Verbal agreements mean absolutely nothing in the court of law. She could say there is nothing wrong with the vehicle, but if you don't have that in writing that fact does not matter. You should always have a used vehicle checked before purchasing it. There is nothing in writing so you basically buy the vehicle as is, but im not sure about lemon laws on used vehicles. You have no evidence that the transmission went bed before you purchased it, so she could claim you caused it to go bad.
Was the payment plan in writing? If so, than you are forced to pay, otherwise she has the right to take the vehicle back without returning any funds. And if she sells it for less, she can even sue you for deficiency!
http://www.ftc.gov/bcp/conline/pubs/autos/carrepo.htm