If you can afford it, I would give her the money. It is likely that she will not pay you back and then you would lose a friend.
This friend cannot afford the car. If you want to be a really good friend, offer different options like buying a junker until she can save up for a nicer car.
Based on your comment, I am gathering the following:
- You can't/don't want to give her the money.
- You are having difficulty saying no.
Sorry to beat a dead horse, but lending the money is akin to giving her the money. So if you don't want to give it to her, then you can't lend it to her.
She has "car fever", she thinks she cannot live her life without this car. She can, and you know it. In a week or two, she will have forgotten all about it.
Since you cannot really say no (for whatever reason) you can "pocket veto" the idea through distraction. Make her do a lot more legwork and in the end she will probably forget about it.
So what I might suggest to her is that she goes to a credit union or a local bank to try for a car loan and see what they say. You might sweeten the deal by saying they typically have lower interest rates then the place that is offering the loan now. Alternatively you should tell her to let the car deal sit for a couple of weeks to see if you can talk them down on price. The key is stalling, so the next shinny thing distracts her.
Now the dad in me is going to come out, please consider yourself yelled at for these items:
- Grow a backbone. Learn to say no. This person is trying to steal from you.
- Choose better friends, don't be afraid to let bad ones go.
- "Iron sharpens iron", hang around people that have plenty of money.
- Don't give out to many details about your financial situation.
- Good job on having enough money to loan this person, keep that up.
Have a nice day.