CARFAX says "engine replaced" - Does this increase or decrease value?

  1. Do you think the engine was replaced with a brand new one or a used or rebuilt one?

Your guess is as good as mine.

  1. Does the replaced engine reduce the car’s resale value? Seems that a new engine properly installed at 85k would make the car last that much longer…but I can imagine potential buyers having the same unease I have now, wondering if the car is a lemon with more major problems to come. But with the engine and cooling system replaced, what else major could go wrong?

Personally, I would stay away from it. Who would want a car that needed a replacement engine after only 85,000 miles?

  1. I am also thinking that for the service contract to have been honored three times from 60k through 85k, the owner must have been keeping up with and documenting the maintenance, otherwise the service contract would not have covered those big-ticket items, right?

Not necessarily. That is a HUGE assumption. You don’t know if the car was brought in for service or simply because something went wrong. Also, since the service contract was probably from a private company, rather than the factory, there may have been no incentive to deny a claim because of a lack of maintenance. Besides, the repairs may not have been related in any way to maintenance.

Good idea or bad idea to think about buying this car?

I would want something much more reliable myself.