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1996 Subaru Outback Slipped Timing needs HG

I bought my 1996 Subaru Outback wagon two years ago for $4000 from a dealer who told us that it had a new timing belt and water pump. It now has $138,000 miles. We have had it maintained by a reputable Subaru mechanic and it was running fine up until two days ago. I started the car, it ran for about 15 seconds then suddenly died. Trying to start the car resulted in a terrible grinding noise. We had it towed to our mechanic who told us that it looked like the timing belt jumped timing and the head gasket was destroyed along with the valves. Without doing a full diagnostic, he couldn’t give us a completely accurate estimate for the repairs, but his ballpark is about $2800 for the timing kit, timing pensioner, headgasket set, full set of valves, oil & filter. Plus, it already needed transmission repairs ($300) and a power steering pump ($300). He said he could do the full repair for about $3000. Or we could sell him the car for parts at $500. Would it be worth while for us to pay another $3000 to get this car back on the road and hopefully drive it for several years to come? My guess is that the value of this car in our area would be about $3500. Our other options would be to take a car out on loan (not my favorite option, as we already have a lot of debt) or to chance it with another used Subaru or perhaps a Toyota Rav 4, in the range of $4000-5000 for a car with perhaps higher mileage than this one. Any thoughts?

What I didn’t mention is that our mechanic thinks that the dealer replaced the timing belt without replacing the pulleys, which wore out, causing the timing belt to jump.

I feel the prices from your mechanic are fair given the problems and work the car needs. I also think you are way overvaluing the car. Go to and you can find the “True Market Value” for the car in the used car tab.

Since it seems your choice is keep this car for $3,000 or buy another pretty old unknown car for $3000 to 4000, either way you are still driving an old car that can result in expensive repairs. If that is all your budget and finances allow I’d probably stick with your current car. It seems you have a decent mechanic and that means you should be able to scrape a few more years out of it.

Cut your losses and sell it for $500. As others point out, it’s an old car and you will be facing many more repairs in the coming years.

@rebeccajarnold, is the body pretty straight and rustfree?
What $300 repair does the transmission need?
AC blows cold?
Tires good?

I would be pretty hesitant to look for another used car.
Someone might try to sell you a POS, telling you it’s a creampuff.

I had similar symptoms once, but it only turned out to be that the inner rubber part of the harmonic balancer (crankshaft pulley) became detached from the outer metal part of the pulley. Same effect as a broken timing belt, but no other damage. Cheap fix. Absolutely confirm that it’s not just a broken harmonic balancer before you decide what to do.

Well, I don’t see how a broken timing belt woulld damage a head gasket. However it would cause a lot of other damage.

Elly, whenever the head needs to be removed, as in when damaged valves need to be replaced, the headgasket needs to be replaced as a part of the operation.