Welcome to the forum, one thing your friend should do is fix his credit when he gets back on his feet. I had a friend who did the same, put money into a car that he did not own. I highly recommend bolt on inexpensive mods on a car that you are still financing. Once the car is paid, then go all out, until then keep it simple. Just my 2 cents.
Also is the VW is FWD? A 1.8L spooled faster than a 3.7 RWD? I don't know much about VW's that's why I ask. The only VW that I know of is the old bug where tuners would swap Porsche motors into them. Anyway good luck and welcome.