Have you already checked all the buying services to see if Carmax is paying the most?
If you co-sign, she could probably refinance it for 4-5% less. Have you done that math?
Transacting on this car, even to sell it and buy a beater, is going to incur sales tax and registration (even if you get a prorated refund). Refinancing it at least let you minimize the hurt while you figure out long-term what the plan is. I would at least run the numbers in your collective shoes.
