ALL RIGHTS AND  INDEBTEDNESS  OF PAYEE  CREATED UNDER THIS NOTE AND THAT CERTAIN
LOAN  AGREEMENT  DATED AS OF EVEN  DATE  HEREWITH  BETWEEN  PAYEE  AND MAKER ARE
SUBORDINATE  TO THE INTERESTS OF THE SENIOR LENDERS AS EVIDENCED BY THAT CERTAIN
SUBORDINATION AND STANDSTILL  AGREEMENT BY AND AMONG PAYEE, MAKER, UGLY DUCKLING
CAR SALES AND FINANCE  CORPORATION AND BNY MIDWEST TRUST COMPANY,  DATED JANUARY
11, 2001.

                                PROMISSORY NOTE

Original Face Amount:  $7,000,000
Maker: UGLY DUCKLING CORPORATION, a Delaware corporation
Dated as of: January 11, 2001

     1. Promise to Repay.  FOR VALUE  RECEIVED,  UGLY  DUCKLING  CORPORATION,  a
Delaware corporation ("Maker"),  promises to pay to VERDE INVESTMENTS,  INC., an
Arizona  corporation  ("Payee"),  or order,  the  principal sum of Seven Million
Dollars ($7,000,000) or such lesser amount as shall equal the outstanding amount
of the loan (the "Loan") made by Payee to Maker, pursuant to Section 2.1 of that
certain Loan Agreement, dated as of January 11, 2001, entered into between Maker
and Payee (the "Loan Agreement").

     2. Defined Terms. Any and all initially capitalized terms used herein shall
have the meaning  ascribed  thereto in the Loan Agreement,  unless  specifically
defined  herein.  The term "or" as used in this Note has, except where otherwise
indicated,  the  inclusive  meaning  represented  by the phrase  "and/or".  This
Promissory  Note  (this  "Note")  is the  promissory  note  defined  in the Loan
Agreement  as the "Note" and is subject to, and entitled to the benefits of, the
terms and provisions of the Loan Agreement.

     3. Payments of Principal and Interest.

          (a) Maker hereby  promises to make  payments of principal and interest
     with respect to the Loan  evidenced  hereby at the rates and times,  and in
     the  amounts,  and in all other  respects  in the manner as provided in the
     Loan Agreement.

          (b) As more fully set forth in the Loan Agreement,  Maker shall not be
     obligated  to pay,  and the holder of this Note shall not be  obligated  to
     charge,  collect,  receive,  reserve, or take interest (it being understood
     that  interest  shall be  calculated  as the aggregate of all charges which
     constitute  interest under applicable law that are contracted for, charged,
     reserved,  received, or paid) in excess of the maximum nonusurious interest
     rate, as in effect from time to time, which may be charged, contracted for,
     reserved,  received,  or  collected  by Payee in  connection  with the Loan
     Agreement,  this Note,  the other Loan  Documents,  or any other  documents
     executed in connection herewith or therewith.

     4. Prepayments. Maker may prepay the principal balance due under this Note,
in whole or in part,  without  penalty or premium,  only in accordance  with the
provisions of the Loan Agreement.

     5.  Application  of Payments.  All payments  (including  prepayments)  made
hereunder  shall be applied  first to accrued  and unpaid  interest  and then to
principal.  6.  Time and Place of  Payments.  All  principal  and  interest  due
hereunder is payable in U.S.  Dollars in immediately  available funds at Payee's
office located at 2575 East Camelback,  Suite 700, Phoenix, Arizona 85016 (or at
such other office as may be  designated  from time to time by Payee),  not later
than 1:30 p.m., Phoenix, Arizona time, on the date of payment.

     7. Waivers.  Maker, for itself and its legal  representatives,  successors,
and assigns,  expressly waives presentment,  demand,  protest, notice (except as
required by the Loan  Agreement),  and all other  requirements  of any kind,  in
connection with the enforcement or collection of this Note.

     8.  Acceleration  and  Waiver.  IT  IS  EXPRESSLY  AGREED  THAT,  UPON  THE
OCCURRENCE OF AN EVENT OF DEFAULT AS SPECIFIED IN SECTIONS 8.1(g) THROUGH (l) OF
THE LOAN AGREEMENT,  THE UNPAID PRINCIPAL  BALANCE OF AND ANY ACCRUED AND UNPAID
INTEREST UNDER THIS NOTE SHALL AUTOMATICALLY  BECOME IMMEDIATELY DUE AND PAYABLE
PURSUANT TO THE TERMS OF THE LOAN  AGREEMENT,  AND,  UPON THE  OCCURRENCE OF ANY
OTHER  EVENT OF DEFAULT  SPECIFIED  IN SECTION  8.1 OF THE LOAN  AGREEMENT,  THE
UNPAID PRINCIPAL BALANCE OF ANY ACCRUED AND UNPAID INTEREST UNDER THIS NOTE MAY,
BY NOTICE IN WRITING TO MAKER,  BE  DECLARED TO BE  IMMEDIATELY  DUE AND PAYABLE
PURSUANT  TO THE  TERMS  OF THE LOAN  AGREEMENT,  WITHOUT  PRESENTMENT,  DEMAND,
PROTEST,  NOTICE (EXCEPT AS REQUIRED THE LOAN AGREEMENT),  OR OTHER REQUIREMENTS
OF ANY KIND, ALL OF WHICH AR HEREBY EXPRESSLY WAIVED BY MAKER.

     9.  Attorneys'  Fees.  In the event it should  become  necessary  to employ
counsel  to collect or enforce  this Note,  Maker  agrees to pay the  reasonable
attorneys' fees and costs  (including  those of in-house  counsel) of the holder
hereof,  irrespective of whether suit is brought,  to the extent and as provided
in the Loan Agreement.

     10.  Amendments.  This  Note  may not be  changed,  modified,  amended,  or
terminated except by a writing duly executed by Maker and the holder hereof.

     11. Headings. Section headings used in this Note are solely for convenience
of reference,  shall not  constitute a part of this Note for any other  purpose,
and shall not affect the construction of this Note.

     12. GOVERNING LAW. EXCEPT AS OTHERWISE PROVIDED IN THE LOAN AGREEMENT:  (a)
THIS NOTE SHALL BE DEEMED TO HAVE BEEN MADE IN THE STATE OF ARIZONA; AND (b) THE
VALIDITY OF THIS NOTE AND THE CONSTRUCTION,  INTERPRETATION  AND ENFORCEMENT OF,
AND THE RIGHTS OF THE PARTIES HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND
CONSTRUCTED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ARIZONA.

     13.  WAIVER OF TRIAL BY JURY.  MAKER,  TO THE EXTENT IT MAY  LEGALLY DO SO,
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION,
CAUSE OF ACTION, OR PROCEEDING ARISING UNDER OR WITH RESPECT TO THIS NOTE, OR IN
ANY WAY CONNECTED  WITH, OR RELATED TO, OR INCIDENTAL TO, THE DEALINGS OF MAKER,
AND PAYEE,  WITH RESPECT TO THIS NOTE, OR THE  TRANSACTIONS  RELATED HERETO,  IN
EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND IRRESPECTIVE OF WHETHER
SOUNDING IN CONTRACT,  TORT, OR  OTHERWISE.  TO THE EXTENT IT MAY LEGALLY DO SO,
MAKER HEREBY AGREES THAT ANY SUCH CLAIM,  DEMAND,  ACTION,  CAUSE OF ACTION,  OR
PROCEEDING  SHALL BE DECIDED BY A COURT TRIAL  WITHOUT A JURY AND THAT PAYEE MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF MAKER TO WAIVER OF ITS RIGHT TO TRIAL BY JURY.

Dated as of January 11, 2001.
                                        UGLY DUCKLING CORPORATION,
                                        a Delaware corporation
                                        By:/s/ JON D. EHLINGER
                                        Name:  Jon D. Ehlinger
                                        Title: Vice President, General Counsel
                                               and Secretary