Even if you purchased the vehicle "as is," the seller still has to disclose known defects, and can be liable for fraud or misrepresentation as to the vehicle's condition.
You may have purchased a "lemon." For more about the Texas lemon law, you can review the following web site from the Texas Department of Motor Vehicles:
But, if the dealer is refusing to repair the vehicle, you probably have an out and out fraud or misrepresentation case. You may also have a deceptive trade practice claim under the Texas Deceptive Trade Practice Act, Texas Business & Commerce Code sections 17.41, et seq. ("DTPA").
I would write a letter to the dealer and demand that the dealer take the vehicle back and rescind (rip up) the sale. The letter should go by certified mail, set out your side of the story, and demand that the dealer resolve this matter. If you have a DTPA claim, you would have to notify the dealer of the claim. Proper notice under the DTPA generally requires help from an attorney.
If the amount you paid for the vehicle is less than $10,000, you can sue in small claims court. If you financed the purchase with the dealer (the dealer is the lender), you may be able to dispute liability for further payments, or pay the money into the court's registry to avoid being in default. If the lender is a third party, and you don't make payments, the lender can declare you in default, and report a negative credit history to the credit reporting agencies. So, you may consider making the payments under protest while the matter with the dealer is being sorted out.
The dealer may have posted a motor vehicle dealer's bond against which you can make a claim. For more information on motor vehicle bonds, you can review the following web site:
The Texas Attorney General may have an open investigation for the dealer. To make a complaint against the dealer with the Attorney General, you can visit the Texas Attorney General complaints web address:
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I would say you've got real problems...This looks to be a classic "he said, she said" scenario. In other words, all the signed, WRITTEN agreements here favor the seller, not you.
If you co-signed the loan, and the vehicle was sold "as is" -- without any warranty, then you will be stuck with the repair bill. Perhaps if this was a purchase from a dealer, and you can show that the dealer knowingly misrepresented the condition of the car, you might have a shot. The general rule in these cases, however, is "Caveat Emptor"...meaning "Let the buyer beware". Sorry.