Car Dealership fraud?

We bought our 2006 Chevy Aveo back in 2008 through a first time buyer program. Origionally my wife was approved for a 2009. We got the 2009 but then after signing the paperwork and going home for a day we get a call saying that the financing fell through and we had to bring the car back. We get back to the dealership and they say we are not approved anymore for the 2009 but for a used 2006.

We look at and test drive the 2006 and are told that it has only had 1 other owner and no problems so far and they have just gotten it in. Being that we needed a car we signed the paperwork and drove home. We after 2 days we washed the car, the paint started coming off the front end so we called and we were told that it was a manufacturer defect and they were going to set up a time with us to get it repainted.

We bought the car in North Carolina. We now live in Indiana and never missed a car payment. We went into a dealership here to try and trade it in and when the sales guy prints up a carfax report stating that it has had two other previous owners and it has been in a accident and he has told us the pumper we have on the car not the original bumper. We were pissed beyond believe.

Now not only did they lie to us but with our financing we have almost paid 12k on the total 15k (after financing) we owed on the car and the salesman we talked to today said at the time we purchased our car was only worth 4k to 5k and now we are having trouble trading in our vehicle. Our paperwork clearly states that the car has never been reconstructed.

There definition of constructed on our paperwork is: A motor vehicle of a type required to be registered hereunder that has been materially altered from original construction due to removal, addition or substitution of new or used essential parts; and includes glider kits and custom assembled vehicles.

They have flat out lied to us. Our paperwork shows they have lied to us. They played the yo-yo financing game and withheld information about the car being in a accident and being repaired. Do we have a legal case? Do we have to get a lawyer and file a suit in the state we bought the car or can we do it here from Indiana.

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