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...I have seen plenty of 3rd-generation VWs with severe rust problems. Look at the hatches of most 93-98 Golfs, for example. Worst was a '97 Jetta with rockers rusted out - the rust extended well into the floor, too. Fortunately for the buyer he got it as a VW Certified Pre-Owned, meaning he had some warranty coverage, and he kicked up enough of a stink that the dealer sent the car out to a collision centre for new rockers & floorpans.
It sounds to me like you'll have your hands full if you tackle this. Don't even consider spending money on repairs until you've got the seats & carpets out, scraped off that undercoating, and had a good look at everything that'll need repair. It's probably going to be more extensive than first glance would indicate. And chances are, if there's been that much corrosion, half the bolts you try to turn will break unless you've got a torch. I'm not trying to be pessimistic, just make sure you go into this with your eyes open.
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Chris, Dartmouth NS Canada 70 M-B 280SE, 83 245DL, 84 244 turbo, 90 780 turbo, 92 VW Golf, 90 740 Rex/Regina
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