Ralph C. Rinzler, whose BMW was confiscated in March after the FBI told him it was a stolen vehicle, will receive $28,000 in compensation from Heishman BMW in Arlington under an out-of-court settlement reached by Rinzler and the car dealer, attorneys for both sides said yesterday.

In return, Rinzler, who thought he was buying a used car from the Arlington dealer, has agreed to drop his $1 million damage suit against Heishman filed in U.S. District Court in Alexandria in May.

"It's been extremely exasperating," said Rinzler, who is assistant secretary for public service at the Smithsonian Institution. He bought his 1981 car for $19,600 from Heishman BMW last year. In March an FBI agent seized the sedan.

Heishman officials said they had to work through the "process" imposed by their insurance company before reimbursing Rinzler. Heishman President Steven Pieper said "it was a matter of establishing proof that the car was stolen" before they turned over money to Rinzler. "It has always been our position that we wanted to make Mr. Rinzler whole again."

Under the out-of-court agreement Rinzler also is being reimbursed for the repairs he made on the BMW, his car rental bills since the FBI took his car and attorney's fees.

Heischman BMW is now suing the person who sold it the car, possibly without being aware it was stolen.

An FBI spokesman said the car was stolen in New York in April 1982 and has had several owners in at least three states since. The thieves, according to Rinzler, found a wrecked BMW, welded the plate containing the serial numbers from the wrecked car onto the stolen car and then reregistered it in a different state. It eventually reached one owner, then Heishman and then Rinzler.

Pieper said the dealership and previous owner had valid title to the car.