car. At the time, we thought it was the most frustrating situation in our move to Mexico. Several other situations have held that top “frustrating” spot over the years, but it still ranks in the top 5.

Disclosure: Some links may be affiliate links where we receive a super-small commission at no additional cost to you if you click through and make a purchase. We call this our Chocolate & Churro Fund.

 

Buying a Car in the United States vs. Mexico

When you buy a car in the States, it’s fairly simple. You’re bombarded by advertisements on TV, you use the internet to learn more about a car and who has the one you want, then you muster up the willpower to go in and deal with car salesmen (who pounce on you like vultures), and three hours later of negotiating some perks and paperwork, you drive off the lot in your new (or newer) car that day. The adrenaline is still pumping through your veins and that “new car euphoria” carries you through to the first payment.

Buying a car in Mexico is different. Way different. It takes a few visits and each time we bought a car, it was almost a month-long learning experience.

Interesting Facts When Buying a Car in Mexico

1. You can’t pay cash for a car.

You cannot walk in with a wad of cash to pay for a car. It must be transferred to the dealership’s bank account. You can do this from your Mexican bank, or transfer money into their account from your USA or Canadian bank with a money transfer service like Wise.com.

2. Buying a car with credit.

When you buy a car on credit, the bank or credit lender needs to know the exact model of the car you want to buy and how much it costs. You don’t just “get approved” for a certain amount. You might get approved for credit to buy that particular car, then go back to the dealership and find out it’s been sold. Now you need to start the process all over again with a different car. Also, your credit history from your home country doesn’t count.

 3. You must have an RFC to buy a car.

You must have an RFC (tax ID number) to buy a car. You can only get an RFC if you have temporary or permanent residency.

 4. The price is the price.

The price you see is the price you pay. Taxes are included. There are no surprise “add-ons”.

 5. Car insurance.

Car insurance can be included in the monthly payments through the car dealer or bank lender.

 6. Used Car or New Car?

Used cars are not losing their value as fast as US cars. You will pay a ridiculously high amount for a used car. But you may have to wait 1-3 months for a new car. Talk to the dealer and see what you can get in the shortest time.

Searching for A Honda CRV in Mexico

Back in 2018, we thought we were doing things the right way. First, we opened a bank account so that we could transfer money down to get a car. The next day, we went to the Honda Dealership to see what was available.

Dealerships overseas are much smaller than in the States. Usually, they just have the new models on display, and their inventory is stored somewhere else. Both of us had Hondas before, so it was a car we trusted. We also researched what cars were made in Mexico. If the car ever needed parts, it would be easy to get them here instead of having parts shipped from another country. (This was another learning experience after we got into an accident.)

We met with a car salesman who could speak English. Our hearts were set on a Honda CRV that was six years old or newer. He checked his database and didn’t have anything available in our price range ($12-14,000 USD). After checking all the associated dealerships around the country and still not finding one, he told us people in Mexico hold on to their CRVs for years. It is very difficult to find one 5 years old or under. He recommended checking back in 10 days to see if anyone traded one in.

Waiting another 10 days for the possibility that there would be a CRV available was a big risk to take. We decided to look at the smaller cars and buy a new Honda City (smaller than the Accord). We chose the model and the color from the booklet. At least we knew that we wouldn’t have any unscheduled maintenance to deal with for a year or two while we learned the ropes.

Now the fun part begins.

Buying a Car in Mexico By Bank Transfer

The Honda dealership does not accept money on the spot. It needed to be transferred from our bank account to Honda’s bank account.
We transferred money from the U.S. last week to buy furniture. It did not go through. This is when we discovered it takes 4 business days (more or less) for the bank account to be “maintenance-free” or accessible.

Two days later, the transfer went through after 4:40 pm on a Friday. I transferred the car money down right away, but because it was after 1 pm, Honda would not receive the money until Monday.

Saturday, the salesman wanted us to come down to fill out the paperwork, you know, to “speed up the process”. During the conversation, he kept pushing the delivery date of the car from Monday to Tuesday then Wednesday. We sternly made it clear that we needed the car by Tuesday, no later. We had plans to go to San Miguel de Allende, and we really didn’t want to Uber it.

Tuesday at 6 pm we arrived at Honda. The salesman delayed us with more paperwork and shuffling. Lots of shuffling. When he handed us the keys, there was one fab and one ordinary key. This pissed me off because we both wanted our own fab and key. Now we would have to order another fab. Finally, the salesman showed us the car. We left the Honda dealership after dark and had to drive home in the crazy after-work traffic. Mexicans are really bad drivers. It was totally nerve-racking.

The worst part: Getting the License Plates

In the state of Queretaro, you must “prove” you live there. If we were Mexican, we would just need an I.D. and a utility bill with our address on it. But we are Americans, so there are more hoops to jump through to not pay a 7000 peso tax ($370 USD) because we “don’t live here” in their eyes. Tom has labeled this the Gringo Tax.

We paid the salesman 1600 pesos (roughly $86 US) to go to the tag office for us. He said there is a lot of waiting around, and it’s just easier if he sends his guy there to do it for us. He printed out a full letter to post in our rear window that says “We are working on getting the tags”.

Here is how the week(s) progressed:

Day 1 – (Tuesday) drove the car home

Day 4- (Friday) The salesman could not get the tags. We need to go back to Honda to drop off Tom’s FM2 visa card (which we just got that day) and passport to the salesman. From the car, I emailed the property tax from our landlord. The salesman said he could not use it because it was not the original. Our landlord was not going to drive up from Mexico City 2-3 hours away to give us a piece of paper.

Day 7- (Monday) Tag office was too busy that day. Couldn’t get tags.

Day 8- (Tuesday) Tag office ran out of plates. They won’t have more in until Thursday.

Day 10- (Thursday) Salesman was turned away.
• Our water bill was not proof because our area gets private water, not from the government.
• Our electric bill isn’t proof because it doesn’t have our name on it. It has our landlord’s name on it.
• Our lease isn’t proof because it does not come from a government office.
• They had no idea what an FM2 visa (temporary visa) was.

Day 11- We got a letter from our banker stating we lived at the address provided. He knew this for a fact since he drove us home to verify it. The tag office still refused to give us the tags.

 

We were livid at this point…

Tom spoke to the salesman on the phone for well over 20 minutes expressing the fact that we had done everything he had asked us to do. The salesman also expressed how time-consuming it was for him to constantly go down to the tag office and be refused. That’s not our fault. Our last option was to pay the 7000 pesos.

Day 13- The salesman called bright and early this morning. He gave us back some of the papers he needed on Day 11, so we had to make another run down to Honda. Later he called saying the tag office still wouldn’t give him the license plates even with the extra 7000 pesos. We were over it.

We told the salesman our banker had another option for us. His brother down in Mexico City could get us plates. Miraculously, the next day, the salesman had the license plates! How? The salesman knew the sister of the tag office manager. That’s how he finally got the tags. Funny how he didn’t mention this contact before…

So we headed down to Honda once again to get the physical tags for our car. It only took us a week to buy the car, and another two weeks to get the tags.

When we walked in, we saw the salesman showing an American couple around, Donna and Lyn. They came in, expecting to buy a car that day. Just like us, they were in for a rude awakening.

Why We Needed to Buy A Second Car

Fast forward to 2022, our second accident:

On Friday, December 24, 2021, Tom was out on a tour and drove over what he thought was paper in the road. Once it went under the car, it turned out to be a rock that tore apart the underside of our car. Oil was leaking everywhere, and the car was undrivable. After waiting for over 8 hours in the parking lot of a closed winery, the tow truck (from the insurance agency) finally showed up and drove him and the car back home. Obviously, since it was a holiday, nothing would be open until the following Monday.

The next month and a half were highly stressful for us. I was on the phone every day with the insurance company ( I know all 3 people who speak English in the call center), and Tom was busy texting back and forth with the Honda serviceperson about getting the parts we needed to fix the car.

Remember how I said we wanted to buy a car that was made here in Mexico?

Most of the parts of the Honda City are made in Mexico, but not the drive train and some other really important thing under the car that was severely damaged by the exploding rock. The parts are going to have to come from China and they are on back order for 130 days. Luckily the car insurance company is paying for the majority of the repairs except for the deductible (which was just over $400 USD).

With tours coming up, our only choice was to buy a used a car.

 

Your previous bank history in the States means nothing. You have to have a credit history in Mexico.

Buying a Car With Credit in Mexico

Since we just started our tour business Heart of Mexico Wine Tours, we did not have $10,000 USD just lying around to buy a  used car with cash. We just received our permanent residency visas so now we could apply for credit. But since we were “new” to the Mexican credit system, all we could get was a 10,000 peso limit ($500 USD) on our bank credit card. In six months, if we were good on our payments, they would raise the limit. We felt like we were teenagers again, but not in a good way.

So we checked out a few car places, found a nice one-year-old 2021 Nissan Kicks at the Nissan dealership that was technically a “new” car because it was never owned by anybody. The car salesman plugged in all the numbers, and our interest rate would be 17.99%. That seemed really high, so we took the information back to our bank, the one we have been with for four years. After 3 days of waiting, they refused to lend us the money. Why? Because we don’t have any credit history. Your previous bank history in the States means nothing. You have to have a credit history in Mexico.

Information on Interest Rates in Mexico

Lending money in Mexico is a relatively new thing. Most people pay cash when they buy a car, build a house, etc. This is why you see so many houses half built. People run out of money, and take a few months to a year to gather enough to continue building.

Mortgages are usually between 8-12% interest. I don’t know for how many months, this is just what I heard from some of our neighbors.

When you buy a new or used car in Mexico with credit, the interest rate can be between 9.9-17.99%.

Obviously it’s on the low end if you have years and years of credit history in Mexico. The payment time is still between 12-48 months.

Back at the Nissan dealer, the Kicks was already sold, so we had to pick out another used car. The car salesman contacted their bank affiliate to see what amount we could be approved for. He was able to get them to stretch it to 100,000 pesos ($5000 USD), and we had to come up with the other $8000 USD. After three days of paperwork (one for the dealer, another for the bank, then another for the dealer again), we paid 269,000 pesos ($13,000 USD roughly) for a 2018 Nissan Versa and car insurance for a year. A new Nissan Versa is just over $15,000 USD.

 

Getting Tags for Our Car… Again

The tag process was again very frustrating. They needed my newly minted permanent visa and 3000 pesos to get the license plates for the car. It was supposed to take 2 days, it took 2 weeks. The excuses we got were “they didn’t believe we lived here permanently, we didn’t have the right utility bills to prove we lived here, they were out of plates that day”.

Four years later and the process and headaches haven’t changed.

Which Is Easier, Buying a Car with Cash or Buying a Car with Credit?

Buying a car in Mexico with cash is the easiest way to get a car.

You will still have to wait a few days to a few weeks, but if you are a temporary resident and don’t have a credit history in Mexico, it will make it extremely hard if not impossible to get buy a car on credit. This pertains to either a new car or a used car. We are permanent residents and could barely qualify for $5000 USD.

Final Thoughts:

When you get a car in Mexico, you will never have that “new car euphoria” you had in the States. The waiting game takes all the fun and excitement out of it. Days of paperwork, days of waiting for the car (though you can see it right THERE in the parking lot), and weeks of waiting to get the tags hoping not to get pulled over really dampen the mood. It’s great to be mobile again, but it’s no longer a chariot, just a tool.

 

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