FORM 10-KSB
                   U.S. SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C.  20549

                  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
                     THE SECURITIES EXCHANGE ACT OF 1934
                 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1996

                    Commission  file  number  0-18819
                            MONACO FINANCE, INC.
                (Name of small business issuer in its charter)

                                    Colorado                   84-1088131
                           (State or other jurisdiction     (IRS Employer
                     of incorporation or organization)     Identification No.)

                            370  17th  Street,  Suite  5060
                                  Denver, Colorado                     80202
                       (Address of principal executive offices)     (Zip Code)

                               Issuer's telephone number:     (303) 592-9411

     SECURITIES  REGISTERED  UNDER  SECTION  12(B)  OF  THE  EXCHANGE  ACT:

Class  A  Common  Stock,  $.01  Par  Value
Title  of  Class

SECURITIES  REGISTERED  UNDER  SECTION  12(G)  OF  THE  EXCHANGE  ACT:

Class  A  Common  Stock,  $.01  Par  Value
Title  of  Class

     Check  whether  the  issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has  been  subject to such filing requirements for the past 90 days.
       X  Yes      _____  No

     Check  if  disclosure  of  delinquent  filers  in response to Item 405 of
Regulation  S-B  is  not  contained  in  this  form, and no disclosure will be
contained,  to  the  best  of  Registrant's  knowledge, in definitive proxy or
information  statements  incorporated  by  reference  in Part III of this Form
10-KSB  or  any  amendments  to  this  Form  10-KSB.  [    ]

State  issuer's  revenues  for  its  most  recent  fiscal year.   $13,500,753.

     State  the  aggregate  market  value  of  the  voting  stock  held  by
non-affiliates  (based  on  the average bid and asked prices of such stock) of
the  Registrant:

As  of  February  28,  1997:    Approximately  $11,360,490.

     As  of  February  28, 1997, there were 5,648,379 shares of Class A Common
Stock,  $.01 par  value and 1,323,715 shares of Class B Common Stock, $.01 par
value,  outstanding.

     DOCUMENTS  INCORPORATED  BY  REFERENCE
     Proxy  Statement  for the 1997 Annual Meeting to be filed within 120 days
after  the  fiscal  year  (Part  III).
Transitional  Small  Business  Disclosure  Format:            Yes    No   X
Total  number  of  pages:  69

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                             MONACO FINANCE, INC.
                        1996 FORM 10-KSB ANNUAL REPORT
                              TABLE OF CONTENTS

                                     PAGE NUMBER

     PART  I
Item 1.     Description of Business     3-14
Item 2.     Description of Property     14
Item 3.     Legal Proceedings           15
Item 4.     Submission  of  Matters
            to  a  Vote  of  Security
            Holders                     15
     PART  II
Item  5.    Market for Common Equity
            and  Related
            Stockholder Matters         16
Item  6.    Management's  Discussion
            and  Analysis  or  Plan
            of Operation                17-28
Item 7.     Financial Statements        29-55
Item  8.    Changes  In  and
            Disagreements With
            Accountants on
            Accounting and
            Financial Disclosure        56
     PART  III
Item  9.    Directors and Executive
            Officers,Promoters and
            Control Persons, Compliance
            With Section 16(a) of the
            Exchange Act                56
Item 10.    Executive Compensation      56
Item  11.   Security Ownership of
            Certain Beneficial Owners
            and Management              56
Item 12.    Certain Relationships
            and Related Transactions    56
Item 13.    Exhibits and Reports on
            Form 8-K                    56-68
            Signatures                  69




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PART  I

ITEM  1.  DESCRIPTION  OF  BUSINESS.

     Monaco Finance, Inc. (the "Company") commenced business in June 1988 and
is  engaged  in  the  business  of  acquiring  automobile  retail  installment
contracts  ("Contract(s)")  by  providing  special  finance  programs  (the
"Program(s)") ("Sub-prime loans") to purchasers of vehicles who do not qualify
for traditional sources of bank financing due to their adverse credit history.
 In  1996,  the  Company  acquired  Contracts  from  automobile  dealers  (the
"Dealer(s)"  or  the  "Dealer  Network")  located  in  twenty-one  states, the
majority  of  which  were  acquired from five states. At December 31, 1996 the
Company  had  sixteen  full-time finance representatives to provide service to
current  Dealers  and  to  sign-up  new Dealers for the Company's Programs. At
December  31, 1996, the Company's loan portfolio had an outstanding balance of
approximately  $83  million.

     In  February  1996, the Company announced that it intended to discontinue
its  Company  owned  retail used car dealerships, which conduct business under
the  name  "CarMart" (the "Company Dealerships" or "CarMart Dealerships"), and
the  associated  financing operations. In April 1996, the Company extended the
expected  disposal date of the CarMart business from April 30, 1996 to May 31,
1996.  The  CarMart  business  ceased  operations  on  May  31,  1996.

AUTO  FINANCE  PROGRAM

GENERAL

     The  Company's automobile finance programs are conducted nationally under
the  name  Monaco  Finance  Auto  Program ("MFAP").  At December 31, 1996, the
Company  had  agreements  with  Dealers  located  in twenty-one states for the
purchase  of  Contracts  which  meet  the  Company's  financing  standards,
requirements  and  criteria.  The Contracts are purchased without recourse and
are generally purchased for a processing fee and discount ranging from $150 to
$750  per  contract.  The purchase price primarily depends upon the particular
financing  option  used,  the  length  of the Contract, and the model year and
mileage  of the automobile financed. To date, the obligors under the Contracts
have  made down payments ranging between 10% and 20% of the sales price of the
vehicle  financed  including  the value of a trade-in, if any.  Generally, the
remaining  balance of the purchase price plus taxes, title fees and insurance,
where  applicable,  is  financed  over  a  period of 24 to 60 months at annual
interest  rates ranging between 17% and 25%. At December 31, 1996 the original
annual  percentage  rate  of  interest  of  the  Company's  portfolio averaged
approximately  23% and the original weighted average term of the portfolio was
approximately  50  months.

PURCHASE  AGREEMENTS  (DEALERS)

The  Company  acquires  Contracts  from  Dealers who have entered into dealer
agreements  with the Company.  The dealer agreements generally are in standard
form  requiring  that Contracts be originated in accordance with the Company's
Program guidelines and that the Contracts be secured by a perfected first lien
     on  the  vehicle  financed.  Each Contract is underwritten by the Company
prior  to  acceptance.    The Contracts are non-recourse to the selling Dealer
except  for  certain  representations  and  warranties.

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     The  Company  markets  its  MFAP  through  Dealer representatives who are
either  full  time  employees  of  the  Company  or  full  time  independent
contractors.  The  Dealer  representatives  reside  in  those states where the
Programs  are  marketed or in certain cases in adjacent states. In addition to
enlisting  new  Dealers  into the Company programs, the Dealer Representatives
assist  Dealers  by  familiarizing them with Monaco's Programs and procedures.

THIRD-PARTY  LOAN  ORIGINATIONS
In  1996,  the  Company  began purchasing sub-prime automobile loans through
certain  third-party  loan originators. These loans are purchased according to
the  company's  underwriting  and  program  guidelines.

FINANCING  SOURCES

     From  inception  through  1991,  the  Company financed the acquisition of
Contracts through loans from its principal stockholders and banks.  In October
1991,  the  Company  expanded  its  financing  sources  by  establishing  an
asset-backed automobile receivables program.  In 1992 the Company entered into
a    secured  revolving line of credit with Citicorp Leasing Inc. ("Citicorp")
to  finance  Contracts.   In 1994 the Company securitized $23.9 million of its
Contracts  and  in 1995 it obtained a $150 million revolving secured warehouse
line.    Since  1993,  the Company has used revolving lines of credit, private
placement  borrowings,  common  stock,  warrant  exercises, and its Automobile
Receivable-Backed Securitization Program and the corresponding Revolving Notes
and  Warehouse  Notes  as  its  primary  sources  of  capital.

The  following is a brief description of the Company's financing sources since
October  1991:

TRUST  OFFERING

In  October  1991,  the  Company completed an offering ("Trust Offering") of
$3,700,000  of  CarMart  Auto  Receivables  Trust  1991-1  (the "Trust") 8.85%
Asset-Backed  Certificates  Class A (the "Class A Certificates").  The Class A
Certificates received an investment grade rating of "BBB" from Fitch Investors
     Services,  Inc.  and  were  sold  to  a  limited  number of sophisticated
investors.   The Company was the servicer with respect to the Contracts in the
Trust and it received a servicing fee of 1.5% per annum on a monthly basis for
providing  customary collection and servicing activities for the assets in the
Trust.

     The  Class  A Certificates represented an undivided ownership interest in
the  Trust whose assets consisted primarily of Contracts which were originated
by  the  Company  Dealerships  or  from the MFAP and sold to banks.  The Trust
financing  allowed  the  Company to reduce the number of Contracts held by the
Banks  under  the  Company's  warehousing  lines.

     On  January  20,  1993,  the  Company's  special  purpose  wholly  owned
subsidiary,  CarMart  Auto  Receivables  Company,  repurchased  the  Class  A
Certificates  from the original institutional investors.  The final payment on
the  Certificates  was  received  in  early  1996.

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                                    <PAGE>



REVOLVING  LINE  OF  CREDIT  -  CITICORP

In  May  1995,  the Company repaid, in full, the then outstanding balance on
its  $25  million  revolving  line  of credit with Citicorp and terminated the
facility.

CONVERTIBLE  SUBORDINATED  NOTE  OFFERING

On  March  15,  1993,  the  Company  completed  a  private  placement  of 7%
Convertible Subordinated Notes (the "Notes") in the aggregate principal amount
     of  $2,000,000  (the  "Note  Offering").    The  purchasers  of the Notes
exercised  an  option to purchase an additional $1,000,000 aggregate principal
amount of the Notes on September 15, 1993.  The principal amount of the Notes,
plus  accrued  and  unpaid  interest  thereon, is due March 1, 1998.  Interest
payments  on the Notes are due semiannually commencing September 1, 1993.  The
Notes are convertible into the Class A Common Stock of the Company at any time
prior  to  maturity  at  a  conversion  price  of  $3.42 per share, subject to
adjustment  for  dilution.  Through December 31, 1996, Notes with an aggregate
principal  amount  of $1,615,000 have been converted resulting in the issuance
of  472,219  shares  of  Class A Common Stock.   Commencing March 15, 1996 the
Company  has the option to pre-pay up to one-third of the outstanding Notes at
par.

SENIOR  SUBORDINATED  NOTE  OFFERING

On  November  1,  1994  the  Company sold, in a private placement, unsecured
Senior  Subordinated  Notes  ("Senior  Notes")  in  the  principal  amount  of
$5,000,000  to  Rothschild  North  America,  Inc.

     Interest  is  due and payable the first day of each quarter commencing on
January  1,  1995.    Principal payments in the amount of $416,667 are due and
payable  the  first  day  of  January,  April, August and October of each year
commencing  January 1, 1997.  The unpaid principal amount of the Senior Notes,
plus  accrued  and  unpaid interest are due October 1, 1999.  The Company used
the  proceeds  from  the sale of the Senior Notes to acquire additional  loans
and  to  reduce its outstanding balance under its $25 million revolving credit
facility  with  Citicorp.

AAA-RATED  AUTOMOBILE  RECEIVABLES  -  BACKED  NOTE  OFFERINGS

In  November  1994 MF Receivables Corp. I. ("MF Receivables"), the Company's
wholly  owned  special  purpose  subsidiary,  sold,  in  a  private placement,
$23,861,823  of  7.6%  automobile  receivables-backed  notes  ("Series  1994-A
Notes").   The Series 1994-A Notes accrue interest at a fixed rate of 7.6% per
annum.    The  Series 1994-A Notes are expected to be fully amortized by March
1998; however, the debt maturities are based on principal payments received on
     the  underlying  receivables,  which  may  result  in  a  different final
maturity.

     In  May  of  1995,  MF  Receivables  issued  its  Floating  Rate  Auto
Receivables-Backed  Note  (Revolving  Note"  or  "Series  1995-A  Note").  The
Revolving  Note  has  a  stated  maturity of October 16, 2002.  MF Receivables
acquires  Contracts  from the Company which are pledged under the terms of the
Revolving  Note  and  Indenture  for  up  to  $40  million  in  borrowing.

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                                    <PAGE>


Subsequently,  the  Revolving Note is repaid by the proceeds from the issuance
of  secured  Term  Notes  or  repaid from collection of principal payments and
interest  on  the  underlying  Contracts.    The Revolving Note can be used to
borrow  up  to  an  aggregate  of $150 million through May 16, 1998.  The Term
Notes  have  a fixed rate of interest and likewise are repaid from collections
on  the  underlying  Contracts.   An Indenture and Servicing Agreement require
that the Company and MF Receivables maintain certain financial ratios, as well
as other representations, warranties and covenants.  The Indenture requires MF
Receivables to pledge all Contracts owned by it for repayment of the Revolving
Note  or  Term  Notes,  including  Contracts  pledged as collateral for Series
1994-A  Notes,  the  Series 1995-B Term Notes, as well as all future Contracts
acquired  by  MF  Receivables.

     The Series 1995-A Note bears interest at LIBOR plus 75 basis points.  The
initial funding of this Note was $26,966,489 on May 16, 1995.  The Company, as
servicer,  provides  customary  collection  and  servicing  activities for the
Contracts.    The Revolving Note has a stated maturity of October 16, 2002 and
an  expected  termination  date  of  May  16, 1998.  The maximum limit for the
Series  1995-A  Note  is  $40  million.  On September 15, 1995, MF Receivables
issued  the  Series 1995-B Term Notes ("Series 1995-B Notes") in the amount of
$35,552,602.   The Series 1995-B Notes accrue interest at a fixed note rate of
6.45%  per  annum.  The Series 1995-B Notes are expected to be fully amortized
by  June  1999;  however,  the debt maturities are based on principal payments
received  on  the underlying receivables which may result in a different final
maturity.  The proceeds from the issuance of the Series 1995-B Notes were used
to  retire,  in  full,  the  1995-A  Note, which will be used to accumulate an
additional  $114.4  million  in  $40  million  increments.

     The  assets  of MF Receivables are not available to pay general creditors
of  the  Company.    In  the  event  there  is insufficient cash flow from the
Contracts  (principal  and  interest)  to  service the Revolving Note and Term
Notes  a  nationally  recognized  insurance  company  (MBIA)  has  guaranteed
repayment.    The  MBIA  insured  Series  1994-A Notes, Series 1995-A Note and
Series 1995-B Notes received a corresponding AAA rating by Standard and Poor's
and  an  Aaa rating by Moody's and were purchased by institutional investors.
The underlying Contracts accrue interest at rates of approximately 17% to 29%.
 All  cash collections in excess of disbursements to the Series 1994-A, Series
1995-A  and Series 1995-B noteholders and other general disbursements are paid
to  MF  Receivables  monthly.

REDEMPTION  OF  CLASS  A  WARRANTS

The Company called its Class A Warrants for redemption on December 21, 1993,
     pursuant  to  its  November  8,  1993, Notice of Redemption.   A total of
1,603,590 or 99% of the outstanding Class A Warrants were exercised, resulting
in  gross  proceeds  to the Company of approximately $7.2 million. The Company
used the proceeds of the exercise of the Class A Warrants to pay its revolving
line  of  credit  with  Citicorp.

REDEMPTION  OF  CLASS  B  WARRANTS

On  or about November 8, 1995, the Company reduced the exercise price of its
then outstanding Class B Common Stock purchase warrants from $6.00 per warrant
     to  $4.90  per warrant through their expiration date, December 11, 1995.
As  a  result  of  the  Class  B  Warrant  exercises,  1,622,970 shares of the
Company's Class A Common Stock were issued.  The Company received net proceeds
of $7,602,606 after deduction of a 4% solicitation fee payable to D.H. Blair &
Co.,  Inc.  A  total  of  108,120 Class B Warrants were not exercised and have
expired.

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                                    <PAGE>



     In  1990,  as  part  of  its initial public stock offering and as partial
underwriter's  compensation, the Company issued options to the underwriter for
the  purchase  of 70,000 units.  Each unit, exercisable at $7.20, consisted of
two  shares  of  Class  A Common Stock and two Class A warrants.  Each Class A
warrant  was  exercisable,  at an exercise price of $4.50 per Class A warrant,
for  one share of Class A Common Stock and one Class B warrant.  By late 1995,
all  the  units  were exercised resulting in the issuance of 137,000 shares of
Class A Common Stock in 1995 and 3,000 shares of Class A Common Stock in 1994,
for  net  proceeds  to the Company of $493,200 and $10,800, respectively.  All
Class  A warrants, which were issued as a result of the exercise of the units,
were  exercised  resulting in the issuance of 140,000 shares of Class A Common
Stock  for  net  proceeds  to  the  Company  of  $630,000.

CONVERTIBLE  SENIOR  SUBORDINATED  NOTE  OFFERING

On  January  9,  1996, the Company entered into a Purchase Agreement for the
sale  of  an  aggregate  of  $5 million in principal amount of 12% Convertible
Senior  Subordinated  Notes  due  2001 (the "12% Notes").  Interest on the 12%
Notes  is  payable  monthly at the rate of 12% per annum and the 12% Notes are
convertible,  subject to certain terms contained in the Indenture, into shares
of  the  Company's  Class  A  Common  Stock,  par  value  $.01 per share, at a
conversion  price  of  $4.625  per  share, subject to adjustment under certain
circumstances.    The  12%  Notes  were  issued pursuant to an Indenture dated
January  9,  1996,  between  the  Company and Norwest Bank Minnesota, N.A., as
trustee.    The  Company  agreed  to  register, for public sale, the shares of
restricted  Common  Stock  issuable upon conversion of the 12% Notes.  The 12%
Notes  were  sold  pursuant to an exemption from the registration requirements
under  the  Securities  Act  of  1933,  as  amended.

     Provisions  have  been  made  for  the issuance of up to an additional $5
million  in  principal  amount of the 12% Notes ("Additional 12% Notes") on or
before  January  9, 1998, between the Company and Black Diamond Advisors, Inc.
("Black  Diamond"),  one  of  the  initial  purchasers.

     On  or  about June 28, 1996, the Company and Black Diamond entered into a
letter  agreement amending (the "Amendment") their rights and obligations with
respect  to  the  Purchase  Agreement and Indenture dated January 9, 1996. The
Amendment  provides  the  following:

1.     The conversion price of the $5,000,000 in principal amount of 12% Notes
issued  on  or  about  January  9,  1996,  is  fixed  at  $4.00  per  share.

2.       The initial conversion price for up to $5,000,000 in principal amount
of  any  Additional  12%  Notes,  if  any,  is  $3.00  per  share.

3.          The  expiration  date  of  the  option  is  September  10,  1998.


REVOLVING  LINE  OF  CREDIT  -  LASALLE  NATIONAL  BANK

In  January  1996,  the  Company  entered  into  a  revolving line of credit
agreement  with  LaSalle National Bank providing a line of credit of up to $15
million, not to exceed a borrowing base consisting of eligible Contracts.  The
scheduled maturity date of the line of credit is January 1, 1998.  At the

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option  of  the Company, the interest rate charged on the line of credit shall
be  either .5% in excess of the prime rate charged by lender or 2.75% over the
applicable LIBOR rate.  The Company is obligated to pay the lender a fee equal
to  .25%  per  annum  of  the  average  daily  unused  portion  of  the credit
commitment.    The  obligation  of  the  lender to make advances is subject to
standard  conditions.    The  collateral  securing  payment  consists  of  all
Contracts pledged and all other assets of the Company.  The Company has agreed
to  maintain  certain standard ratios and covenants.  As of December 31, 1996,
the  Company  had  borrowed  $5,250,000    against  this  line  of  credit.


PACIFIC  USA  HOLDINGS  CORP.  -  INSTALLMENT  NOTE

     On  October  9,  1996,  the  Company  entered  into a Securities Purchase
Agreement  with  Pacific  USA  Holdings Corp. ("Pacific") whereby, among other
things,  Pacific  agreed  to  acquire  certain shares of the Company's Class A
Common  Stock.  On November 1, 1996, the Company entered into a Loan Agreement
with  Pacific whereby Pacific loaned the Company $3 million ("Pacific Loan").
On  February  7, 1997, the Securities Purchase Agreement was terminated by the
parties;  however,  the  Pacific  Loan  and its corresponding Installment Note
remained  in  effect.

     The Installment Note accrues interest at a fixed rate per annum of 9% and
is  payable  interest only from November, 1996 through November, 1997; monthly
principal  payments  of  $100,000  are  due  beginning  December,  1997,  and
continuing  each  month  thereafter through and including November, 1998.  The
unpaid  principal  amount  of  the  Installment  Note, plus accrued and unpaid
interest,  is  due  and  payable  November  16,  1998.

     The  collateral securing payment of the Installment Note consists of 100%
of  the  authorized,  issued and outstanding shares of stock of MF Receivables
Corp. I, consisting of 1,000 shares of common stock $0.01 par value per share.
Among  other  covenants,  the  Company  has  agreed  to  maintain  the monthly
outstanding  balance  of  all  retail  installment  contracts  owned  by  MF
Receivables  Corp.  I, less the then outstanding principal balance of all debt
issued  by  MF Receivables Corp. I, at a level in excess of 3.5 times the then
outstanding  principal  balance  of  the  Installment  Note.

OPERATIONS,  COMPETITION  AND  REGULATION

UNDERWRITING  GUIDELINES

The  Company's  targeted  customers  are  persons  who  do  not  qualify for
traditional  bank  financing  primarily  due  to their adverse credit history.

     The  Company  has  developed  underwriting guidelines and standards based
upon  many  factors including, but not limited to the amount and terms  of the
Contract,  the customer's credit score and his or her employment and residency
history.    In  reviewing  a  customer's credit, the Company evaluates (i) the
credit  application;  (ii)  the customer's cash flow statement of monthly cash
receipts  and  expenses  to  determine  debt  ratios; and, (iii) credit bureau
reports  as  well  as  other  information  and  verifies  the  accuracy of all
information  with  respect  to the customer as well as the car being financed.

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RISK  ADJUSTED  YIELDS

At  the time Contracts are purchased or originated, the Company computes its
risk  adjusted  yield based on estimated future losses of principal determined
by  the type and terms of the Contract, the credit quality of the borrower and
the  underlying value of the vehicle financed.  This estimate of risk adjusted
yield  is  based  on  the  Company's  risk  model,  which  takes  into account
historical  data from similar contracts originated or purchased by the Company
since  its  inception in 1988. However, since the risk model uses past history
to  predict  the  future,  changes  in Company programs, national and regional
economic  conditions,  borrower  mix  and  other  factors  will result in risk
adjusted  yields  varying  from    predictions.

ANALYSIS  OF  CREDIT  LOSSES

The allowance for credit losses has been established utilizing data obtained
     from  the  Company's risk models and is continually reviewed and adjusted
in  order  to  maintain  the allowance at a level considered adequate to cover
losses  of  principal  on  the  existing  Contracts.

     The  provision  for  credit  losses  is  based on estimated losses on all
Contracts  purchased  prior  to  January  1,  1995  with zero discounts ("100%
Contracts")  and  on  all  Contracts  originated  by  CarMart  which have been
provided  for  by  additions   to the Company's allowance for credit losses as
determined  by  the  Company's  risk  analysis.

     Effective January 1, 1995, upon the acquisition of certain Contracts from
its  Dealer Network, a portion of future interest income, as determined by the
Company's  risk  analysis,  is capitalized into Automobile Receivables (excess
interest  receivable)  and  correspondingly used to increase the allowance for
credit  losses  (unearned  interest  income).    Excess interest receivable is
subsequently  reduced  based  upon  the  amoritization  of the excess interest
income  from  the  related  Contracts.

     Unearned  discounts result from the purchase of Contracts from the Dealer
Network  at less than 100% of the face amount of the note.  All such discounts
are  used  to  increase  the  allowance  for  credit  losses.

     See  Note  2  of  Notes  to Consolidated Financial Statements regarding a
change  in  Accounting  Principles  for  Credit  Losses.

SERVICING  AND  MONITORING  OF  CONTRACTS

The  Company  services all of the Contracts it purchases or originates.  The
Company's  servicing  and  collection  department  employs  44  individuals to
perform  these  functions. The servicing  department uses internally developed
software  augmented by a software system purchased from Cyber Resources, Inc.
In  1996,  the  Company  completed  the  installation  of  a predictive dialer
purchased  from  Melita  International.    A  predictive  dialer  enhances the
productivity  of  the  Company's  collection  efforts by making it possible to
contact  more  customers  in  a  shorter  period  of  time.

     Upon    the  funding  of a  Contract, the servicing department boards the
Contract  on  its  servicing system, which allows the Company to track payment
history  from  inception  to final payoff or other disposition.  The servicing

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                                    <PAGE>



system  also  automatically  sends  a  payment  coupon  book to the customer.
Contract payments, if sent by mail, go directly to a lock box and are fowarded
daily  by  a  third-party  servicer to a bank holding the Company's accounts.
Where  required,  Trust receipts are subsequently forwarded to the appropriate
Trust  account.    As  payments  are  processed,  the  customer's  account  is
automatically  updated.

     A  customer service representative calls each customer, greeting them and
welcoming  them to the Company. The Company begins its collection process when
a  customer  is five days late in making a monthly or bi-weekly payment with a
friendly reminder telephone call and a past due mailing notice.  At this time,
the collector assigned to the account attempts to obtain a promise to pay.  If
successful,  the collector will follow up to determine if the promise is met.
If  the  customer  reneges on his or her promise, the collector again contacts
the  customer  in  an  effort  to  collect  and, at this time, explains to the
customer his or her obligation under the contract to repay the Company and the
consequences if timely payment is not made.  These consequences include, among
other  things,  repossession  of  the  vehicle financed and a further damaging
credit  history  for the customer.  In certain cases, if the failure to pay is
the result of unforeseen emergencies such as sickness or temporary layoff, the
collector  will  attempt  to  work  out  a  new  payment schedule to bring the
customer  current.

     In  the  event  the  customer  is  not willing or able to meet his or her
obligation  to the Company under the terms of the contract, and an alternative
payment schedule cannot be agreed to, the collector turns the Contract over to
a  credit  supervisor  for  further  action.  At this time, the supervisor can
decide  to continue to work with the customer to bring the Contract current or
can  remit  the  Contract  to  the  manager  of the collections department for
repossession.    A  decision  to  repossess generally will be made any time up
until  a contract is 100 days delinquent. All Contracts 100 days past due must
be must be charged off under Company policy as of December 31, 1996. Effective
March  1,  1997, the Company changed its charge-off policy to require that all
contracts  120  days  past  due  must  be charged off. Generally, repossession
action takes place as a last resort and when no other arrangement can be made.

AUTOMOBILE  SALES

In February, 1996, the Company announced that it intended to discontinue its
     CarMart  retail  used  car  sales  and  associated  financing  operations
primarily  due to increased competition in the sub-prime used car market.  The
CarMart  business  ceased  operations  on  May  31,  1996.

MARKETING  AND  ADVERTISING

The  Company  utilizes its Dealer Representatives and corresponding sale and
informational  brochures  to  market  its  Programs  to  its  Dealer  Network.

THE  USED  CAR  INDUSTRY  AND  THE  SUBPRIME  FINANCING  MARKET

The  used car industry in the United States can be characterized as a mature
but  growing  market.  According to statistics from CNW Marketing Research, in
1985  15.7% of consumers surveyed stated that they would use available savings
to  purchase  a  used  car.  In 1994, this increased  significantly to 29.8%.


                                      10
                                    <PAGE>


This  consumer  sentiment  was  reinforced  by  the increase in used car sales
which,  in  1985,  totaled  approximately  23  million units at franchised and
independent  dealers and in 1996 had risen to approximately 38 million units.
Since  1994,  the  compounded  annual  growth rate of total used car sales was
approximately  9%.  Management believes this growth will continue for used car
sales  into  the  foreseeable  future.

     The  typical  automobile  finance  company generally classifies borrowers
into four general and subjective credit categories labeled A, B, C, and D. The
subprime  financing  market  is characterized by lower quality credit lenders,
typically,  C  and  D  rated paper.  Generally, C and D rated paper represents
borrowers  who  cannot qualify for financing through traditional sources, such
as  banks,  credit unions or captive finance companies, due primarily to their
adverse  credit  and  employment  history.  Automobile finance companies often
purchase C and D credit paper at a discount to its face value. The discount is
designed to compensate the lender for the credit riskiness of these contracts.
 In  the  past  several years, discount percentages have been declining due to
increased  price  competition.    The subprime market is also characterized by
higher  charge-off  and  delinquency  ratios  than  the "prime" segment of the
automobile  finance  market.

     According  to  the  Federal  Reserve  Board, total outstanding automobile
credit  was  approximately  $367  billion in 1995.  Industry analysts estimate
that  the  subprime automobile financing market comprises approximately 26% of
the automobile finance market. Industry analysts project this market growth to
continue,  with  estimated  annual  originations  of  approximately  $70-$100
billion.

COMPUTERIZED  INFORMATION  SYSTEM

Monaco  Finance  is investing significant time, money and human resources in
the  enhancement  of its information systems.  The business requires Monaco to
timely  respond  to customer and dealer needs.  The Company's network computer
and communication systems are undergoing major changes to increase efficiency.
      In  early  1996, the systems were upgraded with Pentium Servers, running
the  latest  release  of  Novell  Netware.    All front-office and back-office
desktop  computers  have  been  modified  and  enhanced  to  provide  greater
accessibility  to  network  information  via  100-Base-T intelligent switching
technology.    Protection and security have been built into the infrastructure
utilizing  anti-virus  software  and  audit  compliant  password  utilities
throughout  the  entire  network.

     These  enhancements  and  upgrades  are  a  part  of  new  and innovative
technology  being  employed  at  Monaco.  The  Company  also implemented a new
predictive  dialer  system  offered  by  Melita  International.    In order to
maximize its servicing efficiencies, the Company intends to invest significant
additional resources to complete a fully integrated data base application. The
software  research  and  development  for this new system are currently in the
design  phase.

STRATEGY

The  Company's  strategy  is to increase the size of its loan portfolio  while
maintaining  the  integrity  of  the  credit  quality  of auto loans acquired.

     The  Company plans to implement its growth strategy by: (1) Expanding its
Dealer  Network;  (2) Increasing the number and amount of loans purchased from

                                      11
                                    <PAGE>



third-party  originators;    (3)  Purchasing  portfolios  of  seasoned  loans
originated  by  others;    (4)  Continuing  its efforts to increase the credit
quality  of  its portfolios and reduce credit losses and charge-offs; and  (5)
Decrease  the  percentage of Operating Expenses to Total Portfolio Outstanding
by  increasing  the  Portfolio  while  decreasing  Operating  Expenses.

     During 1996 the Company acquired Contracts from approximately 425 Dealers
in  21  states,  the  majority  of  which were purchased in 5 states ("Primary
States").  In order to increase efficiency and reduce operating expenses , the
Company  in 1997 has temporarily reduced its marketing representatives from 16
to 6 in the Primary States. In order to expand it's Dealer Network in the last
three  quarters  of 1997 the Company intends selectively to hire and train new
marketing  representatives  and  to  emphasize  quality  Dealer  service.

     In  the latter part of 1996 the Company initiated a program of purchasing
loans  from a third-party originator for a fee.  These loans were underwritten
by  the  third-party  originator  to  conform  to standards established by the
Company.    All  loans  purchased by the Company are either re-underwritten or
audited  by  Company  personnel prior to funding.  During the first quarter of
1997  the Company has entered into agreements with two similar originators and
is  negotiating an agreement with an additional party to provide contracts for
the  Company  to  purchase    These third-party agreements, if successful, may
provide  additional  loan  production  for  the Company without certain of the
costs  associated  with  purchasing  loans  through  its  dealer  network.

     The  Company  also  plans  to  pursue  the  purchase  of  loan portfolios
previously  originated  by  sub-prime  automobile  contract  originators.  The
Company  does  not  know,  at this time, if such portfolios can be acquired at
prices that provide a risk adjusted yield to the Company that is sufficient to
meet  the  Company's criteria.  Nor does the Company know if Capital or credit
facilities  can  be  obtained  to  fund  such  purchases.

     The  Company in 1997 believes it has improved the credit quality of loans
through    instituting  new in house training  programs for  its credit buyers
and  underwriters.      This  re-emphasis  on its people  in conjunction with
program  modifications  and  its  credit  scoring  system may help to decrease
charge-offs  in  the  future.  The  Company  also  has  revised certain of its
collection and recovery policies along with employing a new Vice President and
Senior  Manager of collections and strongly believes that collections in  1997
will  positively    be  affected  by  these  changes.
     .
     Other strategies for the future include forming a strategic alliance with
another  company,  either  currently  engaged in or interested in entering the
sub-prime  automobile finance industry.  An alliance, if formed, may result in
additional  Capital  and  warehouse  lines of credit as well as increased loan
volume  and  cost  efficiencies  obtained  by  combining  operations.

     In  addition  to  the  above,  the  Company intends to pursue contractual
servicing    arrangements,  whereby,  the  Company  will  earn  fee  income by
providing  servicing  of  loan portfolios owned by third-parties.  Although no
assurance can be given that such contractual arrangements will be consummated,
the  Company  believes  such  opportunities  exist  and intends to pursue them
accordingly.

     Implementation  of the foregoing strategy will be dependent upon a number
of  factors  including,  but  not  limited to:  i)  competition; ii) marketing
efficiency;  iii)  ability  of  the  Company  to  acquire  Contracts at prices

                                      12
                                    <PAGE>



commensurate with estimated risk; and, iv)  maintaining and increasing capital
and  warehouse  lines  of  credit,  of  which  no  assurance  is  given.

COMPETITION

In  connection with its business of financing vehicle purchases, the Company
competes  with  entities,  many  of  whom have significantly greater financial
resources  and  management  experience than the Company.  The Company's target
market  consists  of  persons  who  are generally unable to obtain traditional
vehicle  financing  because  of  their  prior  credit history.  Many financial
institutions,  finance  companies  and lenders have entered into this market.
Their  lending  programs  and marketing efforts are regularly monitored by the
Company.   The Company has maintained its growth by implementing and marketing
Programs  and  providing  prompt  service  to the Dealer Network.  However, as
others  continue  to  enter  into  this  market, competition for the Company's
target customer continues to increase, all of which could adversely affect the
     Company's  business.

REGULATION

The  Company's  operations  are  subject  to  regulation,  supervision  and
licensing  under various federal, state and local statutes and ordinances.  To
date,  the Company's business operations are located in the States of Arizona,
California,  Colorado,  Florida,  Georgia,  Illinois,  Iowa,  Maryland,
Massachusets,  Michigan,  Mississippi,  Missouri,  Nevada,  New  Mexico, North
Carolina,  Oregon,  South  Carolina,  Tennessee,  Texas,  Utah,  Virginia,
Washington,  Wisconsin and Wyoming and, accordingly, the laws of those states,
as  well  as  applicable  federal  laws,  govern  the  Company's  operations.
Compliance  with  existing  laws and regulations applicable to the Company has
not  had  a  material  adverse  effect  on  the  Company's  operations.

     Management believes that the Company maintains all requisite licenses and
permits  and is in substantial compliance with all applicable local, state and
federal  regulations.

EMPLOYEES  AND  FACILITIES

At  December  31,  1996,  the  Company  employed 149  persons on a full time
basis,  including  7  executive  officers,  36    in credit and funding, 44 in
collections  and  liquidations,  15  in  accounting and human resources, 16 in
marketing,  7  in  MIS-computer department, 4 in risk and 20 in administrative
functions.  In 1996, all personnel associated with the CarMart operations have
     been  reassigned  to  other  positions  within  the  Company or have been
released.  As  of  March  28,  1997,  the  Company  had  reduced its number of
employees  to  117.  This  reduction  in  staff is part of an effort to reduce
operating  costs  and  increase  overall  efficiency.

     In April 1994, the Company amended and restated its lease of office space
for  its  executive  offices  located  at 370 17th Street, Suite 5060, Denver,
Colorado 80202, where it maintains approximately 24,716 square feet of space.
The  Company currently pays $39,002 per month under a lease ending October 31,
1999,  with  adjustments  for  monthly  payments  on  a  periodic  basis.

     Effective December 1, 1996, the Company entered into a sublease agreement
for  6,571 square feet of office space located at 370 17th Street, Suite 4960,
Denver,  Colorado,  80202.  The Company pays $1,807 per month under a sublease

                                      13
                                    <PAGE>

ending  November  30,  2000.  The  office space will be utilized as additional
executive  offices  of  the  Company.

     On  March  31,  1994,  the  Company's  lease  at  1319 S. Havana, Aurora,
Colorado    80010  was  terminated  and  the  operations of the retail CarMart
Dealership  at  that  location  were  transferred  to  890  S. Havana, Aurora,
Colorado    80010.    This  property  is  owned  by a corporation all of whose
shareholders  are  officers  of  the  Company.    The  Company  entered into a
seven-year  lease  commencing  March  24,  1994 and ending March 23, 2001.  In
September  1995,  the  Company  amended  the  lease  to  include an additional
property at 894 S. Havana, Aurora, Colorado 80010.  The Company currently pays
$14,238  per month on a triple net basis.  The lease calls for periodic rental
adjustments  over  its term.  It is the Company's belief that the terms of the
related  party  lease  are  generally  no  less favorable than could have been
obtained  from  unrelated third party lessors for properties of similar size ,
condition  and  location.  Effective  June 1, 1996, the Company entered into a
sublease  agreement  on  the property located at  890 S. Havana for the entire
lease  term  at  an  amount  approximately  equal to the Company's obligation.

     Through  January  31,  1996,  the  Company  operated  a  retail  CarMart
Dealership  located  at  1005  Motor  City  Drive, Colorado Springs, Colorado
80906.    The  dealership began full operation on April 30, 1991.  The Company
entered into a twelve-month lease (commencing April 30, 1991 and ending May 1,
1992).    Rent  was  $1,200 per month.  The Company extended the lease on this
property until May 31, 1997 with monthly rent of $1,800 on a triple net basis.
 The  Company  may,  at  its  sole discretion, extend the lease for additional
yearly  periods  through  May 31, 1998 if written notice of intent to do so is
given the lessor prior to April 15 of each year. Effective March 15, 1996, the
Company entered into a sublease agreement on the property for the entire lease
term  at  an  amount  approximately  equal  to  the  Company's  obligation.

     The  Company's third used car retail lot was located at 11085 West Colfax
Avenue, Lakewood, Colorado  80215 and began full operation on March 15, 1992.
The  Company  entered into a twelve-month lease (commencing March 15, 1992 and
ending  February  28, 1993).  Rent was $3,000 per month.  The Company extended
the  lease  through  October  31,  1995 at a monthly rental rate of $4,000. On
March  31,  1995,  the  Company  closed  this  retail  lot.

     The  Company  opened  a  fourth used car retail lot located at 4940 South
Broadway, Englewood, Colorado  80110 and began full operation on May 1, 1994.
The  Company  entered  a lease, commencing March 22, 1994 and ending March 31,
1997. The Company may, at its sole discretion, extend the lease for additional
3-year  periods  through  March 2003.  On January 15, 1996, the Company closed
this retail lot.  The Company currently pays $9,833 per month. The lease calls
for periodic adjustments over the term.  Effective March 15, 1996, the Company
entered into a sublease agreement on the property for the entire lease term at
an  amount  approximately  equal  to  the  Company's  obligation.

ITEM  2.    DESCRIPTION  OF  PROPERTY.

The  Company  does not own any real property.  The Company leases its office
facilities  and  its Company Dealerships as described in Item 1., "Description
of  Business  -  Employees  and  Facilities,"  above.


                                      14
                                    <PAGE>



ITEM  3.    LEGAL  PROCEEDINGS.

On  May 8, 1995, Milton Karsh, a former Officer and Director of the Company,
filed  a  civil  suit in the District Court for the City and County of Denver,
State of Colorado against the Company, its President, Morris Ginsburg, and its
     Executive Vice President, Irwin L. Sandler, both of whom are Directors of
the  Company.    The plaintiff alleges breach of contract, breach of fiduciary
duty  and  conversion  in connection with the plaintiff's proposed sale of the
Class  A Common Stock of the Company pursuant to Rule 144 under the Securities
Act  of  1933.    Plaintiff  claimed  he  sustained  approximately $450,000 in
damages.  The defendants denied the material allegations of the complaint, set
forth  several  affirmative defenses, alleged that the complaint was frivolous
and  filed  a  counterclaim against the plaintiff alleging breach of contract.
Mediation  had  been  set  for  August  14,  1996.

     In  August  1996,  the  parties  settled  the  above  lawsuit.  Under the
settlement,  the  Company agreed to retain the plaintiff as a consultant for a
period  of  three  years,  to  reimburse  the plaintiff's attorney fees and to
release  and abandon any claim to ownership or option to acquire 20,715 shares
of  Class  B  Common  Stock  owned  by  the  plaintiff.

     The  Company  has agreed to pay all litigation costs, including fees, and
to  indemnify the Directors to the maximum extent provided by Colorado law, as
stated  in  the  Company's  By-Laws.

ITEM  4.    SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS.

None.

                                      15
                                    <PAGE>


                                   PART II

ITEM  5.    MARKET  FOR  COMMON  EQUITY  AND  RELATED  STOCKHOLDER  MATTERS.

The  following  table  sets  forth the range of the high and low closing bid
prices of the Class A Common Stock as reported for the periods indicated.  The
     prices  represent  quotations  between  dealers  without retail mark-ups,
mark-downs,  or  commissions  and  may  not  necessarily  represent  actual
transactions.    The  quotations  were  provided  by  NASDAQ  and the National
Quotation  Bureau.


<TABLE>

<CAPTION>

CLASS  A  COMMON  STOCK



<S>                      <C>       <C>

                         Low Bid   High Bid
                         --------  ---------
Quarter Ending 03/31/96  $  3.000  $   5.000
Quarter Ending 06/30/96  $  2.125  $   3.625
Quarter Ending 09/30/96  $  1.625  $   4.000
Quarter Ending 12/31/96  $  2.313  $   3.375

Quarter Ending 03/31/95  $  3.780  $   6.625
Quarter Ending 06/30/95  $  4.250  $   6.625
Quarter Ending 09/30/95  $  5.000  $   7.875
Quarter Ending 12/31/95  $  4.500  $   7.125
<FN>

</TABLE>



     As  of  January  31, 1997, there were approximately 375 record holders of
the  Company's  Class A Common Stock and 3 record holders of Company's Class B
Common  Stock.    The  Company's  Class A Common Stock is traded on the NASDAQ
National  Market  under  the  symbol  "MONFA".

     The  Board  of  Directors currently intends to retain earnings to finance
the  Company's  operations.  The  Company has never paid cash dividends on its
Common  Stock  and  does  not  anticipate  a  change  in  this  policy  in the
foreseeable  future.    Certain  of  the  Company's  loan  agreements  contain
covenants  that  restrict  the  payment  of  cash  dividends.

                                      16
                                    <PAGE>



ITEM  6.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OR  PLAN  OF  OPERATION

FORWARD  LOOKING  STATEMENTS

     This  Annual  Report  on form 10-KSB contains forward looking statements.
Additional  written  or  oral  forward  looking  statements may be made by the
Company  from  time  to  time  in  filings  with  the  Securities and Exchange
Commission  or  otherwise.  Such  forward  looking  statements  are within the
meaning of that term in Section 27A of the Securities Act of 1933, as amended,
and  Section  21E  of  the  Securities  Exchange Act of 1934, as amended. such
statements  may  include,  but  are  not  limited to, projections of revenues,
income,  or loss, capital expenditures, plans for future operations, financing
needs  or  plans,  objectives  relating  to the Automobile Receivables and the
related  allowance  and plans relating to products or services of the Company,
as  well  as  assumptions  relating  to  the  foregoing.

     Forward  looking  statements  are  inherently  subject  to  risks  and
uncertainties,  some of which cannot be predicted or quantified. Future events
and  actual  results  could  differ  materially  from  those  set  forth  in,
contemplated by, or  underlying the forward looking statements.  Statements in
this  Annual  Report, including the Notes to Consolidated Financial Statements
and  "Management's  Discussion and Analysis of Financial Condition and Results
of  Operations,"  describe  factors, among others, that could contribute to or
cause  such differences. Additional factors that could cause actual results to
differ  materially from those expressed in such forward looking statements are
set  forth  in  Exhibit  99  to  this  Annual  Report  on  Form  10-KSB.

SUMMARY

In  February 1996, the Company announced that it intended to discontinue its
CarMart  retail  used car sales and associated financing operations related to
its  CarMart  business.  In  April  1996,  the  Company  extended the expected
disposal date of the CarMart business from April 30, 1996 to May 31, 1996. The
     CarMart  business  ceased  operations  on  May  31,  1996. The results of
operations  of the CarMart business for 1995 were included in the Consolidated
Statements  of  Operations  under  the  caption  "(Loss)  from  discontinued
operations".  The  loss  on  disposal  of  the  CarMart business has also been
accounted  for  as  discontinued  operations. The results of operations of the
CarMart  business  for  1996  were  included  in  the  loss  on  disposal.

     The  Company's  revenues  and  net  income  from  continuing  operations
primarily  are derived from interest income generated from its loan portfolio.
The  Company's  loan portfolio consists of Contracts purchased from the Dealer
Network,  Contracts  purchased  from  third-party  originators  and  Contracts
financed from vehicle sales at the Company's Dealerships. The average discount
on  all Contracts purchased pursuant to discounted Finance Programs during the
fiscal years ended December 31, 1996 and 1995 was approximately 6.6% and 17.1%
respectively.  The  Company  services  all of the loans that it owns. The loan
portfolio carries a contract  annual percentage rate of interest that averages
approximately 23%, before discounts, and has an original weighted average term
of  approximately  50 months. The average amount financed per Contract for the
years  ended  December 31, 1996 and 1995 was approximately $10,390 and $8,407,
respectively.

                                      17
                                    <PAGE>



RESULTS  OF  OPERATION
<TABLE>
<CAPTION>

OVERVIEW
                                                                   INCOME  STATEMENT  DATA
                                                                Years  ended  December  31,
<S>                                                                <C>          <C>

 (dollars in thousands, except share amounts)                            1996         1995
                                                                   -----------  -----------
Total revenues                                                     $   13,501   $   12,642
Total costs and expenses                                           $   17,449   $   11,784
Income (loss) from continuing operations before income taxes
   and cumulative effect of a change in accounting principle          ($3,948)  $      858
Income tax expense (benefit)                                          ($1,477)  $      321
Income (loss) from continuing operations before cumulative
    effect of a change in accounting principle.                       ($2,471)  $      537
(Loss) from discontinued operations, net of income taxes                    -        ($720)
(Loss) on disposal of discontinued business, net of income taxes        ($302)     ($1,158)
Cumulative effect of a change in accounting principle                 ($4,913)           -
Net (loss)                                                            ($7,686)     ($1,341)
Net (loss) per share                                                   ($1.10)      ($0.24)
Weighted average number of shares outstanding                       6,965,485    5,603,689
<FN>

</TABLE>



<TABLE>
<CAPTION>

                           BALANCE  SHEET  DATA
                                  December  31,
<S>                          <C>        <C>

 (dollars in thousands)          1996      1995
                             ---------  -------
Total assets                 $ 95,264   $79,351
Total liabilities            $ 80,262   $56,601
Retained earnings (deficit)   ($7,134)  $   552
Stockholders' equity         $ 15,002   $22,750
<FN>

</TABLE>

     The  Company's  revenues increased 7% from $12.5 million in 1995 to $13.5
million  in  1996. Net income (loss) from continuing operations decreased from
$.5  million in 1995 to ($2.5) million in 1996. Earnings (loss) per share from
continuing  operations  for  1995  were  $0.10,  based on 5.6 million weighted
average  shares  outstanding,  compared  with  ($0.35) per share, based on 7.0
million  weighted  average  shares outstanding, for 1996. Net (loss) increased
from  ($1.3)  million  in  1995  to a loss of ($7.7) million in 1996 while net
(loss)  per share increased  from ($0.24) in 1995 to ($1.10) in 1996 primarily
due  to  a  1996  charge  for  the cumulative effect of a change in accounting
principle  of    $4.9  million and a $3.0 million decrease in 1996 income from
continuing  operations.

                                      18
                                    <PAGE>



<TABLE>
<CAPTION>

CONTINUING  OPERATIONS
                                            SELECTED  OPERATING  DATA
                                          Years  ended  December  31,
<S>                                                <C>       <C>

(dollars in thousands, except where noted)            1996      1995
                                                   --------
Interest income                                    $13,471   $12,501
Other income                                       $    30   $   141
Provision for credit losses                        $   911   $ 1,635
Operating expenses                                 $11,801   $ 6,463
Interest expense                                   $ 4,737   $ 3,686
Operating expenses as a % of average receivables        17%       12%
Contracts from Dealer Network                        6,125     4,892
Contracts from Company Dealerships                     148     1,480
                                                   --------  --------
 Total contracts                                     6,273     6,372
Average amount financed (dollars)                  $10,390   $ 8,407
<FN>

</TABLE>


REVENUES
Total  revenues  for the year ended December 31, 1996 increased $0.9 million
when  compared  to  the  same  period in 1995. Interest income increased $1.0
million,    or  8%,  from $12.5 million in 1995 to $13.5 million in 1996. This
increase was due to greater interest income generated from the 33% increase in
     the Company's loan portfolio from $62.2  million at December 31, 1995, to
$82.9 million at December 31, 1996, offset by the increase in the amortization
of  excess  interest  of  $2.2  million as explained in Note 2 of the Notes to
Consolidated  Financial  Statements.

The most significant aspect of the growth in the Company's loan portfolio is
     attributable  to  the increased number of loans generated from the Dealer
Network.  The  number of contracts generated from the Dealer Network increased
25%  from  4,892 in 1995 to 6,125 in 1996. The dollar value of these Contracts
increased  $21.5  million, or 51%, from $42.6 million in 1995 to $64.1 million
in  1996.  The  increase  in  Contracts mainly was due to the expansion of the
Dealer  Network  in  1996.

     The number of loan originations from the CarMart operations decreased 90%
from  1,480  in  1995  to  148  in  1996.  The dollar value of these Contracts
decreased  $9.9 million, or 90%, from $11.0 million in 1995 to $1.1 million in
1996. The decrease in Contacts mainly was due to the March 31, 1995 closing of
the  Company's  Lakewood, Colorado, retail store, the January 1996 closings of
the  Englewood,  Colorado,  and Colorado Springs, Colorado, retail stores, the
May  31,  1996 closing of the Aurora, Colorado, retail store and the Company's
continued  focus  in  1996  on  the  expansion  of  the  Dealer  Network.

     The  total number of Contracts generated by the Company decreased 2% from
6,372  in 1995 to 6,273 in 1996. The dollar value of these Contracts increased
$11.6  million,  or  22%, from $53.6 million in 1995 to $65.2 million in 1996.
The  average  amount  financed increased 24% from $8,407 in 1995 to $10,390 in
1996.  The  average  discount  on  all  Contracts  purchased  pursuant  to the
discounted  Finance Programs decreased from 17.1% in 1995 to 6.6% in 1996. The
increase  in  the  average  amount  financed  and the decrease in the purchase
discount  were  primarily  due  to new Finance Programs introduced in 1995 and
1996  and  more  selective buying beginning in the third quarter of 1996, with
the  intent  to  reduce  credit  loses.

     At  December  31, 1995 and 1996, approximately $12.8 million, or 21%, and
$4.7  million,  or  6%,  of  the  Automobile  Receivables  loan portfolio were
generated  from  the  CarMart  operations.

     Other  income  decreased  $111,000,  or  79%,    from $141,000 in 1995 to
$30,000  in  1996  due  primarily  to a decrease in insurance servicer income.

                                      19
                                    <PAGE>


COSTS  AND  EXPENSES
The  provision  for  credit  losses decreased $.7 million, or 44%, from $1.6
million  in  1995  to  $.9  million  in  1996. The provision for credit losses
represents  estimated  current  losses based on the Company's risk analysis of
historical trends and expected future results for Contracts purchased prior to
     January  1,  1995.  The  decrease  in  the  provision  for  credit losses
primarily  was due to the introduction of the excess interest method to record
allowances  effective January 1, 1995 (see Note 2 of the Notes to Consolidated
Financial  Statements),  as  well  as  changes  in  certain  of  the Company's
programs.  Net  charge-offs  as  a  percentage  of  average  net  automobile
receivables  increased ("Net Charge-off Increase") from 16.5% in 1995 to 19.5%
in  1996.  The  Company  anticipates  that  net charge-offs as a percentage of
average  net  automobile  receivables  will  decrease in the future due to the
implementation of the company's credit scoring system in 1996. The Company had
2.9% of its loan portfolio over 60 days past due at December 31, 1995 compared
with  2.2  %  at  December  31,  1996.

     Certain  of the increase in charge-offs are a result in the change in the
mix  of  loan  program type purchased by the Company and a general increase in
the  age  of  the  portfolio. In addition, certain Contracts purchased in 1995
have  contributed  to the increase in charge-offs in 1996. In 1996, the number
of  loans purchased at less than face value increased by 239% when compared to
1995.  The  risk  model  for  these  loans  anticipates a higher percentage of
charge-offs  and delinquencies, the cost of which is intended to be off-set by
the  discount  in  the  purchase of these loans. The risk adjusted yields (net
yield on amounts paid for Contracts based on Contract cash flows calculated at
the  note interest rate and adjusted for prepayments, defaults and recoveries)
in these programs is estimated to be as good as, or better than, the Company's
loan  programs  which  have  lower  anticipated charge-offs and delinquencies.

     In  an  attempt to improve the credit quality of Contracts purchased, and
reduce  charge-offs,  the  Company  implemented an internally developed credit
scorecard  during  the  third  quarter  of 1996 to assist in the evaluation of
credit  quality  and  lower  future  charge-offs.

     Effective  October  1,  1996,  the  Company adopted a new methodology for
reserving  for  and  analyzing  its  loan  losses.  This  accounting method is
commonly referred to as static pooling. The static pooling reserve methodology
allows  the  Company to stratify its Automobile Receivables portfolio, and the
related  components of its Allowance for Credit Losses (i.e. discounts, excess
interest, charge offs and recoveries) into separate and identifiable quarterly
pools.  These  quarterly  pools,  along  with the Company's estimate of future
principle  losses  and  recoveries,  are  analyzed  quarterly to determine the
adequacy of the Allowance for Credit Losses. The method previously used by the
Company  to  analyze  the  Allowance  for Credit Losses was based on the total
Automobile  Receivables  portfolio.

     As  part  of  its  adoption  of  the static pooling reserve method, where
necessary,  the  Company  adjusted  its  quarterly  pool allowances to a level
necessary  to cover all anticipated future losses (i.e. life of loan) for each
related  quarterly  pool  of  loans.

     Under  static pooling, excess interest and discounts are used to increase
the  Allowance  for  Credit Losses and represent the Company's primary reserve
for  future  losses  on its portfolio. To the extent that any quarterly pool's
excess  interest  and  discount  reserves  are  insufficient  to absorb future
estimated  losses,  net  of  recoveries,  adjusted  for  the impact of current
delinquencies,  collection  efforts,  and  other economic indicators including
analysis  of  the Company's historical data, the Company will provide for such
deficiency  through  a  charge  to  the  Provision  for  Credit Losses and the
establishment of an additional Allowance for Credit Losses. To the extent that
any  excess  interest and discount reserves are determined to be sufficient to
absorb  future  estimated  losses,  net  of recoveries, the difference will be
accreted  into interest income on an effective yield method over the estimated
remaining  life  of  the  related  quarterly  static  pool.

                                      20
                                    <PAGE>



     Operating  expenses  increased $5.3 million, or 83%, from $6.5 million in
1995  to  $11.8  million  in  1996.  The  major  components of the increase in
operating  expenses  are  as  follows:


<TABLE>
<CAPTION>
<S>                                <C>       <C>       <C>

(dollars in thousands)                1996      1995   Increase
                                   --------  --------  ---------
Salaries and benefits              $ 5,737   $ 3,693   $   2,044
Depreciation and amortization        1,321       922         399
Consulting and professional fees     2,535     1,363       1,172
Telephone                              487       226         261
Travel and entertainment               404       163         241
Loan origination fees               (1,155)   (2,227)      1,072
Rent/Office Supplies/Postage         1,077       988          89
All other                            1,395     1,335          60
                                   --------  --------  ---------
                                   $11,801   $ 6,463   $   5,338
                                   ========  ========  =========
<FN>
</TABLE>



     Interest  expense  increased  $1.0  million, or 29%, from $3.7 million in
1995  to  $4.7 million in 1996. This increase primarily was due to an increase
in  borrowings  that provided the necessary working capital for the Company to
increase  its  loan portfolio from $62.2 million at December 31, 1995 to $82.9
million  at  December  31, 1996. Since December 31, 1995, net increases in the
Company's  debt  were  as  follows:

<TABLE>
<CAPTION>
 (dollars  in  thousands)
<S>                                   <C>

Notes payable - LaSalle               $ 5,250
Installment note payable                3,000
Convertible senior subordinated debt    5,000
Automobile receivables-backed notes     9,486
                                      -------
     Total                            $22,736
                                      =======
<FN>
</TABLE>


     The  average  annualized  interest rate on the Company's debt was 7.1% in
1996  versus  7.7%  in 1995. This decrease was primarily due to lower interest
rates  associated  with  the Company's Series 1994-A, Series 1995-A and Series
1995-B  Notes  as  compared  to those charged under the Company's prior credit
facility  with  Citicorp.

     The  annualized  net  interest  margin  percentage,  representing  the
difference  between  interest  income  and interest expense divided by average
finance  receivables,  decreased  from  16.2%  in  1995  to 12.3% in 1996. The
decrease  was  due primarily to the amortization of excess interest receivable
as  described  in  Note  2  of the Notes to Consolidated Financial Statements.

NET  INCOME
Net income (loss) from continuing operations decreased $3.0 million from $.5
     in 1995 to $(2.5) million in 1996. This decrease was primarily due to the
following  changes  on  the  Consolidated  Statement  of  Operations:
<TABLE>
<CAPTION>
<S>                            <C>

                               Increase (Decrease) to Net Income
(in millions of dollars)             From Cont. Operations
                               -----------------------------------
Interest  and other income     $                              0.9
Provision for credit losses                                   0.7
Operating expenses                                           (5.3)
Interest expense                                             (1.1)
Income tax expense                                            1.8
                               -----------------------------------
Net (decrease) to net income
  from continuing operations   $                             (3.0)
                               ===================================
<FN>
</TABLE>


                                      21
                                    <PAGE>


<TABLE>
<CAPTION>

DISCONTINUED  OPERATIONS
                                     SELECTED  OPERATING  DATA
                                   Years  ended  December  31,
<S>                                         <C>      <C>

(dollars in thousands, except where noted)    1996       1995
                                            -------  ---------
Sale of vehicles                            $1,301   $ 11,307
Other income                                $   15   $     55
Cost of vehicles sold                       $1,085   $  6,576
Provision for credit losses                 $  274   $  2,893
Operating expenses                          $  795   $  3,013
Interest expense                                 -   $     31
Loss on disposal of discontinued business    ($301)   ($1,158)
Gross margin % on vehicle sales                 20%        42%
Operating expenses as a % of revenues           60%        27%
<FN>

</TABLE>

     In  February  1996, the Company announced that it intended to discontinue
its  CarMart  retail  used  car  sales and associated financing operations. In
April  1996,  the  Company  extended the disposal date of the CarMart business
from April 30, 1996 to May 31, 1996. The CarMart business ceased operations on
May  31,  1996. The results of operations of the CarMart business for 1995 are
included  in the Consolidated Statement of Operations under the caption (Loss)
from discontinued operations. The results of operations for 1996 were included
in the loss on disposal. At March 31, 1996 and September 30, 1996, the Company
recorded  additional  losses  on  disposal  of  $150,000  and  $355,000 pretax
($93,900 and $207,551 after tax), respectively, related to the disposal of the
CarMart  business.

     On  January  15, 1996 and January 31, 1996, the Company closed its retail
car  lots  located  in  Englewood,  Colorado,  and Colorado Springs, Colorado,
respectively,  and  transferred  the remaining retail inventory to its Aurora,
Colorado  retail  store.  Effective March 15, 1996, the Company entered into a
sublease agreement on the Englewood, Colorado, and Colorado Springs, Colorado,
properties,  for  the  entire lease terms, at an amount approximately equal to
the  Company's  obligation. On May 31, 1996, the Company closed its retail car
lot  in  Aurora, Colorado and entered into a sublease agreement for the entire
lease  term.  As of October 17, 1996,  the remaining retail inventory had been
liquidated.  The Company had previously closed its retail car lot in Lakewood,
Colorado,  on  March  15,  1995.  All  personnel  associated  with the CarMart
operations  have been reassigned to other positions within the Company or have
been  released.

REVENUES
Revenues  from  the  sale  of vehicles decreased $10.0 million, or 88%, from
$11.3 million in 1995 to $1.3 million in 1996. This decrease was primarily due
     to the March 15, 1995 closing of the Company's Lakewood, Colorado, retail
car  lot,  the  January 1996 closings of the Englewood, Colorado, and Colorado
Springs, Colorado, retail car lots and the May 31, 1996 closing of the Aurora,
Colorado  retail  lot.

     Other  income,  which  primarily represents revenue derived from customer
repairs  performed  by  the  Company's repair shop, decreased $40,000 in 1996.

COSTS  AND  EXPENSES
The cost of vehicles sold decreased $5.5  million, or 84%, from $6.6 million
     in 1995 to $1.1 million in 1996. As a percentage of corresponding vehicle
sales,  the  cost  was  58%  in  1995  and  83%  in  1996.

     The provision for credit losses decreased $2.6 million, or 91%, from $2.9
million  in  1995  to  $.3  million  in  1996. The provision for credit losses
represents  estimated  current  losses based on the Company's risk analysis of
historical  trends  and expected future results for its CarMart portfolio. The
decrease  in the provision for credit losses was due primarily to the decrease
in CarMart sales and associated financing over this period. See the discussion


                                      22
                                    <PAGE>


above  in  Continuing  Operations  regarding  the  provision and allowance for
credit  losses  for  additional  analysis  and  explanation  of  the Company's
charge-offs,  delinquencies  and  risk  model.

     Operating  expenses  decreased $2.2 million, or 73%, from $3.0 million in
1995  to  $.8 million in 1996. As a percentage of revenues, operating expenses
for  1995 were 27% compared to 61% in 1996. This increase was due primarily to
the  relatively high percentage of fixed to variable overhead costs associated
with  operating the CarMart business and the general decrease in CarMart sales
from  1995  to  1996.


The  major  components  of  the increase in operating expenses are as follows:
<TABLE>
<CAPTION>
<S>                     <C>    <C>     <C>

                                       Increase
(dollars in thousands)   1996    1995  (Decrease)
                        -----  ------  ----------
Salaries and benefits   $ 161  $1,611    ($1,450)
Advertising                88     678       (590)
Rent                      100     334       (234)
All other                 446     390         56
                        -----  ------  ----------
                        $ 795  $3,013    ($2,218)
                        =====  ======  ==========
<FN>
</TABLE>

     The  Company  allocated  interest  expense  of  $31,000  to  discontinued
operations  in 1995. The allocation was based on the ratio of discontinued net
assets  to  consolidated  net  assets  plus  consolidated  debt.

LOSS  ON  DISPOSAL
The  loss  on disposal of the CarMart business of $1.8 million in 1995 ($1.2
million  after  tax)  was  comprised  primarily of a provision of $1.2 million
(pre-tax)  for  estimated  future  losses  on Contracts originated through the
CarMart  retail stores. Also, included in the loss on disposal was $.5 million
(pre-tax)  for  estimated  1996  losses  from  the  operations  of the CarMart
business  through  the  disposal  date  and  $.1  million (pre-tax) related to
estimated  CarMart  closing  costs.

     The  loss on disposal of the Carmart business of $.5 million in 1996 ($.3
million after tax) was due primarily to greater than anticipated closing costs
and  the  extension  of the disposal date from April 30, 1996 to May 31, 1996.

                      LIQUIDITY AND CAPITAL RESOURCES

     The  Company's  cash flows for the years ended December 31, 1996 and 1995
are  summarized  as  follows:

<TABLE>
<CAPTION>
     CASH  FLOW  DATA
(dollars  in  thousands)                       Years  ended  December  31,
<S>                                                   <C>        <C>
                                                          1996       1995
                                                      ---------  ---------
Cash flows from:
 Operating activities                                 $  2,377   $  5,937
 Investing activities                                  (30,004)   (28,306)
 Financing activities                                   21,607     29,590
                                                      ---------  ---------
Net increase (decrease) in cash and cash equivalents   ($6,020)  $  7,221
                                                      =========  =========
<FN>

</TABLE>


     The  Company's  business has been and will continue to be cash intensive.
The  Company's  principal  need  for  capital is to fund cash payments made to
Dealers  and  to  third-party  originators  in  connection  with  purchases of
installment  contracts.  These  purchases  have  been  financed  through  the
Company's  capital,  private  placement  borrowings  and  cash  flows  from
operations. It is the Company's intent to use its Revolving Note and revolving
line  of  credit,  as  described  in detail below, to provide the liquidity to
finance  the  purchase  of  installment  Contracts.

                                      23
                                    <PAGE>



     In  order to further insure the Company's ability to finance the purchase
of  installment contracts and thereby continue to grow, the Company is seeking
to obtain an additional warehouse credit facility on terms more favorable than
the Revolving Note described in Note 5 to the Company's Consolidated Financial
Statements.  If the Company is successful in obtaining such a credit facility,
it will provide the Company with additional working capital to the extent that
the  new  cash  advance  terms  are  more  favorable than the Revolving Note.
Although  the Company believes it will be able to consummate such a new credit
facility,  no  assurance  can  be  given  that  it  will  be  consummated.

     In  addition to its efforts to obtain a new credit facility, as described
above,  the  Company on November 1, 1996, obtained a $3 million term loan from
Pacific  USA  Holdings  Corp.  as  described  in  Note  5  to  the  Company's
Consolidated  Financial  Statements.

     The  Agreements  underlying  the  terms  of  the  Company's  Automobile
Receivable  - Backed Securitization Program ("Securitization Program") and the
corresponding  Revolving  Notes  and Warehouse Notes, described below, contain
certain  covenants  which  if not complied with, could materially restrict the
Company's  liquidity.  Although  the  Company  endeavors  to comply with these
covenants,  no  assurance  is  given  that  the Company will continue to be in
compliance.  Furthermore,  if  the  Net  Charge-Off Increase continues to grow
substantially  in  future  reporting  periods,  it  negatively will impact the
Company's  liquidity  and  could  impair  its  ability  to  increase  its loan
portfolio.  Under  the  terms  of the Revolving Note, approximately 80% of the
face  amount  of  Contracts,  in the aggregate, is advanced to the Company for
purchasing qualifying Contracts. The balance must be financed through capital.

     During  1993, the Company completed the Note Offering described in Note 5
of  the  Notes to Consolidated Financial Statements. In the Note Offering, the
Company  sold  7%  Convertible  Subordinated  Notes in the aggregate principal
amount  of  $2,000,000.  The  purchasers  of  the Notes exercised an option to
purchase  an additional $1,000,000 aggregate principal amount on September 15,
1993. The principal amount of the Notes, plus accrued interest thereon, is due
March  1,  1998.  The  Notes  are convertible into Class A Common Stock of the
Company  at  any  time  prior  to  maturity at a conversion price of $3.42 per
share,  subject  to  adjustment  for  dilution. Certain of these Notes with an
aggregate  principal  amount  of  $1,615,000  were converted in 1994 and 1995,
resulting  in  the  issuance  of  472,219  shares  of  Class  A  Common Stock.

     On  November  1,  1994, the Company sold in a private placement unsecured
Senior  Subordinated  Notes  (Senior  Notes")  in  the  principal  amount  of
$5,000,000  to  Rothschild North America, Inc. Interest is due and payable the
first day of each quarter commencing on January 1, 1995. Principal payments in
the  amount  of  $416,667 are due and payable the first day of January, April,
August  and  October  of  each  year,  commencing  January 1, 1997. The unpaid
principal  amount  of  the  Notes,  plus  accrued and unpaid interest, are due
October  1,  1999.

     In  November  1994,  MF Receivables Corp. I ("MF Receivables") sold, in a
private  placement,  $23,861,823  of 7.6% automobile receivables- backed notes
("Series  1994-A  Notes").  The Series 1994-A Notes accrue interest at a fixed
rate  of  7.6%  per  annum.  The  Series 1994-A Notes are expected to be fully
amortized  by  March 1998; however, the debt maturities are based on principal
payments  received  on  the  underlying  receivables,  which  may  result in a
different  final  maturity.

     In  May  of  1995,  MF  Receivables  issued  its  Floating  Rate  Auto
Receivable-Backed  Note  ("Revolving  Note"  or  "Series  1995-A  Note").  The
Revolving  Note  has  a  stated  maturity  of October 16, 2002. MF Receivables
acquires  Contracts  from the Company which are pledged under the terms of the
Revolving Note and Indenture for up to $40 million in borrowing. Subsequently,
the Revolving Note is repaid by the proceeds from the issuance of secured Term
Notes  or  repaid  from  collection of principal payments and interest, on the
underlying  Contracts.  The  Revolving  Note  can  be  used to borrow up to an
aggregate  of  $150  million through May 16, 1998. The Term Notes have a fixed
rate  of  interest  and likewise are repaid from collections on the underlying
Contracts.  An  Indenture and Servicing Agreement require that the Company and
MF  Receivables  maintain  certain  financial  ratios,  as  well  as  other
representations,  warranties  and  covenants.  The  Indenture  requires  MF
Receivables to pledge all Contracts owned by it for repayment of the Revolving
Note  or  Term  Notes,  including  Contracts  pledged as collateral for Series
1994-A  Term  Notes  and  the  Series 1995-B Term Notes, as well as all future
Contracts  acquired  by  MF  Receivables.

     The  Series 1995-A Note bears interest at LIBOR plus 75 basis points. The
initial  funding of this Note was $26,966,489 on May 16, 1995. The Company, as
servicer,  provides  customary  collection  and  servicing  activities for the
Contracts. The Revolving Note has a stated maturity of October 16, 2002 and an
expected  termination  date  of May 16, 1998. The maximum limit for the Series
1995-A  Note  is $40 million. On September 15, 1995, MF Receivables issued the

                                      24
                                    <PAGE>



Series 1995-B Term Notes ("Series 1995-B Notes") in the amount of $35,552,602.
The  Series  1995-B  Notes  accrue  interest at a fixed note rate of 6.45% per
annum.  The  Series  1995-B  Notes  are expected to be fully amortized by June
1999; however, the debt maturities are based on principal payments received on
the underlying receivables which may result in a different final maturity. The
proceeds  from the issuance of the Series 1995-B Notes were used to retire, in
full,  the  1995-A Note, which will be used to accumulate an additional $114.4
million  in  $40  million  increments.

     The  assets  of MF Receivables are not available to pay general creditors
of  the  Company.  In  the  event  there  is  insufficient  cash flow from the
Contracts  (principal  and  interest)  to  service the Revolving Note and Term
Notes,  a  nationally  recognized  insurance  company (MBIA) has guaranteed to
repay.  The  MBIA  insured  Series 1994-A Notes, Series 1995-A Note and Series
1995-B Notes received a corresponding AAA rating by Standard and Poor's and an
Aaa  rating  by  Moody's  and  were  purchased by institutional investors. The
underlying Contracts accrue interest at rates of approximately 21% to 29%. All
cash  collections  in  excess  of  disbursements  to the Series 1994-A, Series
1995-A  and Series 1995-B noteholders and other general disbursements are paid
to  MF  Receivables  monthly.

     As  of  December 31 1996, the Series 1994-A Notes, Series 1995-A Note and
Series  1995-B  Notes  and  underlying receivables backing those notes were as
follows:

<TABLE>
<CAPTION>
<S>                     <C>            <C>
                                           Underlying
(dollars in thousands)  Note Balance   Receivable Balance
                        -------------  -------------------
Series 1994-A Notes     $       4,837  $             4,898
Series 1995-A Note             39,967               50,551
Series 1995-B Notes            14,352               15,680
                        -------------  -------------------
Total                   $      59,156  $            71,129
                        =============  ===================
<FN>
</TABLE>

     On January 9, 1996, the Company entered into a Purchase Agreement for the
sale  of  an  aggregate  of  $5 million in principal amount of 12% Convertible
Senior  Subordinated  Notes  due  2001  (the "12% Notes"). Interest on the 12%
Notes  is  payable  monthly at the rate of 12% per annum and the 12% Notes are
convertible,  subject to certain terms contained in the Indenture, into shares
of  the  Company's  Class  A  Common  Stock,  par  value  $.01 per share, at a
conversion  price  of  $4.625  per  share, subject to adjustment under certain
circumstances.  The  12%  Notes  were  issued  pursuant  to an Indenture dated
January  9,  1996,  between  the  Company and Norwest Bank Minnesota, N.A., as
trustee.  The  Company  agreed  to  register,  for  public sale, the shares of
restricted  Common  Stock  issuable  upon conversion of the 12% Notes. The 12%
Notes  were  sold  pursuant to an exemption from the registration requirements
under  the  Securities  Act  of  1933,  as  amended.

     Provision  has  been  made  for  the  issuance  of up to an additional $5
million  in  principal  amount of the 12% Notes ("Additional 12% Notes") on or
before  January  9, 1998, upon such terms and conditions as shall be agreed to
between the Company and Black Diamond Advisors, Inc. ("Black Diamond"), one of
the  initial  purchasers.

     On  or  about June 28, 1996, the Company and Black Diamond entered into a
letter  agreement amending (the "Amendment") their rights and obligations with
respect  to  the  Purchase  Agreement and Indenture dated January 9, 1996. The
Amendment  provides  the  following:

1.     The conversion price of the $5,000,000 in principal amount of 12% Notes
issued  on  or  about  January  9,  1996,  is  fixed  at  $4.00  per  share.

2.       The initial conversion price for up to $5,000,000 in principal amount
of  any  Additional  12%  Notes,  if  any,  is  $3.00  per  share.

3.          The  expiration  date  of  the  option  is  September  10,  1998.

At  the  Annual  Shareholders'  Meeting  held  on  September  10,  1996,  the
shareholders  voted  to  ratify  the  amended Purchase Agreement and Indenture
dated  January  9,  1996.

                                      25
                                    <PAGE>


     In  January  1996,  the  Company  entered into a revolving line of credit
agreement  with  LaSalle National Bank providing a line of credit of up to $15
million,  not  to  exceed  a  borrowing  base  consisting of eligible accounts
receivable  to  be acquired. The scheduled maturity date of the line of credit
is January 1, 1998. At the option of the Company, the interest rate charged on
the  loans  shall  be  either  .5%  in excess of the prime rate charged by the
lender  or  2.75%  over the applicable LIBOR rate. The Company is obligated to
pay  the  lender  a  fee  equal  to .25% per annum of the average daily unused
portion  of  the  credit  commitment.  The  obligation  of  the lender to make
advances is subject to standard conditions. The collateral securing payment of
the  line  of credit consists of all Contracts pledged and all other assets of
the  Company.  The  Company  has  agreed  to maintain certain restrictive loan
covenants.  As  of  December  31,  1996,  the  Company had borrowed $5,250,000
against  this  line  of  credit.

     On  October  9,  1996,  the  Company  entered  into a Securities Purchase
Agreement  with  Pacific USA Holdings Corp. ("Pacific") whereby, amongst other
things,  Pacific  agreed  to  acquire  certain shares of the Company's Class A
Common  Stock.  On November 1, 1996, the Company entered into a Loan Agreement
with  Pacific whereby Pacific loaned the Company $3 million ("Pacific Loan").
On  February  7, 1997, the Securities Purchase Agreement was terminated by the
parties;  however,  the  Pacific  Loan  and its corresponding Installment Note
remained  in  effect.

     The Installment Note accrues interest at a fixed rate per annum of 9% and
is  payable  interest only from November, 1996 through November, 1997; monthly
principal  payments  of  $100,000  are  due  beginning  December,  1997,  and
continuing  each  month  thereafter through and including November, 1998.  The
unpaid  principal  amount  of  the  Installment  Note, plus accrued and unpaid
interest,  is  due  and  payable  November  16,  1998.

     The  collateral securing payment of the Installment Note consists of 100%
of  the  authorized,  issued and outstanding shares of stock of MF Receivables
Corp. I, consisting of 1,000 shares of common stock $0.01 par value per share.
Among  other  covenants,  the  Company  has  agreed  to  maintain  the monthly
outstanding  balance  of  all  retail  installment  contracts  owned  by  MF
Receivables  Corp.  I, less the then outstanding principal balance of all debt
issued  by  MF Receivables Corp. I, at a level in excess of 3.5 times the then
outstanding  principal  balance  of  the  Installment  Note.

     On  or  about November 8, 1995, the Company reduced the exercise price of
its  then  outstanding  Class  B Common Stock purchase warrants from $6.00 per
warrant to $4.90 per warrant through their expiration date, December 11, 1995.
As  a  result  of  the  Class  B  warrant  exercises,  1,622,970 shares of the
Company's  Class A Common Stock were issued. The Company received net proceeds
of $7,602,606 after deduction of a 4% solicitation fee payable to D.H. Blair &
Co.,  Inc.  A  total  of  108,120 Class B warrants were not exercised and have
expired.

     In  1990,  as  part  of  its initial public stock offering and as partial
underwriter's  compensation, the Company issued options to the underwriter for
the  purchase  of  70,000 units. Each unit, exercisable at $7.20, consisted of
two  shares  of  Class  A  Common Stock and two Class A warrants. Each Class A
warrant  was  exercisable,  at an exercise price of $4.50 per Class A warrant,
for  one  share of Class A Common Stock and one Class B warrant. By late 1995,
all  the  units  were exercised resulting in the issuance of 137,000 shares of
Class A Common Stock in 1995 and 3,000 shares of Class A Common Stock in 1994,
for  net  proceeds  to  the Company of $493,200 and $10,800, respectively. All
Class  A warrants which were issued as a result of the units were exercised in
1995  resulting  in the issuance of 140,000 shares of Class A Common Stock for
net  proceeds  to  the  Company  of  $630,000.

     In  March  1996,  the  Company  announced that its Board of Directors had
authorized  the  purchase  of  up  to  500,000 shares of Class A Common Stock,
representing  approximately  10%  of  its  Class  A  Common Stock outstanding.
Subject  to applicable securities laws, repurchases may be made at such times,
and  in  such  amounts,  as  the Company's management deems appropriate. As of
December 31, 1996, the Company had repurchased 26,900 shares of Class A Common
Stock.

     The  Company  has  never paid cash dividends on its Common Stock and does
not  anticipate  a change in this policy in the foreseeable future. Certain of
the  Company's  loan agreements contain covenants that restrict the payment of
cash  dividends.

     The  Company's  cash needs will, in part, continue to be funded through a
combination  of  earnings  and  cash  flow  from  operations  and its existing
warehouse  credit  facility  and  line  of  credit.  In  addition, the Company
continues to pursue additional sources of funds including, but not limited to,
various  forms  of  debt and/or equity. The ability of the Company to maintain
past  growth  levels  will,  in  large  part, be dependent upon obtaining such
additional  sources of funding, of which no assurance can be given. Failure to
obtain  additional  funding  sources  will  materially  restrict the Company's

                                      26
                                    <PAGE>


future  business  activities  and could, in the future, require the Company to
sell certain  of the Loans in its Portfolio to meet its liquidity requirments.

OTHER

ACCOUNTING  PRONOUNCEMENTS

In  1995,  the Financial Accounting Standards Board ("FASB")issued Statement
No. 123, Accounting for Stock Based Compensation, (SFAS 123) which encourages,
     but  does  not  require,  companies to recognize compensation expense for
grants of stock, stock options and other equity instruments to employees. SFAS
123  is  required  for  such  grants,  described  above,  to acquire goods and
services from non-employees. Additionally, although expense recognition is not
mandatory,  SFAS  123 requires companies that choose not to adopt the new fair
value accounting rules to disclose pro forma net income and earnings per share
information  using  the  new  method.  The Company has adopted SFAS 123 in the
fourth  quarter of fiscal 1995 and disclosed pro forma net income and earnings
per share information related to the 272,500 employee stock options granted in
1996  in  Note  6  of  the  Notes  to  Consolidated  Financial  Statements.

     In  June 1996, the FASB issued SFAS No. 125, Accounting for Transfers and
Servicing  of  Financial Assets and Extinguishment of Liabilities. The Company
intends  to adopt SFAS No. 125. effective January 1, 1997. Under SFAS No. 125,
future  asset  securitization  in  which  control of the securitized financial
assets  is  transferred  would be accounted for by recognizing all assets sold
and  recognizing  in  earnings  any  gain  or  loss  on  the  sale.

INFLATION

Inflation  was  not  a  material factor in either the sales or the operating
expenses  of  the  Company  from  inception  to  December  31,  1996.

FUTURE  EXPANSION  AND  STRATEGY

     The  Company's  strategy  is  to increase the size of its loan portfolio
while  maintaining the integrity of the credit quality of auto loans acquired.

     The  Company plans to implement its growth strategy by: (1) Expanding its
Dealer  Network;  (2) Increasing the number and amount of loans purchased from
third-party  originators;    (3)  Purchasing  portfolios  of  seasoned  loans
originated  by  others;    (4)  Continuing  its efforts to increase the credit
quality  of  its portfolios and reduce credit losses and charge-offs; and  (5)
Decrease  the  percentage of Operating Expenses to Total Portfolio Outstanding
by  increasing  the  Portfolio  while  decreasing  Operating  Expenses.

     During 1996 the Company acquired Contracts from approximately 425 Dealers
in  21  states,  the  majority  of  which were purchased in 5 states ("Primary
States").  In order to increase efficiency and reduce operating expenses , the
Company  in 1997 has temporarily reduced its marketing representatives from 16
to 6 in the Primary States. In order to expand it's Dealer Network in the last
three  quarters  of 1997 the Company intends selectively to hire and train new
marketing  representatives  and  to  emphasize  quality  Dealer  service.

     In  the latter part of 1996 the Company initiated a program of purchasing
loans  from a third-party originator for a fee.  These loans were underwritten
by  the  third-party  originator  to  conform  to standards established by the
Company.    All  loans  purchased by the Company are either re-underwritten or
audited  by  Company  personnel prior to funding.  During the first quarter of
1997  the Company has entered into agreements with two similar originators and
is  negotiating an agreement with an additional party to provide contracts for
the  Company  to  purchase    These third-party agreements, if successful, may
provide  additional  loan  production  for  the Company without certain of the
costs  associated  with  purchasing  loans  through  its  dealer  network.

     The  Company  also  plans  to  pursue  the  purchase  of  loan portfolios
previously  originated  by  sub-prime  automobile  contract  originators.  The
Company  does  not  know,  at this time, if such portfolios can be acquired at
prices that provide a risk adjusted yield to the Company that is sufficient to
meet  the  Company's criteria.  Nor does the Company know if Capital or credit
facilities  can  be  obtained  to  fund  such  purchases.

                                      27
                                    <PAGE>


     The  Company in 1997 believes it has improved the credit quality of loans
through    instituting  new in house training  programs for  its credit buyers
and  underwriters.      This  re-emphasis  on its people  in conjunction with
program  modifications  and  its  credit  scoring  system may help to decrease
charge-offs  in  the  future.  The  Company  also  has  revised certain of its
collection and recovery policies along with employing a new Vice President and
Senior  Manager of collections and strongly believes that collections in  1997
will  positively    be  affected  by  these  changes.
     .
     Other strategies for the future include forming a strategic alliance with
another  company,  either  currently  engaged in or interested in entering the
sub-prime  automobile finance industry.  An alliance, if formed, may result in
additional  Capital  and  warehouse  lines of credit as well as increased loan
volume  and  cost  efficiencies  obtained  by  combining  operations.

     In  addition  to  the  above,  the  Company intends to pursue contractual
servicing    arrangements,  whereby,  the  Company  will  earn  fee  income by
providing  servicing  of  loan portfolios owned by third-parties.  Although no
assurance can be given that such contractual arrangements will be consummated,
the  Company  believes  such  opportunities  exist  and intends to pursue them
accordingly.

     Implementation  of the foregoing strategy will be dependent upon a number
of  factors  including,  but  not  limited to:  i)  competition; ii) marketing
efficiency;  iii)  ability  of  the  Company  to  acquire  Contracts at prices
commensurate with estimated risk; and, iv)  maintaining and increasing capital
and  warehouse  lines  of  credit,  of  which  no  assurance  is  given..


                                      28
                                    <PAGE>

ITEM  7.    FINANCIAL  STATEMENTS.

                   MONACO FINANCE, INC. AND SUBSIDIARIES

TABLE  OF  CONTENTS
                                      Page
Independent Auditors' Report     30
Consolidated Balance Sheets
- December 31, 1996 and 1995     31
Consolidated Statements of
Operations - For the Years Ended
December 31, 1996 and 1995       32
Consolidated Statements of
Stockholders' Equity - For the
Years Ended
December 31, 1996 and 1995       33
Consolidated Statements of
Cash Flows  - For the Years
Ended December 31, 1996 and 1995 34
Notes to the Consolidated
Financial Statements             35-55


                                      29
                                    <PAGE>





                                                                      Ehrhardt
                                                                         Keefe
                                                                     Steiner &
                                                                    Hottman PC
                                                   Certified Public Accountant
                                                               and Consultants

                         INDEPENDENT AUDITORS' REPORT



The  Board  of  Directors  and  Stockholders
Monaco  Finance,  Inc.  and  Subsidiaries
Denver,  Colorado

     We  have  audited  the accompanying consolidated balance sheets of Monaco
Finance,  Inc.  and  Subsidiaries  as  of  December 31, 1996 and 1995, and the
related  consolidated  statements of operations, stockholders' equity and cash
flows  for  the  years  then  ended.  These  financial  statements  are  the
responsibility  of  the Company's management. Our responsibility is to express
an  opinion  on  these  financial  statements  based  on  our  audits.

     We  conducted  our  audits in accordance with generally accepted auditing
standards.  Those  standards  require  that  we  plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material  misstatement. An audit includes examining, on a test basis, evidence
supporting  the  amounts and disclosures in the financial statements. An audit
also  includes  assessing  the  accounting  principles  used  and  significant
estimates  made  by  management,  as  well as evaluating the overall financial
statement  presentation. We believe that our audits provide a reasonable basis
for  our  opinion.

     In  our  opinion, the consolidated financial statements referred to above
present  fairly,  in  all  material respects, the financial position of Monaco
Finance,  Inc. and Subsidiaries at December 31, 1996 and 1995, and the results
of  their  operations  and  their  cash  flows  for  the  years  then ended in
conformity  with  generally  accepted  accounting  principles.


                                     /s/ Ehrhardt Keefe Steiner & Hottman PC
                                           Ehrhardt Keefe Steiner & Hottman PC


     March  21,  1997
Denver,  Colorado


                                      30
                                    <PAGE>


                    MONACO FINANCE, INC. AND SUBSIDIARIES
<TABLE>

<CAPTION>

                                                                     CONSOLIDATED BALANCE SHEETS
                                                                      DECEMBER 31, 1996 AND 1995
                                                                            December 31,

                                                                  1996                       1995
                                                              ------------                -----------
<S>                                                           <C>           <C>           <C>

ASSETS
     Cash and cash equivalents                                $ 1,227,441                 $ 7,247,670
     Restricted cash                                            4,463,744                   3,694,886
     Automobile receivables - net (Notes 2 and 5)              81,890,935                  60,668,324
     Repossessed vehicles held for sale                         2,314,869                   2,637,188
     Income tax receivable (Note 7)                               350,000                      23,608
     Deferred income taxes (Note 7)                             1,581,651                      42,758
     Furniture and equipment, net of accumulated
       depreciation of $1,326,215 (1996) and $701,487 (1995)    2,055,902                   1,615,428
     Net assets of discontinued operations (Note 8)                     -                   1,661,986
     Other assets                                               1,379,526                   1,759,253
                                                              ------------                -----------
          Total assets                                        $95,264,068                 $79,351,101
                                                              ============                ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
     Accounts payable                                         $   851,838                 $   453,240
     Accrued expenses and other liabilities                       619,125                      93,151
     Notes payable (Note 3)                                     5,250,000                           -
     Installment note payable (Note 5)                          3,000,000                           -
     Convertible subordinated debt (Note 5)                     1,385,000                   1,385,000
     Senior subordinated debt (Note 5)                          5,000,000                   5,000,000
     Convertible senior subordinated debt (Note 5)              5,000,000                           -
     Automobile receivables-backed notes (Note 5)              59,156,101                  49,670,127
                                                              ------------                -----------
          Total liabilities                                    80,262,064                  56,601,518
Commitments and contingencies (Note 4)
Stockholders' equity (Note 6)
       Preferred stock; no par value, 5,000,000 shares
         authorized, none issued or outstanding                         -                           -
       Class A common stock, $.01 par value; 17,750,000
         shares authorized, 5,648,379 shares (1996) and
         5,672,279 shares (1995) issued                            56,484                      56,723
       Class B common stock, $.01 par value; 2,250,000
         shares authorized, 1,323,715 shares (1996) and
         1,306,000 shares (1995) issued                            13,237                      13,060
       Additional paid-in capital                              22,066,089                  22,127,941
       Retained earnings (deficit)                             (7,133,806)                    551,859
Total stockholders' equity                                     15,002,004                  22,749,583
                                                              ------------                -----------
Total liabilities and stockholders' equity                    $95,264,068                 $79,351,101
                                                              ============                ===========

<FN>
     See  notes  to  consolidated  financial  statements.
</TABLE>



                                      31
                                    <PAGE>


                    MONACO FINANCE, INC. AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF OPERATIONS
               FOR THE YEARS  ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>

                                                                        YEARS  ENDED  DECEMBER  31,
<S>                                                                    <C>            <C>
                                                                               1996           1995
                                                                       -------------  -------------

REVENUES:
Interest                                                               $ 13,470,631   $ 12,500,879
Other income                                                                 30,122        141,264
                                                                       -------------  -------------
     Total revenues                                                      13,500,753     12,642,143

COSTS AND EXPENSES:

Provision for credit losses (Note 2)                                        910,558      1,634,698
Operating expenses                                                       11,800,782      6,463,267
Interest expense (Notes 3 and 5)                                          4,737,375      3,685,707
                                                                       -------------  -------------
     Total costs and expenses                                            17,448,715     11,783,672
                                                                       -------------  -------------

Income (loss) from continuing operations before income taxes and
    cumulative effect of a change in accounting principle                (3,947,962)       858,471
Income tax expense (benefit) (Note 7)                                    (1,476,538)       321,068
                                                                       -------------  -------------

Income (loss) from continuing operations before cumulative effect
    of a change in accounting principle                                  (2,471,424)       537,403

(Loss) from discontinued operations, net of
   applicable income taxes (Notes 7 and 8)                                        -       (720,607)

(Loss) on disposal of discontinued business, net of
   applicable income taxes (Notes 7 and 8)                                 (301,451)    (1,157,891)

Cumulative effect of a change in accounting principle (Notes 2 and 7)    (4,912,790)             -
                                                                       -------------  -------------

Net (loss)                                                              ($7,685,665)   ($1,341,095)
                                                                       =============  =============


EARNINGS (LOSS) PER SHARE (NOTES 1 AND 6):

Income (loss) from continuing operations before cumulative effect
    of a change in accounting principle                                      ($0.35)  $       0.10
(Loss) from discontinued operations                                               -          (0.13)
(Loss) on disposal of discontinued business                                   (0.04)         (0.21)
Cumulative effect of a change in accounting principle                         (0.71)             -
                                                                       -------------  -------------

Net (loss) per common and common equivalent share                            ($1.10)        ($0.24)
                                                                       =============  =============

Weighted average number of shares outstanding                             6,965,485      5,603,689

<FN>


     See  notes  to  consolidated  financial  statements.
</TABLE>





                                      32
                                    <PAGE>


                    MONACO FINANCE, INC. AND SUBSIDIARIES
<TABLE>

<CAPTION>

                                    CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                   FOR THE YEARS  ENDED DECEMBER 31, 1996 AND 1995

                                        Class  A              Class  B        Additional
                                     Common  Stock          Common  Stock       Paid-in-     Retained
                                   Shares     Amount     Shares     Amount     Capital       Earnings        Total
                                 ----------  --------  ----------  --------  ------------  -------------  ------------
<S>                              <C>         <C>       <C>         <C>       <C>           <C>            <C>

Balance - December 31, 1994      3,363,662   $33,637   1,355,000   $13,550   $12,231,758   $  1,892,954   $14,171,899
Exercise of B warrants           1,622,970    16,230           -         -     7,586,376              -     7,602,606
Exercise of A warrants             140,000     1,400           -         -       631,600              -       633,000
Exercise of underwriter's units    137,000     1,370           -         -       491,830              -       493,200
Conversion of shares                49,000       490     (49,000)     (490)            -              -             0
Conversion of debentures           359,647     3,596           -         -     1,186,377              -     1,189,973
Net (loss) for the year                  -         -           -         -             -     (1,341,095)   (1,341,095)
                                 ----------  --------  ----------  --------  ------------  -------------  ------------
Balance - December 31, 1995      5,672,279    56,723   1,306,000    13,060    22,127,941        551,859    22,749,583
Purchase of treasury stock         (26,900)     (269)          -         -       (84,845)             -       (85,114)
Conversion of shares                 3,000        30      (3,000)      (30)            -              -             0
Treasury stock adjustment                -         -      20,715       207        22,993              -        23,200
Net (loss) for the year                  -         -           -         -             -     (7,685,665)   (7,685,665)
                                 ----------  --------  ----------  --------  ------------  -------------  ------------
Balance - December 31, 1996      5,648,379   $56,484   1,323,715   $13,237   $22,066,089    ($7,133,806)  $15,002,004
                                 ==========  ========  ==========  ========  ============  =============  ============
<FN>


See  notes  to  consolidated  financial  statements.


                                      33
                                    <PAGE>



</TABLE>


                    MONACO FINANCE, INC. AND SUBSIDIARIES
<TABLE>

<CAPTION>

                               CONSOLIDATED STATEMENTS OF CASH FLOWS
                         FOR THE YEARS  ENDED DECEMBER  31, 1996 AND 1995

                                                                        Years  ended  December  31,
                                                                           1996           1995
                                                                       -------------  -------------
<S>                                                                    <C>            <C>

Cash flows from operating activities:
---------------------------------------------------------------------
     Net income (loss)                                                  ($7,384,214)  $    537,403
     Adjustments to reconcile net income (loss) to
       net cash provided by operating activities:
          Depreciation                                                      575,539        345,162
          Provision for credit losses                                       910,558      1,634,698
          Cumulative effect of a change in accounting principle           4,912,790              -
          Amortization of excess interest                                 3,704,234      1,523,998
          Amortization of other assets                                      745,258        575,969
          Deferred tax asset                                             (1,538,893)       (42,758)
          Other                                                              77,154         70,679
                                                                       -------------  -------------
                                                                          2,002,426      4,645,151
     Change in assets and liabilities:
          Receivables                                                    (1,570,892)    (1,379,060)
          Prepaid expenses                                                 (104,365)       (43,318)
          Accounts payable                                                  300,761        (76,976)
          Accrued liabilities and other                                     727,425         48,007
          Income taxes payable                                                    -       (548,418)
                                                                       -------------  -------------
     Net cash flows from continuing operations                            1,355,355      2,645,386
     Net cash flows from discontinued operations                          1,021,611      3,291,175
                                                                       -------------  -------------
Net cash provided by operating activities                                 2,376,966      5,936,561
                                                                       -------------  -------------
Cash flows from investing activities:
---------------------------------------------------------------------
     Retail installment sales contracts - purchased                     (65,973,183)   (41,485,949)
     Retail installment sales contracts - originated                     (1,519,376)   (11,699,374)
     Proceeds from payments on contracts - purchased                     33,818,222     19,579,396
     Proceeds from payments on contracts - originated                     4,611,648      6,323,846
     Purchase of furniture and equipment                                   (937,644)    (1,023,694)
     Equipment deposits and other                                            (3,614)             -
                                                                       -------------  -------------
Net cash (used in) investing activities                                 (30,003,947)   (28,305,775)
                                                                       -------------  -------------
Cash flows from financing activities:
---------------------------------------------------------------------
     Net borrowings (repayments) under line of credit                     5,250,000     (3,090,000)
     Net (increase) in restricted cash                                     (768,858)    (2,100,883)
     Proceeds from issuance of convertible senior subordinated notes      5,000,000              -
     Proceeds from  issuance of installment note                          3,000,000              -
     Borrowings on asset-backed notes                                    42,348,989     49,242,379
     Repayments on asset-backed notes                                   (32,863,015)   (21,777,306)
     Purchases of treasury stock and other adjustments                      (59,042)             -
     Proceeds from exercise of  warrants                                          -      8,718,613
     Increase in debt issue and conversion costs                           (301,322)    (1,402,506)
                                                                       -------------  -------------
Net cash provided by financing activities                                21,606,752     29,590,297
                                                                       -------------  -------------
Net increase (decrease) in cash and cash equivalents                     (6,020,229)     7,221,083
Cash and cash equivalents, beginning of year                              7,247,670         26,587
                                                                       -------------  -------------
Cash and cash equivalents, end of year                                 $  1,227,441   $  7,247,670
                                                                       =============  =============
Supplemental disclosure of cash flow information:
     Cash paid during the year for interest                            $  4,535,614   $  3,514,255
                                                                       =============  =============
     Cash paid during the year for income taxes                        $      1,455   $  1,006,641
                                                                       =============  =============
<FN>

     Non-cash  investing  and  financing  activities:
     In  1996,  the  Company  issued  a  note for $107,407 for the sale of furniture and equipment.
     In  1995,  $1,230,000  (net of debt issue costs) of 7% Convertible Subordinated Notes (Note 5)
were    converted  into  359,647  shares  of  Class  A  Common  Stock.
</TABLE>
     See  notes  to  consolidated  financial  statements.


                                      34
                                    <PAGE>



NOTE  1  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

Monaco  Finance,  Inc.  (the  "Company"),  is  engaged  in  the  business of
providing  alternative  financing  programs  primarily  to  purchasers of used
vehicles.  The Company commenced operations in June 1988. The Company provides
     such  automobile  financing programs by acquiring retail installment sale
contracts  (the  "Contracts")  from  certain  selected  automobile  dealers in
approximately 21 states ("Dealer Network").  The Contracts are acquired by the
Company through automobile financing programs it sponsors.  In February, 1996,
 the Company announced that it intended to discontinue its CarMart retail used
car  sales  and  associated  financing operations. The CarMart business ceased
operations  on  May  31,  1996.

PRINCIPLES  OF  CONSOLIDATION

The  Company's  consolidated  financial  statements  include the accounts of
Monaco  Finance,  Inc.  and  its  wholly-owned  subsidiaries,  CarMart  Auto
Receivables  Company  and  MF  Receivables  Corp.  I  (the Subsidiaries).  All
intercompany  accounts and transactions have been eliminated in consolidation.

CASH  AND  CASH  EQUIVALENTS

For purposes of cash flow reporting, cash and cash equivalents include cash,
     money  market  funds,  government securities, and certificates of deposit
with  maturities  of  less  than  three  months.

RESTRICTED  CASH

Restricted  cash  represents  cash  collections  related  to  the Automobile
Receivables-Backed Notes (Note 5). On a monthly basis, all cash collections in
     excess  of  disbursements  to  the  noteholders  of  the  Automobile
Receivables-Backed  Notes  and  other  general  disbursements are  paid to  MF
Receivables Corp. I. At December 31, 1996 and 1995, the Company had $3,329,031
and $2,911,582, respectively, of its restricted cash balances invested in U.S.
government  securities.

FINANCE  RECEIVABLES

Finance receivables primarily represent receivables generated from Contracts
     purchased from the Dealer Network and from Contracts from the retail sale
of automobiles at the Company's CarMart stores. At December 31, 1996 and 1995,
approximately  $4.7  million,  or  6%,  and  $12.8  million,  or  21%,  of the
Automobile  Receivables  loan  portfolio  were  generated  from  the  CarMart
operations.

REPOSSESSED  VEHICLES  HELD  FOR  RESALE

Repossessed  vehicles  held  for  resale  consists  of  repossessed vehicles
awaiting  liquidation.  Repossessed  vehicles  are carried at estimated actual
cash  value.    At  December  31,  1996  and  1995,  approximately 651 and 658
repossessed  vehicles,  respectively, were awaiting liquidation.  Included are
vehicles  held for resale, vehicles which have been sold for which payment has
not  been  received  and unlocated vehicles (skips), the value of which may be
reimbursed  from  insurance.

                                      35
                                    <PAGE>



FURNITURE  AND  EQUIPMENT

Furniture and equipment are stated at acquisition cost.  Major additions are
     capitalized, whereas maintenance, replacements and repairs are expensed.
Depreciation  is  provided  for  in amounts sufficient to allocate the cost of
depreciable  assets to operations over their estimated service lives using the
straight-line  method.

REVENUE  RECOGNITION

At  Company  owned  CarMart  stores,  the Company recognized revenues on the
sales  of  vehicles  at  the point the sales contract was completed.  Interest
income  from  finance receivables is recognized using the interest (actuarial)
method.  Accrual of interest income on finance receivables is suspended when a
     loan is contractually delinquent for ninety days or more.  The accrual is
resumed  when  the  loan  is less than ninety days delinquent, and collectible
past-due interest income is recognized at that time.  Any discounts recognized
from  the  purchase  of  installment  contracts are added to the allowance for
credit  losses.    Insurance  servicer  income  was  recognized  as  earned.

CREDIT  LOSSES

Provisions  for  credit  losses  are  continually  reviewed  and adjusted to
maintain the allowance at a level considered adequate to cover losses over the
     life  of  the  loans in the existing portfolio.  The Company's charge-off
policy  is  to  automatically  charge-off any installment contract that is 100
days  contractually past due. Effective March 1, 1997, the Company changed its
charge-off  policy  to  require  that  all    contracts  120 days past due are
charged-off.

EXCESS  INTEREST

Effective  January  1,  1995, upon the acquisition of certain Contracts from
its  Dealer Network, a portion of future interest income, as determined by the
Company's  risk  analysis, was capitalized into Automobile Receivables (excess
interest  receivable)  and  correspondingly used to increase the allowance for
credit  losses  (unearned  interest  income).    Excess interest receivable is
subsequently  reduced  based  upon  the amortization of excess interest income
from  the  related  Contracts.

LOAN  ORIGINATION  FEES  AND  COSTS

Fees received and direct costs incurred for the origination of Contracts are
     offset  and any excess fees are deferred and amortized to interest income
over  the  contractual  lives  of  the  Contracts  using the interest method.
Unamortized  amounts,  if  any, are recognized in income at the time Contracts
are sold or paid in full. Direct costs incurred in excess of fees received are
expensed  as  incurred.

                                      36
                                    <PAGE>



CONCENTRATION  OF  CREDIT  RISKS

The  Company's  customers  are  not  concentrated in any specific geographic
region.    However,  their  primary  concentration  of  credit risk relates to
lending  to  individuals  who  cannot  obtain traditional bank financing.  The
Company  places its temporary cash investments with high quality institutions,
and  by  policy, limits the amount of credit exposure to any one institution.
The  Company  does,  however,  on  occasion  exceed the FDIC federally insured
limits and at December 31, 1996 and 1995 exceeded the amount by $5,666,759 and
     $8,100,788,  respectively.

ADVERTISING  COSTS

All  costs  associated  with  advertising  are  expensed  as  incurred.

EARNINGS  PER  SHARE

Earnings  per  share  is  computed  by  dividing  net income by the weighted
average  number  of common and common equivalent shares outstanding during the
period.    Common  Stock  equivalents  are determined using the treasury stock
method.  The  computation  of  weighted  average  common and common equivalent
shares  outstanding  excludes  anti-dilutive  common  equivalent  shares.

INCOME  TAXES

The  Company  recognizes  deferred  tax  liabilities  and  assets  based  on
differences  between  the  financial  statement  and  tax  basis of assets and
liabilities  using  enacted  tax  rates  in  effect  for the year in which the
differences  are  expected  to  reverse.

USE  OF  ESTIMATES

The  preparation of financial statements in conformity with general accepted
accounting  principles  requires  management  to  make  certain  estimates and
assumptions  that affect the reported amounts of assets and liabilities at the
date of financial statements and the reported amounts of revenues and expenses
     during the reporting period. Management believes that such estimates have
been  based  on  reasonable  assumptions and that such estimates are adequate,
however,  actual  results  could  differ  from  those  estimates.

TREASURY  STOCK

In  accordance  with  Section 7-106-302 of the Colorado Business Corporation
Act,  shares  of  its own capital stock acquired by a Colorado corporation are
deemed  to  be authorized but unissued shares.  APB Opinion No. 6 requires the
accounting  treatment  for acquired stock to conform to applicable state law.
As  such,  26,900  shares  of  Class A Common Stock purchased in 1996 has been
reported  as  a  reduction  to  Class  A  Common  Stock  and  Additional
Paid-in-Capital.

                                      37
                                    <PAGE>


RECLASSIFICATIONS

Certain  prior year balances have been reclassified in order to conform with
the  current  year  presentation.

<TABLE>
<CAPTION>

NOTE  2  -  AUTOMOBILE  RECEIVABLES

Automobile  receivables  consist  of  the  following:
                                                    December 31,
                                                   --------------
<S>                                                <C>             <C>
                                                            1996          1995
                                                   --------------  ------------
Automobile Receivables
Retail installment sales contracts                 $  11,777,343   $ 3,843,301
Retail installment sales contracts-Trust (Note 5)     71,129,192    58,358,835
Excess interest receivable                             6,555,682     3,312,635
Other                                                    616,230       795,304
Accrued interest                                       1,331,450     1,020,166
                                                   --------------  ------------
Total finance receivables                             91,409,897    67,330,241
Allowance for credit losses                           (9,518,962)   (6,661,917)
                                                   --------------  ------------
Automobile receivables - net                       $  81,890,935   $60,668,324
                                                   ==============  ============
<FN>

</TABLE>



     At  December  31,  1996,  the accrual of interest income was suspended on
$244,060  of  retail  installment  sale  contracts.

     At  the  time installments sale contracts ("Contracts") are originated or
purchased,  the Company estimates future losses of principal based on the type
and  terms  of  the  Contract,  the  credit  quality  of  the borrower and the
underlying  value  of the vehicle financed.  This estimate of loss is based on
the  Company's  risk  model,  which  takes  into  account historical data from
similar  contracts  originated or purchased by the Company since its inception
in  1988.    However,  since  the  risk model uses past history to predict the
future, changes in national and regional economic conditions, borrower mix and
other factors could  result in actual losses differing from initially prediced
losses.

     The allowance for credit losses, as presented below, has been established
utilizing  data  obtained  from  the  Company's risk models and is continually
reviewed  and adjusted in order to maintain the allowance at a level which, in
the  opinion  of management, provides adequately for current and future losses
that  may  develop  in  the present portfolio. This allowance is reported as a
reduction  to  Automobile  Receivables.

                                      38
                                    <PAGE>

<TABLE>
<CAPTION>
<S>                                                    <C>

                                                       Allowance for
                                                       Credit Losses
                                                       ---------------
Balance as of December 31, 1994                        $    2,559,763
Provisions for credit losses                                5,739,454
Unearned interest income                                    4,836,633
Unearned discounts                                          2,368,127
Retail installment sale contracts charged off             (17,978,277)
Recoveries                                                  9,136,217
                                                       ---------------
Balance as of December 31, 1995                        $    6,661,917
Provisions for credit losses                                1,184,189
Unearned interest income                                    6,947,282
Unearned discounts                                          3,689,364
Cumulative effect of a change in accounting principle       4,912,790
Retail installment sale contracts charged off             (24,819,803)
Recoveries                                                 10,943,223
                                                       ---------------
Balance as of December 31, 1996                        $    9,518,962
                                                       ===============
<FN>
</TABLE>



     The  provision  for  credit  losses  is  based on estimated losses on all
Contracts  purchased  prior  to  January  1,  1995  with zero discounts ("100%
Contracts")  and  for  all  Contracts  originated  by  CarMart which have been
provided  for  by  additions  to  the Company's allowance for credit losses as
determined  by  the  Company's  risk  analysis.

     Effective January 1, 1995, upon the acquisition of certain Contracts from
its  Dealer Network, a portion of future interest income, as determined by the
Company's  risk  analysis, was capitalized into Automobile Receivables (excess
interest  receivable)  and  correspondingly used to increase the allowance for
credit  losses  (unearned  interest  income).  Excess  interest  receivable is
subsequently  reduced  based  upon  the amortization of excess interest income
from  the  related Contracts.  For the years ended December 31, 1996 and 1995,
$3,704,234  and  $1,523,998,  respectively,  of excess interest receivable was
amortized  against  interest  income.



                                      39
                                    <PAGE>


The  December  31, 1996, excess interest receivable balance of $6,555,682 will
be  amortized  as  follows:
<TABLE>
<CAPTION>
<C>   <S>
      Amortization
      -------------
1997  3,713,055
1998  1,859,930
1999  743,224
2000  226,884
2001  12,589
      -------------
      6,555,682
      =============
<FN>

</TABLE>


     Unearned  discounts result from the purchase of Contracts from the Dealer
Network  at less than 100% of the face amount of the note.  All such discounts
are  used  to  increase  the  allowance  for  credit  losses.

CHANGE  IN  ACCOUNTING  PRINCIPLE

     Effective  October  1,  1996,  the  Company adopted a new methodology for
reserving  for  and  analyzing  its  loan  losses.  This  accounting method is
commonly referred to as static pooling. The static pooling reserve methodology
allows  the  Company to stratify its Automobile Receivables portfolio, and the
related  components of its Allowance for Credit Losses (i.e. discounts, excess
interest, charge offs and recoveries) into separate and identifiable quarterly
pools.  These  quarterly  pools,  along  with the Company's estimate of future
principal  losses  and  recoveries,  are  analyzed  quarterly to determine the
adequacy of the Allowance for Credit Losses. The method previously used by the
Company  to  analyze  the  Allowance  for Credit Losses was based on the total
Automobile  Receivables  portfolio.  In  management's opinion, the static pool
reserve method provides a more sophisticated and comprehensive analysis of the
adequacy  of  the  Allowance for Credit Losses and is preferable to the method
previously  used.  With the adoption of the static pooling reserve method, the
Company  increased its Allowance for Credit Losses by $4,912,790 in the fourth
quarter  of  1996.  This amount was included in the Consolidated Statements of
Operations  under  the  caption  "Cumulative  effect of a change in accounting
principle".

     As  part  of  its  adoption  of  the static pooling reserve method, where
necessary,  the  Company  adjusted  its  quarterly  pool allowances to a level
necessary  to cover all anticipated future losses (i.e. life of loan) for each
related  quarterly  pool  of  loans.

      Under static pooling, excess interest and discounts are used to increase
the  Allowance  for  Credit Losses and represent the Company's primary reserve
for  future  losses  on its portfolio. To the extent that any quarterly pool's
excess  interest  and  discount  reserves  are  insufficient  to absorb future
estimated  losses,  net  of  recoveries,  adjusted  for  the impact of current
delinquencies,  collection  efforts,  and  other economic indicators including
analysis  of  the Company's historical data, the Company will provide for such
deficiency  through  a  charge  to  the  Provision  for  Credit Losses and the
establishment of an additional Allowance for Credit Losses. To the extent that
any  excess  interest and discount reserves are determined to be sufficient to
absorb  future  estimated  losses,  net  of recoveries, the difference will be


                                      40
                                    <PAGE>


accreted  into interest income on an effective yield method over the estimated
remaining  life  of  the  related  monthly  static  pool.

     The  pro  forma effects of retroactive application of the above change in
accounting  principle  are  as  follows:

<TABLE>
<CAPTION>
<S>                                                                           <C>           <C>
AS REPORTED:                                                                         1996           1995
----------------------------------------------------------------------------  ------------  -------------
Income (loss) from continuing operations
   before cumulative effect of a change in accounting principle               ($2,471,424)  $    537,403
(Loss) from discontinued operations (net of taxes)                                      -       (720,607)
(Loss) on disposal of discontinued business (net of taxes)                       (301,451)    (1,157,891)
Cumulative effect on prior years
    of changing to a different reserve method                                  (4,912,790)             -
                                                                              ------------  -------------

Net (loss)                                                                    ($7,685,665)   ($1,341,095)
                                                                              ============  =============

EARNINGS (LOSS) PER SHARE (PRIMARY AND FULLY DILUTED):
----------------------------------------------------------------------------

Income (loss) from continuing operations
   before cumulative effect of a change in accounting principle                    ($0.35)  $       0.10
(Loss) from discontinued operations (net of taxes)                                      -          (0.13)
(Loss) on disposal of discontinued business (net of taxes)                          (0.04)         (0.21)
Cumulative effect on prior years of changing
   to a different reserve method                                                    (0.71)             -
                                                                              ------------  -------------

Net (loss)                                                                         ($1.10)        ($0.24)
                                                                              ============  =============

PRO FORMA AMOUNTS ASSUMING THE NEW RESERVE METHOD IS APPLIED RETROACTIVELY:
----------------------------------------------------------------------------

(Loss) from continuing operations                                             ($2,471,424)   ($2,348,342)
(Loss) per share-primary and fully diluted                                         ($0.35)        ($0.42)

Net (loss)                                                                    ($2,772,875)   ($4,226,840)
(Loss) per share-primary and fully diluted                                         ($0.40)        ($0.75)
<FN>
</TABLE>




NOTE  3  -  NOTE  PAYABLE

CITICORP

     In May 1995, the Company repaid, in full, the then outstanding balance on
its  $25  million  revolving  line  of  credit with Citicorp Leasing, Inc. and
terminated  the  facility.

                                      41
                                    <PAGE>



LASALLE  NATIONAL  BANK

     In  January  1996,  the  Company  entered into a revolving line of credit
agreement with LaSalle National Bank  ("LaSalle")providing a line of credit of
up  to  $15  million,  not  to  exceed a borrowing base consisting of eligible
accounts receivable to be acquired. The scheduled maturity date of the line of
credit  is  January  1,  1998. At the option of the Company, the interest rate
charged  on  the loans shall be either .5% in excess of the prime rate charged
by lender or 2.75% over the applicable LIBOR rate. The Company is obligated to
pay  the  lender  a  fee  equal  to .25% per annum of the average daily unused
portion  of  the  credit  commitment.  The  obligation  of  the lender to make
advances  is  subject  to standard conditions. The collateral securing payment
consists  of  all  Contracts  pledged and all other assets of the Company. The
Company has agreed to maintain certain restrictive financial covenants.  As of
December  31,  1996,  the Company had borrowed $5,250,000 against this line of
credit.

NOTE  4  -  COMMITMENTS  AND  CONTINGENCIES

OPERATING  LEASES

     The  Company leases office space, car lot facilities, computer and office
equipment  for  varying periods.  Leases that expire generally are expected to
be  renewed or replaced by other leases, or in the case of CarMart facilities,
the  Company  has  options  to  extend  the  leases.

     On  March  31,  1994,  the  Company's  lease  at  1319 S. Havana, Aurora,
Colorado  80010  was  terminated  and  the  operations  of  the retail CarMart
Dealership  at  that  location  were  transferred  to  890  S. Havana, Aurora,
Colorado  80010.    This  property  is  owned  by  a  corporation all of whose
shareholders  are  officers  of  the  Company.    The  Company  entered into a
seven-year  lease  commencing  March  24,  1994  and ending March 23, 2001. In
September  1995,  the  Company  amended  its  seven-year  lease to include the
property at 894 S. Havana, Aurora, Colorado 80010.  The Company currently pays
$14,238  per month on a triple net basis.  The lease calls for periodic rental
adjustments  over  the term.  It is the Company's belief that the terms of the
related  party  lease  are  generally  no  less favorable than could have been
obtained  from  unrelated  third party lessors for properties of similar size,
condition  and  location.  Effective  June 1, 1996, the Company entered into a
sublease  agreement  on  the  property located at 890 S. Havana for the entire
lease  term  at  an  amount  approximately  equal to the Company's obligation.

     Effective  January  15, 1996 and January 31, 1996, the Company closed its
retail  CarMart  Dealerships  located at 4940 S. Broadway, Englewood, Colorado
and  1005  Motor  City  Drive,  Colorado Springs, Colorado, respectively.  The
Englewood,  Colorado  lease ends March 31, 1997.  The Company may, at its sole
discretion, extend the Englewood, Colorado lease for additional 3-year periods
through March 2003.  The Company currently pays $9,833 per month.  The Company
may,  at  its sole discretion, extend the Colorado Springs, Colorado lease for
additional  yearly periods through May 31, 1998 if written notice of intent to
do  so  is  given  the  lessor  prior  to  April  15 of each year. The Company
currently  pays  monthly rent of $1,800 on a triple net basis. Effective March
15, 1996, the Company entered into a sublease agreement on both properties for
the  entire  lease  terms  at  an  amount approximately equal to the Company's
obligation.

                                      42
                                    <PAGE>



     Effective December 1, 1996, the Company entered into a sublease agreement
for  6,571 square feet of office space located at 370 17th Street, Suite 4960,
Denver,  Colorado,  80202.  The Company pays $1,807 per month under a sublease
ending  November  30,  2000.  This office space will be utilized as additional
executive  offices  of  the  Company.

     At  December  31,  1996,  future  minimum  rental  payments applicable to
noncancelable  operating  leases  were  as  follows:

<TABLE>
<CAPTION>
<S>           <C>            <C>        <C>

Year Ended    Gross Rental   Sublease   Net Rental
December 31,  Payments       Receipts   Payments
------------  -------------
1997          $     808,739  $ 176,698  $   632,041
1998                815,829    151,000      664,829
1999                739,760    159,500      580,260
2000                245,243    162,000       83,243
2001                 46,866     37,800        9,066
Thereafter                -          -            -
              -------------  ---------  -----------
              $   2,656,437  $ 686,998  $ 1,969,439
              =============  =========  ===========
<FN>
</TABLE>


     Total  net  lease  expense for the years ended December 31, 1996 and 1995
was  $631,931  and  $724,388,  respectively.

CONTINGENCIES

On  May 8, 1995, Milton Karsh, a former Officer and Director of the Company,
filed  a  civil  suit in the District Court for the City and County of Denver,
State of Colorado against the Company, its President, Morris Ginsburg, and its
     Executive Vice President, Irwin L. Sandler, both of whom are Directors of
the  Company.    The plaintiff alleged breach of contract, breach of fiduciary
duty  and  conversion  in connection with the plaintiff's proposed sale of the
Class  A Common Stock of the Company pursuant to Rule 144 under the Securities
Act  of  1933.    Plaintiff  claimed  he  sustained  approximately $450,000 in
damages.  The defendants denied the material allegations of the complaint, set
forth  several  affirmative defenses, alleged that the complaint was frivolous
and  filed  a counterclaim against the plaintiff alleging breach of contract.
Mediation  had  been  set  for  August  14,  1996.

     In  August  1996,  the  parties  settled  the  above  lawsuit.  Under the
settlement, the Company agreed to retain the plaintiff as a consultant for the
period  of  three  years,  to  reimburse  the plaintiff's attorney fees and to
release  and abandon any claim to ownership or option to acquire 20,715 shares
of  Class  B  Common  Stock  owned  by  the  plaintiff.

     The  Company  has agreed to pay all litigation costs, including fees, and
to  indemnify the Directors to the maximum extent provided by Colorado law, as
stated  in  the  Company's  By-Laws.

                                      43
                                    <PAGE>


EMPLOYMENT  AGREEMENTS

The Company's two executive officers have entered into employment agreements
     (the  "Employment  Agreements")  with  the  Company.

     Messrs.  Ginsburg  and  Sandler are paid annual salaries of $200,000  and
$150,000,  respectively, under their Employment Agreements and are eligible to
receive  discretionary  bonuses,  compensation increases, death benefits, life
insurance  with  premiums payable by the Company, and two years regular salary
in  the  event  of  certain  business combinations or changes in control.  The
Employment Agreements have five-year terms which began in December, 1990.  The
Employment Agreements are automatically renewed for consecutive one year terms
unless  terminated by either party.  The Company or the employee may terminate
the Employment Agreement for cause upon 30 days prior written notice.  Each of
these  individuals  has agreed not to compete with the Company for a period of
two years following the termination of his relationship with the Company under
this  Employment  Agreement.

LOANS  IN  FUNDING  (COMMITMENTS)

As  of  December  31,  1996, there were $8,744 in open commitments to extend
credit  through  the  normal  course  of  business.

401(K)  EMPLOYEE  SAVINGS  PLAN

The  Company  has a voluntary 401(k) savings plan pursuant to Section 401(k)
of the Internal Revenue Code, whereby participants may contribute a percentage
     of compensation, but not in excess of the maximum allowed under the code.
 The  plan  provides for a matching contribution by the Company which amounted
to  $26,239  and  $15,443  in  1996  and  1995,  respectively.

NOTE  5  -  DEBT

CONVERTIBLE  SUBORDINATED  DEBENTURES

On  March 15, 1993, the Company completed a private placement of $2,000,000,
7%  Convertible  Subordinated  Notes  (the  "Notes")  with  interest  payable
semiannually  commencing September 1, 1993. The principal amount of the Notes,
plus  accrued and unpaid interest, is due on March 1, 1998.  Additionally, the
purchasers  of  the  Notes  exercised  an  option  to  purchase  an additional
$1,000,000 aggregate principal amount of the Notes on September 15, 1993.  The
     Notes are convertible into the Class A Common Stock of the Company at any
time  prior  to  maturity at a conversion price of $3.42 per share, subject to
adjustment  for dilution. As detailed below, Notes with an aggregate principal
amount  of $1,615,000 have been converted resulting in the issuance of 472,219
shares  of  Class  A Common Stock.  Commencing March 15, 1996, the Company has
the  option  to  pre-pay  up  to  one-third  of  the outstanding Notes at par.

                                      44
                                    <PAGE>


<TABLE>
<CAPTION>
<S>              <C>         <C>

                 Notes       Class A Common
Conversion Date  Converted   Stock Issued
---------------  ----------  --------------
September 1994   $  385,000         112,572
March 1995          770,000         225,147
August 1995          85,000          24,853
September 1995      375,000         109,647
                 ----------  --------------

                 $1,615,000         472,219
                 ==========  ==============
<FN>
</TABLE>



SENIOR  SUBORDINATED  DEBENTURES

On  November  1,  1994  the  Company sold, in a private placement, unsecured
Senior  Subordinated  Notes  ("Senior Notes") in the gross principal amount of
$5,000,000 to Rothschild North America, Inc.  The Senior Notes accrue interest
     at  a  fixed rate per annum of 9.5% through October 1, 1997, and for each
month  thereafter,  a  fluctuating  rate  per annum equal to the lesser of (a)
11.5%  or  (b)  3.5%  above  LIBOR.

     Interest  is  due and payable the first day of each quarter commencing on
January  1,  1995.    Principal payments in the amount of $416,667 are due and
payable  the  first  day  of  January,  April, August and October of each year
commencing  January 1, 1997.  The unpaid principal amount of the Senior Notes,
plus  accrued  and  unpaid  interest  are  due  October  1,  1999.

AUTOMOBILE  RECEIVABLES  -  BACKED  NOTES

In  November  1994  MF Receivables Corp. I ("MF Receivables"), the Company's
wholly  owned  special  purpose  subsidiary,  sold,  in  a  private placement,
$23,861,823  of  7.6%  automobile  receivables-backed  notes  ("Series  1994-A
Notes").   The Series 1994-A Notes accrue interest at a fixed rate of 7.6% per
annum.    The  Series 1994-A Notes are expected to be fully amortized by March
1998; however, the debt maturities are based on principal payments received on
     the  underlying  receivables,  which  may  result  in  a  different final
maturity.

     In  May  of  1995,  MF  Receivables    issued  its    Floating  Rate Auto
Receivable-Backed  Note  ("Revolving  Note"  or  "Series  1995-A  Note").  The
Revolving  Note  has  a  stated  maturity of October 16, 2002.  MF Receivables
acquires  Contracts  from the Company which are pledged under the terms of the
Revolving  Note  and  Indenture  for  up  to  $40  million  in  borrowing.
Subsequently,  the  Revolving Note is repaid by the proceeds from the issuance
of  secured  Term  Notes  or  repaid from collection of principal payments and
interest  on  the  underlying  Contracts.   The Revolving Note  can be used to
borrow  up  to  an  aggregate  of $150 million through May 16, 1998.  The Term
Notes  have  a fixed rate of interest and likewise are repaid from collections
on  the  underlying  Contracts.   An Indenture and Servicing Agreement require
that the Company and MF Receivables maintain certain financial ratios, as well
as other representations, warranties and covenants.  The Indenture requires MF
Receivables to pledge all Contracts owned by it for repayment of the Revolving
Note  or  Term  Notes,  including  Contracts  pledged as collateral for Series
1994-A  Term  Notes,  the  Series  1995-B  Term  Notes,  as well as all future
Contracts  acquired  by  MF  Receivables.

                                      45
                                    <PAGE>

     The Series 1995-A Note bears interest at LIBOR plus 75 basis points.  The
initial funding of this Note was $26,966,489 on May 16, 1995.  The Company, as
servicer,  provides  customary  collection  and  servicing  activities for the
Contracts.    The Revolving Note has a stated maturity of October 16, 2002 and
an  expected  termination  date  of  May  16, 1998.  The maximum limit for the
Series  1995-A  Note  is  $40  million.  On September 15, 1995, MF Receivables
issued  its  Series 1995-B Term Notes ("Series 1995-B Notes") in the amount of
$35,552,602.   The Series 1995-B Notes accrue interest at a fixed note rate of
6.45%  per  annum.  The Series 1995-B Notes are expected to be fully amortized
by  June  1999;  however,  the debt maturities are based on principal payments
received  on  the underlying receivables which may result in a different final
maturity.  The proceeds from the issuance of the Series 1995-B Notes were used
to  retire,  in  full,  the  1995-A  Note, which will be used to accumulate an
additional  $114.4  million  in  $40  million  increments.

     The  assets  of MF Receivables are not available to pay general creditors
of  the  Company.    In  the  event  there  is insufficient cash flow from the
Contracts  (principal  and  interest)  to  service the Revolving Note and Term
Notes,  a  nationally  recognized    insurance  company  (MBIA) has guaranteed
repayment.    The  MBIA  insured  Series  1994-A Notes, Series 1995-A Note and
Series 1995-B Notes received a corresponding AAA rating by Standard and Poor's
and  an  Aaa rating by Moody's and were purchased by institutional investors.
The underlying Contracts accrue interest at rates of approximately 17% to 29%.
 All  cash collections in excess of disbursements to the Series 1994-A, Series
1995-A  and Series 1995-B noteholders and other general disbursements are paid
to  MF  Receivables  monthly.


     As  of December 31, 1996, the Series 1994-A Notes, Series 1995-A Note and
the Series 1995-B Notes and underlying receivables backing those notes were as
follows:
<TABLE>
<CAPTION>
<S>                  <C>            <C>

                                    Underlying
                     Note Balance   Receivable Balance
                     -------------  -------------------
Series 1994-A Notes  $   4,837,297  $         4,897,944
Series 1995-A Note      39,967,130           50,550,645
Series 1995-B Notes     14,351,674           15,680,603
                     -------------  -------------------
TOTAL                $  59,156,101  $        71,129,192
                     =============  ===================
<FN>
</TABLE>




CONVERTIBLE  SENIOR  SUBORDINATED  NOTE  OFFERING

On  January  9,  1996, the Company entered into a Purchase Agreement for the
sale  of  an  aggregate  of  $5 million in principal amount of 12% Convertible
Senior  Subordinated  Notes  due  2001 (the "12% Notes").  Interest on the 12%
Notes  is  payable  monthly at the rate of 12% per annum and the 12% Notes are
convertible,  subject to certain terms contained in the Indenture, into shares

                                      46
                                    <PAGE>


of  the  Company's  Class  A  Common  Stock,  par  value  $.01 per share, at a
conversion  price  of  $4.625  per  share, subject to adjustment under certain
circumstances.    The  12%  Notes  were  issued pursuant to an Indenture dated
January  9,  1996,  between  the  Company and Norwest Bank Minnesota, N.A., as
trustee.    The  Company  agreed  to  register, for public sale, the shares of
restricted  Common  Stock  issuable upon conversion of the 12% Notes.  The 12%
Notes  were  sold  pursuant to an exemption from the registration requirements
under  the  Securities  Act  of  1933,  as  amended.

     Provisions  have  been  made  for  the issuance of up to an additional $5
million  in  principal  amount of the 12% Notes ("Additional 12% Notes") on or
before  January  9, 1998, between the Company and Black Diamond Advisors, Inc.
("Black  Diamond"),  one  of  the  initial  purchasers.

     On  or  about June 28, 1996, the Company and Black Diamond entered into a
letter  agreement amending (the "Amendment") their rights and obligations with
respect  to  the  Purchase  Agreement and Indenture dated January 9, 1996. The
Amendment  provides  the  following:

1.     The conversion price of the $5,000,000 in principal amount of 12% Notes
issued  on  or  about  January  9,  1996,  is  fixed  at  $4.00  per  share.

2.     The initial conversion price for up to $5,000,000 in principal amount
of  any  Additional  12%  Notes,  if  any,  is  $3.00  per  share.

3.     The  expiration  date  of  the  option  is  September  10,  1998.

     At  the  Annual  Shareholders'  Meeting  held  on  September 10,1996, the
shareholders  voted  to so ratify the amended Purchase Agreement and Indenture
dated  January  9,  1996.

INSTALLMENT  NOTE  PAYABLE  -  PACIFIC  USA  HOLDINGS  CORP.

On October 9, 1996, the Company entered into a Securities Purchase Agreement
     with  Pacific USA Holdings Corp. ("Pacific") whereby, among other things,
Pacific  agreed  to  acquire  certain  shares  of the Company's Class A Common
Stock.    On  November 1, 1996, the Company entered into a Loan Agreement with
Pacific  whereby  Pacific  loaned the Company $3 million ("Pacific Loan").  On
February  7,  1997,  the  Securities  Purchase Agreement was terminated by the
parties;  however,  the  Pacific  Loan  and its corresponding Installment Note
remained  in  effect.

     The Installment Note accrues interest at a fixed rate per annum of 9% and
is  payable  interest only from November, 1996 through November, 1997; monthly
principal  payments  of  $100,000  are  due  beginning  December,  1997,  and
continuing  each  month  thereafter through and including November, 1998.  The
unpaid  principal  amount  of  the  Installment  Note, plus accrued and unpaid
interest,  is  due  and  payable  November  16,  1998.

     The  collateral securing payment of the Installment Note consists of 100%
of  the  authorized,  issued and outstanding shares of stock of MF Receivables
Corp. I, consisting of 1,000 shares of common stock $0.01 par value per share.
Among  other  covenants,  the  Company  has  agreed  to  maintain  the monthly
outstanding  balance  of  all  retail  installment  contracts  owned  by  MF
Receivables  Corp.  I, less the then outstanding principal balance of all debt
issued  by  MF Receivables Corp. I, at a level in excess of 3.5 times the then
outstanding  principal  balance  of  the  Installment  Note.

                                      47
                                    <PAGE>


TOTAL  DEBT  MATURITIES

Estimated  aggregate  debt maturities for the years ending December 31, 1997
through  2001    are  as  follows:
<TABLE>
<CAPTION>
<S>          <C>          <C>         <C>    <C>

   1997         1998         1999     2000     2001
-----------  -----------  ----------  -----  ----------
38,579,507  $27,737,478  $2,224,116  $ -0-  $5,000,000
<FN>
</TABLE>




NOTE  6  -  STOCKHOLDERS'  EQUITY

COMMON  STOCK

The  Company  has two classes of common stock.  The two classes are the same
except  for  the  voting  rights of each.  Each share of Class B stock retains
three  votes  while  each  share  of Class A stock retains one vote per share.

STOCK  OPTION  PLANS

The  Company  has  reserved 1,775,000 of its authorized but unissued Class A
Common  Stock for a stock option plan (the "Plan") pursuant to which officers,
directors and employees of the Company are eligible to receive incentive and /
     or  non-qualified  stock  options.    The Plan, which expires in the year
2000,  is  administered  by a committee designated by the Board of Directors.
Incentive stock options granted under the Plan are exercisable for a period of
up to 10 years from the date of grant and at an exercisable price which is not
less  than  the  fair  market value of the Class A Common Stock on the date of
grant,  except  that  the  term of an incentive stock option granted under the
Plan  to  a stockholder owning more than 10% of the outstanding Class A Common
Stock  of  the Company must not exceed five years and the exercise price of an
incentive  stock  option  granted  to such a stockholder must not be less than
110%  of  the fair market value of the Class A Common Stock on the date of the
grant.   The Plan also provides for issuance of stock appreciation rights.  At
December 31, 1996 and 1995, the Company has granted options to acquire a total
of   840,300 and 666,200 shares, respectively, of the Company's Class A Common
Stock.   These options are exercisable for a period of up to 10 years from the
date  of  grant  and  have  exercise prices from $1.88 to $6.63 a share, which
represents  bid  prices  of  the Company's Common Stock at the date of grant.
Through  December  31,  1996,  none  of  these  options  have  been exercised.

                                      48
                                    <PAGE>



<TABLE>
<CAPTION>

<S>                            <C>            <C>

                               Option Price
                               Per Share      Options
                               -------------  --------
Outstanding December 31, 1994  $2.13 - $6.63  673,000
Granted                        $        4.50   10,000
Canceled                       $        6.63  (16,800)
 Exercised                                 -        -
                               -------------  --------
Outstanding December 31, 1995  $2.13 - $6.63  666,200
Granted                        $        1.88  272,500
Canceled                       $  2.50-$6.63  (98,400)
Exercised                                  -        -
                               -------------  --------
Outstanding December 31, 1996  $1.88 - $6.63  840,300
                                              ========
<FN>
</TABLE>



     In  1995,  the  Financial Accounting Standards Board issued Statement No.
123,  "Accounting for Stock Based Compensation," ("FAS 123") which encourages,
but  does  not require, companies to recognize compensation expense for grants
of stock, stock options and other equity instruments to employees.  FAS 123 is
required  for  such grants, described above, to acquire goods or services from
nonemployees.    Additionally,  although expense recognition is not mandatory,
FAS  123  requires  companies  that  choose  not  to  adopt the new fair value
accounting  rules  to  disclose  pro  forma  net income and earnings per share
information  using  the  new  method.

     The  Company  has  adopted  the  disclosure-only  provisions of FAS 123.
Accordingly,  no  compensation  cost  has been recognized for the stock option
plan.    Had  compensation  cost  for  the  Company's  stock  option plan been
determined  based  on  the  fair  value  at  the grant date for awards in 1996
consistent  with  the  provisions  of FAS 123, the Company's 1996 net loss and
loss  per  share  would have been increased to the pro forma amounts indicated
below:

<TABLE>
<CAPTION>
<S>                                       <C>


Net (loss) - as reported                  ($7,685,665)
Net (loss) - pro forma                    ($7,857,956)
(Loss) per share (primary) - as reported       ($1.10)
(Loss) per share (primary) - pro forma         ($1.13)
<FN>
</TABLE>

     The  assumption  regarding the stock options issued in 1996 was that 100%
of  such options vested in 1996, which was the case for all but 10,000 options
which  vest  at  December  31,  1997.

     The  fair  value  of  each option grant is estimated on the date of grant
using  the  Black-Scholes  option-pricing  model  with  the following weighted
average assumptions used for grants in 1996:  dividend yield of 0.0%; expected
average  annual volatility of 44.5%; average annual risk-free interest rate of
5.9%;  and  expected  lives  of  10  years.

                                      49
                                    <PAGE>

PUBLIC  OFFERING

In  December  1990,  the  Company  completed  its initial public offering of
securities.    The  offering  consisted  of 1,400,000 shares of Class A Common
Stock  and  1,400,000  redeemable  Class  A  warrants  offered  in  $6  units,
consisting  of two Class A common shares and two Class A common share purchase
warrants.    The Class A purchase warrants were immediately exercisable.  Each
Class  A  warrant  entitled the holder to purchase one share of Class A Common
Stock  and  one  Class  B warrant for $4.50 until December 1994.  Each Class B
warrant  entitled the holder to purchase one share of Class A Common Stock for
$6.00  through  December  11,  1995.

     On  or  about November 8, 1995, the Company reduced the exercise price of
its  then  outstanding  Class  B Common Stock purchase warrants from $6.00 per
warrant to $4.90 per warrant through their expiration date, December 11, 1995.
 As  a  result  of  the  Class  B  warrant  exercises, 1,622,970 shares of the
Company's Class A Common Stock were issued.  The Company received net proceeds
of $7,602,606 after deduction of a 4% solicitation fee payable to D.H. Blair &
Co.,  Inc.    A  total of 108,120 Class B warrants were not exercised and have
expired.

     In  1990,  as  part of the initial public stock offering and as partially
underwriter's  compensation, the Company issued options to the underwriter for
the  purchase  of 70,000 units.  Each unit, exercisable at $7.20, consisted of
two  shares  of  Class  A Common Stock and two Class A warrants.  Each Class A
warrant  was  exercisable,  at an exercise price of $4.50 per Class A warrant,
for  one share of Class A Common Stock and one Class B warrant.  By late 1995,
all  the  units  were exercised resulting in the issuance of 137,000 shares of
Class A Common Stock in 1995 and 3,000 shares of Class A Common Stock in 1994,
for  net  proceeds  to the Company of $493,200 and $10,800, respectively.  All
Class  A  warrants, which were issued as a result of the units, were exercised
in  1995  resulting  in the issuance of 140,000 shares of Class A Common Stock
for  net  proceeds  to  the  Company  of  $630,000.


                                      50
                                    <PAGE>


NOTE  7  -  INCOME  TAXES

<TABLE>
<CAPTION>
     The  provision  for  income  taxes  is  summarized  as  follows:
<S>                         <C>                    <C>

                                    For the Years Ended
                                         December 31,
                            ---------------------------------
                                            1996        1995
                            ---------------------  ----------
Current expense (benefit)
Federal                     $           (350,000)  $(672,383)
State                                          -     (35,388)
                            ---------------------  ----------
                            $           (350,000)  $(707,771)
                            ---------------------  ----------
Deferred expense (benefit)
Federal                     $         (1,164,007)  $ (88,786)
State                                   (166,080)     (4,673)
                            ---------------------  ----------
                            $         (1,330,087)  $ (93,459)
                            ---------------------  ----------
TOTAL                       $         (1,680,087)  $(801,230)
                            =====================
<FN>
</TABLE>


<TABLE>
<CAPTION>


     The  following  is  a reconciliation of income taxes at the Federal Statutory rate with income
taxes  recorded  by  the  Company.
                                                                         For the Years Ended
                                                                             December 31,
                                                                  ---------------------------------

<S>                                                               <C>                    <C>

                                                                                  1996        1995
                                                                  ---------------------  ----------
Computed income taxes (benefit) at statutory rate - 34%           $         (3,184,356)  $(728,390)
State income taxes (benefit), net of Federal income tax benefit               (333,114)    (72,840)
Change in valuation allowance                                                1,837,383           -
                                                                  ---------------------
                                                                  $         (1,680,087)  $(801,230)
                                                                  =====================  ==========
<FN>
</TABLE>



     Deferred  taxes are recorded based upon differences between the financial
statements  and  tax  basis of assets and liabilities and available tax credit
carryforwards.  Temporary  differences  and carryforwards which give rise to a
significant  portion  of  deferred tax assets and liabilities were as follows:

                                      51
                                    <PAGE>


<TABLE>
<CAPTION>
                                                 December 31,
                                         --------------------------
<S>                                      <C>             <C>
                                                  1996        1995
                                         --------------  ----------
Deferred tax assets:
---------------------------------------
Federal and State NOL tax carry-forward  $   5,143,530   $ 101,000
Loss on disposal of CarMart                          -     238,627
Other                                           48,296      67,721
                                         --------------  ----------
                                             5,191,826     407,348
    Valuation allowance                     (1,837,383)          -
                                         --------------  ----------
Total deferred tax assets                    3,354,443     407,348
                                         --------------  ----------
Deferred tax liabilities:
---------------------------------------
Depreciation                                   (90,768)    (72,377)
Allowances and loan origination fees        (1,682,024)   (109,499)
Other                                                -      (8,566)
                                         --------------  ----------
Total deferred tax liability                (1,772,792)   (190,442)
                                         --------------  ----------
Net deferred tax asset                   $   1,581,651   $ 216,906
                                         ==============  ==========
<FN>
</TABLE>



The  net deferred tax asset disclosed above equals the deferred income taxes
on  the  balance sheet.  The valuation allowance relates to those deferred tax
assets  that  may  not  be  fully  utilized.

     As  of  December  31,  1996,  the  Company  has  a  net  operating  loss
carryforward  of  approximately  $13,750,000 for income tax reporting purposes
which  expires  in  2011.

NOTE  8  -  DISCONTINUED  OPERATIONS

     In  February  1996,  the Company announced that it intends to discontinue
its  CarMart  retail  used  car  sales  and  associated  financing operations.

     In  April  1996,  the  Company extended the expected disposal date of the
CarMart  business  from  April  30, 1996 to May 31, 1996. The CarMart business
ceased  operations  on  May  31,  1996.

     On  January  15, 1996 and January 31, 1996, the Company closed its retail
car  lot  in Englewood, Colorado and Colorado Springs, Colorado, respectively,
and  transferred the remaining retail inventory to its Aurora, Colorado retail
store. Effective March 15, 1996, the Company entered into a sublease agreement
on both properties for the entire lease terms at an amount approximately equal
to  the  Company's  obligation. On May 31, 1996, the Company closed its retail
car  lot  in  Aurora,  Colorado and entered into a sub-lease agreement for the
entire  lease  term.  As  of  October 17, 1996, the remaining inventory at the
Aurora,  Colorado  store  had  been  liquidated.

     On  March  31,  1995,  the Company closed its retail car lot in Lakewood,
Colorado.   The Company made monthly rental payments of $4,000 through the end
of  the  lease  term  on  October  15,  1995.

                                      52
                                    <PAGE>

     All personnel associated with the CarMart operations have been reassigned
to  other  positions  within  the  Company  or  have  been  released.

     The  results  of operations of the CarMart business for 1995 are included
in  the  Consolidated Statements of Operations under the caption " (Loss) from
discontinued  operations"  and  includes:

<TABLE>
<CAPTION>
                     For  the  Year  Ended  December  31,
<S>                                          <C>
                                                    1995
                                             ------------
Revenues                                     $11,361,642
Total costs and expenses                      12,512,772
                                             ------------
(Loss) from discontinued operations before
income taxes                                  (1,151,130)
Income tax (benefit)                            (430,523)
                                             ------------
(Loss) from discontinued operations            ($720,607)
                                             ============
<FN>
</TABLE>



     The  Company  allocated  interest  expense and associated direct costs of
$36,337  to discontinued operations in 1995. The allocations were based on the
ratio  of discontinued net assets to consolidated net assets plus consolidated
debt.

     The  loss  on  the disposition of the CarMart business has been accounted
for  as  discontinued  operations.   In March 1996, and June 1996, the Company
recorded  additional  pretax  charges  of  $150,000  and $355,000 ($93,900 and
$207,551  after  tax),  respectively,  related to the estimated 1996 loss from
operations  of  CarMart.  The  1995  loss  on  disposal  includes:

<TABLE>
<CAPTION>
<S>                                                                      <C>
                                                                         (Loss) on Disposal
                                                                         -------------------
Estimated losses on Contracts originated at  CarMart                            ($1,211,627)
Estimated 1996 loss from operations of CarMart  through April 30, 1996             (547,342)
Estimated closing costs                                                            ( 90,697)
                                                                         -------------------
Total disposal costs before taxes                                                (1,849,666)
Tax (benefit)                                                                      (691,775)
                                                                         -------------------
(Loss) on disposal of discontinued business                                     ($1,157,891)
                                                                         ===================
<FN>
</TABLE>



     The components of the loss on disposal of the CarMart business were based
on  reasonable  estimates  and  assumptions  by  Management.

Summarized  balance  sheet  data for the discontinued CarMart operations is as
follows:

                                      53
                                    <PAGE>


<TABLE>
<CAPTION>
                                       December 31,
<S>                                    <C>
                                                1995
                                       -------------
Assets
-------------------------------------
Vehicles held for sale                 $     790,424
Income tax receivable                        948,150
Deferred tax asset                           174,148
Furniture and equipment, net                 269,563
Other receivables                             83,710
Other assets                                  58,746
                                       -------------
Total assets                           $   2,324,741
                                       =============
Liabilities
-------------------------------------
Accounts payable and accrued expenses  $     662,755
Income taxes payable                               -
                                       -------------
Total liabilities                      $     662,755
                                       =============
Net assets of discontinued operations  $   1,661,986
                                       =============
<FN>
</TABLE>

                                      54
                                    <PAGE>

NOTE  9-  DISCLOSURE  ABOUT  FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS

CASH  AND  CASH  EQUIVALENTS.  RESTRICTED  CASH AND ACCRUED INTEREST PAYABLE

The  carrying  value approximates fair value due to its liquid or short-term
nature.

AUTOMOBILE  RECEIVABLES  -  NET

The  interest  rates  and  credit  ratings of the net Automobile Receivables
outstanding  at  December  31, 1996 are consistent with the interest rates and
credit  ratings on current purchases by the Company of Contracts with the same
maturities  and  collateral; as such, the carrying value of the net Automobile
Recievables   outstanding at December 31, 1996 approximates fair value at that
date.

INSTALLMENT  NOTE PAYABLE, CONVERTIBLE SUBORDINATED DEBT, SENIOR SUBORDINATED
DEBT,  CONVERTIBLE SENIOR SUBORDINATED DEBT  AND AUTOMOBILE RECEIVABLES-BACKED
NOTES

Rates  currently  available  to  the Company for debt with similar terms and
maturities  are  used  to  estimate  the  fair  value  of  existing  debt.

     The  estimated  fair  value  of  the  Company's  financial instruments at
December  31,  1996  were  as  follows:

                                      54
                                    <PAGE>


<TABLE>
<CAPTION>
                                                    December  31,  1996
<S>                                             <C>                <C>

                                                Carrying Amount    Fair Value
                                                -----------------  ------------
Financial Assets:
----------------------------------------------
Cash and Cash Equivalents and Restricted Cash   $      5,691,185   $ 5,691,185
Automobile Receivables                                91,409,897    91,409,897
Less: Allowance for Credit Losses                     (9,518,962)   (9,518,962)
                                                -----------------  ------------
     Total                                      $     87,582,120   $87,582,120
                                                =================  ============
Financial Liabilities:
----------------------------------------------
Accrued Interest Payable (included in
   Accrued expenses and other liablities)       $        343,570   $   343,570
Installment Note Payable                               3,000,000     3,000,000
Convertible Subordinated Debt                          1,385,000     1,385,000
Senior Subordinated Debt                               5,000,000     5,000,000
Convertible Senior Subordinated Debt                   5,000,000     5,000,000
Automobile Receivables-backed Notes                   59,156,101    59,156,101
                                                -----------------  ------------
     Total                                      $     73,884,671   $73,884,671
                                                =================  ============
<FN>
</TABLE>

                                      55
                                    <PAGE>



ITEM  8.  CHANGES  IN  AND  DISAGREEMENTS  WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL  DISCLOSURE.

NONE

                                  PART III

     Part  III, including the following items, is incorporated by reference to
the  Company's  Proxy  Statement  which  will be filed with the Securities and
Exchange  Commission  and  mailed to shareholders on or before April 30, 1997:

ITEM  9.  DIRECTORS  AND  EXECUTIVE  OFFICERS, PROMOTERS AND CONTROL PERSONS,
COMPLIANCE  WITH  THE  SECTION  16(A)  OF  THE  EXCHANGE  ACT.

ITEM  10.  EXECUTIVE  COMPENSATION.

ITEM  11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

ITEM  12.  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS.


                                  PART IV

ITEM  13.EXHIBITS  AND  REPORTS  ON  FORM  8-K

(a)  The  following  documents  are  filed  as  part  of  this  Report:

1     Financial Statements              Page of this
                                        Report
      Independent Auditors' Report      30
      Consolidated Balance Sheets
      December 31, 1996 and 1995        31
      Consolidated  Statements of
      Operations For the Years
      Ended December 31, 1996 and 1995  32
      Consolidated  Statements of
      Stockholders' Equity For
      The Years Ended
      December 31, 1996 and 1995        33
      Consolidated  Statements
      of Cash Flows For The Years
      Ended December 31, 1996 and 1995  34
      Notes to Consolidated Financial
      Statements                        35-55

                                      56
                                    <PAGE>



2.FINANCIAL  STATEMENT  SCHEDULES:

All  other  statements  or  schedules  for  which  provision  is made in the
applicable  regulation  of  the  Securities  and Exchange Commission have been
omitted  because  they  are  not  required  under  related instructions or are
inapplicable,  or  the  information  is  shown in the financial statements and
related  notes.

3.(a)          Exhibits
3.1          Articles of Incorporation, dated August 12, 1986,
             and Articles of amendment,  dated  July  2,  1990
             and  August  31,  1990  (1)
3.2          Bylaws  (1)
4.4          Form of Mergers and Acquisitions Agreement with the
             Underwriter (1)
10.1         Employment Agreement between the Registrant and Morris
             Ginsburg dated July  9,  1990  (1)
10.2         Employment Agreement between the Registrant and Irwin L.
             Sandler July  9,1990  (1)
10.3         Lease with BCE Development Properties, Inc., dated December
             23, 1988 (1)
10.4         Key-man  Insurance  Policies on the lives of Messrs.Ginsburg
             and Sandler  (1)
10.5         Form  of  Purchase  Agreement  (re:  Dealers)  (1)
10.6         Agreement  -  Guaranty  Bank  and  Trust  Company  (1)
10.7         Agreement  -  Central  Bank  of  Denver  (1)
10.8         Agreement  -  First  National  Bank  of  Southeast  Denver
             (1)
10.9         Agreement  -  Arapahoe  Bank  and  Trust  (1)
10.9 (A)     First Amendment to Arapahoe Bank/Monaco Finance Agreement
             dated February  22, 1991  with Assignment of Savings Account
             and Security Agreement (2)
10.10        Agreement  -  Southwest  State  Bank  (1)
10.11        Agreement  -  Lakeside  National  Bank  (2)
10.12        Agreement  -  Western  Funding,  Inc.  (2)
10.13        Form  of  Agreement  -  First  Eagle  (2)
10.14        Form  of  Financing  Agreement  (re: Floorplan Financing) (1)
10.15        Stock  Option  Plan  (1)
10.16        Single  Interest  Blanket  Insurance  Policy  (1)
10.17        Lease with Richard A. Boddicker dated September 4, 1990,
             as amended, re:  South  Havana  Lot  (1)
10.18        Financing Agreement, Promissory Note and Security Agreement
             (re:wholesale  floorplan  financing)  (1)
10.19        Lease  re:    Colorado  Springs  Lot  (3)
10.21        Lease  re:    West  Colfax  Lot  (3)
10.22        Financing Agreement with Citicorp Leasing, Inc., including
             three Amendments  (4)
10.23        7%  Subordinated  Note  Agreement  (4)
10.24        Consent  of  Independent  Certified  Public  Accountants  (9)
10.25        Sixth Amendment to Financing Agreement with Citicorp Leasing,
             Inc. dated    June  1,  1994  (5)
10.26        Lease  Agreement  between the Registrant and GSC Ltd.
             Liability Company,  a  related  party  owned  company(5)
10.27        Note Purchase Agreement for Senior Subordinated Notes to
             Rothschild North  America,  Inc.(6)
10.28        Seventh Amendment to Financing Agreement with Citicorp
             Leasing, Inc. dated  July  26,  1994
10.29        Eighth Amendment to Financing Agreement with Citicorp Leasing,
             Inc. dated  September  7,  1994  (7)
10.30        Ninth Amendment to Financing Agreement  with Citicorp Leasing,
             Inc.dated  November  2,  1994  (7)
10.31        Indenture Agreement related to private placement of
             $23,861,823 of 7.6%  automobile  receivables-backed notes  (8)
10.32        Form  of  Term Note issued by MF Receivables Corp. I
             related to private  placement  of $23,861,823 of 7.6%
             automobile receivables-backed notes (8)
10.33        Tenth Amendment to Financing Agreement with Citicorp Leasing,
             Inc. dated  November  16,  1994  (10)
10.34        Amended and restated Lease re: Executive Offices at 370 17th
             Street, 50th  floor,  Denver,  Colorado  80202  with
             Brookfield  Republic,  Inc. (10)
10.35        Amended and Restated Indenture Agreement dated as of May 1,
             1995 related  to  private  placement  of  $40 million
             aggregate principal amount of floating  rate  automobile
             receivable-backed  warehouse  notes  (11)
10.36        Form of Warehouse Note issued by MF Receivables Corp I related
             to private  placement  of $40 million aggregate principal
             amount of floating rate automobile  receivable-backed
             warehouse  note  (11)
10.37        MBIA Forward Commitment to Issue related to private placement
             of$40 million  aggregate  principal  amount  of  floating rate
             automobile receivables-backed  warehouse  notes  (11)
10.38        Purchase  Agreement  dated January 9, 1996 by and among Monaco
             Finance,  Inc.  and Black Diamond Advisors, Inc. and other
             purchasers relating to  $5,000,000  in  12%  Convertible
             Senior  Subordinated Notes due 2001 (12)

                                      57
                                    <PAGE>


3.(a)          Exhibits  (continued)
10.39        Indenture dated as of January 9, 1996, between Monaco Finance,
             Inc. and  Norwest  Bank  of  Minnesota,  N.A.,  realting to
             12% Convertable Senior Subordinated  Notes  due  2001  (12)
10.40        Loan and Security Agreement dated as of January 16, 1996,
             between Registrant    and  LaSalle  National  Bank  (12)
10.41        Revolving Credit Note in the principal amount of $15 million
             or so much  thereof as may be advanced, dated January 16,
             1996, payable to the order of  LaSalle  National  Bank  by
             Registrant  (12)
10.42        Letter Agreement dated June 28, 1996, by and between the
             Registrant and  Black  Diamond  Advisors,  Inc.  (13)
10.43        Letter Agreement dated July 3, 1996, by and between  the
             Registrant and  David  M.  Ickovic  regarding  director
             compensation  (13)
10.44        Securities Purchase Agreement between the Registrant and
             Pacific USA Holdings  Corp.  (14)
10.45        Stock Purchase Warrant in favor of Pacific USA Holdings
             Corp. (14)
10.46        Shareholder option Agreement among Pacific USA Holdings
             Corp. and Morris  Ginsburg,  Irwin  Sandler  and  Sandler
             Family  Partners,  Ltd.  (14)
10.47        Executive Employment Agreement between the Registrant
             and Morris Ginsburg  related  to  the  Securities  Purchase
             Agreement  with  Pacific USA Holdings  Corp.  (14)
10.48        Executive Employment Agreement between the Registrant and
             Irwin Sandler  related  to  the  Securities  Purchase
             Agreement  with   Pacific USA Holdings  Corp.  (14)
10.49        Loan Agreement between Pacific USA Holdings Corp. and the
             Registrant (14)
10.50        Press Release of the Registrant related to the Securities
             Purchase Agreement  with    Pacific  USA  Holdings  Corp.(14)
10.51        Termination Agreement dated as of February 6, 1997, between
             the Registrant  and  Pacific  USA  Holdings  Corp.  (15)
10.52        Press Release of the Registrant regarding the termination of
             the Securities  Purchase Agreement between the Registrant and
             Pacific USA Holdings Corp.  (15)
11           Statement  Re: Computation of  Earnings  Per  Share - PAGE60
18           Letter on  Change  in  Accounting  Principles  -  PAGE  61
23           Consent of  Independent  Certified  Accountants  -  PAGE  62
99           Cautionary Statement Regarding Forward Looking Statements
             - PAGES 63-68


Footnotes:
(1)    Incorporated by reference to the Registrant's Registration Statement on
Form S-1 and all Amendments thereto, as filed with the Securities and Exchange
Commission,  Registration  No.  33-35843,  and which was declared effective on
December  11,  1990.

(2)   Incorporated by reference to the Registrant's Annual Report on Form 10-K
for  the  year  ended  December  31,  1990.

(3)   Incorporated by reference to the Registrant's Annual Report on Form 10-K
for  the  year  ended  December  31,  1991.

(4)    Incorporated  by  reference  to  the Registrant's Annual Report on Form
10-KSB  for  the  year  ended  December  31,  1992.

(5)    Incorporated  by reference to the Registrant's Quarterly Report on Form
10-QSB  for  the  quarter  ended  June  30,  1994.

(6)   Incorporated by reference to the Registrant's Form 8-K dated November 3,
1994.

(7)    Incorporated  by reference to the Registrant's Quarterly Report on Form
10-QSB  for  the  quarter  ended  September  30,  1994.

(8)  Incorporated by reference to the Registrant's Form 8-K dated November 18,
1994.

(9)    Incorporated  by  reference  to  the Registrant's Annual Report on Form
10-KSB  for  the  year  ended  December  31,  1993.

(10)  Incorporated  by  reference  to  the  Registrant's Annual Report on Form
10-KSB  for  the  year  ended  December  31,  1994.

(11)  Incorporated  by  reference  to  the Registrant's Form 8-K dated May 18,
1995.

                                      58
                                    <PAGE>



(12)  Incorporated  by reference to the Registrant's Form 8-K dated January 9,
1996.

(13)  Incorporated  by  reference  to the Registrant's Form 8-K dated June 28,
1996.

(14)  Incorporated by reference to the Registrant's Form 8-K dated October 29,
1996.

(15)  Incorporated by reference to the Registrant's Form 8-K dated February 7,
1997.

     3.(b)    Reports  on  Form  8-K:

     A  Form  8-K dated October 31, 1996 was filed announcing the signing of a
Securities  Purchase Agreement, a Stock Purchase Warrant, a Shareholder Option
Agreement  and  a  Loan  Agreement  with  Pacific  USA  Holdings  Corp.

     A Form 8-K dated February 7, 1997 was filed announcing the termination of
the  Securities  Purchase  Agreement  dated  October 29, 1996 with Pacific USA
Holdings  Corp.




                                      59
                                    <PAGE>



<TABLE>
<CAPTION>

                                         EXHIBIT 11
                           MONACO FINANCE, INC. AND SUBSIDIARIES
                             COMPUTATION OF EARNINGS PER SHARE
                               YEAR  ENDED  DECEMBER  31,


                                                                      1996          1995
                                                                  ------------  ------------
<S>                                                               <C>           <C>

EARNINGS (LOSS) PER SHARE - PRIMARY AND FULLY DILUTED
NET EARNINGS (LOSS)
----------------------------------------------------------------
Income (loss) from continuing operations                          $(2,471,424)  $   537,403
(Loss) from discontinued operations                                         -      (720,607)
(Loss) on disposal of discontinued business                          (301,451)   (1,157,891)
Cumulative effect of a change in accounting principle              (4,912,790)            -
                                                                  ------------  ------------
Net (loss)                                                        $(7,685,665)  $(1,341,095)
                                                                  ============  ============
AVERAGE SHARES OUTSTANDING
----------------------------------------------------------------
Weighted average shares outstanding                                 6,965,485     5,204,100
Shares issuable from assumed exercise of stock options (a)                 (b)      277,306
Shares issuable from assumed exercise of underwriters' units (a)           (b)       50,723
Shares issuable from assumed exercise of stock warrants (a)                (b)       71,560
                                                                  ------------  ------------
Common stock and common stock equivalents - primary                 6,965,485     5,603,689
Additional dilutive effect of assumed exercise of
  stock options                                                            (b)       18,972
Additional dilutive effect of assumed exercise of
  stock warrants                                                           (b)       21,487
Additional dilutive effect of assumed exercise of
  underwriters' units                                                      (b)       15,669
Shares issuable from assumed conversion of 7%
 subordinated debt (c)                                                     (b)           (b)
                                                                  ------------  ------------
Common stock and common stock equivalents - fully
diluted                                                             6,965,485     5,659,817
                                                                  ============  ============
 EARNINGS (LOSS)PER SHARE - PRIMARY
----------------------------------------------------------------
Income (loss) from continuing operations                          $     (0.35)  $      0.10
(Loss) from discontinued operations                                         -         (0.13)
(Loss) on disposal of discontinued business                             (0.04)        (0.21)
Cumulative effect of a change in accounting principle                   (0.71)            -
                                                                  ------------  ------------
Net (loss) per share                                              $     (1.10)  $     (0.24)
                                                                  ============  ============

EARNINGS (LOSS)PER SHARE - FULLY DILUTED
----------------------------------------------------------------
Income (loss) from continuing operations                          $     (0.35)  $      0.09
(Loss) from discontinued operations                                         -         (0.13)
(Loss) on disposal of discontinued business                             (0.04)        (0.20)
Cumulative effect of a change in accounting principle                   (0.71)            -
                                                                  ------------  ------------
Net (loss) per share                                              $     (1.10)  $     (0.24)
                                                                  ============  ============

<FN>
</TABLE>

     Notes:
(a)          Common  Stock equivalents are calculated using the treasury stock
method.
(b)         The computation of average number of common stock and common stock
equivalent shares outstanding excludes anti-dilutive common equivalent shares.
(c)          Subordinated  debentures  were not included in the calculation of
primary  earnings per share in accordance with paragraph 33 of APB Opinion No.
15.

                                      60
                                    <PAGE>

                                  EXHIBIT 18



Monaco  Finance,  Inc.  and  Subsidiaries
370  17th,  Suite  5060
Denver,  Colorado  80202

Board  of  Directors:


We have audited the financial statements as of December 31, 1996 and 1995, and
for  each  of the two years in the period ended December 31, 1996, included in
your  Annual  Report  on Form 10-KSB to the Securities and Exchange Commission
and have issued our report thereon dated March 21, 1997. Notes 2 and 7 to such
financial  statements  contains a description of your adoption during the year
ended  December  31,  1996  of  static  pool  accounting for the reserving and
analyzing  of  loan  losses. In our judgment, such change is to an alternative
accounting  principle  that  is  preferable  given current industry practices.


                                     /s/ Ehrhardt Keefe Steiner & Hottman PC
                                           Ehrhardt Keefe Steiner & Hottman PC


March  21,  1997
Denver,  Colorado



                                      61
                                    <PAGE>



                                  EXHIBIT 23



                  CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS



The  Board  of  Directors
Monaco  Finance,  Inc.
370  17th,  Suite  5060
Denver,  Colorado  80202

We  hereby  consent to the incorporation by reference of our reports on Monaco
Finance,  Inc.  (the  "Company")  dated  March  21,  1997,  into the Company's
Registration  Statement  on Form S-3 (File No. 33-97976) and on Form S-8 (File
NO.  33-68530),  and  to  all  references  to  our  firm  in such Registration
Statements.


                                     /s/ Ehrhardt Keefe Steiner & Hottman PC
                                           Ehrhardt Keefe Steiner & Hottman PC


March  31,  1997
Denver,  Colorado


                                      62
                                    <PAGE>


                                  EXHIBIT 99
                       CAUTIONARY STATEMENT REGARDING
                         FORWARD LOOKING STATEMENTS

     The  Company wishes to take advantage of the new "safe harbor" provisions
of  the  Private  Securities  Litigation Reform Act of 1995 and is filing this
cautionary  statement  in  connection  with  such safe harbor legislation. The
Company's  Form 10-KSB, any Form 10-QSB, any Form 8-K, or any other written or
oral  statements  made  by  or  on  behalf  of the Company may include forward
looking  statements  which reflect the Company's current views with respect to
future  events  and  financial  performance.  The  words  "believe," "expect,"
"anticipate,"  "intends,"  "forecast,"  "project,"  and  similar  expressions
identify  forward  looking  statements.

     The  Company  wishes  to  caution  investors  that  any  forward  looking
statements  made  by  or on behalf of the Company are subject to uncertainties
and  other  factors  that could cause actual results to differ materially from
such  statements.  These  uncertainties and other factors include, but are not
limited  to,  the Risk Factors listed below (many of which have been discussed
in prior SEC filings by the Company). Though the Company has attempted to list
comprehensively  these  important  factors,  the  Company  wishes  to  caution
investors  that  other  factors  may  in  the  future prove to be important in
affecting the Company's results of operations. New factors emerge from time to
time and it is not possible for management to predict all of such factors, nor
can  it assess the impact of each such factor on the business or the extent to
which  any  factor,  or  combination  of  factors, may cause actual results to
differ  materially  from  forward  looking  statements.

     Investors  are  further  cautioned  not  to  place undue reliance on such
forward looking statements as they speak only of the Company's views as of the
date the statement was made. The Company  undertakes no obligation to publicly
update  or  revise  any forward looking statements, whether as a result of new
information,  future  events,  or  otherwise.

                                RISK FACTORS

     DEPENDENCE  UPON  ADDITIONAL  CAPITAL TO EXPAND OPERATIONS. The Company's
business  has been and will continue to be cash intensive. Capital is required
primarily  to purchase Contracts from the Dealer Network. Further expansion of
the  Company's  business  and the Company's longer-term liquidity requirements
may  require additional borrowings or other funding. There can be no assurance
that  such  additional  financing  will  be  available  to  the Company, or if
available,  on  terms  satisfactory  to the Company. The net proceeds from any
borrowings  or  other  funding  may  be  used  for working capital and general
corporate  purposes,  including repayment of debt, origination and purchase of
additional  Contracts  and, if required, the hiring of additional personnel to
support  expanded  operations.

     RELIANCE ON DEBT FINANCING. Since inception, in addition to shareholders'
equity,  the  Company  has financed its capital requirements using debt from a
variety  of  sources  including  commercial  banks  and  other  institutional
investors.  One  of  the  Company's  principal  sources  of such capital as of
December  31, 1996, consists of a warehouse line of credit, allowing issuance,
under  certain  circumstances,  of automobile receivable-backed notes of up to
$150  million,  of  which  approximately  $35.6  million  has  been drawn. The
warehouse  line  of  credit  is  secured  by Contracts in face amount equal to
approximately  80%  of the amount drawn. Other than the pledged Contracts, the
line  is  non-recourse  to  the Company. Senior subordinated debt, convertible

                                      63
                                    <PAGE>


subordinated  debt, convertible senior subordinated debt, a line of credit and
cash  flow from operations also provide capital. The ability of the Company to
receive additional advances on the warehouse credit facility and to secure new
financing  sources  is dependent upon compliance with loan covenants and other
factors.  Based  on  current operations, management believes the Company is in
full compliance with its existing loan covenant requirements. However, failure
to  meet  any loan covenant requirements may have a material adverse effect on
the  ability  of the Company to obtain new sources of financing and expand its
operations.

     SUBSTANTIAL  LOSSES  AND EFFECT OF DISCONTINUANCE OF CAR MART OPERATIONS.
During  the  fiscal  years  ended  December  31,  1995  and  1996, the Company
sustained  losses  of $1,341,095 and $7,685,665, respectively. Of this amount,
approximately  $1,878,498  and  $301,451, respectively, was in connection with
discontinued operations relating to the Car Mart retail used car lots. For the
same  periods,  income  (loss)  from  continuing  operations  was $537,403 and
$(2,471,424),  respectively.  The Car Mart retail used vehicle operations were
closed  effective  May  31,  1996.  In 1995, the Car Mart operations generated
approximately  23%  of  the  Contracts  financed  by  the  Company.  However,
competition in the retail used car market resulted in reduced sale prices and,
accordingly,  lower  margins  on used car sales. In addition, the default rate
with  respect  to  certain Car Mart Contracts was higher than the default rate
with  respect  to  Contracts  purchased  from  the  Dealer Network. Management
determined  that the Company's best interests would be served by concentrating
on  its core business of acquiring and servicing sub-prime Contracts purchased
from  its Dealer Network. Operating expenses were approximately 12% of average
gross  receivables  for  fiscal  1995  and  increased  to approximately 17% of
average  gross  receivables for fiscal 1996. During 1995, the Company expanded
its  staff  and  other services so as to be able to support increased Contract
acquisitions  and to service its growing Contract portfolio. However, factors,
including,  but  not  limited  to, termination of the Car Mart operations have
reduced  the  volume  of  Contracts  acquired  by  the  Company.  Even  though
management  anticipates that the volume of Contracts purchased from the Dealer
Network  will  increase,  the  Company  has undertaken efforts to decrease its
operating  costs. If the number of Contracts purchased by the Company does not
increase  significantly,  the Company may reduce  its operating costs further.

     COST  OF  CAPITAL  AND  INTEREST  RATE  RISKS.  A substantial part of the
Company's  operating revenues are derived from the spread between the interest
income  it  collects  on  its  contracts  and  the interest expense it pays on
borrowings  incurred to purchase and retain such contracts. As of December 31,
1995  and 1996, the Company's interest expense as a percentage of revenues was
29.2%  and  35.1%,  respectively. Net interest margin percentage, representing
the difference between interest income and interest expense divided by average
finance  receivables,  decreased  from  16.2%  in  1995  to 12.3% in 1996. The
Company's  capacity  to  generate  earnings  on  its portfolio of contracts is
dependent  upon  its ability to maintain a sufficient margin between its fixed
portfolio  yield  and its floating or fixed cost of funds. In addition, losses
from  Contract defaults reduce the Company's margins and profits. In the event
interest rates increase due to economic conditions or other reasons, resulting
in  an  increase  in  the  cost  of  borrowed  capital,  it is likely that the
Company's  spread  will  be reduced since the rates charged on the majority of
its  Contracts  are  already  at  the legal limits. If defaults on outstanding
Contracts  increase  resulting  in  larger  credit losses, the availability of
outside  financing  (i)  may  diminish  and (ii) may become more costly due to
higher  interest  rates  or fees. Either of these events could have an adverse
effect  on  the  Company.

                                      64
                                    <PAGE>



     RISK  OF  LENDING  TO  HIGHER-RISK  BORROWERS. The market targeted by the
Company for financing of the purchase of vehicles consists of individuals with
low  income  levels  and/or  adverse  credit  histories but who fit within the
underwriting  parameters  established  by the Company indicating a probability
that  the  borrower is a reasonable credit risk. The benefit to the Company is
that  higher-risk  borrowers  are  not  able to obtain credit from traditional
financing  sources  and  hence  are  willing  to  pay a relatively high annual
percentage  rate of interest. The risk to the Company is that the default rate
for  such  borrowers  is  relatively  high.  Contracts which, according to the
Company's  model,  pose a higher risk of default will be acquired only if they
have  a  relatively high contract rate of interest and/or purchase prices at a
relatively  high  discount  from  face  value  in  order to compensate for the
increased  risk.

     ADVERSE  ECONOMIC CHANGES MAY INCREASE DELINQUENCIES. The majority of the
individuals  who  purchase  automobiles  financed  by  the  Company  and other
sub-prime  finance  companies  are  hourly wage earners with little or no cash
reserves.  In  most  cases,  the  ability  of  such  individuals to meet their
required  semi-weekly  or  monthly  payment  on  their installment contract is
completely  dependent  upon  continued  employment.  Job losses generally will
result  in defaults on their consumer debt, including their contracts with the
Company.  An  economic  downturn  or prolonged economic recession resulting in
local,  regional  or  national  unemployment  could  cause a large increase in
delinquencies,  defaults  and  charge-offs. If this would occur, the Company's
cash  reserves  and  allowance  for  losses  may  not be sufficient to support
current levels of operations if the downturn or recession were for a sustained
period  of  time.

     RISK  OF  DELAYED  REPOSSESSIONS.  The  relatively  high  default rate on
Contracts  requires that the Company repossess and resell a substantial number
of vehicles. After a default occurs, the condition of the vehicle securing the
Contract  in  default  generally  deteriorates  due  to lack of maintenance or
otherwise.  The  Company carefully monitors delinquencies and moves quickly to
repossess,  recondition and resell vehicles secured by Contracts in default so
as  to  minimize  its  losses. Any delays in repossessions could decrease loan
loss  recoveries.

     POTENTIAL  INADEQUACY  OF  LOAN  LOSS  RESERVES. The Company maintains an
allowance  for  credit  losses  to  absorb  anticipated  losses  from Contract
defaults  net  of  repossession  recoveries.  The allowance for credit losses,
which  anticipates  losses  based on the Company's risk analysis of historical
trends  and  expected  future results, is continually reviewed and adjusted to
maintain  the allowance at a level which, in the opinion of management and the
Board  of  Directors,  provides adequately for existing and future losses that
may  develop in the present portfolio. However, since the risk model uses past
history  to  predict  the  future,  changes  in national and regional economic
conditions,  borrower  mix, competition for higher quality Contracts and other
factors  could  result  in  actual  losses  exceeding  predicted  losses.

     CHANGE  IN  ACCOUNTING  PRINCIPLE. Effective October 1, 1996, the Company
adopted  a  new  methodology  for reserving for and analyzing its loan losses.
This  accounting  method is commonly referred to as static pooling. The static
pooling  reserve  methodology  allows  the  Company to stratify its Automobile
Receivables  portfolio, and the related components of its Allowance for Credit
Losses  (i.e.  discounts,  excess  interest,  charge offs and recoveries) into
separate  and  identifiable quarterly pools. These quarterly pools, along with
the Company's estimate of future principal losses and recoveries, are analyzed
quarterly  to  determine  the adequacy of the Allowance for Credit Losses. The

                                      65
                                    <PAGE>


method  previously  used  by  the  Company to analyze the Allowance for Credit
Losses  was  based  on  the  total  Automobile  Receivables  portfolio.  In
management's  opinion,  the  static  pool  reserve  method  provides  a  more
sophisticated  and comprehensive analysis of the adequacy of the Allowance for
Credit  Losses  and  is  preferable  to  the  method previously used. With the
adoption  of  the  static  pooling  reserve  method, the Company increased its
Allowance  for Credit Losses by $4,912,790 in the fourth quarter of 1996. This
amount  was  included  in  the Consolidated Statements of Operations under the
caption  "Cumulative  effect  of  a  change  in  accounting  principle".

     EFFECT  OF  SUPERVISION  AND  REGULATION  UPON  COMPANY  OPERATIONS.  The
Company's present and proposed operations are subject to extensive regulation,
supervision  and  licensing  under  various federal, state and local statutes,
ordinances  and  regulations  and,  in most of the states in which the Company
conducts  business, limit the interest rates the Company is allowed to charge.
While management believes that it maintains all requisite licenses and permits
and  is in substantial compliance with all applicable federal, state and local
regulations,  there  can  be  no  assurance  that  the Company will be able to
maintain  all requisite licenses and permits, and the failure to satisfy those
and  other regulatory requirements could have a material adverse effect on the
operations  of  the  Company,  including  severe monetary and other penalties.
Further,  the  adoption of additional laws, rules and regulations could have a
material  adverse  effect  on  the  Company's  business.

     POSSIBILITY  OF  UNINSURED LOSSES. The Company requires that all vehicles
financed by it be covered by collision insurance. To reduce the risk that such
collision  insurance will lapse because of nonpayment of premiums, the Company
monitors  premium  payments.  When  notification is received that a policy has
lapsed, the Company immediately contacts the borrower by telephone and sends a
letter indicating that failure to maintain insurance constitutes default under
the  borrower's  Contract.  If  the  borrower  fails  to secure insurance, the
Company may repossess the vehicle. In addition, the Company has the ability to
force  place  collision  insurance  should  the  debtor  fail to pay insurance
premiums  resulting  in  cancellation  of  the  debtor's  insurance  coverage.
Collision  insurance,  in  the  event  of a total vehicle loss, generally will
cover  only for the fair value of the vehicle which often can be substantially
less  than  the  outstanding contract receivable. In addition, the Company may
incur  losses  in situations where the borrower fails to make payments and the
Company  is  unable to locate the car for repossession. Although the Company's
losses to date in such cases have been minimal, there can be no assurance that
this  will  continue  to  be  the  case.

     SUBSTANTIAL  COMPETITION.  In  connection  with its business of financing
vehicle  purchases,  the Company competes with many well-established financial
institutions,  including banks, thrifts, independent finance companies, credit
unions, captive finance companies owned by automobile manufacturers and others
who  finance  used  vehicle  purchases  (some  of  which  are  larger,  have
significantly  greater  financial  resources  and  have  relationships  with
established  captive  dealer networks). Any increased competition could have a
material adverse effect on the Company, including its ability to acquire loans
meeting  its  underwriting  requirements.

     DEPENDENCE ON KEY PERSONNEL. The Company's success depends largely on the
efforts and abilities of senior management. The loss of the services of any of
these  individuals  could  have  a  material  adverse  effect on the Company's
business. The Company maintains insurance policies in the amount of $2,000,000
each  on  the lives of Messrs. Ginsburg and Sandler for the purpose of funding
the  Company's  obligation to purchase shares of its common stock beneficially


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owned  by either of them upon death. The purchase obligation is limited to the
insurance  proceeds. The purchase price is the greater of book value or 80% of
the  average  closing price of the Class A Common Stock for the 30 consecutive
trading  days  commencing  45 trading days before the death of the insured. At
December  31,  1996,  the  book value of the stock was approximately $2.15 per
share,  while  the  closing price of the stock on December 31, 1996, was $2.50
per  share. As of that date, the Company's purchase obligation would have been
less than $2,000,000 with respect to each of Messrs. Ginsburg and Sandler. Any
excess  insurance  proceeds  will  be  used  for  general  corporate purposes,
including replacement of the decedent. The Company also maintains a traveler's
accidental  death  policy  on  the lives of Messrs. Ginsburg and Caukin in the
amount  of  $1,000,000  each.  The Company otherwise does not maintain key-man
insurance  upon  the  lives  of  its  executive  officers.

     INSURANCE  RISKS.  The  Company  maintains comprehensive insurance of the
type  and  in  the  amounts  management  believes are customarily obtained for
businesses  similarly  situated,  including  liability  insurance  for  used
vehicles,  sold, repaired or maintained by the Company. However, certain types
of  losses  generally  of  a catastrophic nature are either uninsurable or not
economically  insurable. Any uninsured or partially insured loss could have an
adverse  economic  effect  upon  the  Company.

     VOTING  POWER OF CLASS B COMMON STOCK. As of December 31, 1996, 1,323,715
shares  of  Class B Common Stock were issued and outstanding. These shares are
held  by  Messrs.  Ginsburg  and  Sandler  and by another individual. They are
identical  in all respects to the Class A Common Stock except that the Class B
Common  Stock has three votes per share while the Class A Common Stock has one
vote  per  share. The Class B Common Stock automatically converts into Class A
Common  Stock  on  a  share-for-share  basis  upon transfer (excluding certain
transfers  for  estate  planning  purposes) or upon death of the holder. As of
December 31, 1996, holders of the Class A Common Stock owned approximately 81%
of  the  aggregate issued and outstanding shares of Class A and Class B Common
Stock,  but had the power to cast approximately 58.7% of the combined votes of
both  classes. As of the same date, Messrs. Ginsburg and Sandler had the power
to  vote  an  aggregate of 826,858 shares and 496,857 shares of Class B Common
Stock,  respectively,  and  collectively  had  the power to cast approximately
41.3%  of  the combined votes of both classes. This effectively may constitute
voting  control  of  the  Company.

     EFFECT OF ISSUANCE OF PREFERRED STOCK. The Company is authorized to issue
up  to  5,000,000 shares of preferred stock, no par value. The preferred stock
may  be issued in one or more series, the terms of which will be determined at
the  time  of  issuance  by the Board of Directors without any requirement for
shareholder approval. Such rights may include voting rights, preferences as to
dividends and upon liquidation, conversion and redemption rights and mandatory
redemption  provisions  pursuant  to  sinking funds or otherwise. No preferred
stock  is  currently  outstanding  and  the  Company  has no present plans for
issuance  thereof.  However,  any issuance of preferred stock could affect the
rights  of the holders of Class A Common Stock and therefore reduce its value.
Rights  could  be granted to holders of preferred stock hereafter issued which
could  reduce the attractiveness of the Company as a potential takeover target
or  make  the removal of management of the Company more difficult or adversely
impact  the  rights  of  holders  of  Class  A  Common  Stock.

     SHARES ELIGIBLE FOR FUTURE SALE. As of December 31, 1996, the Company had
1,323,715    shares of Class B Common Stock outstanding which are convertible,
on a share-for-share basis, into shares of Class A Common Stock. The shares of

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Class  A  Common  Stock underlying the shares of Class B Common Stock will be,
when  issued,  "restricted securities," as that term is defined under Rule 144
promulgated  under  the  Securities  Act  of 1933, as amended (the "Securities
Act").  In  general,  under  Rule  144,  a person who has satisfied a two-year
holding  period  may, under certain circumstances, sell within any three-month
period a number of shares of Common Stock which does not exceed the greater of
1%  of  the  then  outstanding  shares  of  Common Stock or the average weekly
trading  volume  in  such  shares during the four calendar weeks prior to such
sale.  Rule  144 also permits, under certain circumstances, the sale of shares
without  any  quantity or other limitation by a person who is not an affiliate
of  the  Company and who has satisfied a three-year holding period. The shares
of  Class  A  Common  Stock issued upon conversion of the Class B Common Stock
will be eligible for immediate sale under Rule 144. Sales of such stock in the
public  market  could  adversely affect the market price of the Class A Common
Stock.

     EFFECT  OF CONVERSION OF NOTES. As of December 31, 1996, 5,648,379 shares
of  Class  A  Common Stock, 1,323,715 shares of Class B Common Stock, 7% Notes
convertible  into  an aggregate of 404,971 shares of Class A Common Stock, and
12%  Notes  convertible  into  aggregate of 1,250,000 shares of Class A Common
Stock  were  issued  and outstanding. If the option to purchase the Additional
12%  Notes  is  exercised  in  full and if the entire $11,385,000 in principal
amount  of convertible notes which would then be outstanding is converted into
Class  A  Common  Stock, then the Company will be obligated to issue 3,321,637
shares  of  Class  A  Common Stock at an average exercise price of $3.43. Such
shares,  if  they  had  been  issued  as  of  December  31,  1996,  would have
represented  approximately 32.3% of the total number of shares of common stock
outstanding  and  approximately 25.7% of the voting power of the common stock.
Issuance  of  the shares upon conversion of the notes could result in dilution
to  earnings  and  book value per share of common stock and will substantially
reduce  the  voting  power  of  the common stock beneficially owned by Messrs.
Ginsburg  and  Sandler.

     EFFECT  OF  OUTSTANDING OPTIONS AND WARRANTS. For the respective terms of
the  Placement Warrants and the options granted by the Company pursuant to the
Company's  stock option plans, the holders thereof are given an opportunity to
profit  from a rise in the market price of the Company's Class A Common Stock,
with a resulting dilution in the interests of the other shareholders. Further,
the  terms  on  which the Company may obtain additional financing during those
periods  may  be  adversely  affected by the existence of such securities. The
holders of such securities may be expected to exercise them at a time when the
Company  might  be able to obtain additional capital through a new offering of
securities  on  more  favorable  terms.

     NO  CASH  DIVIDENDS.  The holders of Class A and Class B Common Stock are
entitled  to  receive  dividends  when,  as  and  if  declared by the Board of
Directors of the Company out of funds legally available therefor. To date, the
Company has not paid any cash dividends. The Board of Directors of the Company
does  not  intend to declare any cash dividends in the foreseeable future, but
instead  intends  to  retain  all  earnings,  if any, for use in the Company's
business  operations. The Company's credit facilities restrict or prohibit the
Company  from  paying dividends. Accordingly, it is unlikely any dividend will
be  paid  on  the  Class  A  Common  Stock  in  the  foreseeable  future.

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                                    <PAGE>



                                  SIGNATURES

     Pursuant  to  the  requirements  of Section 13 or 15(d) of the Securities
Exchange  Act of 1934, the Registrant has duly caused this report to be signed
on  its  behalf  by  the  undersigned,  thereunto  duly  authorized.
          MONACO  FINANCE,  INC.
          (Registrant)

March  31,  1997          By          /s/  Morris  Ginsburg
                                      ----------------------------
                                      Morris  Ginsburg,  President

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report  has  been  signed  below  by  the  following  persons on behalf of the
Registrant  and  in  the  capacities  and  on  the  dates  indicated.

March  31,  1997          /s/  Morris  Ginsburg
                          ------------------------------
                          Morris  Ginsburg,  President,
                          Chief  Executive  Officer  and
                          Director

March  31,  1997          /s/  Irwin  L.  Sandler
                          ------------------------------
                          Irwin  L.  Sandler
                          Executive  Vice  President,
                          Secretary/Treasurer  and
                          Director

March  31,  1997          /s/  Brian  M.  O'Meara
                          ------------------------------
                          Brian  M.  O'Meara,
                          Director

March  31,  1997          /s/  David  M.  Ickovic
                          ------------------------------
                          David  M.  Ickovic,
                          Director

March  31,  1997          /s/  Craig  L.  Caukin
                          ------------------------------
                          Craig  L.  Caukin,
                          Executive  Vice  President,
                          Director

March  31,  1997          /s/  Michael  Feinstein
                          ------------------------------
                          Michael  Feinstein,
                          Senior  Vice  President,
                          Chief  Financial  Officer



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