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Remanufactured Engines
Remanufactured or rebuilt engines are engines which have served their lifespan, been taken completely apart, had extensive repairs and replacements done, and then are resold or re-used. Some mechanics swear by them, some don't.
The Advantages of a Reman
The greatest advantage is cost. A quality remanufactured engine can be 20-30% cheaper (or even more) than an all-new replacement engine. The cost can often be even cheaper if the existing engine in the vehicle can be rebuilt.
New engines have core costs and the most expensive single item on a new engine is its block - the very basis of the thing. In a remanufactured engine, the block is the part least likely to require replacement or extensive repair. Most of the replacement/repairs are in the cylinder bores, heads, etc.
This is because the engine block is the heavy, central core of the engine that has few moving parts and is built to be extremely robust as it is where all of the pressure and activity happen.
The Disadvantages of a Reman
The disadvantage is that the engine has already seen some use and despite the new parts, it is still a used engine. Most of the time, this is not really a serious issue as the re-used parts are usually the ones that are strongest, least likely to have problems.
If the remanufacturer, however, is not reputable or fails to do a good job, then quality control issues in the cleanup, re-boring, or replacement parts may lead to early problems in the rebuilt engine.
This issue is more common with existing engines that are rebuilt by those with little experience in that specific engine make and model. Chances are, your corner mechanic is not going to be the right guy to do your rebuild.
To Replace or Not To Replace?
In the case of a classic, antique, or otherwise desirable car, the question of engine replacement is not asked. If you have a 1980 Toyota, however, the cost of replacement is almost definitely going to be more than the car is worth.
In that case, you must ask whether it's really worth the expense of undergoing a replacement. If you are emotionally attached to the car, then perhaps there is reason, but most likely finding another car is a better option.
Sadly, the same goes for many late model cars as well. Most new cars do not hold their value as well as cars of 10 or so years ago. Replacing the engine also often means replacing a lot of expensive electronics too.
Make sure you are absolutely better off by replacing the engine rather than just scrapping the vehicle and buying another.
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