Many thanks. The position isn't quite as simple as just handing the car back to the finance company unfortunately though this is something you could propose and something the finance company could potentially accept given your following rights which with our permission I will outline below. Your agreement with the dealer includes implied rights under the Consumer Rights Act 2015 that among other things, the vehicle is to be of satisfactory quality and fit for purpose. From what you say, this is clearly not the case. You will also have mirror rights as against the finance provider by virtue of s75 Consumer Credit Act.
The good news is that during the first six months from your purchase, any faults are assumed to be the responsibility of the dealer unless he can proveotherwise - i.e. any faults are assumed to have been present at the time you purchased unless the dealer can prove that they were caused by damage by you or they represent fair wear and tear. That is very unlikely to be the case from what you say. After the first six months, the burden of proof switches to you to demonstrate that any faults were present at the time of purchase and have not been caused by damage by you or wear and tear however by my calculations you are still just in the first six months so your task is much easier if you strike now.
Providing you have evidence as above that the fault in question was present at the time of purchase (although as above this will be treated as the case unless they can prove otherwise as above), you can look to exercise your rights under s24 CRA 2015. This section provides You with the right to a price reduction or a replacement. In order to exercise your right, you need to have given the dealer at least one opportunity to repair or replace the vehicle and that the dealer has either failed to do so was failed to avail themselves of this opportunity within a reasonable time.
Subject as above, you can require the dealer to be responsible for all the repair costs that are required for your vehicle by a competent garage or you can look to reject the vehicle and the final right to reject under section 2 of the CRA and require a full refund less a reasonable deduction to take account of wear and tear on the car for the period you have owned it. You have a right to exercise one of these options but not both so you will need to decide whether you wish to seek a price reduction or wish to reject the vehicle. I assume given the severity of the fault, you may prefer the latter.
In either event, you will need to serve notice in writing upon the dealer of your requirement and either request the amount of price reduction require or notify him that you are rejecting the vehicle under your final right to reject under section 24 CRA 2015. If the dealer refuses to accede to either request, you can issue proceedings in the county court to recover either the price reduction you seek or the cost of the vehicle you paid less a reasonable reduction for wear and tear.
If you need any assistance in preparation of a letter of claim I would be pleased to assist.
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