I feel like this situation could get really ugly. I doubt the stealership will let you off easy on this one. Before thinking about hiring a lawyer, talk to your insurance company. If your insurance is willing to cover the damage without having your rate increase, I would honestly just pay the $500 and end it there.
But if you know for certain and you can prove to the stealership that the exchange of title was complete and sold as is, then technically you have nothing to worry about. But the stealership might still sue you.
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