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Well as it is a K4, confirmed by your visual inspection and the engine number, then unless it has been professionally enlarged to 2L you should walk away from it. In fact, you should run from it. There would be some indication as to who had tuned the engine if it had been done professionally - for example, Judd changed the rocker cover to one with their name on it.
The more likely situation is that the car is a 1800 and that the salesman that you have been dealing with is a complete and utter plonker who can't admit when he is wrong, or just does not know anything about the cars that he is selling. In which case you should walk away from the car.
The alternative option is to point out to the salesman that since the car is a 2L that your insurance will be much higher (maybe quote some figures, e.g. £1000 for a 1.8 and £2,500 for a 2L) and as such the car is worth less to you. Plus the fact that the 2L has a 5,000 mile service interval instead of 15,000. Use this to negotiate the price down and then sort out the problems with the DVLA and insurance yourself.
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By how much do those who have gained by war fall short of the number of those who have perished in it? No doubt you will reply that there can be no comparison, that the dead cannot be numbered, while the living who have been rewarded may be summed up with three figures.
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