Going by the age of your car I would probably just keep it and fix it up. There is a point with cars that you are not really going to get too much for them on the 2nd hand market or for trade in, so you are better off keeping them. Seeing your car seems to be quite a good one and the mechanic is happy with it, then I would be reluctant to let go of it.

If you were planning on getting a loan for the new car, then you could keep your old one and save the "repayments'. That way by the time you current car is really ready to be gotten rid of, you could pay cash for the new one.