Can You Move a Financed Car Across State Lines?
Can You Legally Drive a Sponsored Car With Graphics and Logos on Public Roads?
Many companies provide sponsored vehicles wrapped in custom graphics to individuals as part of endorsement deals and ambassador programs. This raises questions around legally operating branded vehicles on public roads. Here is a comprehensive look at key factors like registration requirements, insurance, taxes, and advertising regulations impacting sponsored car street legality.
Overview of Sponsored Vehicle Programs
Sponsorship programs involve companies providing vehicles to:
- Compensate/incentivize brand ambassadors and influencers
- Reward consumers as part of contests and giveaways
- Promote products through mobile advertising
- Support races teams and driving events
The recipient receives a vehicle wrapped in sponsor branding and logos to drive for a period of time. But regulations vary regarding operating branded cars on public roads.
Like any vehicle, a sponsored car must be properly registered to legally drive on streets:
- In most states, the vehicle owner or lessor registers the car
- Required documentation like title transfer and bill of sale applies to sponsored cars
- Normal license plates are issued rather than commercial or dealer plates
- Some states require notarized statement regarding financial responsibility
Sponsorship alone does not alter normal registration procedures in most jurisdictions.
Mandatory Insurance Requirements
Sponsored vehicles driven on public roads must carry state minimum liability coverage:
- Bodily injury and property damage minimums must be met
- Additional coverage beyond minimums is recommended to reduce liability
- The sponsor company may provide supplemental coverage
- Gaps like demos and borrowed vehicles should be evaluated
Regular private auto insurance likely applies more often than commercial policies. Check with underwriters.
Tax Implications of Sponsored Vehicles
Tax rules create further considerations:
- Sponsored cars given away constitute income to recipients
- Taxes owed based on fair market value of the vehicle
- Liability falls to recipient even if sponsor initially pays excise tax
- May qualify for personal use exemption under certain conditions
Consult a tax professional to understand possible gift, income, and use tax impacts when receiving a sponsored vehicle.
Federal and State Advertising Laws
Sponsors and recipients must comply with applicable advertising regulations:
- Federal Truth in Advertising laws prohibit deceiving marketing
- Certain states limit mobile advertisements on vehicles
- Local sign ordinances may impact branded graphics on cars
- Some racing sponsorship rules affect livery and graphics
Seek legal guidance to ensure sponsor branding stays compliant across jurisdictions.
Who Typically Receives Sponsored Vehicles?
Sponsorships involve vehicles provided to:
Brand Ambassadors – Social media influencers, athletes, and celebrities who promote products. Cars display sponsor logos.
Giveaway Winners – Contest and sweepstakes winners receive branded cars as prizes. Usually non-transferable.
Motorsports Participants – Race teams and drivers have sponsored liveries. Graphics subject to sanctioning body rules.
Car Reviewers – Automotive journalists receive press cars for evaluation and reporting. No branding.
Dealership Demo Cars – Manufacturers provide new models to dealers for test drives and loaners. No branding.
Recipients should understand program terms and compliance requirements before driving the sponsored car.
Key Legal Takeaways for Sponsored Vehicles
- Sponsored vehicles must meet standard registration and insurance requirements for street legality.
- Tax rules treat sponsored cars as income which may create gift/income tax obligations.
- Advertising and sponsorship regulations impact certain graphics and branding.
- Review program terms and confirm compliance to avoid legal issues.
While sponsored vehicles need extra diligence, they can generally be legally operated on public roads given prudent steps. But consult experts given the nuances and liability risks involved.