Get 5 quarts of T-IV fluid, as it's a Toyota transmission, if you plan to drain and fill it. Under the car, you have two drain pans. The FLAT pan is the transmission. The one that looks like
this is your engine oil pan.
Now, put a big drain pan under your transmission plug and take the drain bolt out. It is a size 14 mm bolt. It is best to drain the transmission when it's still warm.
Next, reinstall the pug. Get it snug, but don't crank down on it like it owes you money. Just get it to the point where it feels like it doesn't want to keep going. If you tighten it too hard, you will rip the threads out of the pan.
Next, pull the dipstick. It is the yellow one in the shape of a T. Get a funnel with a narrow enough tip to fit in. This is the only place you can fill from. Add 3 quarts, install the dipstick, start the engine, and
while holding the brakes, shift into reverse, wait 3 seconds, shift to drive, 3 seconds, 2, 3 seconds, and 1, 3 seconds. Then go back to park with 3 seconds in each gear in the opposite order. Wait until the engine reaches operating temperature (about the middle of the coolant temperature gauge or just under).
With the engine still running, pull the dipstick out, wipe it, put it all the way back in, and pull it back out and check the HOT level. You should be closer to MAX than to MIN. If you are still too low, add more, shift the gears again, and recheck.
Why do you shift through the gears? Well, the ATF (auto transmission fluid) isn't just a lubricant and cleaner. It also drives the transmission using fluid pressure, valves, clutch packs, bands, and pistons. The fluid is directed into a clutch pack inside a piston, which holds certain parts stationary.
Basically, a lot of fluid must be moved out of the pan and into the rest of the system to get an accurate reading of whether you have enough for it to operate correctly.
All this engagement of pistons, bands, and clutch packs changes how power is transferred through a single gearset. In a 4 speed transmission (the Vibe/Corolla/Matrix), all you have is this as far as gears go:
It looks complicated, but the manual gearsets are more complicated. What you see in the image above actually only accounts for 3 speeds. The 4th speed, actually called "overdrive," locks up the torque converter so that for every single turn the engine makes, the transmission turns more than once (I don't know the ratio for this car, but it's probably like 1.3 transmission turns for 1 turn of the engine). This increases highway efficiency.
I left out a lot of details as far as how things work and what the torque converter does, since it's hard to explain these things without going in to a lot of other concepts.
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