...Only hang up is the check-engine light is on, and the problem is unknown...
PROCEED WITH EXTREME CAUTION! Make sure to have an independent mechanic inspect the vehicle and pull the OBDC error codes before negotiating a price.
To me, it is strange that the seller didn't know the cause of the dreaded "Check Engine" light before putting this V40 up for sale. Why did he suggest a bad O2 sensor is the culprit? Is that because it sounds like a fairly easy DIY repair that won't scare off potential buyers? Is a more serious problem lurking in the near future, like transmission or turbo failure?
What is the mileage on the V40? Have the timing belt and tensioner been replaced recently? Does it have the original turbo, or has it been rebuilt? Any major oil leaks? Does the seller have maintenance records?
I would be very suspicious of this vehicle until it is examined by a trusted mechanic. If everything checks out, I would offer a low price for assuming the risk of that "unknown" check engine light.
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