<PAGE>   1
                                                                  EXHIBIT 10.5.1



                            INDEMNIFICATION AGREEMENT

                             dated as of ___________

                                  by and among

                        FINANCIAL SECURITY ASSURANCE INC.

                         WFS FINANCIAL AUTO LOANS, INC.

                                WFS FINANCIAL INC

                                       and

                         -------------------------------
<PAGE>   2
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                          Page
<S>                                                                                       <C>
1.      Definitions.........................................................................1

2.      Representations and Warranties of the Insurer.......................................3

3.      Agreements, Representations and Warranties of the Underwriters......................4

4.      Representation and Warranty of the Seller and WFS...................................4

5.      Indemnifications....................................................................5

6.      Insurer Undertaking.................................................................5

7.      Notice To Be Given Insurer..........................................................5

8.      Notice To Be Given Underwriters.....................................................6

9.      Contribution........................................................................7

10.     Notices.............................................................................8

11.     Governing Law, Etc..................................................................8

12.     Insurance Agreement; Underwriter Agreement..........................................8
</TABLE>


<PAGE>   3
                            INDEMNIFICATION AGREEMENT


               This Agreement, effective as of ______________, by and among
FINANCIAL SECURITY ASSURANCE INC. (the "Insurer"), as the Insurer under the
Financial Guaranty Insurance Policy issued in connection with the Notes (as
hereinafter defined), WFS FINANCIAL AUTO LOANS, INC. (the "Seller"), WFS
FINANCIAL INC ("WFS") and _______________________, as representative (the
"Representative") of the several Underwriters named in the Underwriting
Agreement referred to below.


               1. Definitions. As used in this Agreement, the following terms
shall have the respective meanings stated below:

                      "Agreement" means this Indemnification Agreement by and
               among the Insurer, the Seller, WFS and the Representative.

                      "Certificates" means the trust certificates evidencing the
               undivided beneficial ownership interests in the Trust.

                      "Federal Securities Laws" means the Securities Act of 1933
               (the "1933 Act"), the Securities Exchange Act of 1934, the Trust
               Indenture Act of 1939, the Investment Company Act of 1940, the
               Investment Advisers Act of 1940 and the Public Utility Holding
               Company Act of 1935, all as amended from time to time, and any
               rule or regulation in effect from time to time under any such
               act.

                      "Indemnified Party" means any party entitled to any
               indemnification pursuant to Section 5 below, as the context
               requires.

                      "Indemnifying Party" means any party required to provide
               indemnification pursuant to Section 5 below, as the context
               requires.

                      "Indenture" means the Indenture, dated as of the date
               hereof, by and between the Trust and Bankers Trust Company, as
               Indenture Trustee.

                      "Insurance Agreement" means the Insurance, Indemnity and
               Pledge Agreement, dated as of the date hereof, by and among the
               Trust, the Seller, WFS, WFS Investments, Inc. ("WII"), the
               Insurer and Bankers Trust Company, as Collateral Agent, Proceeds
               Agent and Indenture Trustee.

                      "Insurance Laws" means any state, local or foreign
               statute, and any rule or regulation thereunder, regulating (i)
               transactions and dealings in insurance or (ii) any Person or
               entity engaging in the business of issuing, selling or otherwise
               providing insurance.

                      "Insurer Party" means any of the Insurer and/or its
               parent, subsidiaries and affiliates, and any shareholder,
               director, officer, employee, agent or "controlling person" (as
               such term is defined under any Federal Securities Law) of any of
               the foregoing.

<PAGE>   4
                      "Losses" means (i) any actual out-of-pocket loss paid by
               the party entitled to indemnification or contribution, (ii) any
               actual out-of-pocket costs or expenses paid by such party,
               including reasonable fees and expenses of its counsel, to the
               extent not paid, satisfied or reimbursed from funds provided by
               any other Person (provided that the foregoing shall not create or
               imply any obligation to pursue recourse against any such other
               Person), plus (iii) interest on the amount paid by the party
               entitled to indemnification or contribution from the date of such
               payment to the date of payment by the party who is obligated to
               indemnify or contribute hereunder at the statutory rate
               applicable to judgments for breach of contract.

                      "Notes" means $________ ____% Auto Receivable Backed
               Notes, Class A-1, $________ ____% Auto Receivable Backed Notes,
               Class A-2, $________ ____% Auto Receivable Backed Notes, Class
               A-3 and $__________ ____% Auto Receivable Backed Notes, Class
               A-4.

                      "Offering Documents" means the Prospectus and any
               materials or documents delivered by an Underwriter or any
               Underwriter Party to any Person in connection with the offer or
               sale of the Notes.

                      "Person" means any individual, partnership, joint venture,
               limited liability company, corporation, trust or unincorporated
               organization or any government or agency or political subdivision
               thereof.

                      "Policy" means the financial guaranty insurance policy
               (including the endorsement thereto) (Policy No. ________) issued
               by the Insurer in support of the Notes.

                      "Prospectus" means the Prospectus dated _____________
               relating to the Notes, as supplemented by the Prospectus
               Supplement dated ____________ as filed with the Securities and
               Exchange Commission pursuant to Rule 424(b) under the Securities
               Act of 1933, as amended.

                      "Seller Party" means the Seller and WFS and any director,
               officer, employee, agent or "controlling person" (as such term is
               defined under any Federal Securities Law) of either the Seller or
               WFS.

                      "Trust" means WFS Financial ______ Owner Trust.

                      "Trust Agreement" means the Trust Agreement dated as of
               ___________, by and among the Seller, WII, the Insurer and Chase
               Manhattan Bank Delaware, as Owner Trustee.

                      "Underwriter Party" means any of the Underwriters, their
               parents, subsidiaries and affiliates and any shareholder,
               director, officer, employee, agent or "controlling person" (as
               such term is defined under any Federal Securities Law) of any of
               the foregoing.

                      "Underwriters" means _____________________________.

                      "Underwriting Agreement" means the Underwriting Agreement
               dated ______________, among the Seller, WFS and the
               Representative.



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<PAGE>   5
               2. Representations and Warranties of the Insurer. The Insurer
represents and warrants as follows:

                      (a) Organization and Licensing. The Insurer is a duly
               incorporated and existing New York financial guaranty insurance
               company licensed to do business in the State of New York.

                      (b) Corporate Power. The Insurer has the corporate power
               and authority to issue the Policy and execute and deliver this
               Agreement, the Trust Agreement and the Insurance Agreement and to
               perform all of its obligations hereunder and thereunder.

                      (c) Authorization; Approvals. The issuance of the Policy
               and the execution, delivery and performance of this Agreement,
               the Trust Agreement and the Insurance Agreement have been duly
               authorized by all necessary corporate proceedings. No further
               approvals or filings of any kind, including, without limitation,
               any further approvals of or further filing with any governmental
               agency or other governmental authority, or any approval of the
               Insurer's board of directors or stockholders, are necessary for
               the Policy, this Agreement, the Trust Agreement and the Insurance
               Agreement to constitute the legal, valid and binding obligations
               of the Insurer.

                      (d) Enforceability. The Policy, when issued, this
               Agreement, the Trust Agreement and the Insurance Agreement will
               each constitute a legal, valid and binding obligation of the
               Insurer, enforceable in accordance with its terms subject, as to
               the enforcement of remedies, to bankruptcy, insolvency,
               reorganization, moratorium and other similar laws affecting the
               enforceability of creditors' rights generally applicable in the
               event of the bankruptcy, insolvency or reorganization of the
               Insurer and to general principles of equity.

                      (e) Financial Information. The consolidated balance sheet
               of the Insurer as of December 31, ____ and as of December 31,
               ____, and the related consolidated statements of income, changes
               in shareholder's equity, and cash flows for the three fiscal
               years then ended, and the accompanying footnotes, together with
               the report thereon of Coopers & Lybrand LLP, independent
               auditors, and the unaudited interim consolidated balance sheet of
               the Insurer as of June 30, ____ and the related consolidated
               statements of income, changes in shareholder's equity and
               cashflows for the three-month periods ended June 30, ____ and
               June 30, ____, copies of which are included in the Prospectus
               (collectively, the "Insurer Financial Statements"), fairly
               present in all material respects the financial condition of the
               Insurer as of such dates and for the periods covered by such
               statements in accordance with generally accepted accounting
               principles consistently applied and, since June 30, ____, there
               has been no material change in the financial condition of the
               Insurer that would materially and adversely affect its ability to
               perform its obligations under the Policy.

                      (f) Insurer. The information in the Prospectus as of the
               date hereof under the caption "Financial Security Assurance Inc."
               that describes the Insurer and certain aspects of the principal
               business in which the Insurer is engaged (collectively, the
               "Insurer Information"), is true and correct in all material
               respects



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<PAGE>   6
               and does not contain any untrue statement of a fact that is
               material to the Insurer's ability to perform its obligations
               under the Policy or omit to state a fact (i) required to be
               stated therein that is material to the Insurer's ability to
               perform its obligations under the Policy or (ii) necessary in
               order to make statements therein that are material to the
               Insurer's ability to perform its obligations under the Policy, in
               light of the circumstances under which such statements are being
               made, not materially misleading.

                      (g) No Litigation. There are no actions, suits,
               proceedings or investigations pending, or to the best of the
               Insurer's knowledge, threatened against it at law or in equity or
               before or by any court, governmental agency, board or commission
               or any arbitrator that, if decided adversely, would materially
               and adversely affect its condition (financial or otherwise) or
               operations or would materially and adversely affect its ability
               to perform its obligations under this Agreement, the Trust
               Agreement, the Indenture or the Policy.

               Nothing in this Agreement shall be construed as a representation
or undertaking by the Insurer concerning the rating currently assigned to its
claims-paying ability by Moody's Investors Service, Inc. ("Moody's") and/or
Standard & Poor's, a division of The McGraw-Hill Companies, Inc. ("S&P") or any
other rating agency (collectively, the "Rating Agencies"). The Rating Agencies,
in assigning such rating, may take into account facts and assumptions not
described in the Prospectus and the facts and assumptions that are considered by
the Rating Agencies are subject to change over time. The Insurer has not
attempted to disclose all facts and assumptions that the Rating Agencies deem
relevant in assigning a rating within a particular rating category to the
Insurer's claims-paying ability. Notwithstanding the foregoing, the Insurer is
not aware of any facts that, if disclosed to Moody's or S&P, would be reasonably
expected to result in a downgrade of the rating of the claims-paying ability of
the Insurer by either of such Rating Agencies.

               3. Agreements, Representations and Warranties of the
Underwriters. The Underwriters, severally and not jointly, represent, warrant
and agree with the Insurer as follows:

                      (a) Each of the Underwriters agrees not to use any
               information relating to the Insurer (other than the information
               contained in the Prospectus) unless such information has been
               approved by the Insurer in writing, such approval not to be
               unreasonably withheld.

                      (b) Each of the Underwriters represents and warrants that
               all material provided by the Underwriter for inclusion in the
               Prospectus (being the information set forth in the second, third
               and sixth paragraphs under "Underwriting" in the Prospectus,
               including any information in any amendment or supplement to the
               Prospectus furnished that amends or supplements such
               information), insofar as such information relates to the
               Underwriter (all such information being collectively referred to
               herein as the "Underwriter Information"), is true and correct in
               all material respects.

               4. Representation and Warranty of the Seller and WFS. The Seller
and WFS jointly and severally represent and warrant to the Insurer and the
Underwriters that the Prospectus does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made therein, in the light of the circumstances under which



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they were made, not misleading (except that no representation or warranty is
made with respect to the Insurer Information, the Insurer Financial Statements
or the Underwriter Information).

               5. Indemnifications.

                      (a) The Insurer hereby agrees, upon the terms and subject
               to the conditions of this Agreement, to indemnify, defend and
               hold harmless each Seller Party and each Underwriter Party
               against any and all Losses incurred by them with respect to the
               offer and sale of the Notes and resulting from the Insurer's
               breach of any of its representations and warranties set forth in
               Section 2 of this Agreement.

                      (b) Each of the Underwriters hereby agrees, severally and
               not jointly, upon the terms and subject to the conditions of this
               Agreement, to indemnify, defend and hold harmless each Insurer
               Party and each Seller Party against any and all Losses incurred
               by them with respect to the offer and sale of the Notes and
               resulting from such Underwriter's breach of any of its
               representations and warranties set forth in Section 3 of this
               Agreement.

                      (c) Upon the incurrence of any Losses for which a party is
               entitled to indemnification hereunder, the Indemnifying Party
               shall reimburse the Indemnified Party promptly upon establishment
               by the Indemnified Party to the Indemnifying Party of the Losses
               incurred.

               6. Insurer Undertaking. The Insurer hereby agrees that, for a
period of seven years hereafter, the Insurer will furnish to the Underwriters or
the Seller, upon request and at the expense of the Underwriters or the Seller,
as the case may be, copies of the Insurer's most recent financial statements
(annual or interim, as the case may be) prepared in accordance with generally
accepted accounting principles (subject, as to interim statements, to normal
year-end adjustments) within a reasonable time after they are available. In
addition, until the ninety-first (91st) day following the date of the
Prospectus, the Insurer will promptly provide the Underwriters and the Seller
with any revisions to the Insurer Information that are in the judgment of the
Insurer necessary to prepare an amended Prospectus or a supplement to the
Prospectus or to be incorporated by reference into the Prospectus (as may then
be amended or supplemented) as described in the Prospectus under "Incorporation
of Certain Documents by Reference".

               7. Notice To Be Given Insurer. Except as provided in Section 9,
the indemnification provided herein by the Insurer shall be the exclusive remedy
of any Underwriter Party or Seller Party for the Insurer's breach of a
representation or warranty hereunder; provided, however, that any Underwriter
Party or Seller Party shall be entitled to pursue any other remedy at law or in
equity for any such breach so long as the damages sought to be recovered shall
not exceed the Losses incurred thereby resulting from such breach. In the event
that any action or regulatory proceeding shall be commenced or claim asserted
that may entitle an Underwriter Party or Seller Party to be indemnified under
this Agreement, such party shall give the Insurer written or telegraphic notice
of such action or claim reasonably promptly after receipt of written notice
thereof. The Insurer shall be entitled to participate in the defense of any such
action or claim in reasonable cooperation with, and with the reasonable
cooperation of, the Seller Party or Underwriter Party, as the case may be. The
Indemnified Party will have the right to employ its own counsel in any such
action in addition to the counsel of the Insurer, but the fees and expenses of
such counsel will be at the expense of such Indemnified Party, unless (1) the



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employment of counsel by the Indemnified Party at its expense has been
authorized in writing by the Insurer, (2) the Insurer has not in fact employed
counsel to assume the defense of such action within a reasonable time after
receiving notice of the commencement of the action or (3) the named parties to
any such action or proceeding (including any impleaded parties) include both the
Insurer and the Indemnified Party, and the Indemnified Party shall have been
advised by counsel that there may be one or more legal defenses available to it
that are different from or additional to those available to the Insurer (it
being understood, however, that the Insurer shall not, in connection with any
one such action or proceeding or separate but substantially similar or related
actions or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys at any time for the Indemnified Party,
which firm shall be designated in writing by the Indemnified Party), in each of
which cases the fees and expenses of counsel will be at the expense of the
Insurer and all such fees and expenses will be reimbursed promptly as they are
incurred. No settlement of any such claim or action shall be entered into
without the consent of the Seller Party or Underwriter Party, as the case may
be, on the one hand and each Insurer Party who is subject to such claim or
action on the other hand. Any failure by a Seller Party or Underwriter Party, as
the case may be, to comply with the provisions of this Section shall relieve the
Insurer of liability only if such failure is substantially prejudicial to the
Insurer's position and then only to the extent of such prejudice.

               8. Notice To Be Given Underwriters. Except as provided in Section
9, the indemnification provided herein by the Underwriters shall be the
exclusive remedy of any Insurer Party for any Underwriter's breach of a
representation, warranty or agreement hereunder; provided, however, that each
Insurer Party shall be entitled to pursue any other remedy at law or in equity
for any such breach so long as the damages sought to be recovered shall not
exceed the Losses incurred thereby resulting from such breach. In the event that
any action or regulatory proceeding shall be commenced or claim asserted that
may entitle an Insurer Party to be indemnified under this Agreement, such party
shall give the Underwriters written or telegraphic notice of such action or
claim reasonably promptly after receipt of written notice thereof. The
Underwriters shall be entitled to participate in the defense of any such action
or claim in reasonable cooperation with, and with the reasonable cooperation of,
the Insurer Party. The Indemnified Party will have the right to employ its own
counsel in any such action in addition to the counsel of the Underwriters, but
the fees and expenses of such counsel will be at the expense of such Indemnified
Party, unless (1) the employment of counsel by the Indemnified Party at its
expense has been authorized in writing by the Underwriters; (2) the Underwriters
have not in fact employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action; or (3)
the named parties to any such action or proceeding (including any impleaded
parties) include both the Insurer and the Indemnified Party, and the Insurer
shall have been advised by counsel that there may be one or more legal defenses
available to it that are different from or additional to those available to the
Indemnified Party (it being understood, however, that the Indemnified Party
shall not, in connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys at any
time for the Insurer, which firm shall be designated in writing by the Insurer),
in each of which cases the fees and expenses of counsel will be at the expense
of the Underwriters and all such fees and expenses will be reimbursed promptly
as they are incurred. No settlement of any such claim or action shall be entered
into without the consent of the Insurer and each Underwriter Party. Any



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failure by an Insurer Party to comply with the provisions of this Section shall
relieve the Underwriters of liability only if such failure is substantially
prejudicial to the Underwriters' position and then only to the extent of such
prejudice.

               9. Contribution. To provide for just and equitable contribution
if the indemnification provided for pursuant to this Agreement is determined to
be unavailable for any Underwriter Party, Insurer Party or Seller Party (other
than due to application of this Section), the Insurer, the Seller, WFS and the
Underwriters, as the case may be, shall contribute to the aggregate costs of
liabilities arising from any breach of a representation or warranty set forth in
this Agreement (i) in such proportion as is appropriate to reflect the relative
benefits received by the Insurer, the Seller and WFS pursuant to the
Underwriting Agreement and the Underwriters from the offering of the Notes or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Insurer, the Seller, WFS and the Underwriters in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Seller and WFS, the Insurer and the
Underwriters shall be deemed to be, respectively, in the same proportions as the
total proceeds from the offering (net of underwriting discounts and commissions
but before deducting expenses) received by the Seller, the premiums on the
Policy to be paid to the Insurer and the underwriting discounts and commissions
received by the Underwriters. The relative fault of each Indemnifying Party, on
the one hand, and of each Indemnified Party, on the other, shall be determined
by reference to, among other things, whether the breach of, or alleged breach
of, any of its representations and warranties set forth in Section 2, 3 or 4 of
this Agreement relates to information supplied by, or an action within the
control of, the indemnifying party or the indemnified party and the parties'
relative intent, knowledge, access to information and the opportunity to correct
or prevent such breach. The parties agree that the Insurer shall be solely
responsible for the Insurer Information, the Underwriters shall be solely
responsible for the Underwriter Information and the Seller and WFS shall be
jointly and severally responsible for all other information in the Prospectus.

               Notwithstanding anything in this Section 9 to the contrary, with
respect to contribution between any Seller Party and any Underwriter Party, the
Underwriter Parties shall not be required to contribute an amount in excess of
the amount by which the total price of the sum of the Notes sold by such
Underwriter Parties exceeds the amount of any damages that such Underwriter
Parties have otherwise been required to pay in respect of such untrue or alleged
untrue statement or omission or alleged omission; provided, however, that the
terms of the contribution between any Seller Party and any Underwriter Party
contained in the Underwriting Agreement shall control to the extent they are
inconsistent with or in addition to the terms of this Section 9. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.

               The indemnity and contribution agreements contained in this
Agreement shall remain operative and in full force and effect, regardless of (a)
any investigation made by or on behalf of any Underwriter Party or any Insurer
Party (b) the issuance of the Notes or the Policy or (c) any termination of this
Agreement. The indemnification provided in this Agreement will be in addition to
any liability that the parties may otherwise have.



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<PAGE>   10
               Upon the incurrence of any Losses entitled to contribution
hereunder, the contributor shall reimburse the party entitled to contribution
promptly upon establishment by the party entitled to contribution of the Losses
incurred.

               10. Notices. All notices and other communications provided for
under this Agreement shall be addressed to the address set forth below as to
each party or at such other address as shall be designated by a party in a
written notice to the other party.

If to the Insurer:                  Financial Security Assurance Inc.
                                    350 Park Avenue
                                    New York, New York  10022
                                    Attention:  Senior Vice President -
                                                Surveillance

If to the Seller:                   WFS Financial Auto Loans, Inc.
                                    23 Pasteur
                                    Irvine, California  92618
                                    Attention:  Thomas A. Wolfe



If to WFS:                          WFS Financial Inc
                                    23 Pasteur
                                    Irvine, California  92618
                                    Attention:  Guy DuBose, Esq.

If to the Underwriters:


               11. Governing Law, Etc. This Agreement shall be deemed to be a
contract under the laws of the State of New York and shall be governed by and
construed in accordance with the laws of the State of New York. This Agreement
may not be assigned by any party without the express written consent of each
other party. Any assignment made in violation of this Agreement shall be null
and void. Amendments of this Agreement shall be in writing signed by each party.
This Agreement shall not be effective until executed by each of the Insurer, the
Seller, WFS and the Representative.

               12. Insurance Agreement; Underwriter Agreement. This Agreement in
no way limits or otherwise affects the indemnification and contribution
obligations of the Seller and WFS under the Insurance Agreement.



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<PAGE>   11
               IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered by their respective officers thereunto duly
authorized, all as of the date first above written.



                                       FINANCIAL SECURITY ASSURANCE INC.


                                       By:
                                           -------------------------------------
                                                      Authorized Officer


                                       WFS FINANCIAL AUTO LOANS, INC.


                                       By:
                                          --------------------------------------
                                       Title:
                                             -----------------------------------

                                       WFS FINANCIAL INC


                                       By:
                                          --------------------------------------
                                       Title:
                                             -----------------------------------



                                               as Representative of the several
                                               Underwriters

                                       By:
                                          --------------------------------------
                                       Title:
                                             -----------------------------------



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