Chile is definitely the best place to buy a motorbike in South America if you want to take it out of the country and travel around. If you buy one in Argentina you can't take it out of the country for one year. Brazil is way too expensive, the rest i'm not sure about, but wouldn't risk it.

I bought a 125cc motorbike in Santiago de Chile and sold it in Paraguay 18 months ago, all for just under 400 UK pounds. I have been meaning to post a blog on this site for some time, so here we go.....

Firstly i'd like to thank Patagoniax for his useful information on buying a bike in Chile - that information was so invaluable when originally planning the journey .

I've got a few additional do's and dont's to be noted; some apply to all non-Chilean citizens, but mainly informs UK residents of what they can get away with. I'll try and make it as simple as possible, it is NOT easy, you will have to be patient (but that's the fun of it).

Note for UK citizens: The whole process of buying the bike and travelling SA can be done with a counterpart driving license form alone (no photocard). I still to this day don't have a motorcycle license - the reason is that in Chile the code letter for being able to ride a bike is A, the letter A also appears on a UK Driving license form (but has different meaning).
Also, on the back of the counterpart form is a statement about 125cc bikes, which when shown to someone who doesn't speak English worked fine - much to the surprise of my Chilean friends!

Which brings me to my first point - If you don't speak Spanish, you will definitely need someone to help you who can, so get a Chilean friend who speaks English.. then as Patagoniax stated, get a RUT number (tax identification). Santiago has many places where this can be done, it's free to do and takes minutes.

ALWAYS TAKE YOUR LICENSE AND PASSPORT WITH YOU.

Next step is buying a bike. From my experience Chileautos.cl was the best website to search for a bike: I bought an Acadian CG125cc Firemax for 329,000 chilean pesos (£329.00). The bike was a cheap Chinese Honda copy, which due to regular oil changes (which can be done in any garage) got me safely to selling it on in Paraguay.

I didn't do what Patagoniax advised when buying the bike, but in retrospect would have done: When I bought the bike I signed it over to my Chilean friend to claim back the Chileans form of Value Added Tax. Do not do that! Doing that created tons more hassles and procedures on his part. Plus I never got the rebate anyway!

In retrospect I would have gone to the dealer and got the registration in their name, then got a notarized (legalized) paper that I was authorized to take the vehicle out of the country.
In order to do that I would have gone to the Notario with the dealer. There are a few Notario's in Santiago. The Notario, as far as I know (and from an outsiders perspective) is a lawyer/actuary behind a desk who stamps forms of large financial amounts in total silence.
You don't have to speak to the Notario, you explain what you want to the receptionists who type up a legal document (on a typewriter - which takes a while) THEY then take the form to be signed and stamped by the Notario. I would imagine this procedure probably costs no more then £40's.

(I did have to go to the Notario, but when I did it was to register my bike and type up a document stating I was allowed to ride my motorbike because it was purchased in my Chilean friends name, don't do that either!)

My next step after obtaining a RUT number and buying the bike was heading to Registro de Civil (civil registration) to get the bike registered. I had to do this because my bike was unregistered and brand new.
So, if you're going to do this get to one early in the day as you may have to wait a while, the queues are ALWAYS long in Santiago. You pay a small fee as far as I remember, take your license and passport. Then you get the registration plates for the bike with a document, which needs to be approved by the Notario
(see where i'm getting? Confusing I know, but saying that I rode around Santiago for quite a few weeks without registration plates, but luckily I wasn't caught)...

So whatever way you've done it, you've got to the point where you have a bike that is legally registered.

Now I recommend that you go to the Municpalidad de Providencia (or any Municipality) and get a circulation permit (Permiso de Circulacion), I know how much it costs because it's the only form I have left now, it was £7.50 and well worth getting.

Finally I recommend that you head to the Ministry of Justice in central Santiago next to the Police Station. Go there and get all your documents signed by them, it's totally free and takes 5 minutes, but again is well worth doing for legal reasons (especially when you're doing the whole thing illegally!)

So that's pretty much how to do it. I got across the Santiago- Mendoza pass fine (although nearly froze to death). Headed through Argentina to Uruguay, then up to Paraguay where I sold it for 200 US dollars staright up cash in hand with no form stamping!

One warning if you're going to do this: Take food and water. Be wary of the border patrols. When I was crossing provinces in Argentina they would go through all my documentation, inventing something illegal i'd commited (for example not tying a scarf to the back of the rucksack bungeed to the back of my bike)

After the first bribe I kept all my cash in my boot, pretended to not understand them when they spoke, and when crossing provinces prepared to be sat down for 30 minutes of minor interrogation nodding my head saying "no me entiendo" (I don't understand). They won't hurt you and are just looking for a quick buck, so keep about 30-40 Argntine Pesos in your pocket and be prepared to lose it at any time.

That is most definitely how you have the time of your life in South America for next to nothing.