If the money you paid is worth filing suit, then you could file suit to ask the court to rescind your contract because you didn't have a meeting of the minds. In that case, you would be required to return the car and title to the previous owner and he would be required to return your money. The risk you face is that he court will find that you did have a binding agreement and that you are stuck with the car. You would then be out the costs of the suit and still be stuck with the car you apparently don't want. Consult an attorney who can go over the specifics with you and outline your options by weighing the pros and cons of each alternative.
This response is being provided for information purposes only and does not constitute an attorney client relationship. Furthermore, I am only licensed to practice law in the State of Illinois. While there are oftentimes similarities between States' laws, there can also be large differences. You should not rely on this response as legal advice and are highly encouraged to speak to an attorney licensed in your State for an accurate legal answer.
Some consumers have been successful in cases against dealers for selling rebuilt vehicles. Important facts for these type of cases include things like whether or not he made any statements about whether or not the vehicle was in an accident, what he told you about the car's history, and whether the price was low enough for that make and model to put you on notice that something was wrong. The problem I see with your facts is that if you were aware of the type of business he is in, you will have a harder time arguing you had no knowledge the car may have been rebuilt. That may be a hard fact to overcome, unless was somehow concealed from you.
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