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Hello, I will be doing an engine swap in my s-10 fairly soon. The specific truck I have is a 1992 s-10 ext. cab 2.5l 4-banger, with RWD and a 5 speed manual. 

What I am thinking for engine/ tranny is a Chevy 350 with a NV3500 transmission. It would be easier for me to find a 350 that already has a NV4500 married to it, but I have heard that it is difficult to fit a NV4500 in an s-10. I can't find any info for my exact model, so I'm asking if the combo of the 350/nv3500 will be a good fit. I won't be racing this truck, I just want more get-up and towing capacity. if you know of a better setup I am very open. also originally I was thinking of putting a 5.3 Vortec instead of the 5.7/350 but everyones been saying the 350 is easier.

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Putting a heavier engine and transmission in that truck will reduce it's towing capacity, not increase it.
You're absolutely correct, legally it reduces towing capacity.
With payload and towing You're also limited by the suspension and physical weight of the vehicle. There are websites that can break down the specifics on this.

Sent from my SM-G975U using Tapatalk

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