EXECUTION
      COPY


October 23, 2007




Navistar
      Financial Corporation


Attention:
      General Counsel


425
      N.
      Martingale Road, Suite
      1800


Schaumburg,
      Illinois 60173




LaSalle
      Bank National Association


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


Suite
      1625


Chicago,
      Illinois 60603




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 , (c) the Servicing Agreement dated as of September 1, 2006 (the "Servicing
      Agreement"), among Navistar Leasing Company, Harco Leasing Company, Inc.,
      Navistar Financial Retail Receivables Corporation, The Bank of New York Trust
      Company, N.A., as Collateral Agent, JP Morgan Trust Company, National
      Association (as successor-in-interest to Bank One, National Association), as
      Portfolio Trustee, Navistar Financial 2006-ARC Owner Trust, as Issuer, NFC,
      as
      Servicer, and LaSalle Bank, National Association, as Indenture Trustee, and
      (d)
      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, (iii) each of the Funding Agent, the
      Alternate


E-404




Investor
      and the Conduit Investor waives and instructs the Indenture Trustee to waive,
      and the Indenture Trustee hereby waives, any failure of the Seller under Section
      5.1 (p) of the Indenture to deliver the Independent Accountant's Report of
      KPMG
      LLP addressed to the board of directors of the Seller with respect to minimum
      servicing standards for the year ended October 31, 2005, required to be
      delivered on or before September 30, 2006, and (iv) 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),(ii) and
      (iii), 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
      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) December 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) December 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.


E-405




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
      Deutsche Bank Trust Company Delaware (as successor to Chase Bank USA, National
      Association), not in its individual capacity but solely in its capacity as
      Owner
      Trustee and in no event shall Deutsche Bank Trust Company Delaware (as successor
      to 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 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-406


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/THOMAS
      EDUCATE


Name:           
       Thomas Educate


Title:         
           Managing Director




By:       
       /s/  ADNAN
      BHANPURI


Name:         
       Adnan Bhanpuri


Title:          
        Vice President






AMSTERDAM
      FUNDING CORPORATION, as


Conduit
      Investor




By:         /s/
      JILL
      A.
      GORDON


Name:          Jill
      A. Gordon


Title:            Vice
      President





LASALLE
      BANK NATIONAL ASSOCIATION,


as
      Indenture Trustee





By:         /s/  BRIAN
      D.
      AMES


Name:           Brian
      D. Ames


Title:             First
      Vice President





LASALLE
      BANK NATIONAL ASSOCIATION


as
      Swap
      Counterparty





By:         /s/ 
      CHAS
      MCDONALD


Name:           Chas
      McDonald


Title:             Senior
      Vice President




E-407




Acknowledged
      and Agreed,


as
      of
      October 23, 2007





NAVISTAR
      FINANCIAL RETAIL RECEIVABLES CORPORATION,


as
      Seller
      and Certificateholder





By:        /s/
      JOHN
      V.
      MULVANEY, SR.


Name:  
            John V. Mulvaney, Sr.


Title:        
        V.P., CFO & Treasurer




NAVISTAR
      FINANCIAL Corporation,


as
      Servicer





By:         /s/
      JOHN
      V.
      MULVANEY, SR.


Name:          John
      V. Mulvaney, Sr.


Title:            V.P.,
      CFO & Treasurer






NAVISTAR
      FINANCIAL 2006 – ARC OWNER TRUST





By:  Deutsche
      Bank Trust Company Delaware (as successor to


Chase
      Bank USA, National Associated), not in its


individual
      capacity, but solely as Owner Trustee on behalf of the Trust





By:          /s/
      MICHELE
      HY VOON


Name            Michele
      HY Voon


Title:             Attorney-in-fact




E-408