To drive your car in Mexico, you'll need a valid driver's license. Driver's licenses from other countries are generally accepted. Yes, your US or Canadian license is perfect.
You'll also need Mexican Auto Insurance. Don't drive across the border into Mexico until you've bought your Mexican auto insurance!
Rules of the road in Mexico are very much like those of the United States. However, there are a few things you can do to make your driving a little safer. First, avoid driving at night. Every kind of trouble for the visiting driver seems to come out under cover of darkness. Besides, you would miss some of the scenery. Be aware that you might come across unlighted hazards including pedestrians, livestock, potholes, broken down cars, etc. I have also been warned that some truck drivers make piles of rocks about a foot high right on the pavement to warn you of a broken down truck ahead on the road. You wouldn't want to hit the pile of rocks, but from the truck driver's perspective I suppose it's better than hitting the truck.
Fuel in Mexico is sold exclusively by PEMEX, the state petroleum company. Yes, the Mexican passenger car fleet seems to run day after day on this fuel, and yes, the fuel prices are pretty reasonable. Nevertheless, I usually fill up on the US side of the border, make the trip to Ensenada, drive around all weekend and get home on a single tank of gas.
If you have the misfortune to get a traffic ticket, you might do best to offer to pay the fine to the officer. Have some 10 and 20 dollar bills ready, be polite and friendly and don't get your Yankee pride up about not wanting to pay a bribe. Pay up with a smile, put it behind you, and enjoy your visit. A little Zen and a couple of twenty dollar bills go a long way when dealing with Mexican officials.
Don't count on the roadside filling station to have nice clean bathrooms. A restaurant or hotel is a better bet. Also, it might not be a bad idea to bring along a roll of toilet paper. Some kind of handy wipes or the like might not be a bad idea either.
If you're going to have your car in Mexico more than 72 hours then you'll have to get an importation permit.
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