Repair old or buy new

It's a Toyota. The engine is barely broken in! If the car is otherwise in good shape and you like it, fix it! Those engines are usually good for 300,000 to 400,000 miles at least! So, assuming you didn't blow the engine because you didn't change the oil, I'd fix it if it were mine. This advice is generally true for any Toyota built in the past 20 years, that is why they usually have the best reputation for value for trade-ins or private sales/trades. I am assuming that you can afford that repair, there are other factors to consider if you can't make repairs that expensive. You can sell it as-is I suppose, depending on what your $3000 is going for. Hope this helps. I work at a Toyota engine plant (but as a contractor), and no one disagrees with me on the engine quality anywhere around here. Transmissions are generally good too, everything else is ok to good, as long as you follow the maintenance schedule properly.

Yes, if you plan on driving it for another couple years and you enjoy driving it.

For Toyota vehicles with a 3.5L V6, you have the GR engine. That engine is very reliable and it will take care of you if you take care of it. Any GR engine with 126k miles is just getting broken in! Since you didn't specify what the nature of the repair is, I will have to guess that I would fix it if it were me, because I know I can get at least another 200,000 to 300,000 miles out of that engine! If it is body work, it depends. $3000 for a body shop at the dealer to repair a car isn't much of a repair these days, look for a reputable non-dealer shop and get 2 or 3 quotes. If it is drive train related that is not the engine, get 2 or three quotes that does not involve a dealer there too. Once you get your numbers, consider the balance between keeping a known good and reputable vehicle against the cost of a new vehicle. I'd buy any used and running Toyota at 126k miles that is 12 years old as that is low mileage for the age, that's a good deal! Depending on your problem, I'd consider keeping it and getting it fixed. If you need an excuse to sell it, you may get more for it than you realize. Do your homework and then decide. I am employed at a Toyota engine plant and I think the Toyota engines are some of the best ever made from a quality control perspective. If an ungloved finger even touches an engine before it leaves the plant, it is tossed into the recycle bin! I have seen it happen.

I would say this is a big maybe. You must judge this on the cars merits. If it is a rust bucket or has other problems I would not fix it but if it is clean I would probably go for it. Like Dolby says, keep it for several years to get your moneys worth.