Give her back to the car, tell her why (we can't afford a new car right now, you are going to financially wreck us). Tell her you never wanted her 'in danger' (driving the old car), but that you are tired of letting her have the easy way out (ie: reliable car to see Shrek). And if you truly think FIL is upset (and it matters to you...), then explain why to him, and after that, tell him this will be the last time you 'explain yourself' to him and put him in the middle. That if he ever wants to talk or ask you questions, your door is open.
This is my gut opinion. I have NO idea if its the *right* thing to do.... I am thinking of you.
