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Totaled Out VW Beetle

A car buying question from Tomm G. in El Mirage, AZ...
We owe VW Credit $8,500, because we didn't have GAP insurance.

Hello, my wife just totaled our Volkswagen beetle and it turns out we did not have gap insurance coverage, so I am in big trouble.

Actually, I don't remember them even offering GAP insurance, because I think the loan was full taking on some negative equity of the car we traded in.

Now I was wondering if you had any idea as to what I should try?

Does the bank (Volkswagen Credit) usually want to finance another loan and roll the negative equity into it, so they are more likely to get paid? It is about $8500.

I can put a grand down, but that is still $7500 negative....Yikes! Or should I be looking at some crappy buy here pay here, "Everyone is approved" places? I will never buy a car without gap insurance again! What do you think?

I know I can't get another auto loan while having this loan on my credit, so am I hosed? I have slipped a bit in credit rating since the VW credit loan and am now a 632, but with the VW auto loan on my credit, I doubt I can get a loan regardless.

Thanks, any help would be great. I need to hurry and get out of this rental car, I can't afford to stay in it much longer. Any idea's would be a great help. Help!! :)

Hey Tomm,

Bad situation and I'm sorry to hear it happened to you. I would certainly agree with you about not ever buying another car without GAP insurance.

In fact, if it was not offered to you on the original purchase I'm a little disappointed with the car dealership, unless like you mentioned your loan was capped by the bank, but in my experience that's unlikely with VW Credit unless you were a first time buyer.

I have about a years experience working with VW Credit down in Phoenix and have to say they have one of the strongest lending programs of all the manufacturers financing arms.

It would not surprise me (assuming they lend the way they used to) if they did roll the GAP, not covered by your insurance company, into your new auto loan.

If not, then they would probably be willing to work out payments, which if structured right you could still get a new loan and pay the GAP (not referring to the insurance, but the amount owed on the Beetle) on the side. With both payments together you'd still only have the equivalent of one car payment.

Volkswagen Credit contact information:

Send correspondence to:
Volkswagen Credit
P.O. Box 3
Hillsboro, OR 97123-003

Call 1-800-428-4034
8:00 am - 11:00 pm Eastern Time, Monday - Friday
Volkswagen Credit

Another option to consider is to negotiate with your current insurance company to pay more. Insurance companies will try to stick it to you when possible and may be trying to settle for less than their real top end settlement.

I don't think that you'll have to resort to a "buy here pay here" just yet, but there is still a lot I don't know about your credit situation, and I'd suggest heading over to a VW dealer ASAP to see what they can do to help get you squared away with VW Credit and hopefully into a new car.

You may have to settle for a car the dealer selects (i.e. you want a Beetle, but they put you in a Jetta, etc.), because of the loan structure, but it will keep that GAP from being charged off which would be really harmful to your credit and FICO score.

When explaining your situation you may want to ask the dealer to have the Finance Director present so they'll know how to explain it to VW Credit. If not the Finance Director (they can get pretty busy at larger dealerships), then someone above a salesman, because the salesman probably won't have a clue what can or can't be done. Try one of the larger dealerships, as they have probably dealt with this before.

Another thing that came to mind...You could possibly use a new car rebate to apply towards some of the GAP and finance the rest, then have the dealer cut you a check back for the difference and payoff the amount owed to Volkswagen Credit. A lot of this will come down to your credit and how creative the dealer is.

I truly hope that you are able to get through this without that balance reporting as charged off, so please let me know how else I may be able to help. VW Credit tends to be flexible, so I'm optimistic...Justin

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