The engine oil light signifies a lack of oil pressure. Could be because the sump strainer is blocked with sludge. Could be the oil pump is failing. Could be the piston rings are worn. This is serious. I would use The Consumer Rights Act 2015 to back the car on the dealer. If he refuses to take it back and refund your money, send a letter to him by recorded delivery stating your disquiet and that you still intend to take the matter to small claims, then do exactly that. See: www.honestjohn.co.uk/faq/consumer-rights/