Whether it’s your neighbor or a complete stranger, you may have spotted a car or two on the road with dealer plates.
But is it legal to drive with dealer plates?
Dealer Plate Laws
In general, dealer plates are special license plates used by dealers that allow customers to legally test-drive unregistered cars on public streets and highways.
The laws on dealer plates vary significantly state-to-state. But in general, most states only allow dealer license plates to be used by an owner, officer, employee of the dealership, or by a customer that is test driving the car, according to the Automobile Dealer Training Association.
If you think you can get away with using dealer plates while renting or leasing a car, think again. Like Utah, most states prohibit the use of dealer plates on cars that are being leased or rented.
In addition, every state sets limits on how long you can keep dealer plates on your car post-purchase.
When you buy a car from a dealership in Michigan, for example, you can use the dealer plates for up to 72 hours after taking possession of the car. But you need to have already applied for vehicle registration and you must carry proof of purchase with you while driving.
Using Dealer Plates to Dodge Fees
Dealers are entitled to use dealer plates because they pay for the right via special license fees.
If you purchase a vehicle and place a dealer license plate on it with no plan to immediately sell the vehicle, you are dodging the payment of sales tax on the vehicle, which is unlawful.
When customers have long-term control of cars, they need to properly register the vehicle and fork over the necessary sales taxes, title, and license fees. Drivers who try to game the system by using dealer plates can face financial penalties and face additional repercussions for driving without valid vehicle registration.
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