Advice on car problem

Financial Pros:
- Staying with the Trax avoids adding new debt, keeping your finances focused on other goals like saving for a house.
- Repairing the Trax will likely cost less than taking on a new $23K car loan with higher monthly payments.
- Your current payment of $327/month fits comfortably into your budget.
Reliability Concern:
- If the Trax continues to have major issues after the warranty expires, you could face repair costs of $1,000–$3,000+ annually, which is unpredictable and stressful.
- Being stranded with a baby is a real concern, and it may not be worth the risk to save money.
What to Do If You Keep the Trax:
- Get a comprehensive diagnostic done by a trusted mechanic to evaluate the overheating issue and estimate repair costs for the next 1–3 years.
- Consider putting aside $2,000–$3,000 in an emergency fund specifically for potential repairs.

Financial Cons:
- Adding a new car loan with payments of $390–$450/month will cost $4,000–$7,000 more over 3 years than keeping the Trax, diverting funds from your house savings.
- Financing for six years locks you into debt longer, and cars depreciate rapidly, reducing the resale value of the Rav4 over time.
Reliability Pros:
- The Rav4 is a more reliable and higher-quality vehicle compared to the Trax, meaning fewer repairs and breakdowns.
- With the Rav4, you reduce the risk of being stranded with a baby, which has non-financial peace-of-mind value.
What to Do If You Choose the Rav4:
- Negotiate aggressively to lower the purchase price and secure the lowest possible interest rate for financing. Aim to keep your payment closer to $390/month.
- Keep the loan term as short as possible (ideally 4–5 years) to minimize long-term interest costs.

Emergency Fund: With $30,000 in student loans about to enter repayment, ensure you maintain an emergency fund of at least 3–6 months' expenses before taking on a new loan.
House Savings: Trading the Trax will slow your progress toward saving for a house. Consider how delaying homeownership might impact your family’s long-term financial goals.
Third Option – Repair and Sell Later:
- Invest minimally in fixing the Trax now, then sell it for another used vehicle with a more reliable track record, like a Honda CR-V or Toyota Highlander.
- This would keep you in a similar price range while improving reliability without committing to six more years of car payments.