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Shipping Cars to Puerto Rico

tidestertidester Posts: 10,110
How do you deal with Puerto Rico's excise tax when importing cars? Let's discuss it here!

tidester, host
SUVs and Smart Shopper

Comments

  • joel0622joel0622 Posts: 3,302
    Come on folks, the anticipation is killing me. :D
  • fezofezo Posts: 9,342
    You want anticipation? Go try the 2008 Taurus buyers in Sedans. They started it in early August and still don't have an actual buyer!

    Hope that doesn't reflect on how you are moving them.
  • I'm retiring to Ponce, Puerto Rico from NYC soon and have been trying to get quotes on a 2008 Chrysler Town & Country LX-H minivan (MSRP $26,190.) PR car dealers tell me they must first receive 2008 T&C inventory so the excise tax can be determined.

    I called the PR tax department at 787-774-1474 and 787-774-1463 and they said they hadn't calculated it yet for the 2008 T&C. (Note: if you don't speak Spanish they put you on hold a long time to find a translator.) So I asked for the tax on the 2007 T&C LX instead and they told me $8,300. Wow, what a tax bite! That's 31.65% compared to 7.35% sales tax in NYC.

    I could buy a new 2008 T&C LX-H in NYC for $25,000 cash then ship it to PR. I was quoted a 10% fee ($2500) by Flor de Mayo Express in the Bronx, 718-585-7220, to ship and insure the new T&C, but only as far as San Juan PR customs. There I would have to pay an excise tax in cash or certified check, plus $400 more for license plates and required basic no-fault collision insurance.That totals $37,380 for a new minivan that would cost me $10K less if I stayed in NYC.

    I asked the PR car dealers about this option and they said they were not obliged to service nor warrant imported cars they didn't sell, and estimated their price on the car to be about $33K if I patiently waited till October when they start receiving inventory. Furthermore, they didn't give cash discounts off MSRP on new cars. The prevailing financing interest rate in PR is now 7.5% APR. And a PR bank officer confided to me that PR banks pay kickbacks to local car dealers, so the dealers have no incentive to give cash discounts.

    I kept looking for more options and found a website: www.clasificadosonline.com, which is a comprehensive search engine for new and used cars in PR. Another useful site is www.elnuevodia.com which has classified auto ads from private sellers and dealers in the Ponce region.

    I prefer to buy new since I intend to keep this T&C minivan under the lifetime power train warranty available. Online, I did find a liquidation sale on new? 2006 Kia Sedonas LX for $23,800 and 2007 Sedonas EX for $27,000 total out the door. I've test driven all these models in NYC and find them all acceptable. The Sedona is much cheaper and available now, and it does have a 10-year/100K mile power train warranty, if not lifetime.

    So I may settle for a Kia Sedona LX when I arrive in PR. But does anyone have any suggestions how I might wind up with the 2008 T&C LX-H I really want at the best price and fastest delivery possible? :confuse:
  • I just got an updated sales call from one of the five Kia dealers in PR competing for my business and he will sell me a new 2007 Kia Sedona LX for $24,000 -- that is $3K less than his competitor's best offer. Apparently new car sales in PR are at an all time low and this is great for those buying now, whatever the model may be. Make these guys undercut each other to the bone because this 30% excise tax and financing loan kickback scam are outrageous. Now if I can only get the PR Chrysler dealers into the mix. I'm sure they will jump in when they have to make way for new 2008 inventory. but I just don't like the 2007 T&Cs egg-shape styling.
  • It costs just under a grand to ship a car from Jacksonville to San Juan last I checked.

    http://www.trailerbridge.com/default.asp

    Use them, I have many many times... as far as bank commissions, all banks do this anywhere in the country. FWIW, dealers generally buy and can sell money a lot cheaper than you can. The typical dealer sends a bank more auto finance business in a day than you will in your lifetime.

    Dealers either get a flat fee of $200-400 per contract if they sell the money at cost, which is usually 2-3% under what the same bank will charge a retail customer who walks into a branch, or they get a percentage of the rate markup, generally not to exceed 3% over the buy rate.
  • I assume you're talking about shipping a new car, as I am. Can you please share what percentage of MSRP you had to pay as excise tax? Was it in the 30% range or what? I got my info about 2007 and 2008 new car excise tax rates directly from the PR taxation department today. Also, did you encounter any problems with local dealers honoring your new car warranty since you purchased it in Florida? This info may be helpful in my negotiations with the PR car dealers. If you shipped a used car, it would be useful to know the particulars of that too if you want to tell us.
  • I'm a dealer, we used to send a lot of used cars there.

    Since you mentioned that you are in NY, ask what happens if you relocate to PR.. are you still charged the taxes? Might make sense to buy it here, keep it here for 6 months or so with NY plates and then ship it to PR.

    Your warranty should apply in Puerto Rico, it's part of the USA. As far as excise tax goes.. eh, it's not as bad as paying income taxes!
  • I did ask those questions. If I bought and registered a new car in NYS, I would have to pay the 7.35% sales tax plus $250 for registration and license plates, plus NYS comprehensive insurance costing at least $500 for six months through Geico.

    According to the phone conversation I had with the PR tax department in my broken Spanish, current law does not provide any particular time span for which I could wait to avoid the full PR excise tax on the original MSRP, not even based on the lower cash price I paid. If and when I shipped the now used car to PR, I would have paid taxes twice, NYS and PR taxes, for a combined total of nearly 40%. No way, even if I drove the car down to Jacksonville to save on the shipping costs.

    Now you admit you are a dealer, so you qualify to ship cars to another dealer in PR and get special resale tax exemption because it is your business to sell and ship cars. But for the average consumer like me, we pay the full tariff.

    And although technically a USA new car warranty is valid in Puerto Rico, as a dealer you know that local dealers take better care of their loyal customers than out of state strangers. It can be the difference between getting a loaner and speedy warranty work approval, rather than waiting a week for a mere service appointment and then more weeks with an expensive run-around to teach you a lesson for trying to beat them out of a new car sale and their bank loan bonus. If the dealer isn't making money off you, he's going to gouge you when he can, or discourage you from bothering him for free warranty service on his dime.

    But you did confirm this loan collusion between bankers and car dealers I was previously naive of. I am trying to use my own bank loan ploy. Instead of applying for a 7.5% PR bank auto loan, I will instead apply for a 5.5% secured home improvement loan and I will use that money to purchase the car for cash. Even though PR dealers say they don't give cash discounts, I've already knocked off $6000 on 2007 Kia Sedona pricing just playing them off against each other by long distance phone, and I haven't even shown up yet in person to really turn the screws with cash on the table.

    By using a home improvement loan, I save two points on the interest and I can also deduct all that yearly interest on my tax return, so I get a double saving. Of course, I will need two checking accounts at totally separate banks because if one bank notices I borrowed $24K for a home improvement loan then promptly wrote a $24K check for a new car, they would catch me cold. I haven't actually arrived in PR to pull it off yet, but it's a plan.

    I can't hold out too long because PR dealers only have a few 2007 Kia silver color Sedona LX I would consider and it's first come, first served. So I placed a refundable $500 deposit by phone on my credit card to hold a new minivan I want until I can arrive in PR in two more weeks to test drive it, or the vehicle could be gone by then. If I change my mind about the Sedona, or the Chrysler dealer gives me competitive pricing on the 2008 T&C LX I really want, I can get my Sedona refund back, much more easily from a credit card than a cashed check.

    I've always had to file a claim with the local consumer affairs agency that licenses auto dealers to get a cashed refund back because the dealers will stall till hell freezes over or you give up in frustration. So a credit card deposit is the only way to go to maintain control.

    Oddly, only the PR Kia salespeople are willing to slash prices by thousands. Odyssey, Toyota and Chrysler dealers vainly try to hold the line on pricing, over the phone anyway. They are backed up to the gills with stock and still quote over $30K for cars with invoices under $24K. Of course, they all claim Kia is an inferior minivan, but many reviews and my own test drive in NYC found it comparable with the others at a better price.

    Now, longterm Kia warranty service may turn out to be a problem in PR, as it is in the US. But I won't know until I actually need it. Until then, I'll save as much upfront money as I can and try to establish a good longterm relationship with my local dealer.

    Finally, to be complete, I should address the issue of gap auto insurance in PR, as I undersand it from afar, not having bought it yet. When you pay about $400 in PR for your registration and license, the fee also includes a year's worth of minimum basic no fault collision and bodily injury insurance that is woefully inadequate if you suffer or cause major damage and injuries, or have a total loss from robbery. You can buy private gap insurance at the going rates from the usual major insurance carriers, for whatever coverage and deductions you require.

    My relatives in PR scoff at this. They claim hardly anyone there buys insurance, not even home insurance, which boggles the typical American litigation mindset. It is Puerto Rico and apparently too hot to argue or worry. I think it's because it is an expense they really can't afford with the low salaries and high cost of Americanized living down there. There are as many shopping malls as palm trees now.

    I'm definitely going to get me some gap insurance for both my new home and car, cause I'll sue the hell out of anyone who messes with a Nuyorican like me. :shades:
  • Well to tie up this saga, I did wind up buying the 2006 Kia Grand Sedona LX, with full new car warranty, in color silver, by phone, from AutoSuperstore in Ponce PR for $24K plus $250 for license plate, reg and minimum insurance. I qualified for a US bank 5% car loan for 60 months with $20K comprehensive gap insurance that will run me just under $500 per month. So apparently, you can overcome the PR auto excise tax bite if you catch the right liquidation sale on the right overstocked car. By all rights, if I had bought that same car in 2006, the MSRP was $23K. The excise tax would have been over 30%, so my retail price would have been about $30,000. Buying now saved me $6,000. I could have pushed my luck and tried to hold out longer, but there were only a few silver new 2006 Kia minivans left on the entire island and I didn't want to lose out to another buyer. I did have a local mechanic acquaintance check out the minivan before I closed the deal because 2006 Sedonas do have two recalls for brakes, hydraulics and electrical wiring problems. The mechanic cleared it and the Sedona awaits my arrival and usage. That's all folks! :)
  • OK.. it's not collusion on the financing, it's business. Do you think that Best Buy makes nothing off of their Best Buy cards?

    5% is a killer rate, I assume that's a home equity loan, correct? If so, it's the cheapest way to finance because the interest is tax-deductible.

    Generally any business that sells a product or service is going to make money on it, economics 101. I recall one customer that we had who showed up with their own financing "because we would just mark up the rate". It was through her local bank, First Union at 7.75%. I asked her if I could get her financing through First Union for 6.95% would she be interested? She couldn't believe that we could do it, I explained that we bought money from FU for about 6% and sold it for about 7%, and that their normal retail rate for their customers was 7.75 and people off the street it was 8-8.25%. I explained that we do mark up the rate, but was she better off paying us 7% and us making a comission, or was she better off dealing with First Union directly and paying more for the money?

    We ended up using Chase with her because I got the rate down another half a point. Here's another example, Volvo Finance, at the end of the 1998 model year, offered unadvertised 0% finance for 36 months on S70 and V70 cars. The requirement was 40% of the MSRP as a down payment and Tier 1, 2 or 3 credit... even if you had a 660 becaon score, you qualified! We got a $200-300 flat fee per contract from Volvo Finance like every deal we did with them at the buy rate. We converted virtually every single cash customer into this program, and why wouldn't we? We made money and the customer got to borrow about $15-20,000 for free for 3 years. I told every cash customer that was planning on paying cash to take the money, throw it in a CD for 3 years and even at 5% on $15,000 they would make $2,250.

    If I can sell you money cheaper than your own bank will and make money on it, how is that collusion or a kickback? It's neither. Collusion is when competitors fix prices, such as all Chevrolet dealers agreeing to sell cars for no less than $X, and it does happen but it's rare. A kickback is a bribe, a payment for doing something illegal or unethical.
  • Point taken. As they say in the Godfather, it's not personal, it's business. I admitted I was naive to think banks didn't give kickbacks to car dealers. As for the 5% car loan, it actually is a car loan. But the low rate is offered by a credit union I belong to and requires a CD or other account to secure the loan as collateral. So I'm earning 6% on a 5-year CD, while paying 5% on a five year car loan. That's the kind of business I like. Thanks for your input.
  • After going through all those commotions to deal with the 30% Puerto Rico excise tax on new cars, by mere chance I came across an internet ad on clasificadosonline.com over the weekend for a new silver 2007 Caravan SXT (not Grand Caravan) with 3.3 liter 170 HP engine and cruise control (no Stow N Go) and full lifetime powertrain warranty, for nearly $2K below invoice. I bought it cash for $20K and totally avoided the new car excise tax.

    I don't know how because I called the PR tax department again to be sure and they told me the excise tax on that new car should be $6,200, But apparently when a dealer needs to make room for new inventory, they do whatever it takes to clear the lot and sidestep the tax, so I'm not looking this gift horse in the mouth.

    I did have a mechanic check it out to make sure it's not a lemon, and he says it's an incredible bargain. He wants one to resell at a profit. So go figure, sometimes you just fall into dumb luck. ;)
  • joel0622joel0622 Posts: 3,302
    So now you have two cars in PR?
  • fezofezo Posts: 9,342
    Yes. He's becoming a dealer by default....
  • Technically, I did buy two cars, a 2006 new? Kia Sedona LX for $24K on a car loan and a 2007 definitely new Caravan SXT for $20K cash. But I cancelled the Kia Sedona by falsely telling the Kia dealer my bank loan fell through. I had yet to take actual delivery of the Sedona although a mechanic did check it out for me at the dealership. So we had a verbal contract pending receipt of the loan paperwork, which I secretly cancelled with the bank when I saw the opportunity to get the Caravan online for $4K less. I jumped on it and held it with a credit card deposit.

    It wasn't ethical. The Kia dealer cursed me out, but I didn't feel bad because he had previously pulled a switch on me. He told me he would sell me a 2007 new Kia Sedona LX at $24K, and when I agreed, he "corrected" himself to say he only had a new 2006 Sedona LX. So you live by the lie, you die by the lie.

    I still don't understand why the Caravan dealer didn't charge the $6,200 excise tax on the new car, but that's the dealer's problem, not mine. It definitely came with the lifetime powertrain warranty in writing on the bill of sale.

    For an extra $300, the Caravan dealer even drove the new car, with new plates and registration in my name, over 100 miles from Bayamon to Ponce to have my mechanic check it out because it seemed too good a deal to be true. But it was. The odometer read 108 miles, so it is a new car and got a nice break in drive.

    My relative took the dealer to the local Banco Popular where I had wired enough funds for a cash deal. The Caravan is now in my new Puerto Rican home garage until I arrive next week. I also arranged online for full insurance coverage at a quarterly premium of $250 through Geico PR in case my new car gets stolen or damaged before I get down there.

    I have test driven the 2007 Caravans and TCs in NYC, so I know what I bought. If I do want to add adjustable pedals or other minor options, the Ponce Dodge dealer told me I could do it anytime and he had no qualms about honoring my warranty even though I bought from another dealer because I did give him the chance to match the $20K price and he simply could not. He actually told me I would be a fool to pass it up, but to make sure it wasn't a problem car, which my mechanic did certify to me in writing via email.

    As I wrote in my original post, I had wanted to wait for the 2008 TC LX or GC SXT, but the PR dealers were telling me the price was definitely going to be over $30K with the excise tax and they wouldn't even get inventory until next month, October, which in Puerto Rican time means "whenever." The classified ads there show dozens of 2006 models still being sold as new, so don't hold your breath waiting for 2008 models.

    I do prefer the squared front styling of the 2008 models than the 2007 egg-shape. I also gave up Stow N Go, but the Caravan SXT seats do pull out completely when I really need all that cargo space on rare occassion. So I decided to save over $10K and have a new car awaitng me while there was still 2007 new inventory on sale in the colors I wanted.

    End of story. :)
  • One last note, I received an email copy of my new car auto insurance policy which I thought was to be underwritten by Geico PR. The policy is actually under CAICO, which sounds like GEICO. I don't know if this is a subsidiary of Geico in PR or what, but my PR relatives assure me it is a reliable insurer because they use it too. I just wanted to advise readers of this detail. In fact I used an online insurance broker and not the Geico website itself, so when we spoke by phone to conclude the deal, when he said Caico, I heard Geico. I'm sure this is no coincidence to take advantage of the similar names, but that's business. Buyer beware. :surprise:
  • A friend suggested I offer a basic Spanish translation for asking about the new car excise tax if you call the Puerto Tax Dept. at 787-774-1474 and 787-774-1463

    The tax itself is called el arbitrio "arh-bee-tree-oh."

    Therefore, to ask the tax on a new 2007 (dos mil siete) or 2008 (dos mil ocho) model you could say.

    "Buenos dias. Cuanto es el arbitrio del dos mil siete auto del modelo Dodge Caravan
    Ese Eckees Teh (SXT) , por favor?"

    Don't forget "Gracias" after you get an answer.

    It's very important to be extra polite in the Spanish language, especially if you are butchering the pronunciation.

    After receiving my new 2007 Caravan SXT, I asked the dealer how he and I avoided paying the arbitrio, which I was told would be over $6K. He told me that as soon as he received new stock of 2008 Caravans, the 2007 technically became last year's model and exempt, at his option, from the excise tax, although it could still be "liquidated" as new with the full factory warranty.

    So if you can wait till the usual Sept/Oct model turnover, that could be your best chance to avoid the new car excise tax.

    The dealer also said shipping a used car to PR should not have to pay the new car excise tax, but may still have to pay a host of shipping, insurance and customs luxury taxes that can vary greatly from model to model. :)
  • Hello~

    Does anyone know how to calculate the approx. vehicle tax for an auto brought into PR? The car is a 2002 Corvette. Are there any military exemptions to the tax?

    Thanks all!
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