Some good advice in here. I would also add that if you do go through with the co-signing, that it isn't on a new car but a used car instead. Reason being is depreciation- a new car with a $20K loan is going to be worth $15K in 6 months when she defaults, but a $15K used car will be worth $14K in 6 months.
Or if you do co-sign for a new car, make it a condition that she get "purchase price" insurance on the vehicle. So if it gets written off, the loan can be paid in full.
And of course if you cannot afford a new car on your own (ie-credit bad enough that you need a co-signer) she can always buy a $5K car. Or for that matter she can go into one of those "we finance everybody" places and pay 15-20% interest. That's what I had to do when my credit sucked- it's part of the cost of rebuilding your credit.
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