What is the reason behind people using paper temp plates on cars instead of getting actual license plates?

When buying a car, new or used, the dealer will place a paper temp. plate in the car window.  This is to stay there until the actual license plates are issued to the driver.

If someone told you it's because they don't have insurance - then this someone knows NOTHING about the paper temp. plates at all.

No. If it's a used car, it takes a few weeks for the DMV to mail them. If it's a new car, people like the paper - it looks brand new, again. If it's black market, the police will know & impound the car.

You should probably not get any more "knowledge" from the person that told you it meant that they didn't have insurance.  Those are temporary registrations that are issued until the paperwork clears and the permanent registration is done, typically including paying sales tax.

The paper temp plates is to move a vehicle "from Point A" to "Point B" (straight as the crow flies) Meaning it is not to go anywhere else(shopping, visiting friends, the bar,)  It is temporary INSURANCE for that stretch of road the car is suppose to be on for that 1 day.    It happens on many vehicles that are sold that don't have plates yet but as it was an auction you got to get the vehicle out of there and the vehicle is driveable so it is moved that way.

.  You occasionally see houses being moved on trailers.  They too must get a moving permit. The same paper plate stuck on the rear window of the trailer.  They are INSURED.

. I used to get those permits at the Highway Weigh Scales.

.  Many car sales are done on the weekend so getting plates do not happen instantly.  Paper Transport licenses are easier to get and you take the car HOME.

They are temporary plates to use until they are sent the permanent ones.  Maybe why you are seeing so many paper plates is because all of the DMV's are behind getting metal plates sent out due to covid ?

The paper plates have Nothing to do with Insurance.

Those are the temporary tags that a dealer puts on the car until the person gets their permanent tags in the mail.

We were issued them on two occasions when buying a driving a car home from out of state. A dealer is allowed to extend your existing insurance on another vehicle to do this. It has to be an existing policy in the name of the buyer.

I’m sure there are many reasons why.

Don’t think insurance is one, because there is fine print when we sign our very first drivers license, that we agree to have the car insured legally before driving.

It depends where you are.

Prior to Dec 31, 2018 = California did not have numbered paper plates.  People would use dealer or no plates for various reasons - thought the car looked newer with them, were too lazy to switch them out, no insurance, no registration, harder to track, etc.

- you legally had 6 months to put on the metal plates.

Following a fatal hit and run accident in Encino where the car with the paper plates was never found there was a movement to create numbered paper plates.  This went into law on Jan 1, 2019.  It's actually known as the Steve Jobs law because he would only keep cars for 5.5 months because he didn't want to use metal plates.

2+ years later you periodically see cars with dealer paper plates. 

And sometimes you see expired numbered paper plates.

The police scanners can read the numbered paper plates to link the plate with the appropriate model car, thus it's much harder to get away with using fake paper plates. 

i would ask the dmv about that