STOCK PLEDGE AGREEMENT

     THIS STOCK  PLEDGE  AGREEMENT  dated as of January  11,  2001 (the  "Pledge
Agreement")  among UGLY DUCKLING CAR SALES AND FINANCE  CORPORATION,  an Arizona
corporation formerly known as Duck Ventures,  Inc. ("Pledgor"),  as owner of all
of  the  outstanding  capital  stock  in  Ugly  Duckling  Receivables  Corp.  II
("UDRCII"),  a Delaware corporation,  and Ugly Duckling Receivables Corp. III, a
Delaware  corporation  ("UDRC  III"),  UGLY  DUCKLING  CORPORATION,  a  Delaware
corporation  ("UDC") and VERDE  INVESTMENTS,  INC., an Arizona  corporation (the
"Lender").

                             INTRODUCTORY STATEMENTS

     Pledgor is the sole holder of fifty (50) shares of common  stock,  $.01 par
value per share in UDRC II and one thousand (1000) shares of common stock,  $.01
par value per share, in UDRC III (collectively,  together with the capital stock
of each New  Issuer  (as  defined  below)  pledged  or  required  to be  pledged
hereunder,  the  "Pledged  Shares").  UDC, as  borrower,  has on the date hereof
entered into a Loan  Agreement  with Lender (as such  agreement  may be amended,
supplemented  or otherwise  modified  from time to time,  the "Loan  Agreement")
pursuant to which UDC has or will borrow money from the Lender.  Pledgor,  which
is a wholly  owned  subsidiary  of UDC,  will  receive  substantial  direct  and
indirect  benefits  from the  loans  made to UDC under  the Loan  Agreement  and
Pledgor  has agreed to pledge the  Pledged  Shares and any  proceeds  thereof as
security for Pledgor's  obligations under the Loan Agreement.  Accordingly,  the
Pledged  Shares and any  proceeds  thereof  will  secure  obligations  of UDC to
Lender.  Terms  used  herein but not  defined  herein  shall  have the  meanings
assigned to such terms in the Loan Agreement.

     UDC has or will enter into a Senior  Secured  Loan  Agreement  with certain
lenders and the collateral  agent as defined therein ("Senior  Lenders"),  which
shall be dated on or about January 11, 2001 ("Senior  Secured Loan  Agreement").
As a condition  of the Senior  Secured  Loan  Agreement  and as security for the
obligations thereunder,  Pledgor has or will enter into a Stock Pledge Agreement
among Pledgor,  UDC and BNY Midwest Trust Company  ("Senior Pledge  Agreement").
Pursuant to the terms of the Senior Pledge  Agreement,  Pledgor  pledged or will
pledge a first priority  security  interest in the Pledged Shares and additional
collateral  as  identified  therein.  Further,  pursuant  to the  Senior  Pledge
Agreement,  Pledgor delivered or will deliver to the collateral agent thereunder
all share certificates or other instruments  representing the Pledged Shares and
collateral.

     As  a  condition  precedent  to  entering  into  the  Senior  Secured  Loan
Agreement,  the Senior Lenders require that Lender  subordinate the liens of the
Loan Agreement and this Pledge Agreement to the liens of the Senior Secured Loan
Agreement and Senior Pledge  Agreement and to  subordinate  Lender's  rights and
remedies,  including,  without  limitation,  its rights to receive any payments,
pursuant  to the Loan  Agreement  to the Senior  Lenders'  rights  and  remedies
including,  without limitation, their rights to receive payments pursuant to the
Senior  Secured  Loan  Agreement,  as more  particularly  provided in a separate
agreement of subordination of even date herewith ("Subordination Agreement").

     In  consideration of the premises and of the agreements  herein  contained,
Pledgor, Lender and UDC agree as follows:


     Section 1. Definitions.

     (a)  Capitalized  terms  used  but not  otherwise  defined  in this  Pledge
Agreement shall have the meanings specified therefor in the Loan Agreement.

     (b) As used  herein,  the term "Final  Date" shall mean the date upon which
all of the Obligations as defined in the Loan Agreement have been fully paid and
performed to the  satisfaction of Lender.  The term "Loan  Documents" shall mean
the Loan Agreement, the Promissory Note, the Warrants, this Pledge Agreement and
any and all documents,  instruments  and agreements  securing and/or relating to
the Obligations of UDC or Pledgor to Lender.

     Section 2. Pledge of Stock and Grant of Security Interest.  As security for
the prompt payment and  performance in full when due of the Secured  Obligations
(as defined below),  Pledgor hereby delivers,  pledges and assigns to Lender and
grants in favor of Lender, a security interest in all of Pledgor's right,  title
and interest in and to the Pledged Shares (which  represent all capital stock of
each  issuer of Pledged  Shares)  and all  capital  stock of each New Issuer (as
defined  below),  together  with all of  Pledgor's  rights and  privileges  with
respect thereto,  all proceeds,  income and profits  thereof,  all dividends and
other distributions in respect thereof (including,  without limitation,  any and
all  investment  property  distributed  in  respect  thereof)  and all  property
(including,  without limitation,  all investment  property) received in exchange
thereof or in substitution therefor (the "Collateral").

     This Agreement secures,  and the Collateral is collateral security for, the
prompt payment and performance in full when due, whether on a specified  payment
date, at stated  maturity,  by  acceleration  or otherwise  (including,  without
limitation,  the payment of amounts that would become due but for the  operation
of the automatic stay under Section 362(a) of the Bankruptcy Code or any similar
law) of all obligations of UDC and all  obligations of Pledgor,  in each case of
every type and  nature,  now or  hereafter  existing  under the Loan  Documents,
whether for principal, interest (including,  without limitation,  interest that,
but  for  the  filing  of  a  petition  in  bankruptcy   would  accrue  on  such
obligations),  fees,  expenses,  indemnities or otherwise (all such  obligations
being  the  "Secured  Obligations").  Without  limiting  the  generality  of the
foregoing,  this  Agreement  secures the payment of all amounts that  constitute
part of the Secured  Obligations  and would be owed to the Lender under the Loan
Documents but for the fact that they are  unenforceable  or not allowable due to
the existence of a bankruptcy, reorganization or similar proceeding.

     Section  3.   Subordination.   As  more   particularly   provided   in  the
Subordination  Agreement,  Lender  agrees that the liens and security  interests
created  hereunder and all other right,  title and interest of the Lender in the
Collateral  are and will be at all times  subordinate  to the liens and security
interests  created by the  Senior  Secured  Loan  Agreement  and  Senior  Pledge
Agreement and all other right,  title and interest of the Senior  Lenders in and
to the  Collateral.  In the  event  of any  inconsistency  between  this  Pledge
Agreement and the Subordination  Agreement,  the  Subordination  Agreement shall
control.

     Section 4. Dividends, Options, or Other Adjustments.  Until the Final Date,
Pledgor shall deliver as Collateral to the Lender, and, as security for the full
and complete  payment and performance of all of the Secured  Obligations  hereby
grants to the Lender a continuing  security  interest in, any and all additional
shares of stock or any other property (including, without limitation, investment
property) of any kind  distributable on or by reason of the Collateral,  whether
in  the  form  of or by way of  stock  dividends,  warrants,  total  or  partial
liquidation,  conversion, prepayments,  redemptions or otherwise, including cash
dividends and any cash interest payments.

     Section 5. Delivery of Share Certificates:  Stock Powers.  Unless delivered
to the Senior  Lenders  pursuant to the Senior Secured Loan  Agreement,  Pledgor
shall  promptly  deliver  to  Lender,  or cause UDRC II or UDRC III or any other
entity issuing the Collateral to deliver directly to Lender,  share certificates
or other instruments representing any Collateral issued to, acquired or received
by Pledgor  after the date of this Pledge  Agreement  with a stock or bond power
duly executed in blank by Pledgor.  If, at any time the Lender notifies  Pledgor
that it  requires  additional  stock  powers  endorsed in blank,  Pledgor  shall
promptly execute in blank and deliver the requested power to the Lender.  If the
share  certificates or other instruments  representing any Collateral is held by
the Senior  Lenders or by a third  party on their  behalf,  such party  shall be
deemed to be holding the same on behalf of Lender for the purpose of  perfection
of a second lien on the Collateral.  Further, if the share certificates or other
instruments  are held by the  Senior  lenders  or third  party on their  behalf,
Pledgor  agrees that it shall not accept return of the same back from the Senior
Lenders without the prior consent of Lender.

     Section  6. Power of  Attorney.  Subject  to the  Subordination  Agreement,
Pledgor hereby constitutes and irrevocably appoints the Lender as Pledgor's true
and lawful  attorney-in-fact,  with the power, after the occurrence of an "Event
of  Default"  under and as defined  in the Loan  Agreement,  to the full  extent
permitted by law, to affix to any  certificates  and documents  representing the
Collateral,  the stock or bond powers  delivered  with respect  thereto,  and to
transfer or cause the transfer of Collateral,  or any part thereof, on the books
of UDRC II or UDRC III or any other entity issuing such Collateral,  to the name
of the Lender or any nominee thereof, and thereafter to exercise with respect to
such  Collateral all the rights,  powers and remedies of an owner.  The power of
attorney  granted  pursuant to this Pledge  Agreement and all  authority  hereby
conferred are granted and conferred  solely to protect the Lender's  interest in
the  Collateral  and shall not impose any duty upon the Lender to  exercise  any
power.  This power of  attorney  shall be  irrevocable  as one  coupled  with an
interest until the Final Date.

     Section 7. Inducing  Representations  of Pledgor.  Pledgor  represents  and
warrants to the Lender that:

     (a)  The   Pledged   Shares  are  validly   issued,   fully  paid  for  and
non-assessable.

     (b) The Pledged  Shares of UDRC II and UDRC III represent all of the issued
and outstanding capital stock of UDRC II and UDRC III, respectively.

     (c) Except for the interests of the Senior Lenders under the Senior Secured
Loan Agreement and the liens created by the Senior Pledge Agreement,  Pledgor is
the sole legal and beneficial  owner of, and has good and  marketable  title to,
the Pledged Shares, free and clear of all pledges, liens, security interests and
other  encumbrances   except  the  security  interest  created  by  this  Pledge
Agreement,  and Pledgor has the  unqualified  right and authority to execute and
perform this Pledge Agreement.

     (d) No options, warrants or other agreements with respect to the Collateral
are outstanding.

     (e) Any consent, approval or authorization of or designation or filing with
any authority on the part of Pledgor  which is required in  connection  with the
pledge and  security  interest  granted  under this  Pledge  Agreement  has been
obtained or effected.

     (f) Neither the execution and delivery of this Pledge Agreement by Pledgor,
the consummation of the transaction  contemplated hereby nor the satisfaction of
the terms and conditions of this Pledge Agreement:

     (i)  conflicts  with or results in any breach or violation of any provision
          of the  articles  of  incorporation  or bylaws of  Pledgor or any law,
          rule,   regulation,   order,  writ,  judgment,   injunction,   decree,
          determination  or award  currently in effect having  applicability  to
          Pledgor or any of its properties,  including  regulations issued by an
          administrative   agency  or  other   governmental   authority   having
          supervisory powers over Pledgor;

     (ii) conflicts  with,  constitutes  a default  (or an event  which with the
          giving of notice or the passage of time, or both,  would  constitute a
          default) by Pledgor under, or a breach of or contravenes any provision
          of, any  agreement to which  Pledgor or any of its  subsidiaries  is a
          party or by which it or any of their  properties is or may be bound or
          affected,  including without limitation any loan agreement,  mortgage,
          indenture or other agreement or instrument; or

     (iii)results in or requires  the creation of any lien upon or in respect of
          any of  Pledgor's  assets  except  the  lien  created  by this  Pledge
          Agreement.

     (g) With respect to all Pledged Shares, and upon issuance of any additional
Pledged Shares hereafter issued to, acquired or received by Pledgor,  the Lender
has (and, with respect to Pledged Shares hereafter  issued,  will have) a valid,
perfected  second priority  security  interest  (subordinate  only to the Senior
Lenders)  in and to the  Collateral,  enforceable  as  such  against  all  other
creditors of Pledgor and against all persons  purporting  to purchase any of the
Collateral from Pledgor.

     (h) The board of  directors  of UDRC II and UDRC III have duly  adopted the
resolutions  identified on Exhibits A-1 and A-2,  respectively,  attached hereto
(the "Standing Dividend Resolutions"), and such resolutions remain in full force
and effect and have not been rescinded, amended, altered, revoked or modified in
any respect. Subject to the rights of the Senior Lenders and so long as there is
no Event of Default existing under the Loan Agreement, all distributions made in
respect of the Pledged  Shares shall be paid to Pledgor.  If an Event of Default
under the Loan  Agreement is in  existence,  subject to the rights of the Senior
Lenders, all such distributions shall be paid to Lender.

     Section 8.  Obligations  of UDC and Pledgor.  Pledgor  further  represents,
warrants  and  covenants  to the  Lender  that,  subject  to  the  Subordination
Agreement:

     (a) Pledgor will not sell, transfer or convey any interest in, or suffer or
permit any lien or  encumbrance  to be created upon or to exist with respect to,
any of the Collateral during the term of this Pledge  Agreement,  other than the
lien granted hereunder, the lien granted pursuant to the Senior Pledge Agreement
and the lien granted to General Electric Capital  Corporation  ("GECC") pursuant
to the Amended and Restated Motor Vehicle Installment Contract Loan and Security
Agreement  entered  into as of August 15, 1997 among  GECC,  UDC,  Pledgor,  and
certain  other  entities,  as such  Agreement  may be amended from time to time,
which lien of GECC is subordinate to the lien granted hereunder.

     (b) Pledgor will not effect any  securitizations  through any subsidiary or
affiliate  other than UDRC III unless (i) either (A)  Pledgor  pledges to Lender
all of the capital stock of any such  subsidiary or affiliate (the "New Issuer")
and Pledgor  delivers to Lender a standing  dividend  resolution of the board of
directors of New Issuer,  which standing  dividend  resolution is  substantially
similar  to the UDRC III  Standing  Dividend  Resolution,  or (B) the New Issuer
pledges  directly to Lender all of its  interests  in any trust or other  entity
which issues interests in a securitization.

     (c) Pledgor will, at Pledgor's  expense,  at any time and from time to time
at the request of the Lender do,  make,  procure,  execute and deliver all acts,
things,  writings,  assurances and other documents as may be reasonably proposed
by Lender to preserve,  establish,  demonstrate or enforce the rights, interests
and remedies of the Lender as created by,  provided  in, or emanating  from this
Pledge Agreement.

     (d) Pledgor  will not take any action which would cause UDRC II or UDRC III
or any New Issuer to issue any other  capital  stock  without the prior  written
consent of the Lender.

     (e)  Pledgor  will  not  consent  to  any  amendment  to  the  articles  of
incorporation of UDRC II or UDRC III or any New Issuer without the prior written
consent of the Lender.

     (f)  Pledgor  will not take any  action  which  would  cause,  and will not
consent to, any transfer by UDRC II or UDRC III or any New Issuer of the Class B
Notes,  Class C Certificates  (other than the Excluded Class C Certificates,  as
defined in the Senior Secured Loan Agreement) and the Class D  Certificates,  as
each are defined under the Senior Secured Loan  Agreement,  of UDRC II, UDRC III
or any New Issuer.

     Section 9.  Dividends.  Pledgor has not and will not permit UDRC II or UDRC
III or any New Issuer to, rescind,  amend,  alter, revoke or modify any Standing
Dividend  Resolutions  in any respect  without the prior written  consent of the
Lender.

     Section 10. Voting Right.  Subject to the rights of the Senior  Lenders and
the Subordination Agreement, and so long as no Event of Default exists under the
Loan  Agreement,  Pledgor shall retain the right to vote the Pledged Shares with
respect to any matter  permitted under the Articles of  Incorporation of UDRC II
and UDRC III and each New Issuer,  as the case may be. However,  Pledgor may not
vote the Pledged Shares in a manner that would violate this Pledge  Agreement or
impair  the rights of Lender.  If an Event of Default  under the Loan  Agreement
exists,  subject  to the  rights of the  Senior  Lenders  and the  Subordination
Agreement,  Pledgor  shall be deemed to have granted  Lender a proxy to vote the
Pledged   Shares.   Subject  to  the  rights  of  the  Senior  Lenders  and  the
Subordination  Agreement,  upon the request of Lender,  Pledgor shall deliver to
Lender such further  evidence of such proxy to vote the Pledged Shares as Lender
may request pursuant hereto.

     Section 11.  Rights of the Lender.  The Lender may, at any time and without
notice,  discharge any taxes,  liens,  security  interests or other encumbrances
levied or placed on the Collateral,  pay for the maintenance and preservation of
the  Collateral,  or pay for  insurance  on the  Collateral;  the amount of such
payments,  plus any and all  reasonable  fees,  costs and expenses of the Lender
(including attorneys' fees and disbursements) in connection therewith,  shall be
reimbursed by UDC within five (5) days of demand, with interest thereon from the
date paid at the rate provided in the Loan Agreement.

     Section  12.  Remedies  Upon  Event of  Default  under the Loan  Agreement.
Subject to the Subordination  Agreement,  Lender may exercise any one or more of
the following remedies:

     (a) Upon the  occurrence  of an "Event  of  Default"  pursuant  to the Loan
Agreement, the Lender may, without notice to Pledgor:

     (i)  cause the  Collateral to be transferred to the Lender's name or to the
          name of a nominee of the Lender,  and  thereafter  exercise as to such
          Collateral all of the rights, powers and remedies of an owner;

     (ii) collect by legal  proceedings  or otherwise all  dividends,  interest,
          principal  payments,  capital  distributions  and  other  sums  now or
          hereafter payable on account of the Collateral, and hold all such sums
          as part of the  Collateral,  or apply such sums to the  payment of the
          Secured  Obligations  in such  manner  and order as the  Lender  shall
          decide; or

     (iii)enter  into any  extension,  subordination,  reorganization,  deposit,
          merger, or consolidation agreement, or any other agreement relating to
          or affecting the Collateral,  and in connection  therewith  deposit or
          surrender  control of the  Collateral  thereunder,  and  accept  other
          property  in  exchange  therefor  and hold and apply such  property or
          money so received in accordance with the provisions hereof.

     (b) In addition to all the rights and remedies of a secured party under the
Uniform  Commercial Code as in effect in any applicable  jurisdiction,  upon the
occurrence of an "Event of Default"  pursuant to the Loan Agreement,  the Lender
shall  have  the  right,   without   demand  of  performance  or  other  demand,
advertisement  or notice of any kind,  except  as  specified  below,  to or upon
Pledgor  or any  other  person  (all and each of which  demands,  advertisements
and/or notices are hereby  expressly  waived to the extent permitted by law), to
proceed  forthwith  to  collect,  receive,  appropriate  and  realize  upon  the
Collateral,  or any part  thereof  in one or more  parcels  in  accordance  with
applicable  securities  laws and in a manner  designed  to ensure that such sale
will not result in a distribution  of the Pledged Shares in violation of Section
5 of the Securities Act of 1933, as amended (the  "Securities  Act") and on such
terms  (including  a  requirement  that any  purchaser of all or any part of the
Collateral  shall be  required  to  purchase  any  securities  constituting  the
Collateral   solely  for   investment  and  without  any  intention  to  make  a
distribution  thereof) as the Lender deems appropriate without any liability for
any loss due to a decrease  in the  market  value of the  Collateral  during the
period  held.  If any  notification  to Pledgor of intended  disposition  of the
Collateral is required by law, such notification  shall be deemed reasonable and
properly  given if mailed to Pledgor,  postage  prepaid,  at least ten (10) days
before any such disposition at the address indicated by Pledgor's signature. Any
disposition  of the  Collateral or any part thereof may be for cash or on credit
or for future delivery without  assumption of any credit risk, with the right of
the Lender to  purchase  all or any part of the  Collateral  so sold at any such
sale or sales,  public or private,  free of any equity or right of redemption in
Pledgor,  which right of equity is, to the extent  permitted by applicable  law,
hereby expressly waived or released by Pledgor.

     (c) The Lender shall sell the Collateral on any credit terms which it deems
reasonable.  The out-of- pocket costs and expenses of such sale shall be for the
account of Pledgor.  The sale of any of the Collateral on credit terms shall not
relieve  Pledgor of its liability with respect to the Secured  Obligations.  All
payments  received in respect of any sale of the  Collateral by the Lender shall
be applied to the Secured Obligations as and when such payments are received and
any price received by the Lender in respect of such sale shall be conclusive and
binding upon Pledgor.

     (d) Pledgor  recognizes that it may not be feasible to effect a public sale
of all or a part of the Collateral by reason of certain  prohibitions  contained
in the  Securities  Act,  and that it may be  necessary  to sell  privately to a
restricted group of purchasers who will be obliged to agree, among other things,
to acquire the Collateral  for their own account,  for investment and not with a
view for the  distribution or resale thereof.  Pledgor agrees that private sales
may be at prices  and other  terms  less  favorable  to the  Seller  than if the
Collateral  were  sold at  public  sale,  and that the  Collateral  Agent has no
obligation to delay the sale of any  Collateral for the period of time necessary
to  permit  the  registration  of the  Collateral  for  public  sale  under  the
Securities  Act.  Pledgor  agrees  that a private  sale or sales  made under the
foregoing  circumstances  shall be deemed  to have  been made in a  commercially
reasonable manner.

     (e) If any consent,  approval or authorization  of any state,  municipal or
other  governmental  department,  agency  or  authority  shall be  necessary  to
effectuate  any sale or  other  disposition  of the  Collateral  or any  partial
disposition of the Collateral,  Pledgor will execute all such  applications  and
other  instruments  as may be  required in  connection  with  securing  any such
consent,  approval or authorization,  and will otherwise use its best efforts to
secure the same.

     (f) The Lender shall have the right to deliver,  assign and transfer to the
purchaser  thereof the  Collateral  so sold or disposed  of, free from any other
claim or right of whatever kind,  including any equity or right of redemption of
Pledgor. Pledgor specifically waives, to the extent permitted by applicable law,
all rights of redemption,  stay or appraisal which it may have under any rule of
law or statute now existing or hereafter adopted.

     (g) The Lender shall not be obligated to make any sale or other disposition
of the  Collateral  permitted  under  this  Pledge  Agreement,  unless the terms
thereof shall be satisfactory to the Lender.  The Lender may,  without notice or
publication,  adjourn any such  private or public sale and,  upon five (5) days'
prior  notice to Pledgor,  hold such sale at any time or place to which the same
may be so  adjourned.  In  case  of any  such  sale  of all or any  part  of the
Collateral on credit or future delivery,  the Collateral so sold may be retained
by the Lender until the selling price is paid by the purchaser thereof,  but the
Lender shall not incur any liability in case of the failure of such purchaser to
take up and pay for the  property so sold and, in the case of any such  failure,
such property may again be sold as herein provided.

     (h) All of the rights and remedies granted to the Lender, including but not
limited to the  foregoing,  shall be  cumulative  and not exclusive and shall be
enforceable  alternatively,  successively or concurrently as the Lender may deem
expedient.

     Section 13. Limitation on Liability.

     (a) The Lender, any of its directors,  officers,  employers or agents shall
not be liable to  Pledgor,  UDC,  UDRC II,  UDRC III or any New  Issuer  for any
action taken or omitted to be taken by it or them  hereunder,  or in  connection
herewith,  except that the Lender  shall be liable for its own (and only for its
own) gross negligence, bad faith or willful misconduct.

     (b) The Lender shall be protected and shall incur no liability to any party
in relying upon the accuracy, acting in reliance upon the contents, and assuming
the genuineness of any notice,  demand,  certificate,  signature,  instrument or
other  document  the Lender  reasonably  believes to be genuine and to have been
duly executed by the appropriate signatory,  and (absent actual knowledge to the
contrary of any officer of the Lender) the Lender  shall not be required to make
any  independent  investigation  with respect  thereto.  The Lender shall at all
times be free  independently  to establish to its reasonable  satisfaction,  but
shall have no duty to  independently  verify,  the existence or  nonexistence of
facts that are a condition to the exercise or enforcement of any right or remedy
hereunder.

     (c) The Lender may consult with qualified  counsel,  financial  advisors or
accountants  and shall not be liable for any action taken or omitted to be taken
by it hereunder in good faith and in accordance with the advice of such counsel,
financial advisors or accountants.

     Section 14. Indemnification. UDC and Pledgor jointly and severally agree to
indemnify  Lender and its directors,  officers,  employees and agents,  for, and
hold Lender and its directors,  officers, employees and agents harmless against,
any loss,  liability or expense  (including  the costs and expenses of defending
against any claim of liability) arising out of or in connection with this Pledge
Agreement and the transactions  contemplated  hereby,  except that no indemnitee
shall be entitled to indemnification  to the extent any such loss,  liability or
expense results from the gross  negligence,  bad faith or willful  misconduct of
such  indemnitee.  The  obligation  of UDC and Pledgor  under this Section shall
survive the termination of this Pledge Agreement.

     Section 15. Termination. This Pledge Agreement shall continue in full force
and effect until the Final Date. Subject to any sale or other disposition of the
Collateral  pursuant  to and in  accordance  with  this  Pledge  Agreement,  any
Collateral  held by Lender  shall be returned to Pledgor on the Final Date.  The
obligations  of UDC under  Section 14 and  Section 16 of this  Pledge  Agreement
shall survive the termination of this Pledge Agreement.

     Section 16.  Compensation and Reimbursement.  UDC agrees for the benefit of
the Lender and as part of the Secured  Obligations  to reimburse the Lender upon
its request for all reasonable expenses,  disbursements and advances incurred or
made by the Lender in  accordance  with any  provision  of, or carrying  out its
duties and obligations  under,  this Pledge Agreement  (including the reasonable
compensation  and fees and the expenses  and  disbursements  of its agents,  any
independent  certified public accounts and independent  counsel),  except Lender
shall not be entitled to reimbursement for any expense, disbursement or advances
as may be attributable to gross negligence,  bad faith or willful  misconduct on
the part of Lender.

     Section 17. Foreclosure  Expenses.  All expenses (including reasonable fees
and  disbursements of counsel) incurred in compliance with this Pledge Agreement
by the Lender in connection with any actual or attempted  sale,  exchange of, or
any  enforcement,  collection,  compromise or settlement  respecting this Pledge
Agreement or the  Collateral,  or any other action taken in compliance with this
Pledge   Agreement   by  the   Lender   hereunder,   whether   directly   or  as
attorney-in-fact  pursuant to a power of attorney or other authorization  herein
conferred,  for the purpose of satisfaction of the Secured  Obligations shall be
deemed a Secured  Obligation  for all purposes of this Pledge  Agreement and the
Lender may apply the  Collateral  to payment of or  reimbursement  of itself for
such liability.

     Section 18.  Obligations  Absolute.  The  obligations of Pledgor under this
Pledge Agreement are independent of the Obligations or any other  obligations of
any other party under the Loan  Documents,  and a separate action or actions may
be brought and  prosecuted  against  Pledgor to enforce  this Pledge  Agreement,
irrespective  of whether any action is brought against the Borrower or any other
party or whether the Borrower or any other party is joined in any such action or
actions.  The  liability  of Pledgor  under this Pledge  Agreement  is joint and
several and shall be irrevocable,  absolute and  unconditional  irrespective of,
and Pledgor hereby  irrevocably waives any defenses it may now or hereafter have
in any way relating to, any or all of the following:

     (a) any lack of  validity  or  enforceability  of any Loan  Document or any
agreement or instrument relating thereto;

     (b) any change in the time,  manner or place of payment of, or in any other
term of, all or any of the  Obligations  or any other  obligations  of any other
party  under  the Loan  Documents,  or any other  amendment  or waiver of or any
consent to departure from any Loan Document,  including, without limitation, any
increase in the obligations resulting from the extension of additional credit to
the Borrower or any of its Subsidiaries or otherwise;

     (c) any taking, exchange,  release or non-perfection of any Collateral,  or
any taking,  release or amendment or waiver of or consent to departure  from any
other guaranty, for all or any of the Obligations;

     (d) any manner of application of collateral, or proceeds thereof, to all or
any of the  Obligations,  or any  manner  of sale or  other  disposition  of any
collateral  for all or any of the  Obligations  or any other  obligations of any
other party under the Loan  Documents or any other assets of the Borrower or any
of its Subsidiaries;

     (e) any change,  restructuring or termination of the corporate structure or
existence of the Borrower or any of its Subsidiaries;

     (f) any  failure of the Lender to  disclose  to the  Borrower  or any other
party  any  information  relating  to  the  financial   condition,   operations,
properties  or  prospects  of any other party now or in the future  known to the
Lender  (Pledgor  hereby  waiving any duty on the part of the Lender to disclose
such information); or

     (g) any other circumstance (including,  without limitation,  any statute of
limitations) or any existence of or reliance on any representation by the Lender
that might otherwise  constitute a defense  available to, or a discharge of, the
Borrower, Pledgor, any other party or any other guarantor or surety.

     This Pledge  Agreement shall continue to be effective or be reinstated,  as
the case may be, if at any time any payment of any of the Secured Obligations is
rescinded  or must  otherwise be returned by the Lender or any other Person upon
the insolvency,  bankruptcy or reorganization of the Borrower or any other party
or otherwise, all as though such payment had not been made.

     Section 19. Waivers and Acknowledgments.

     (a) Pledgor hereby waives promptness,  diligence,  notice of acceptance and
any other notice with respect to any of the Secured  Obligations and this Pledge
Agreement and any requirement that the Lender protect, secure, perfect or insure
any Lien or any property subject thereto or exhaust any right or take any action
against the Borrower or any other person or any collateral.

     (b) Pledgor  hereby waives any right to revoke this Pledge  Agreement,  and
acknowledges  that this  Agreement  is  continuing  in nature and applies to all
Secured Obligations, whether existing now or in the future.

     Section 20.  Notices.  Any notice or other  communication  given  hereunder
shall be in  writing  and shall be sent by  registered  mail,  postage  prepaid,
overnight  courier or  personally  delivered or  facsimiles  to the recipient as
follows:

         To Pledgor:

                  UGLY DUCKLING CAR SALES
                  AND FINANCE CORPORATION
                  2525 East Camelback Road, Suite 500
                  Phoenix, Arizona 85016
                  Attn:    Jon D. Ehlinger
                  Facsimile:        (602) 852-6686

         with a copy to:

                  SNELL & WILMER, L.L.P.
                  One Arizona Center
                  Phoenix, Arizona 85004-0001
                  Attention:        David A. Sprentall
                  Facsimile:        (602) 382-6070



<PAGE>


         To Lender:

                  VERDE INVESTMENTS, INC.
                  2575 East Camelback, Suite 700
                  Phoenix, Arizona  85016
                  Attention:        Stephen P. Johnson
                  Telephone:        (602) 778-5003
                  Facsimile:        (602) 778-5025

         To UDC:

                  UGLY DUCKLING CORPORATION
                  2525 East Camelback Road, Suite 500
                  Phoenix, Arizona 85016
                  Attn:    Jon D. Ehlinger
                  Facsimile:        (602) 852-6686

         with a copy to:

                  SNELL & WILMER, L.L.P.
                  One Arizona Center
                  Phoenix, Arizona 85004-0001
                  Attention:        David A. Sprentall
                  Facsimile:        (602) 382-6070

     Section 21. General Provisions.

     (a) The failure of the Lender to exercise, or any delay in exercising,  any
right,  power or remedy  hereunder,  shall not operate as a waiver thereof,  nor
shall any single or partial exercise by the Lender of any right, power or remedy
hereunder preclude any other or future exercise thereof,  or the exercise of any
other right,  power or remedy.  The remedies  herein provided are cumulative and
are not exclusive of any remedies provided by law or any other agreement.

     (b)  The  representations,  covenants  and  agreements  of  Pledgor  herein
contained shall survive the date hereof; provided,  however that only Section 14
and Section 16 shall survive after the Final Date.

     (c) Neither this Pledge Agreement nor the provisions hereof can be changed,
waived or terminated  unless any such change,  waiver or termination shall be in
writing,  signed by the parties hereto.  This Pledge  Agreement shall be binding
upon and inure to the  benefit  of the  parties  hereto,  and  their  respective
successors,  legal  representatives and assigns. If any provision of this Pledge
Agreement  shall  be  invalid  or   unenforceable  in  any  respect  or  in  any
jurisdiction, the remaining provisions shall remain in full force and effect and
shall be enforceable to the maximum extent permitted by law.

     (d) This Pledge  Agreement may be executed in  counterparts,  each of which
shall  constitute  an  original  but all of which,  when taken  together,  shall
constitute one instrument.

     (e) THE VALIDITY OF THIS PLEDGE AGREEMENT AND THE OTHER LOAN DOCUMENTS, THE
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS
OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING  HEREUNDER
OR THEREUNDER  OR RELATED  HERETO SHALL BE  DETERMINED  UNDER,  GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF ARIZONA.

     THE PARTIES  AGREE THAT ALL ACTIONS OR  PROCEEDINGS  ARISING IN  CONNECTION
WITH THIS  PLEDGE  AGREEMENT  MAY BE TRIED AND  LITIGATED  IN THE UNITED  STATES
DISTRICT COURT FOR ARIZONA.  PLEDGOR AND LENDER WAIVE,  TO THE EXTENT  PERMITTED
UNDER  APPLICABLE  LAW,  ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM
NON  CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN
ACCORDANCE WITH THIS SECTION.

     THE PARTIES  HEREBY  WAIVE THEIR  RESPECTIVE  RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN  AGREEMENT
OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. UDC
AND LENDER  REPRESENT  THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND
VOLUNTARILY  WAIVES  ITS JURY TRIAL  RIGHTS  FOLLOWING  CONSULTATION  WITH LEGAL
COUNSEL.  IN THE EVENT OF  LITIGATION,  A COPY OF THIS PLEDGE  AGREEMENT  MAY BE
FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

     IN WITNESS  WHEREOF,  the parties  hereto have executed and delivered  this
Pledge Agreement on the date first above written.

                  [Remainder of Page Left Intentionally Blank]



<PAGE>



                        UGLY DUCKLING CAR SALES AND FINANCE CORPORATION,
                        an Arizona corporation

                        By:

                        Name:

                        Title:

                        UGLY DUCKLING CORPORATION,
                        a Delaware corporation

                        By:

                        Name:

                        Title:

                        VERDE INVESTMENTS, INC.,
                        an Arizona corporation

                        By:

                        Name:

                        Title: