Repairs cost more than engine, but car might have some life left

Question

I am trying to decide whether to repair a car or sell it. The car is a 2007 Scion TC. The car has about 80,000 miles on it, and the KBB value is around $2700-$3700.

The engine of the car died while driving down the highway. The AAA service center said the engine will need to be replaced, at a cost of around $4100. I had it towed to a Toyota dealership for a second opinion, and they too have said the engine will need to be replaced. They will charge around $6200.

My dilemma is this - Since the cost of replacing the engine is more than the KBB value of the car, is this worth doing? 
- On the one hand I hear that Toyotas can go 200,000 miles, and this car has only 80,000 miles on it. So it might actually have a lot of life left in it.
- On the other hand mileage is different from age. This car is 9 years old, meaning other parts like the transmission are 9 years old, even if the engine is new.

How many years do Toyotas last? Will I probably get another 4-5 years of use from this vehicle? Is it universally always wrong to spend more money fixing a car than its KBB value?

Also, any thoughts on whether it is better to spend 6K at a Toyota dealer versus $4K at a AAA service center? Toyota claims that their engine will be remanufactured, whereas engines at repair shops come out of crashed vehicles, and so are not good. Is this statement a fact?

tlhIngan · Accepted Answer

There's a lot of things going on in your question.

1. To fix or not to fix: nevermind the Kelly BlueBook value. That's only useful in determining a proper resale value. Are you driving a resale value or are you driving a motorvehicle? More to the point, are you repairing the resale value or are you repairing the motorvehicle? Look at that car: do you want to keep driving it or are you ready and willing to let it go and drive something else? That's the question you need to answer. A repair is not a function of how much it costs, it's a function of does the car need it and are you willing to give it what it needs.

2. Junkyard engine vs rebuilt engine: there's not question that a rebuilt engine will be in better mechanical condition than a junkyard engine. Junkyard engines usually come with a very short warranty, usually long enough for you to drive around and make sure everything is ok. Of course, the shop will fire it up and do a short test drive to make sure it runs properly. Most of the cost of the repair is labour, get a breakdown from AAA and the dealership: maybe the rebuilt engine from the dealership can be installed for cheaper by AAA.

3. How long do Toyotas last: that's a matter of maintenance and usage. Neglect your maintenance and the car will be toast by 200,000 km. Give it what it needs, it can last until 400,000 km, even beyond. Drive mostly highway miles, it's easier on the powertrain and it will age gracefully. Drive mostly in stop-and-go traffic, that car will get old fast.

Advice: it's up to you and what you want to drive, really. 2007 isn't that old by my standards. I own 4 vehicles, ranging from 1994 to 2003. My '94 Nissan is pretty solid, just a bit rusted and went over 300,000 km last week; the '96 Chrysler needs to spend some time with me in the garage, it's gone over 350,000 km and is badly rusted; the '97 Toyota needs a friggin engine and is barely over 200,000 km (I picked it up as a project car); the '03 Pontiac is perfectly fine and is over 200,000 km.

So:

do you want to spend $4k-$6k fixing this car?
do you want to put the same money down on something new?
do you want to spend the same money on something used that drives?

Repairs cost more than engine, but car might have some life left

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