VW Looking to Secure $21 Billion in Short-Term Loans

2016 Volkswagen Passat (Credit: Volkswagen )

The Volkswagen scandal just keeps on growing, and today we learn that the embattled automaker is seeking help from outsiders to pad its pockets before the fines and penalties start rolling in, according to Bloomberg. In total, the company is supposedly seeking a whopping €20 billion ($21.5 billion) in loans.

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This supposed short-term loan is not to necessarily keep the company afloat, like the massive bailouts the U.S. government handed out to various automakers years ago. Instead, this loan is to help the company maintain while it sorts out the final damages form the Dieselgate scandal and gets the liquid capital it needs to handle the massive amounts of cash that is set to vacate its bank accounts.

According to the report, which quotes several insiders at VW, the massive automaker has already met with about a dozen banks to secure financing. The insiders also indicated that the financing should be in place by the end of 2015.

While the amount of the financing may sound crazy, you have to keep in mind that VW will be recalling as many as 11 million diesel vehicles to make things right. In addition to the recall, the company is facing massive fines from around the globe, and it’s shelling out big incentives to keep buyers coming. In total, Barclays Plc estimates that this scandal will drain around €25 billion from VW’s coffers.

While VW’s short-term future seems to be on solid ground, its long-term stability remains very questionable. This really depends on whether buyers around the world are willing to forgive and forget one of the largest scandals the automotive realm has very experienced.

Stay tuned for additional updates.