Bank loans in Ecuador

Sorry, this is not a reply, but a question.

My husband and I want to get a car in Ecuador.  We don't have the cash to pay for it right now. 
Can we get a bank loan in Ecu? How are the interest rates?  It would be paid off in a year or two at the most.

Any information would be helpful!

Thanks,
Robin and Joel

The benchmark interest rate is 7.6% according to tradingeconomics.

I can't speak to the experience of buying a car in Ecuador, but I can say that major car dealers (Toyota, Kia, chevy,etc} advertise financing.

The benchmark interest rate as of August 2018 is 7.6% according to tradingeconomics.com

I can't speak to the experience of buying a car in Ecuador, but I can say that major car dealers (Toyota, Kia, chevy,etc} advertise financing.

Interest rates (tasa de interes) for cars is way more than that and as high as 17.3%. In Ecuador, it’s categorized under consumo ordinario, and the average rate for this category is around 16.50% for September 2018. I/m in the market for an SUV/Truck and these rates reflect the reality.

I7%
I just choked on my tea.
I wonder if getting an unsecured personal loan before leaving the USA would be possible?

An additional reason for me to take the bus and Uber

The thing is the crazy high interest rates are actually justified. It’s not like dealers are trying to rip-off people. I came to this realization after talking with a few of them because they also have to pay high interest rates on their inventory. Looking at an intrest rate table for commercial interest rates confirms this.

Now, as for Uber, taxis and buses - for a couple, it eventually gets old. This is such a gorgeous country and the best way to enjoy it IMO as a couple is with a car, and preferably an SUV. 

In Quito, going down to the valley for a Sunday drive for brunch or a café is beautifully scenic.  So, IMO the benefits are significant for couples.

But the rates are what they are and buying a car is expensive in Ecuador. First, we have to deal with car prices being as much as 50% more expensive than our neighbor Colombia, case in point is Chevrolet Cruze which starts at $22,900 there and starts at $33,900 here then we have these exorbitantly high rates.

So when someone makes a claim that cost of living is cheap. That claim is rather ignorant because it’s not reflective of cost of living in Ecuador. It reflects their lifestyle.

For a person to be objective they have to view prices for everything, and not just bananas, tomatoes and returnable Pilsenser beer bottles.

In doing so, the true cost of living is known. Cars are not cheap, apartments in Centro North Quito and elsewhere are not cheap, and quality schooling is certainly not cheap.

Quality clothing, footwear, grooming products, computers, cell phones, and stuff for hobbies are also not cheap at all. Imported beer, many kinds of food items, mid-range and high-end restaurants are not cheap especially when comparing to neighboring countries.

Interest rates are merely just one more thing that is not cheap.

lebowski888 wrote:

I can't speak to the experience of buying a car in Ecuador, but I can say that major car dealers (Toyota, Kia, chevy,etc} advertise financing.

I paid cash in Quito (via overseas bank wire) for my 2016 Chevy Sail, so I didn't do intensive research on car loans.

I would be surprised if an Expat could get a car loan secured only by the vehicle, regardless of what the billboards are supposedly offering.  If the car was theoretically totaled, the lender would be SOL (out of luck).

A related (though probably moot) issue is that new arrivals usually have no credit history in Ecuador.

cccmedia

I don't doubt the high interest rates. Especially when Ecuador's government has had two sovereign debt crises in the last 20 years. It's only a small part of the interest rate story, but the whole nation suffers as a result. No easy credit.

Colombia has a benchmark 4.25, and Peru has a benchmark 2.5.

When the time comes for me to get a car, I'll do what I've always done: buy a quality car model as recommended by consumer reports, buy low mileage used and pay cash. 

But I am still bummed I can't import my Lexus to Ecuador. I do love it. Though that car would probably make me a constant target for kidnapping.

lebowski888 wrote:

When the time comes for me to get a car, I'll do what I've always done: buy a quality car model as recommended by consumer reports, buy low mileage used and pay cash. 

But I am still bummed I can't import my Lexus to Ecuador. I do love it. Though that car would probably make me a constant target for kidnapping.

There isn't an entity like carfax that compiles service records.

I'd never get a used car in Ecuador for this reason and also because cars only depreciate about 7% a year at most. This includes the first year.

Used cars are expensive here, and considering the bad condition of many roads, and the flooding?

Hey, I don't know how they were driven or how many real miles. 

Thank you, but no thank you to used cars.

vsimple. wrote:

There isn't an entity like carfax that compiles service records.


Used cars are expensive here, and considering the bad condition of many roads, and the flooding?

Hey, I don't know how they were driven or how many real miles. 

Thank you, but no thank you to used cars.

Excellent points that are peculiar to Ecuador. I hadn't considered that.  The  system for VIN checking, accurate titles, etc. is non-existent. I'll keep that in mind when I need to look for one. Maybe the laws will change by then, anyhow

Some cars get messed up by the salty air near the coast.  That's another wrinkle in the case against buying used.  Regardless of where the previous owner(s) supposedly lived, there may be no way to know for sure where the car was driven.

cccmedia

lebowski888 wrote:

vsimple. wrote:

There isn't an entity like carfax that compiles service records.


Used cars are expensive here, and considering the bad condition of many roads, and the flooding?

Hey, I don't know how they were driven or how many real miles. 

Thank you, but no thank you to used cars.

Excellent points that are peculiar to Ecuador. I hadn't considered that.  The  system for VIN checking, accurate titles, etc. is non-existent. I'll keep that in mind when I need to look for one. Maybe the laws will change by then, anyhow

It’s alright, and yeah things are different here. We all learn new things every day, and it’s better when info is shared. With buying cars here, it’ll ultimately end with getting a much lesser car for the price.

But speaking about the law, there are some exceptions with lower taxes. Hybrids are exempt for some taxes including sales tax (12%). So something like a Kia Niro is about $28,000. Unfortunately, there aren't many cheaper options and cheapest I believe is Hyundai Ioniq which costs about $25,000.

With the engines they have, I would get something cheaper.

Well said, excellent advise. We do not own a car and for 13 years have used taxis, buses, and private trucks. In general, this is the worst country (I have lived in 14 ), I have ever experienced for retail purchase, or car ownership. Fortunately, we live here for reasons other than materia, but it is sometimes frustrating. Take this person's words seriously if you think of moving here. You can live very cheaply as a lower class Ecuadorian, but if you want a lifestyle equal to where you came from,  be prepared to pay for it. My wife and I live on  $700.00 per month very well in the house I built. This includes taxes, government insurance, water, telephone, Internet, food, bus fare, and two dogs. We can afford far more, but we are suited for this. I built the house  (170 m Sq. ,3 bath, 4 bedrooms, brick, wood, concrete construction, on a  540 meter lot in front of the Rio Verde river for total $45,000. I put my money in  real estate, (2 buildings, apartment in Baños, house in Baños, farm in Palora, and three properties. We average 10% income, and I do occasional building partnerships with local builders, at 20% return plus capital per 120 days. I am not smart, but find Ecuadorian business pretty easy these past 12 years. Too bad I'm getting old, wish I could live forever. We like living here. Estamos contentos.

Ridiculous idea to borrow money here

I offer investment capital at 12%, and the whole country wants my money, including my banker at pichinchabank. That should tell something about rates. My investments are secured by title  (escritura) only, and if I had a million dollars more, I could invest it in two weeks, at 12% annual. Many people pay really terrible rates here.

Hi,

My husband and I need to buy a car or truck.  The taxies don't like to drive up the mountain to our home and I don't blame them.  But walking down the mountian is not so good either.  We are going to build a new road to make it easier.

We go back and forth now from the USA to Ecu.  I am a retired teacher and he is going to work for one more year for a big company.

We take taxies and buses and that is fine.  We also go with our Ecu neighbors on the mountain.  We have become familia!  They have helped us out in many ways!  It has always been good!

One more year and we will live there permanently.  We are so ready to move but things have to get finished up here first - USA.

Thanks,
Robin and Joel

MikeJosha wrote:

I put my money in  real estate ... apartment in Baños, house in Baños, farm in Palora, and three properties. We average 10% income, and I do occasional building partnerships with local builders, at 20% return plus capital per 120 days. I am not smart, but find Ecuadorian business pretty easy these past 12 years.

That's a fascinating post, Mikejosha.

You are modest and (I believe) much smarter than you think you are.

Most Expats would fall down a figurative hole if they attempted half of what you are obviously succeeding at.

----

Note to Expats:  don't try this stuff unless Mikejosha has personally taught you his métodos.

cccmedia

Just a little update on the IVA for hybrids. As of  last Saturday (Sept 3rd), the 12% sales tax was re-imposed on all hybrid cars.

Austerity in full swing, apparently.

Too bad! Austerity is the one thing that can ruin the whole deal.....Correas debt must be paid....Bankers are not known for their generousity and compassion....And taking so much money from the Chinese based on future oil production was just plain stupid....and not in the best interest of anybody but a select few........Interesting to know the base interest rates of the surrounding countries......Peru is the easiest deal of all besides Panama, and even Colombia much better...You would think that Ecuador using the dollar, would have interest rates and borrowing policies similar to other dollar based economies......But not........Those prices quoted for new cars, mediocre cars, are just stupid......not even worth considering......Ive always, (at least here in latin amer) bought used cars with low mileage from local execs or burned out gringos/as and will continue to do so.......No more new cars here, there or the U.S. Those daze are gone with the wind........

I agree, austerity is indeed evil, a necessary evil but nevertheless evil. I've lived in one country that went through austerity, and prices of everything went up and never came down again. To keep this topic on track, a bank loan even if obtainable is difficult to justify.

dumluk wrote:

I've always, (at least here in latin amer) bought used cars with low mileage from local execs or burned out gringos/as and will continue to do so.

Good job, Dumluk.

Buying your cars from burnt-out Gringos and exiting execs is the best idea I've seen you post on this site.

Most Expats should probably do the same, but if they're not as savvy as you, they should consider 'buying used' from a dealership....

If a burnt-out Gringo rips them off in some way
      they won't have any recourse.

cccmedia

Now please tell us your top methods for finding burnt-out Gringos and departing execs who are willing to sell their cars for a song.

cccmedia

Hi All!

This post has provided much information with so many comments. We have decided to wait and pay cash for a car/truck when we buy.  A friend who is like family and has helped us in many ways, also Ecuadorina, will negotiate the price of what we want and then we will buy it.

We do need one due the area in which we live and we do want to travel.  As a couple, a car/truck will make it easier.

Thank you everyone.

Robin

Well, it works in Costa Rica and Panama. Cant say it will also work quite as well in Ecuador where cars are so crazy expensive.....But Ive made it a general habit to avoid used car dealers like the plague........find  a car you like owned by somebody who looks and lives like they take care of things, and then take the car to a mechanic and pay em to check it out......I have an uncanny success rate actually........almost as good as real estate........Would have to think long and hard to remember the last lemon I bought.......Even you can do it CC.......

Fortunately, with my current international travels (sans vehicle) and a 2016 Chevy Sail getting plenty of rest in Ecuador .. I don't expect to be in the new or used car markets for quite a while.

I bought new in 2016 -- yeah, yeah, I overpaid -- because of convenience, presumed dependability of the vehicle and because it was the first time I had bought a car in América del Sur.

It has always run well, except that I had to have the embrague replaced twice, the first time for free, under warranty.  I believe I am much improved at shifting gears while driving .. although the parts replacements don't exactly prove it.

What I was getting at, Dumluk, is:  using your método, how do you find the folks you described as looking and living "like they take care of things" and who also fit the profile of desiring to sell a decent car?

cccmedia, currently in Lima, Peru

Thats the hard part CC......takes time......you gotta look at a lot of cars........its a job.........but you get better and better at it.......btw, I have heard that new cars (at least new, maybe used) can be bought duty free in Iquitos, Peru.....Would you know anything about that? Of course you cant just drive them out of there...You have to put them on a boat and ship them to the closest port on the hwy sistem.......

dumluk wrote:

I have heard that new cars (at least new, maybe used) can be bought duty free in Iquitos, Peru.....Would you know anything about that? Of course you cant just drive them out of there...You have to put them on a boat and ship them to the closest port on the hwy sistem.......

Iquitos, huh?

So far on this Peru trip I have been in Lima with its plentiful casinos, tasty food and safe, Expat-friendly Miraflores district.   

I think of Iquitos, Peru, as a steamy inland jungle, a hotbed of shamans proffering their fancy ayahuasca potions and incantations   -- a bizarre and obscure fifth-dimension .. where a North American can appear and "disappear" amidst unusual dreadlocked company.

Go to Iquitos to buy a car and ship it to some more-civilized port to save a thousand dollars or even more by evading/avoiding a tax "duty"?  Thus reinvesting some of the putative savings in car-shipment fees, a port fee plus insurance against damage during shipment....

All the time figuring out how and where to register the car, how to store it in Peru or wherever when the owner is away, paying the annual property tax on the vehicle, dealing with drivers insurance and licensing and half a dozen other trámites I cannot even foresee.

----

I'm all for legally gaming the system when it comes to avoiding payment of a worldwide income-tax to a South American country .. or figuring out a workaround to sidestep an airline's onward-travel requirement.

But going to Iquitos, Peru, to buy a car
    and then dealing with the ensuing porquería ?

I don't see how it's possibly worth it.

So count me out.

In fact, count me as rejecting such a possibility
                              with 'extreme prejudice'.

  --  cccmedia in the Peruvian capital

Ok, so I gather then, that you dont know anything about it? I think that would be a safe assumption after your colorful and exaggerated reply.......Thats ok........just a question......exploring the options......Nice to know what they are........and IF they are......and considering auto prices in Ecuador and Colombia just could be an option worth exploring......Peru seems to have lower taxes on just about everything........tax friendly but cochino like Panama.........Im sure that doesnt apply to casino heaven there in Mira Flores tho..........

Right, I had never heard of this Iquitos car-scheme before ..
                         and me da igual  if I don't hear about it again.

The casinos here in the capital are friendly.  I haven't seen anybody on the staff sending FinCEN reports to the gaming authority when players win money.  At my favorite casino in Miraflores, Lima, they open up a hot-food area at 8 p.m. (except Sundays) and give players a free plate of food in addition to the customary free-beverage service.

La Hacienda casino has signs up saying that over-betting can lead to ludopatía, which is a fancier word for gambling adicción.

-----

Frankly, Dumluk, the hot humid weather in Iquitos will keep me from even considering a trip over there.

Thanks for giving me the earlier opportunity to craft a "colorful" post.

cccmedia in Miraflores, Lima

RobinJoel wrote:

Hi All!

This post has provided much information with so many comments. We have decided to wait and pay cash for a car/truck when we buy.  A friend who is like family and has helped us in many ways, also Ecuadorina, will negotiate the price of what we want and then we will buy it.

We do need one due the area in which we live and we do want to travel.  As a couple, a car/truck will make it easier.

Thank you everyone.

Robin

Just be careful when it comes to "friends." Try to be more independent and not involve "friends" with purchases like cars. You can easily find out the price of a car by looking at the dealer's face book page as they often have monthly deals. Read some of the comments as well. This of course will require a level of Spanish.

Some offers are on a national basis and are something like free matricula or a free whatever.

The best thing about living in a new country is to actually do the stuff on your own. To actually learn and do it yourself.

This is of course my opinion and reflects generally to anyone interested in living in Ecuador.

@vsimple Another way to put it might be this - living like a middle to upper-middle class North American in Ecuador is not cheap.  However, living like the typical Ecuadorian in Ecuador can be very inexpensive for a North American, especially if you get out of Quito, one of the most expensive areas to be.

if you are serious about money, and you avoid temptations like bar b que restaurants, Ecuador

is easy on the pocketbook...most folks live on less than $400 a month...a gringo can live well on $600 a month, including rent, cable, internet, food, wine.

Wow.  Wish I had the lungs of a llama I’d move back. Anything looks cheap compared to California.

My daughter was born at home in Tumbaco. The copay was $200. Dr Celi passed away   That was a beautiful experience. It was all natural. 💕💙

saludos