Here's what to do next ZeniX;

Go to the dealership and tell your dealer 'friend' that you are not buying a car from them anymore.

Tell them, in writing, that you expect your deposit refunded within 7 days as a result. You are entitled to the return of your deposit because you have entered into a three party agreement (You, them, finance co). In these circustances, any of the three parties can withdraw from the agreement without penalty. If they do not refund your deposit within the alloted time frame you will be seeking further legal advice and take them to court for the return of the cash.

They know their rights (none) and are trying it on by saying they aren't going to refund your deposit.

Forget their finance rates and what they may or may not end up doing. Get your money back and go find a reputable dealer who conducts his business with transparency rather than the Arthur Daly style Smoke and Mirrors approach.

As an aside, this isnt accurate to the decimal place but you will need their 5.25 'flat rate' reducing to about 4.25 to compete with your 9.2apr from the bank.

Avoid these cowboys - friend or no friend.

JJ