Driving Financed Vehicles into Mexico
Is your vehicle financed, or has it already been paid off?
When planning to drive your vehicle into Mexico, it is important to consider whether or not, the car, truck, SUV, recreational vehicle, or motorcycle, that you will be driving, is financed.
If a vehicle is financed, then it is also subject to a loan agreement that was originally signed by you. If you are still making payments, or if there is a lien holder listed on your vehicle registration, then the lender also maintains some ownership of the vehicle. Because the lender maintains a financial interest in the vehicle, they also legally have a say in whether or not you can take the vehicle outside of the country.
Letter of Permission from the Auto Lender
If your vehicle is financed, you will need to obtain a letter of permission from the lender, allowing you to drive it in Mexico. The first thing the lender will want to see, before giving you any kind of permission letter, is proof that you have already arranged for sufficient insurance coverage for the vehicle while it will be in Mexico.
Most lending institutions have very similar requirements for limits of coverage and deductible amounts. However, since all loan agreements are not exactly alike, we recommend that you review your individual finance contract, and/or contact your lender directly, to learn what their specific requirements are.
"What if I'll only be driving in the Hassle Free Zone?"
Some of the most popular auto tourist destinations in Mexico are located along the northern border, and in the three westernmost states. In efforts to help promote and encourage tourism, the Mexican government has created the "Hassle Free Zone" where the usual requirement for a temporary vehicle importation permit is waived.
The Hassle Free Zone covers all of the Baja peninsula, including the Mexican states of Baja California Norte and Baja California Sur, along with the western half of the Mexican state of Sonora (including Guaymas), and also a zone of 20 miles running along the rest of the U.S. border. Even though the requirement for temporary vehicle importation permit is waived in these areas, it is still important for you obtain a permission letter from your auto lender before taking any financed vehicle into Mexico.
So now you may be asking "if I don't need to get a temporary vehicle importation permit inside the Hassle Free Zone, why should I bother with obtaining a letter of permission from my auto lender?" Well, these are actually two totally independent requirements. Sure, there is some overlap, because one document (the letter of permission) is used to obtain the other document (temporary vehicle importation permit), however even though the requirement for the permit gets waived in the Hassle Free Zone, the ownership of the vehicle does not change, and the letter of permission is still very much required.
"We've been going to Mexico for years, and we never got a permission letter before..."
It very well may be, that lots of people have driven financed vehicles into Mexico numerous times, without ever obtaining the proper permission from their lender. However, doing something wrong, and then getting away with it, even repeatedly, does not change the fact that it was still wrong. Neglecting to obtain a letter of permission from the lender could place you in direct breach of your auto finance contract.
You should also consider what might happen should you ever be involved in an accident inside Mexico, or if you should get detained by the Mexican authorities, and they then ask you to show them the letter of permission from your lender, after seeing the lien holder information listed right on your vehicle registration. I'm sure the last thing you want to do during your vacation in Mexico, is spend unnecessary time trying to explain to the Policía Federal why your vehicle documentation is not completely in order.
Getting a letter of permission is usually a fairly easy process. Here is a simple two-step-list:
- Purchase a Mexico insurance policy that meets the lender's requirements - This step can be completed online, any time, day or night. Tip: an Extended Coverage policy, from the Mexican Insurance Professionals at www.mexpro.com, already has the lender required deductibles, and an acceptable limit of liability coverage, built right into the policy package.
- Provide a copy of the proof of coverage to the lender along with the request- The lender will need to see a copy the policy declarations page, listing them as the Lienholder. Typically, your proof of coverage can simply be faxed to the lender, along with a brief note requesting permission for the specific days that the vehicle will be in Mexico. Providing the lender with a fax number, where they can send your letter of permission is a good way to ensure you'll get it back more quickly.
Tip: Lenders typically will only fax or mail letters of permission, and never email them, because email messages are a much less secure means of communication.
Be sure to make your request a letter of permission well in advance of your trip, to allow sufficient time for the lender to be able to review the request and process the documentation. Remember, if your vehicle is financed, obtaining permission from the lender is always required, because of the shared ownership of the vehicle, between you and the lender.
If you still have questions about insuring financed vehicles in Mexico, please contact the Mexico Insurance Professionals at mexpro.com or give them a call at 888-467-4639.
National Agency Producer
Mexico Insurance Online