New cars are more expensive in Spain than in some other EU countries (although cheaper than in the UK) and up to double the cost of cars in the US. This also results in higher used car prices. However, although cars may be more expensive to buy, they depreciate more slowly than in most other European countries, so the extra you pay when buying a car is usually gained when you sell it.
Spanish-made cars are generally cheaper than imported cars, due to import taxes and duty. If you do high mileage, it may be worth considering buying a diesel car, as diesel fuel costs marginally less than petrol in Spain (it’s also cheaper in most other EU countries).
Cars may be bought in Spain by residents or by non-residents owning a property in Spain, renting a property for a minimum of a year or registered as an inhabitant of their municipality ( empadronado).
A record number of cars (1.53m) were sold in 2005 with Citroën, Renault and Ford the leading makes. Many new cars are manufactured in Spain, which is the world’s seventh largest car manufacturer and around 80 per cent of new cars are exported to the European market. New cars are more expensive than in many other European countries owing to taxes, which include the registration tax ( impuesto sobre la circulación) of up to 12 per cent and VAT ( IVA) at 16 per cent. Most new cars are sold at list price, although you should still shop around for the best deal, as dealers compete in offering discounts, guarantees, financing terms and special deals.
To boost new car sales and reduce the number of old cars on Spanish roads (more than a third are over ten years old), anyone who has owned a car over ten years old for more than a year is given a registration tax discount when buying a new car. The new vehicle must be purchased within six months of scrapping the old vehicle.
Residents can buy cars on a hire purchase agreement (instalment plan), although those who aren’t property owners must usually provide a financial guarantee or obtain a guarantor. You also need a certificate from your Spanish bank stating that you pay your bills regularly, a copy of your employment contract and a copy of your previous year’s tax return. The deposit (down payment) varies with the dealer and payments can be spread over one to four years. After making the deposit, you’re asked to sign a number of ‘bills of exchange’ ( letras de cambio), usually one for each monthly instalment due (a reassuringly antiquated system!).
These are like cheques or individual direct debit advices and are addressed directly to your bank for payment. Most car dealers also sell car insurance, although you should shop around, as you will probably get a better deal elsewhere.
It’s possible to buy a new car VAT-free in another EU country, e.g. from the factory of a European manufacturer or from an exporter in countries such as Belgium, Denmark (usually the cheapest due to high local taxes), Greece and the Netherlands, and personally import it into Spain. In some countries (e.g. the UK) you can buy a VAT-free car up to six months before exporting it. Personally importing any car from the US is usually much cheaper than buying the same car in Spain or elsewhere in Europe. However, before importing a car from outside the EU, you should ensure that it’s manufactured to Spanish specifications, or you will encounter problems getting it through the homologation inspection. There’s no longer any import duty on cars imported from other EU countries, although you must pay Spain’s registration tax ( impuesto sobre la circulación) and 16 per cent VAT (if VAT hasn’t already been paid in another EU country).
The used or second-hand ( de segunda mano/de ocasión) car market in Spain is currently booming and in 2005, with sales up by 8 per cent, more used than new cars were sold for the first time. However, the used car market is still small compared to that of France, where used car sales are double new car sales, and Germany and the UK, where the ratio of used to new sales is three to one. Used cars tend to be more expensive in Spain than in many other EU countries, as cars hold their value better. It often pays to buy a used car that’s around two years old, as depreciation in the first one or two years is considerable (high mileage cars, particularly ex-rental cars, are good value). Note, however, that older cars in Spain (outside their warranty period) aren’t always well maintained.
Used car dealers have the same dreadful (and usually well deserved) reputation in Spain as in other countries, and caution must be taken when buying from them. There are many ‘cowboys’ in Spain (often foreigners) selling worthless wrecks (the small advertisements in the expatriate press are full of them) and it’s generally better to buy from a reputable dealer, even if you pay a bit more, and obtain a warranty.
There are various motoring journals advertising used cars, including Auto Semanal and Coche Actual, in addition to most daily newspapers. There are also free magazines in most areas, such as Mi Coche. Most national and local (including free) newspapers carry advertisements for used cars, as do expatriate newspapers, which include foreign-registered cars. There are also numerous websites advertising used cars. Second-hand car prices vary with the region of Spain and are generally higher in remote areas and the islands than they are in Madrid and other major cities.
If you intend to buy a used car in Spain, whether privately or from a garage, check the following:
whether a written guarantee is provided; car dealers usually give warranties on used cars up to 12 months old.
When you’re buying a used car from a garage, try to negotiate a reduction, particularly when you’re paying cash and aren’t trading in another vehicle. When you buy a car from a dealer, he will arrange the transfer of ownership, usually for a small fee. Alternatively, you can employ a gestor to handle the transfer or do it yourself at the local provincial traffic department.
Be extremely wary of buying a car with foreign registration plates, as it can be very expensive to register it in Spain if you need to. When you buy a second-hand car in Spain, the seller must de-register it at the provincial traffic department, after which you receive the registration document ( permiso de circulación), the ITV test certificate and card and photocopies (if applicable), the road tax receipt and a photocopy, and a receipt for the payment of transfer tax. You have 30 days to register the vehicle in your name.
This article is an extract from Living and Working in Spain.
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