Wow, talk about a rock and a hard place ...
Is this car repair place .. a place that you trust? Or was it just where they towed the car?
Is this a transmission place?
When you place the gear selector into Drive, does the instrument cluster show the proper gear?

I would call around for a better price. On the vehicle is engine, tranny, steering, exhaust, and suspension. The rest is passenger comfort. There is no guarantee if you fix one thing that another won't break down. Then again, what guarantee is there that the next car won't break down? Any car whether the car runs or not is worth about $200 to $500 due to the catalytic converter having valuable metals. A junkyard?
I have seen parts cars for sale on Facebook that they want $500 to $1500 for the jalopy.

It is tough. Still owe $5k and they want $5k to fix? Private sale, the car is worth about $5k to $6k. Trade in is worth $2k to $3k For running car. Still call around and see if there is a better price out there. Last time I had to rebuild a tranny on a van and a car, it cost about $2000 (for each one, this was at a shop that specialized in transmission) and that was about five years ago. (Albany, NY)

 

Recap:

1. It will cost up to $6,500 to fix the transmission
2. She owes $5,000 on the car.
3. Blue book is maybe 3k

Do I have that right?

How much will your car repair guy charge to remove and replace the transmission?

If it was me, I would get a used transmission and have it installed. Buy one from eBay, or find someone parting out a wrecked RAV4. Like this:

Automatic Transmission Gasoline 6 Cylinder AWD Fits 06-12 RAV4 1664154 | eBay

Find many great new & used options and get the best deals for Automatic Transmission Gasoline 6 Cylinder AWD Fits 06-12 RAV4 1664154 at the best online prices at eBay! Free shipping for many products!

www.ebay.com

JDM 2009-2012 Toyota Rav4 | 2.4L 4 Cylinder Automatic Transmission | FWD – JDM of California

www.jdmcalifornia.com

Alternatively, buy a salvage but running RAV4 and harvest the transmission and whatever else you need. Like this:

https://www.copart.com/lotSearchResults?free=false&displayStr=Search%20vehicles&from=%2FvehicleFinder&searchCriteria=%7B%22query%22:%5B%22*%22%5D,%22filter%22:%7B%22VEHT%22:%5B%22vehicle_type_code:VEHTYPE_V%22%5D,%22ODM%22:%5B%22odometer_reading_received:%5B0%20TO%209999999%5D%22%5D,%22YEAR%22:%5B%22lot_year:%5B2009%20TO%202011%5D%22%5D,%22MODG%22:%5B%22lot_model_group:%5C%22RAV4%5C%22%22%5D,%22FETI%22:%5B%22lot_condition_code:CERT-D%22%5D%7D,%22searchName%22:%22%22,%22watchListOnly%22:false,%22freeFormSearch%22:false%7D

 

what would you do?

Thinking more about this in the cold light of day....

Thought #1
If you are handy and motivated, you could buy a salvage but running and driving RAV4, have the transmission installed in your RAV4, and then part out the rest of the salvage RAV4 and probably break even on cash.

Thought #2
If the car was fixed it would be worth maybe $3k to $4k.

Even if you could get a used transmission in there for $2k to $3k, it still seems like you might be better off scrapping the car and buying another one.

 

Thanks to you all for the great ideas/advice. I did have it towed to a real transmission shop today so hopefully they can give me a second opinion on it. The idea of buying a used one was one option they gave me but still around 5K all in. The idea of buying one off ebay is interesting or buying a whole car and removing the trans is a good idea as well. Really thanks for the ideas.

 

Paying upwards of $6500 is crazy and with the high high mileage comes more repairs. If it was me I would find another car before things get even more worse.