North Carolina State Highway Patrol ISU-425 Demonstration Permit for Use of Dealer Plate form
November 12, 2026 · Compliance

NC Dealer Plates: Who Can Drive on Them, Demo Permits, and the $250 Penalty

That dealer plate on your desk is one of the most useful tools you have, and one of the easiest ways to get your dealership in trouble! North Carolina law spells out exactly which cars can wear a dealer plate and exactly who can drive them. Get it wrong and the driver gets a ticket, you get a civil penalty, and the state can take back all of your dealer plates.

Here's what every NC independent dealer needs to know.

The Six Rules Every Dealer Plate Car Must Meet

Under N.C.G.S. § 20-79(d), a dealer plate may be displayed only on a vehicle that meets all of these requirements:

  1. It's part of your inventory.
  2. It's NOT consigned to you. Consignment cars don't qualify, period.
  3. It has liability insurance that meets North Carolina's financial responsibility law (Article 9A of Chapter 20).
  4. It's not being used in another business you run. Own a landscaping company on the side? The dealer plate can't go on the work truck.
  5. It's driven by someone the law allows (more on that below).
  6. The driver has the registration card. The plate must match a copy of the dealer plate registration card carried by the driver, or, if the car is being driven in North Carolina, a registration card kept on file at the dealer's address that you can produce within 24 hours if a law enforcement officer asks for it.

Miss any one of these, and the plate shouldn't be on that car.

Who Can Legally Drive on Your Dealer Plate?

G.S. 20-79(d)(5) lists who can drive a dealer-plated vehicle on the highway:

  • A person with a demonstration permit to test-drive the vehicle, who carries the permit while driving.
  • An officer or sales representative of the dealership driving for a business purpose of the dealer.
  • An employee of the dealer driving in the course of employment.
  • An employee of the dealer or of the dealer's contractor, driving within a 20-mile radius of where the vehicle is being repaired or otherwise prepared for sale.
  • An employee of the dealer or the dealer's contractor transporting the vehicle to or from a vehicle auction or to the dealer's established salesroom.
  • An officer, sales representative, or other employee of an independent or franchised dealer, or an immediate family member of one.

And here's the line that catches people: a dealer may not lend, rent, lease, or otherwise place a dealer plate at the disposal of anyone except as the statute allows. Your buddy who "just needs a car for the weekend"? No!

Demo Permits: The 96-Hour Rule

When a customer wants to take a car home overnight or show it to their mechanic, the demonstration permit is how you do it legally.

Under G.S. 20-79(d):

  • You can issue a demo permit to a person licensed to drive that type of vehicle.
  • The permit lets each person named on it drive the vehicle described on it for up to 96 hours from the time you issue it.
  • You can renew it one time, for one additional 96-hour period, for good cause.

The NC State Highway Patrol's Dealer Section publishes the official form, the ISU-425 Demonstration Permit for Use of Dealer Plate. It asks for the driver's name, address, and driver license number, the make and VIN, the dealer plate number, and the date and hour it was issued and must be returned. A few details straight from the form:

  • The customer signs agreeing to return the vehicle and plate by the date and time listed.
  • The form states that no compensation has been or will be received for use of the vehicle or plate.
  • The permit and a copy of the registration card must be in the driver's possession at all times.
  • Issue it in duplicate: the original goes to the driver and the copy stays in your files.

Pro tip: Fill in the hour! A demo permit with no time on it doesn't tell anyone when those 96 hours run out.

What Happens If You Get It Wrong?

G.S. 20-79(e) sets out the sanctions when a dealer-plated vehicle is driven in violation of these rules:

  • The driver is responsible for an infraction with a $100 penalty.
  • The dealer the plate was issued to faces a $250 civil penalty.
  • The state may rescind ALL dealer plates issued to that dealer, not just the one on the car.

If your plates are rescinded, you have to surrender them, file a new application, and pay the plate fees again to get them back (G.S. 20-79(c)). That's a lot of trouble over one bad loan!

How Many Dealer Plates Can You Get?

G.S. 20-79(b) ties your plate count to your sales in the previous 12-month period ending December 31:

Vehicles soldMaximum plates
Fewer than 123
12 to 246
25 to 367
37 to 488
49 or moreAt least 8, up to 5 times your average number of qualifying sales reps

A "qualifying sales representative" works for you at least 25 hours a week on a regular basis and is paid by you. A dealer who wasn't licensed for all of the previous period can get four times the number of qualifying sales reps employed on the application date. You certify your sales on the application, and a material misstatement is grounds to deny, suspend, or revoke your dealer license.

Fees: Under G.S. 20-87(7), each of your first five plates costs the regular private passenger plate fee, and additional plates cost half. The Dealer Section's current ISU-405 Application for Dealer Plates (Rev. 10/26) lists $46.25 per plate per year for the first five and $23.13 per plate per year for each additional plate, plus Regional Transportation Authority tax in Wake, Orange, Durham, and Randolph counties. Dealer plates are now issued for two years to line up with your dealer license, and must be replaced every four years (G.S. 20-79(c), (c1)).

Learn It Before It Costs You!

Dealer plate use is one of the topics we cover in our NC 12-hour pre-license class, and it comes up every year in continuing education because it's one of the most common ways good dealers get written up.

Questions? Call us at 704-918-4138. We're here to help, even after class!

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