In my opinion trying to finance another car is just going to put you in more debt!. You need to rid yourself of that VW. I would sell the car privately to get the most out of it and be prepared to pay the difference. This might seem harsh but in the long run you will be out of debt and able to buy a new car with good rates. Short term, I have heard people on here talking about FORD being somewhat lenient these days so I would look into it.
Welcome to the forums! Unfortunately unless you have addressed the issues which made it impossible to qualify for a decent car loan the first time your options are extremely limited. Do you have the income to support a second car loan while you work on paying off the VW? That would be the best option for you. It is going to be difficult at best and almost improbable that any dealer is going to be able to buy into a deal to cover the negative equity on the VW and sell you another vehicle. And even if they do it means that you are adding to your troubles as you will automatically be upside down in the new deal by the old negative equity and any drive it off the lot depreciation in the next vehicle.
You may want to see if you can find an outside loan source to cure the negative equity in the VW and provide a decent down payment on the next vehicle before you even step on the lot. Sorry I don't have any better advice or happy news for you.
I was once in your position ( I feel like I say that alot), and it is a difficult one to be in. If your credit has improved somehow since then, and you have no emotional attatchment to the car, maybe you can trade it in for a lease? My girlfriend did just this for a bad Pontiac she had. She put 3k down, traded in the car she owed 7k on....dealership ate the balance, and she was put into a new Sonata. Her car payment went down after that as well.
The dealership doesn't eat the balance. They tell you they do because it makes them look good, but the person that pays the price is the person paying for the lease. So, no, a lease is not a good idea. The negative equity doesn't go away, it gets transferred over to the new vehicle. With a lease all you have are payments and at the end you have nothing, except possibly a huge bill if you went over in milage or had damage to the vehicle.
By trading for a lease, even presuming you could qualify for one, all you are doing is pushing off the problem to be dealt with during the lease term. Take care of the car issue by saving up funds so you can refi it into a better loan - sooner rather than later.
I agree that is the better way to go...and I should have used different language in explaining what we did. It worked for us because it was an issue with reliability and necessity, the loan interest rate was at the high 20's percentage wise...close to 30 I think and the mileage was at the point where they would not refi. At least that is the reason she was given at the time.
If you have fixed your credit it can certainly be done. We were around the same upside down on my wifes vehicle. It was having some mechanical issues so we needed to get rid of it before it had major problems. Traded it in and bought a 2013 Camry. It's a bit easier to do with a new car than a used car but can be done. Big thing is you need to have solid credit for the banks to take the risk on the loan.