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How and where was the transaction arranged? Did he visit your home and did you sign there or did you conclude it at the dealership?
Right, there's no applicable 'cooling off' period applicable to the contract then unfortunately. You have to refer to the actual contract you have with the dealer to check your rights as to cancellation of it at this stage.
The provision for a non-refundable deposit would probably not be ruled unfair under the Unfair Terms in Consumer Contracts 1999 given that it has not caused a significant imbalance in your rights and obligations either, so you may have to stomach the loss of the £500 if the contract allows for termination.
As the contract is with a dealer the Sale of Goods Act 1979 implies certain terms in to your contract, but these relate to satisfactory quality of the goods to be supplied and does not imply an automatic right of termination. In the event that the car that is supplied to you is not of satisfacoty quality then you would have the right for any shortfall in satisfactory quality remedied or, if this is not possible, a right to a refund but right now the Act does not confer rights that are particulaly useful for your purpose.
Check that the contract itself is enforceable (ie. signed and dated) then check for termiantion provisions. If the car you are supplied with is well below satisfactory quality then you may have a right to a refund but this is obviously not actionable until you have checked the car. You can try reasoning with the dealer to let him off, perhaps by offering some other kind of incentive but he is not under any obligation to accept your proposal I'm afraid.
Sorry it could not be better news, I hope you appreciate there is little point in my sugar coating your position for you.
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