This one's a tricky one. First off did you buy the car in MI and title it in KY or did you buy it in KY with a clean title.
This makes a difference because if you were never on notice of this defect, then the auto dealer was in a better position to CarFax the title and registration than you, and did so; and accepted the car at a certain value. Unlike you, they are professional dealers.
Also I would be wary to believe anything they say. It could very well be being a spot sale or Bush contract or whatever you want to call it, a "yo yo" deal, it could be they could not get you the financing they promised and in turn decided to sock you for the cash difference instead to avoid the anti-Bushing laws.
Very hard to advise anyone without more facts.
My suggestion is that they want way too much more money to suggest this was a "mistake" they overlooked at the closing of the deal. Car dealers are way too shrewed to get skunked up front. That's where they make their money when they buy the car.
So I suggest you click on "Find a Lawyer" above and locate a lawyer in your area who handles consumer protection cases.
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