January 31, 2007




Navistar
      Financial Corporation


425
      N.
      Martingale Road


Suite
      1800,


Attention:  
      General Counsel


Schaumburg,
      Illinois 60173




LaSalle
      Bank National Association


Suite
      1625


Chicago,
      Illinois 60603




Attention:  
Global
      Securities and Trust
      Services-Navistar 2006-ARC




Re:            Defaults
      and Events of
      Default Ladies/Gentlemen:




Please
      refer to (a) the Indenture dated as of September 1, 2006 (as amended, the "Indenture") between
      Navistar Financial 2006-ARC Owner Trust, a Delaware statutory trust, and LaSalle
      Bank National Association, a national banking association, as indenture trustee
      (in such capacity, the "Indenture Trustee"),
      (b) the Note Purchase Agreement dated as of September 1, 2006 (the "Note Purchase
      Agreement"), among Navistar Financial Retail Receivables Corporation (the
"Seller"),
      Navistar Financial Corporation ("NFC"), Amsterdam Funding Corporation, as a
      Conduit Investor, and ABN AMRO Bank, N.V., as Funding Agent and an Alternate
      Investor and (c) the ISDA Master Agreement dated as of September 1, 2006 between
      LaSalle Bank National Association (in such capacity, the "Swap Counterparty")
      and Navistar Financial Corporation. Capitalized terms used but not otherwise
      defined herein have the respective meanings assigned thereto (including by
      incorporation by reference) in the Indenture, or if not defined therein, in
      the
      Note Purchase Agreement.




By
      its
      signature below, effective as of the date hereof, (i ) each of the Funding
      Agent, the Alternate Investor and the Conduit Investor waives a breach of the
      covenant set forth in Section 5.02(c) of the Note Purchase Agreement arising
      as
      a result of the failure of NFC to deliver its financial statements for fiscal
      year 2005 and for the fiscal quarters ending January 31, April 30 and July
      31 of
      2006 by January 31, 2007, the financial statements for fiscal year 2006 within
      120 days after the end thereof and for fiscal quarters ended January 31, April
      30 and July 31, 2007 within 45 days after the end thereof (such financial
      statements, collectively, the "Financial
      Statements"), (ii) each of the Funding Agent, the Alternate Investor and
      the Conduit Investor waives and instructs the Indenture Trustee to waive, and
      the Indenture Trustee and the Swap Counterparty hereby waive, any failure of
      the
      Servicer under Section 3.02 of the Servicing Agreement to deliver the
      Accountant's Report (as defined in the Servicing Agreement) required to be
      delivered on or before February 1, 2007 and (iii) each of such parties hereto
      waives the occurrence of a default, Default, Event of Default or Servicer
      Default arising solely from the breach of the covenants described in the
      foregoing clauses
      (i) and (ii), whether
      such
      event is matured or unmatured, under the Indenture, the Servicing Agreement
      or
      the Note Purchase Agreement; provided that each
      of
      the Seller, the Servicer, the Issuer, the Swap Counterparty and the Indenture
      Trustee acknowledge that an immediate Event of Default under the Indenture
      and
      the Interest Rate Swap and Servicer Default will occur if, and to the extent
      such failures constitute an Event of Default under the Indenture or the Interest
      Rate Swap or a Servicer Default, as applicable, without the need for the giving


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of
      any
      notices by any party or the passage of any grace period, the Funding Agent
      and
      Swap Counterparty shall not have received the Financial Statements and the
      Accountant's Report (as defined in the Servicing Agreement) by the earlier
      of
      (i) October 31, 2007 and (ii) five (5) Business Days after the filing of such
      Financial Statements with the SEC, unless the Funding Agent, the Conduit
      Investors, the Majority Investors and the Swap Counterparty, shall have provided
      a further waiver of the covenant violation described in this sentence on or
      before such date.




LaSalle
      Bank National Association, as Swap Counterparty, hereby agrees that it will
      not
      request any financial statements or other information pursuant to Part 3(b)
      of
      the Schedule to the ISDA Master Agreement dated as of September 1, 2006, between
      it and NFC until the earlier of (i) October 31, 2007 and (ii) five (5) Business
      Days after the filing of such financial statements with the SEC.




The
      foregoing waiver shall become effective as of the date hereof when the Funding
      Agent has received: (1) counterparts of this letter executed by the Seller,
      the
      Servicer, the Conduit Investors, the Alternate Investor, the Indenture Trustee,
      the Issuer and the Swap Counterparty and (2) each of Standard & Poor's and
      Moody's confirms in writing to the Conduit Investor that such waiver shall
      not
      result in a reduction or withdrawal of its rating of the Commercial Paper issued
      by the Conduit Investor; it being understood that such rating confirmation
      does
      not constitute an assessment by Standard & Poor's or Moody's of the
      financial strength of NFC.




Except
      as
      specifically waived above, all of the terms, conditions and covenants of the
      Note Purchase Agreement, the Indenture and the other Transaction Documents
      shall
      remain in full force and effect and are hereby ratified and confirmed in all
      respects. Further, the Funding Agent, as agent for the Conduit Investor,
      acknowledges, represents and warrants that it holds all of the Outstanding
      Amount of the Controlling Class.




Notwithstanding
      anything contained herein to the contrary, this waiver has been signed by
      LaSalle Bank National Association, in its capacity as Indenture Trustee, not
      in
      its individual capacity but solely as Indenture Trustee and in no event shall
      LaSalle Bank National Association have any liability for the representations,
      warranties, covenants, agreements or other obligations of the Issuer hereunder
      or in any of the certificates, notices or agreements delivered pursuant hereto,
      as to all of which recourse shall be had solely to the assets of the
      Issuer.




No
      failure or delay by any party in exercising any right hereunder shall operate
      as
      a waiver thereof, nor shall any single or partial waiver thereof preclude any
      other or further exercise thereof or the exercise of any other right
      hereunder.




Notwithstanding
      anything contained herein to the contrary, this waiver has been executed by
      Chase Bank USA, National Association not in its individual capacity but solely
      in its capacity as Owner Trustee and in no event shall Chase Bank USA, National
      Association in its individual capacity or, except as expressly provided in
      the
      Trust Agreement, as Owner Trustee of the Issuer have any liability for the
      representations, warranties, covenants, agreements or other obligations of
      the
      Issuer hereunder or in any of the certificates, notices or agreements delivered
      pursuant hereto, as to all of which recourse shall be had solely to the assets
      of the Issuer.   For  all  purposes  of this 
Agreement, in  the  performance  of  its
      duties


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or
      obligations hereunder, or in the performance of any duties or obligations of
      the
      Issuer hereunder, the Owner Trustee shall be subject to, and entitled to the
      benefits of, the terms and provisions of Article VI of the Trust
      Agreement.









[Signatures
      Follow]


E-283




This
      letter may be executed in any number of counterparts and by the different
      parties on separate counterparts, and each such counterpart shall be deemed
      to
      be an original but all such counterparts shall together constitute one and
      the
      same letter. This letter shall be governed by the laws of the State of New
      York,
      without reference to its conflict of law provisions, and the obligations, rights
      and remedies of the parties hereto shall be determined in accordance with such
      laws.




Very
      truly yours,




ABN
                AMRO BANK, N.V., as Funding Agent and Alternate Investor
              
              By:   /s/
                THERESE
                GREMLEY
              Title:     Vice
                President
              
              By:   /s/
                MICHAEL
                MCINTYRE
              Title:     Vice
                President
              
              
              AMSTERDAM
                FUNDING CORPORATION, as Conduit Investor
              
              By:   /s/
                BERNARD J.
                ANGELO
              Title:     Vice
                President
              
              
              LASALLE
                BANK NATIONAL ASSOCIATION, as Indenture Trustee
              
              By:   /s/
                TIMOTHY E.
                CUTSINGER
              Title:     Assistant
                Vice President
              
              LASALLE
                BANK NATIONAL ASSOCIATION, as Swap Counterparty
              
              By:   /s/
                FREDRICK P.
                ENGLER
              Title:     Senior
                Vice President




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Acknowledged
                and Agreed, as of January 31, 2007
              
              NAVISTAR
                FINANCIAL RETAIL RECEIVABLES
              CORPORATION,
                as Seller and Certificateholder
              
              By:  /s/
                KRISTIN L
                MORAN
              Name:  Kristin
                L Moran
              Title:    V.P.,
                & General Counsel
              
              
              NAVISTAR
                FINANCIAL CORPORATION, as Servicer
              
              By:  /s/
                KRISTIN L
                MORAN
              Name:  Kristin
                L Moran
              Title:    V.P.,
                & General Counsel
              
              NAVISTAR
                FINANCIAL 2006-ARC OWNER TRUST,
              
              By:  Chase
                Bank USA, National Association, not in its
              individual
                capacity, but solely as Owner Trustee on behalf of the Trust
              
              By:  /s/
                JOHN J.
                CASHIN
              Name:  Vice
                President


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