<PAGE>

                                     [LOGO]

               BOOK-ENTRY-ONLY MEDIUM-TERM NOTE, DEPOSIT NOTE, OR
                              MEDIUM-TERM BANK NOTE
                [MASTER NOTE AND/OR GLOBAL CERTIFICATES] PROGRAM

                            LETTER OF REPRESENTATIONS
          (To be Completed by Issuer, Issuing Agent, and Paying Agent)

                  PACCAR Financial Corp.
-------------------------------------------------------------------------------
                                [Name of Issuer]

                  Citibank, N.A.  2790
-------------------------------------------------------------------------------
               [Name and DTC Participant Number of Issuing Agent]

                  Citibank, N.A.  2790
-------------------------------------------------------------------------------
               [Name and DTC Participant Number of Issuing Agent]

                                                            -------------------
                                                                  [Date]

Attention:   General Counsel's Office
THE DEPOSITORY TRUST COMPANY
55 Water Street; 49th Floor
New York, NY 10041--0099

         PACCAR Financial Corporation Medium Term Notes
Re:      -----------------------------------------------------------------------
         $1 Billion Series I
         -----------------------------------------------------------------------

         -----------------------------------------------------------------------
         [Description of Note Program, including, as applicable, (i) series
         designator; (ii) rank of indebtedness; and (iii) reference to the
         provision of the Securities Act of 1933, as amended, pursuant to which
         Note Program is exempt from registration]

Ladies and Gentleman:

This letter sets forth our understanding with respect to certain matters
relating to the issuance by Issuer from time to time of notes under its note
program described above (the "Securities"). Issuing Agent will act as issuing
agent with respect to the Securities. Paying Agent will act as paying agent with
respect to the Securities. The Securities will be issued pursuant to a
prospectus supplement, private placement memorandum, or other such document
authorizing the issuance of the Securities, dated as of SEPTEMBER 10, 1998.

Paying Agent has entered into a Money Market Instrument Master Note and/or
Global Certificates Certificate Agreement, or a Medium--Term Note Certificate
Agreement, with The Depository Trust Company ("DTC") dated as of OCTOBER 31,
1988, pursuant to which Paying Agent will act as custodian of a Master Note
Certificate and/or


                                     - 1 -
<PAGE>

Global Certificates evidencing the Securities, when issued. Paying Agent will
amend Exhibit A to such Certificate Agreement to include the note program
described above, prior to issuance of the Securities.

To induce DTC to accept the Securities as eligible for deposit at DTC and to act
in accordance with its Rules with respect to the Securities, Issuer, Issuing
Agent, and Paying Agent make the following representations to DTC:

          1.   All or certain issues of the Securities shall be evidenced by one
               Master Note Certificate, or by one or more Global Certificates
               for each issue, in registered form registered in the name of
               DTC's nominee, Cede & Co., and such Certificate or Certificates
               shall represent 100% of the principal amount of the Securities
               issued through DTC. The Master Note Certificate, if any, shall
               include the substance of all material provisions set forth in the
               appropriate DTC model Master Note for the note program described
               above, a copy of which previously has been furnished to Issuing
               Agent and Paying Agent, and may include additional provisions as
               long as they do not conflict with the material provisions set
               forth in the DTC model. If the principal amount of an issue of
               the Securities to be evidenced by one or more Global
               Certificates, if any, exceeds $200,000,000, one Global
               Certificate shall be issued with respect to each $200,000,000 of
               principal amount and an additional Global Certificate shall be
               issued with respect to any remaining principal amount. Paying
               Agent shall cause each Global Certificate to be stamped with the
               following legend:

               Unless this certificate is presented by an authorized
               representative of The Depository Trust Company, a New York
               corporation ("DTC"), to Issuer or its agent for registration of
               transfer, exchange, or payment, and any certificate issued is
               registered in the name of Cede & Co. or in such other name as is
               requested by an authorized representative of DTC (and any payment
               is made to Cede & Co. or such other entity as is requested by an
               authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER
               USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
               inasmuch as the registered owner hereof, Cede & Co., has an
               interest herein.

          2.   Issuer or Issuing Agent has obtained from the CUSIP Service
               Bureau a written list of approximately 900 nine-character numbers
               (the basic first six characters of which are the same and
               uniquely identify Issuer and the Securities to be issued under
               its note program described above). The CUSIP numbers on such list
               have been reserved for future assignment to issues of the
               Securities. At any time when fewer than 100 of the CUSIP numbers
               on such list remain unassigned, Issuer or Issuing Agent shall
               promptly obtain from the CUSIP Service Bureau an additional
               written list of approximately 900 such numbers.

          3.   When Securities are to be issued through DTC, Issuing Agent shall
               give notice to Paying Agent and issuance instructions to DTC in
               accordance with DTC's Procedures, including DTC's Final Plan for
               DTC Money Market Programs, and DTC's Issuing/Paying Agent General


                                     - 2 -
<PAGE>

               Operating Procedures and Participant Terminal System Procedures
               for Medium-Term Notes (MTNs) Including Deposit Notes and
               Medium-Term Bank Notes (the "Procedures"), a copy of which
               previously has been furnished to Issuing Agent and Paying Agent.
               The giving of such issuance instructions, which include delivery
               instructions, to DTC shall constitute: (a) a representation that
               the Securities are issued in accordance with applicable law; and
               (b) a confirmation that a Master Note Certificate, or a Global
               Certificate (or Certificates), evidencing such Securities, in the
               form described in Paragraph 1, has been issued and authenticated.

          4.   Issuer recognizes that DTC does not in any way undertake to, and
               shall not have any responsibility to, monitor or ascertain the
               compliance of any transactions in the Securities with any
               exemptions from registration under the Securities Act of 1933 or
               of any other state or federal securities laws.

          5.   If issuance of Securities through DTC is scheduled to take place
               one or more days after Issuing Agent has given issuance
               instructions to DTC, Issuing Agent may cancel such issuance by
               giving a cancellation instruction to DTC in accordance with the
               Procedures.

          6.   At any time that Paying Agent has Securities in its DTC accounts,
               it may request withdrawal of such Securities from DTC by giving a
               withdrawal instruction to DTC in accordance with the Procedures.
               Upon DTC's acceptance of such withdrawal instruction, Paying
               Agent shall reduce the principal amount of the Securities
               evidenced, as the case may be, by the Master Note Certificate, or
               by one or more Global Certificates, accordingly.

          7.   In the event of any solicitation of consents from or voting by
               holders of the Securities, Issuer, Issuing Agent, or Paying Agent
               shall establish a record date for such purposes (with no
               provision for revocation of consents or votes by subsequent
               holders) and shall, to the extent possible, send notice of such
               record date to DTC not less than 15 calendar days in advance of
               such record date. If delivered by hand or sent by mail or
               overnight delivery, such notice shall be sent to:

                               Supervisor:  Proxy
                               Reorganization Department
                               The Depository Trust Company
                               7 Hanover Square; 23rd Floor
                               New York, NY 10004-2695

               If sent by telecopy, such notice shall be sent to (212) 709--6896
               or (212) 709--6897. Issuer, Issuing Agent, or Paying Agent shall
               confirm DTC's receipt of such telecopy by telephoning (212)
               709-6870.

          8.   Notices of reorganization events (corporate actions) with respect
               to the Securities, including full or partial redemptions (calls),
               repayments (puts), extensions of maturities, resets of interest


                                     - 3 -
<PAGE>

               rates or spreads, mandatory tenders, and consolidations of
               individual issues, shall be given to DTC by Paying Agent in
               accordance with the Procedures.

          9.   Paying Agent may override DTC's determination of interest and
               principal payment dates, in accordance with the Procedures.

          10.  Notice regarding the amount of variable interest and principal
               payments on the Securities shall be given to DTC by Paying Agent
               in accordance with the Procedures.

          11.  All notices sent to DTC shall contain the CUSIP number of the
               Securities.

          12.  Paying Agent shall confirm with DTC daily by CUSIP number the
               face value of the Securities outstanding, and Paying Agent's
               corresponding interest and principal payment obligation, in
               accordance with the Procedures.

          13.  DTC may direct Issuer, Issuing Agent, or Paying Agent to use any
               other number or address as the number or address to which notices
               may be sent.

          14.  Payments on the Securities, including payments in currencies
               other than the U.S. Dollar, shall be made by Paying Agent in
               accordance with the Procedures.

          15.  In the event that Issuer determines that beneficial owners of
               Securities shall be able to obtain certificated Securities,
               Issuer or Paying Agent shall notify DTC of the availability of
               certificates. In such event, Issuer or Paying Agent shall issue,
               transfer, and exchange certificates in appropriate amounts, as
               required by DTC and others.

          16.  DTC may discontinue providing its services as securities
               depository with respect to the Securities at any time by giving
               reasonable notice to Issuer or Paying Agent (at which time DTC
               will confirm with Issuer or Paying Agent the aggregate amount of
               Securities outstanding by CUSIP number). Under such circumstance,
               at DTC's request Issuer and Paying Agent shall cooperate fully
               with DTC by taking appropriate action to make available one or
               more separate certificates evidencing Securities to any DTC
               Participant having Securities credited to its DTC accounts.

          17.  Issuer: (a) understands that DTC has no obligation to, and will
               not, communicate to its Participants or to any person having an
               interest in the Securities any information contained in the
               Master Note Certificate, if any, or the Global Certificates, if
               any; and (b) acknowledges that neither DTC's Participants nor any
               person having an interest in the Securities shall be deemed to
               have notice of the provisions of such Certificate or Certificates
               by virtue of submission of such Certificate or Certificates to
               DTC.

          18.  Issuer authorizes DTC to provide to Issuing Agent or Paying Agent


                                     - 4 -
<PAGE>

               listings of DTC Participants' holdings with respect to the
               Securities from time to time at the request of Issuing Agent or
               Paying Agent. Issuer authorizes Issuing Agent and Paying Agent to
               provide DTC with such signatures, exemplars of signatures, and
               authorizations to act as may be deemed necessary by DTC to permit
               DTC to discharge its obligations to DTC Participants and
               appropriate regulatory authorities.

          19.  Nothing herein shall be deemed to require Issuing Agent or Paying
               Agent to advance funds on behalf of Issuer.

NOTE:                                                Very truly yours,
Schedule A contains statements
that DTC believes accurately describe               PACCAR Financial Corp.
DTC, the method of effecting book-             ---------------------------------
entry transfers of securities distri-                     (Issuer)
buted through DTC, and certain
related matters.                           By:
                                               ---------------------------------
                                               (Authorized Officer's Signature)

                                                 Citibank, N.A.
                                             -----------------------------------
                                                        (Issuing Agent)

                                           By:
                                               ---------------------------------
                                               (Authorized Officer's Signature)

                                                 Citibank, N.A.
                                             -----------------------------------
                                                      (Paying Agent)


                                           By:
                                               ---------------------------------
                                               (Authorized Officer's Signature)

Received and Accepted:
THE DEPOSITORY TRUST COMPANY

By:
    ---------------------------------


                                     - 5 -
<PAGE>

                                                                      SCHEDULE A

                        SAMPLE OFFERING DOCUMENT LANGUAGE
                       DESCRIBING BOOK-ENTRY-ONLY ISSUANCE
  (Prepared by DTC-bracketed material may be applicable only to certain issues)

1.   The Depository Trust Company ("DTC"), New York, NY, will act as securities
     depository for the securities (the "Securities"). The Securities will be
     issued as fully--registered securities registered in the name of Cede & Co.
     (DTC's partnership nominee). One fully-registered Security certificate will
     be issued for [each issue of] the Securities, [each] in the aggregate
     principal amount of such issue, and will be deposited with DTC. [If,
     however, the aggregate principal amount of [any] issue exceeds $200
     million, one certificate will be issued with respect to each $200 million
     of principal amount and an additional certificate will be issued with
     respect to any remaining principal amount of such issue.]

2.   DTC is a limited-purpose trust company organized under the New York Banking
     Law, a "banking organization" within the meaning of the New York Banking
     Law, a member of the Federal Reserve System, a "clearing corporation"
     within the meaning of the New York Uniform Commercial Code, and a "clearing
     agency" registered pursuant to the provisions of Section 17A of the
     Securities Exchange Act of 1934. DTC holds securities that its participants
     ("Participants") deposit with DTC. DTC also facilitates the settlement
     among Participants of securities transactions, such as transfers and
     pledges, in deposited securities through electronic computerized
     book--entry changes in Participants' accounts, thereby eliminating the need
     for physical movement of securities certificates. Direct Participants
     include securities brokers and dealers, banks, trust companies, clearing
     corporations, and certain other organizations. DTC is owned by a number of
     its Direct Participants and by the New York Stock Exchange, Inc., the
     American Stock Exchange, Inc., and the National Association of Securities
     Dealers, Inc. Access to the DTC system is also available to others such as
     securities brokers and dealers, banks, and trust companies that clear
     through or maintain a custodial relationship with a Direct Participant,
     either directly or indirectly ("Indirect Participants"). The Rules
     applicable to DTC and its Participants are on file with the Securities and
     Exchange Commission.

3.   Purchases of Securities under the DTC system must be made by or through
     Direct Participants, which will receive a credit for the Securities on
     DTC's records. The ownership interest of each actual purchaser of each
     Security ("Beneficial Owner") is in turn to be recorded on the Direct and
     Indirect Participants' records. Beneficial Owners will not receive written
     confirmation from DTC of their purchase, but Beneficial Owners are expected
     to receive written confirmations providing details of the transaction, as
     well as periodic statements of their holdings, from the Direct or Indirect
     Participant through which the Beneficial Owner entered into the
     transaction. Transfers of ownership interests in the Securities are to be
     accomplished by entries made on the books of Participants acting on behalf
     of Beneficial Owners.  Beneficial Owners


                                     - 6 -
<PAGE>

     will not receive certificates representing their ownership interests in
     Securities, except in the event that use of the book-entry system for the
     Securities is discontinued.

4.   To facilitate subsequent transfers, all Securities deposited by
     Participants with DTC are registered in the name of DTC's partnership
     nominee, Cede & Co. The deposit of Securities with DTC and their
     registration in the name of Cede & Co. effect no change in beneficial
     ownership. DTC has no knowledge of the actual Beneficial Owners of the
     Securities; DTC's records reflect only the identity of the Direct
     Participants to whose accounts such Securities are credited, which may or
     may not be the Beneficial Owners. The Participants will remain responsible
     for keeping account of their holdings on behalf of their customers.

5.   Conveyance of notices and other communications by DTC to Direct
     Participants, by Direct Participants to Indirect Participants, and by
     Direct Participants and Indirect Participants to Beneficial Owners will be
     governed by arrangements among them, subject to any statutory or regulatory
     requirements as may be in effect from time to time.

[6.  Redemption notices shall be sent to Cede & Co. If less than all of the
     Securities within an issue are being redeemed, DTC's practice is to
     determine by lot the amount of the interest of each Direct Participant in
     such issue to be redeemed.]

7.   Neither DTC nor Cede & Co. will consent or vote with respect to Securities.
     Under its usual procedures, DTC mails an Omnibus Proxy to the Issuer as
     soon as possible after the record date. The Omnibus Proxy assigns Cede &
     Co.'s consenting or voting rights to those Direct Participants to whose
     accounts the Securities are credited on the record date (identified in a
     listing attached to the Omnibus Proxy).

8.   Principal and interest payments on the Securities will be made to DTC.
     DTC's practice is to credit Direct Participants' accounts on payable date
     in accordance with their respective holdings shown on DTC's records unless
     DTC has reason to believe that it will not receive payment on payable date.
     Payments by Participants to Beneficial Owners will be governed by standing
     instructions and customary practices, as is the case with securities held
     for the accounts of customers in bearer form or registered in "street
     name," and will be the responsibility of such Participant and not of DTC,
     the Agent, or the Issuer, subject to any statutory or regulatory
     requirements as may be in effect from time to time. Payment of principal
     and interest to DTC is the responsibility of the Issuer or the Agent,
     disbursement of such payments to Direct Participants shall be the
     responsibility of DTC, and disbursement of such payments to the Beneficial
     Owners shall be the responsibility of Direct and Indirect Participants.

[9.  A Beneficial Owner shall give notice to elect to have its Securities
     purchased or tendered, through its Participant, to the [Tender/Remarketing]
     Agent, and shall effect delivery of such Securities by causing the Direct
     Participant to transfer the Participant's interest in the Securities, on
     DTC's records, to the [Tender/Remarketing] Agent. The requirement for
     physical delivery of Securities in connection with a demand for purchase or
     a mandatory


                                     - 7 -
<PAGE>

     purchase will be deemed satisfied when the ownership rights in the
     Securities are transferred by Direct Participants on DTC's records.]

10.  DTC may discontinue providing its services as securities depository with
     respect to the Securities at any time by giving reasonable notice to the
     Issuer or the Agent. Under such circumstances, in the event that a
     successor securities depository is not obtained, Security certificates are
     required to be printed and delivered.

11.  The Issuer may decide to discontinue use of the system of book-entry
     transfers through DTC (or a successor securities depository). In that
     event, Security certificates will be printed and delivered.

12.  The information in this section concerning DTC and DTC's book-entry system
     has been obtained from sources that the Issuer believes to be reliable, but
     the Issuer takes no responsibility for the accuracy thereof.

                                 BOUND BY RIDER

     The Issuer and the Agent acknowledge that DTC is not a party to the Trust
Deed and that no obligations or liabilities shall be deemed to accrue to DTC
with regard to the Trust Deed.


                                     - 8 -