Got my van checked out today from a check engine light. Long story short, part of the transmission has gone bad, and given the lower quality of this particular transmission, rather than diagnose the specific root cause issue, it's better to replace/overhaul the whole transmission.
We're still waiting on a quote, but I know from previous research that this repair would've cost $3000 two and a half years ago; I bet it's likely $4000-$5000 these days.
We bought the van two-and-a-quarter years ago for $6700, it currently has about 115,000 miles on it. Kelley Blue Book private party value for "fair" condition is $5700, "good" condition $6400. I bet these are actually low values; on Craigslist right now, for example, I see a same make, model, and year van at 103,000 miles for $13,000. Though I also see one two model years newer at 130,000 miles for $8000.
My spouse thinks that since the repair cost is likely to be most of the current value of our van, that's an argument against undertaking the repair and instead applying that money to the purchase of a different car. To me, that sounds like some form of a sunk-cost fallacy, but I can't quite tell, can someone help me understand on this?
My thoughts are that, ignoring all previous costs, we basically have a choice between "buying" our current van (with a new transmission) for the repair cost, or buying a different vehicle for the price of the repair + whatever we can get out of selling our unrepaired van. Is this a rational approach to this decision? If not, where is my logic going wrong?
(There's also a third choice of spending even more money and buying a more expensive vehicle, but I list the two above as equivalent choices since in terms of dollars spent they are equal.)
Update: got the repair quote, with tax it will be about $4400.