I need a guy's opinion on my car?

Don't fix it then sell it.

You wont get the $4,000 back...

Only fix it if you intend to keep it. Then the $4,000 get you 4 more years of driving, and might be money well spent.

Because it's got an engine knock it will be hard to sell privately, or it will come back to bite you when the buyer finds out you sold then a lemon.

Personally I'd go and talk to some decent car dealers and see what they can offer.

Well a general rule of thumb is when your mechanical bill is higher than what the car is worth, it's time to trade it in. But if you think you can get more than 4300 (2500 to fix plus 1800 to payoff) for it on your own then do it. I don't know what the retail value for your car is, but I doubt that you'd be able to resell it after repairs for that much. If it were me, I'd put my money into a new vehicle instead of repairs that may or may not work out in the long run. Good luck!

What is the problem causing the engine knock? And what else would need done? That would be the main consideration, especially if I'd be deciding to keep it or find a buyer willing to fix it.

In any case, unless you need a pickup truck, I'd personally pay off the loan, fix it and keep it for quite some time. You're about to pay off a 10 year old car, which is hopefully a good feeling. I'll guess you'd like to not be in a position to have payments on a 10 year old car again. For instance, I kept a car until it was 16 years old and had nearly 250,000 miles before deciding to sell it. Because of that I didn't need to take a loan out at all for my new car. And if I should decide to sell or trade it in, I could get another without a loan, as I haven't had car payments for a long time. (And saved a bunch).

But if that wasn't an option, or I decided I really wanted to go ahead and get a pickup, I'd probably first go to a Carmax and get an offer. Then I'd either take it or consider selling the car myself. If I did the latter, I'd pay off the rest of the loan to get the title to make things easier. I'd also fully disclose the problems and the cost estimate (to dealers and individual buyers). With a $2,500 repair estimate, however, I wouldn't expect to get much more that what I owed. Maybe a few hundred.

I'd also avoid having a dealer roll the $1,800 into a new car loan. Instead I'd get it paid off if at all possible. For the new loan and go to a couple banks or credit unions to see what terms they'd offer and have financing arranged before going shopping. I'd also not take a loan out for more than three years (36 months). That way you just negotiate price with the dealer and don't get caught up in the "four square" how much can you pay a month stuff and wind up paying for a car for five years or more.

Go to a dealer and see what they will offer you as a trade in on it.