1

                                  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, 1997

     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.   $12,638,907.

     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  27,  1998:    Approximately  $4,716,540.

     As  of  March  30,  1998,  there  were 8,014,631 shares of Class A Common
Stock,  $.01 par  value and 1,273,715 shares of Class B Common Stock, $.01 par
value,  outstanding.

     DOCUMENTS  INCORPORATED  BY  REFERENCE
     Proxy  Statement  for the 1998 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:  76


<PAGE>
                             MONACO FINANCE, INC.
                        1997 FORM 10-KSB ANNUAL REPORT
                               TABLE OF CONTENTS

                                                       PAGE NUMBER
                                                       -----------

     PART  I
     -------
Item 1.     Description of Business                           3-12
Item 2.     Description of Property                             12
Item 3.     Legal Proceedings                                   12
Item  4.    Submission  of  Matters  to
            a Vote of Security Holders                          12
     PART  II
     --------
Item  5.    Market  for  Common  Equity  and  Related
            Stockholder Matters                              13-14
Item  6.    Management's  Discussion  and  Analysis  of
            Financial Condition and Results of Operation     15-28
Item  7.    Financial Statements                             29-57
Item  8.    Changes In and Disagreements With Accountants
            on Accounting and Financial Disclosure              58
     PART  III
     ---------
Item  9.    Directors and Executive Officers, Promoters and
            Control  Persons,  Compliance  With  Section  16(a)
            of the Exchange Act                                 58
Item 10.    Executive Compensation                              58
Item 11.    Security  Ownership  of  Certain  Beneficial  Owners
            and Management                                      58
Item 12.    Certain Relationships and Related Transactions      58
     PART  IV
     --------
Item 13.    Exhibits and Reports on Form 8-K               58-75
            Signatures                                        76


  2
<PAGE>
PART  I
-------

ITEM  1.  DESCRIPTION  OF  BUSINESS.
------------------------------------
     Monaco  Finance,  Inc.  (the  "Company")  is a specialty consumer finance
company  engaged  in  the  business  of underwriting, acquiring, servicing and
securitizing  automobile  retail  installment  contracts  ("Contract(s)"). The
Company  provides special finance programs (the "Program(s)") to purchasers of
vehicles  who  do not qualify for traditional sources of bank financing due to
their  adverse  credit history, or for other reasons which may indicate credit
or  economic  risk  ("Sub-prime  Customers").  The  Company  also  purchases
portfolios  of sub-prime loans from third parties other than dealers. In 1997,
the  Company  acquired Contracts in connection with the sale of used and, to a
limited  extent,  new  vehicles,  to  customers,  from automobile dealers (the
"Dealer(s)"  or  the  "Dealer  Network")  located  in twenty-eight states, the
majority  of  which  were  acquired from five states. At December 31, 1997 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, 1997, the Company's loan portfolio had an outstanding balance of
approximately  $74  million.

     In  February  1996, the Company announced that it intended to discontinue
its  Company owned retail used car dealerships, which conducted business under
the  name  "CarMart" (the "Company Dealerships" or "CarMart Dealerships"), and
the associated financing operations. 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, 1997, the
Company  had  agreements  with  Dealers located in twenty-eight 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
generally  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, 1997 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  52  months. From inception through December 31,
1997,  the  Company originated and acquired 25,130 Contracts with an aggregate
principal  balance  of  approximately  $223  million.  During this period, the
Company  completed  four  securitizations  though  which  it  privately placed
approximately  $133  million  in  Contracts.

PURCHASE  AGREEMENTS  (DEALERS)
-------------------------------
     The  Company  acquires  Contracts from franchised and independent 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.

     The  Company  markets  its  MFAP  through  Dealer representatives who are
either  full  time  employees  of  the Company or 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.

LOAN  PORTFOLIO  ACQUISITIONS
-----------------------------
     In  order  to  more  efficiently utilize its existing cost structure, the
Company  has  decided  to grow its portfolio, in part, through acquisitions of
existing  Contract  portfolios.

     In  1997,  the  Company  acquired,  at a discount, two portfolios of auto
loans  with  a  face  value  of approximately $12 million from unrelated third
parties.  Also,  in  January  1998,  the  Company completed the acquisition of
approximately $81 million in auto loans from certain affiliates of Pacific USA
Holdings  Corp.  and  in February 1998, the Company acquired approximately $14
million  of  auto  loans,  at  a  discount, from an unrelated third party. The
Company  is  actively  seeking  to  acquire  other  portfolios  of  auto loans
previously  originated  by  third  parties.


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 completing its first
asset-backed  automobile  receivables  securitization.    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 $34.1
million  of  its  Contracts  and  in 1995 it obtained a $150 million revolving
secured  warehouse  line  and securitized $43.1 million in Contracts. In 1997,
the  Company securitized $51.4 million of its Contracts and entered into a $75
million  warehouse line of credit.  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.

     Reference  is  made  to Management's Discussion and Analysis of Financial
Condition and Results of Operation and the Notes to the Consolidated Financial
Statements  for  details  regarding  the  Company's  financing  sources.

OPERATIONS,  COMPETITION  AND  REGULATION
-----------------------------------------

UNDERWRITING  GUIDELINES
------------------------
     The  Company    targets customers who do not qualify for traditional bank
financing  primarily  due to their adverse credit history or for other reasons
which  may  indicate  credit  or  economic  risk.

     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 residence and employement stability, credit history,
ability  to pay, discretionary income and debt ratio. In addition, the Company
uses a proprietary credit scoring system to evaluate the likeliness of default
and,  in  conjunction with the company's risk models, calculates the predicted
loss,  if  any, in the event of default. 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.

RISK  ADJUSTED  YIELDS
----------------------
     The  Company  reports interest income earned on its loan portfolio on the
accrual  basis.    Under this method, interest income represents the estimated
risk  adjusted  yield on the Company's Contracts.  The estimated risk adjusted
yield  for the Company's loan portfolio takes into account: (1) the face value
of  the contracts in the portfolio; (2) the annual percentage rate of interest
on  the  Contracts;  (3) the purchase discounts; (4) the estimated pre-payment
amount  and timing; (5) the estimated frequency or occurrence of defaults; and
(6)  the  estimated  severity  of  losses  resulting from defaults.  Since the
computation of risk adjusted yields uses estimates as well as actual data, the
risk adjusted yields as originally estimated may not equal the actual yield on
the  monthly  pools.  Actual yield on the monthly pools can only be determined
when  the Contract is repaid or defaulted. In the event the Company's estimate
of  risk  adjusted  yield  is  less than actual, the difference is accreted to
income.  Likewise,  in the event the Company's estimate of risk adjusted yield
is  greater  than  actual,  the  difference  is  charged  to  expense.

ANALYSIS  OF  CREDIT  LOSSES
----------------------------
     At  the time Contracts are purchased or originated, 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  predicted  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  which, in the opinion
of  management,  provides  adequately  for  current and future losses that may
develop  in  the  present  portfolio.

     The provision for credit losses represents estimated current losses based
on  the  Company's  risk  analysis  and  static  pooling  reserve  analysis of
historical trends and expected future results. The provision for credit losses
also  represents  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, and will continue to be, 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).    Subsequent receipts of excess
interest  are  applied  to  reduce  excess  interest  receivable.

     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  1996  in  Accounting  Principles  for  Credit  Losses.

SERVICING  AND  MONITORING  OF  CONTRACTS
-----------------------------------------
     The  Company  services  all  of the Contracts it purchases or originates.
However,  from  time  to  time,  the Company may acquire loan portfolios under
short-term,  third  party  interim servicing agreements. At December 31, 1997,
the  Company's  collections  and  asset  recovery  and  remarketing department
employed 44 individuals to perform these functions. The collections department
uses  internally  developed software augmented by vendor provided systems.  In
1996,  the  Company  completed  the  installation  of  a predictive dialer.  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 accounting 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
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 90 days delinquent. All Contracts 100 days past due must
be  must  be  charged  off  under  Company  policy  as  of  December 31, 1997.
Generally,  repossession action takes place as a last resort and when no other
arrangement  can  be  made.

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 and steady market.  Industry estimates place the used-vehicle market in
1996  at  approximately  40  million  units  sold  annually.  Since  1994, the
compounded annual growth rate of total used car sales was approximately 9% and
Management expects that growth to continue, although no such assurances can be
given  for  reasons  including  national and regional economic conditions. The
increase  in  new  car leasing in recent years has flooded the used car market
with  late-model, low-mileage used cars: According to Andersen Consulting, 3.1
million  cars  came  to the used car market in 1997 when their leases expired.
That  trend, coupled with the rising price tags for new cars - typically twice
that of a used car - has made purchasing a quality used car more attractive to
customers.

     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  $416  billion in 1997.  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  in  1996.    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.

     The  "Year  2000" issue affects the Company's installed computer systems,
network  elements,  software applications and other business systems that have
time-sensitive  programs  that  may not properly reflect or recognize the Year
2000.    Because  many computers and computer applications define dates by the
last  two  digits of the year, "00" may not be properly identified as the Year
2000.    This  error  could  result  in  miscalculations  or  system failures.

     The  Company  is  conducting a review of its computer systems to identify
those  areas that could be affected by the "Year 2000" issue and is developing
an  implementation  plan  to  ensure  compliance.    The Company is using both
internal and external sources to identify, correct and reprogram, and test its
systems  for  Year  2000 compliance. Because third party failures could have a
material  impact  on  the Company's ability to conduct business, confirmations
are  being requested from our processing vendors and suppliers to certify that
plans  are  being  developed  to  address  the  Year  2000  issue. The Company
presently believes that, with modification to existing software and investment
in  new  software, the Year 2000 problem will not pose significant operational
concerns  nor  have  a material impact on the financial position or results of
operation  in any given year.  The total cost of modifications and conversions
is  not  expected  to  be  material  and  will  be  expensed  as  incurred.

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) increasing the
number of loans acquired from the Dealer Network; (2) purchasing portfolios of
loans  originated by third parties; (3) continuing its efforts to increase the
credit  quality of its portfolio and reduce credit losses and charge-offs; (4)
decreasing  the  percentage of operating expenses to average gross receivables
by  increasing  the  portfolio  while  decreasing  operating expenses; and (5)
securitizing  portfolios  of  auto  loans.

     To  further  promote  its  growth  and  profitability,  the  Company will
continue  to  pursue  its  growth  strategy  based  on  the  following:
     MARKET  FOCUS: The Company targets the middle range of the Sub-prime auto
finance  market.  Auto loans can be classified as follows:  (A) Prime loans to
borrowers  with  no credit blemishes; (B) Almost prime loans to borrowers with
generally  good credit and a few minor blemishes; (C+) The highest category of
sub-prime borrowers who have suffered reversals in the past but are current on
all  obligations  and  have  demonstrated  the  ability  and  willingness  to
reestablish  their  credit  in  the higher categories; (C) Similar to (C+) but
present  a  slightly  greater  risk due to higher debt-to-income ratios, lower
salaries,  prior  bankruptcy  etc.;  (C-)  Borrowers  with  substantially more
adverse  credit  history,  but  appear  to  have the wherewithal to meet their
credit  obligations;  (D)  First time borrowers or borrowers with little or no
past  credit  history,  borrowers  with  recent  bankruptcies or those lacking
stability  in  employment  etc.,  Monaco  Finance  Inc.,  is  focusing  on all
categories  of (C) credit with  the emphasis on obtaining more (C+) borrowers.
The  Company  will  purchase  few,  if  any,  (D)  loans.

     The  Company  also  targets  late  model  used vehicles, which have lower
depreciation  rates  than  either  new vehicles or used vehicles that are over
three  years old and have high mileage.  In addition, the Company concentrates
on  acquiring  loans  from new car franchised dealers because, generally, such
dealers  are  stronger  financially  and  can  better  perform  on  their
representations  and  warranties,  offer  higher  quality  vehicles, and often
provide  better  repair  service  than  independent  used  car  dealers.

     During  1997,  the  Company  acquired  contracts  from  approximately 375
dealers in 28 states, the majority of which were purchased in five states.  In
order  to increase efficiency and reduce operating expenses, in the first half
of 1997, the Company temporarily reduced its marketing representatives from 16
to  6.  In  August  1997,  the  Company initiated its strategy to increase its
Dealer Network by hiring two regional marketing managers. At December 31, 1997
the  Company  had  increased  its  marketing  representatives  to  16.

     PORTFOLIO  ACQUISITIONS:  The  Company  plans to continue the purchase of
loan  portfolios previously originated by third parties.  In 1997, the Company
acquired, at a discount, two such portfolios with a face value of $12 million.
In  January  1998, the Company announced that it had completed the acquisition
of  $81  million  in auto loans from affiliates of Pacific USA and in February
1998 the Company acquired approximately $14 million of auto loans from another
third  party.   The Company actively is seeking to acquire other portfolios of
auto  loans.

     FUNDING  AND  FINANCING STRATEGIES: In December 1997, the Company entered
into  a  warehouse  line  with   Daiwa Finance Corporation, under the terms of
which,  up  to 90% of the face amount of loans can be financed.  This facility
allows the Company to acquire loans on a leveraged basis and increase the size
of its portfolio with its current capital.  Periodic rated securitizations are
also  part  of the Company's financing strategies. Securitizations lock in low
interest  rates  and  free up the Company's warehouse line and capital for new
loan  acquisitions.    The Company makes all efforts to obtain sufficient cash
from a securitization to repay all warehouse debt collateralized by the loans.
In the event funds obtained from a securitization are not sufficient to retire
the  corresponding  debt,  the  securitization may adversely affect liquidity.

     RISK  EVALUATION  AND UNDERWRITING: As discussed in more detail elsewhere
herein,  the  Company  has  developed  proprietary  credit  scoring  and  risk
evaluation  systems  which predicts the frequency of default and the resultant
predicted  loss after repossession and sale of financed vehicles.  This system
assists  the  Company's  credit buyers and underwriters in pricing loans to be
acquired.    Credit  buyers  can negotiate interest rates, loan term, purchase
discount and fees and terms of the deal, including such items as down payment,
in  order to achieve a desired risk adjusted rate of return for each Contract.

     CENTRALIZED  OPERATING  STRUCTURE: Management believes the centralization
of  all  operations  in  one  location results in a consistent, cost effective
means  of  operating  a  sub-prime  automobile  loan  business.  Sales
representatives,  of  course,  are  disbursed  throughout  the country to deal
directly  with  dealers.

     COLLECTIONS MANAGEMENT: Management believes that collections and recovery
are vital to the successful operation of the Company. The Company has invested
substantial  amounts  of  time, money and resources in developing an efficient
collections  department. The results of the Company's efforts are evidenced by
its  percentage of delinquent contracts, which at February 28, 1998, was 6.95%
over  30  days past due. This percentage consisted of 5.84% 30 to 59 days past
due,  1.11%  60  to  89 days past due and 0.0% over 90 days past due.  Further
additions  and improvements to its collections department and systems, both in
personnel  and  automated  equipment,  would enable the Company, for the first
time, to seek out servicing and collections of sub-prime auto loans for others
in  similar businesses which could result in creating a new revenue source for
the  Company.

     CONTROLLING  INTEREST:  As a result of the Asset Purchase Agreement dated
January  8,  1998,  Pacific  USA  Holdings Corp. ("Pacific USA") increased its
voting  power in the Company to 51.8%.  Pacific USA is the beneficial owner of
38.6% of the Company's outstanding voting stock. Pacific USA is a diverse U.S.
holdings  company,  100%  owned by Pacific Electric Wire & Cable, Ltd. of Hong
Kong.    Pacific  USA  is  a  multi-billion  dollar company which owns various
business  including  but  not  limited  to home building, home equity lending,
sub-prime  auto  finance, loan servicing and also is the 100% owner of Pacific
Southwest  Bank.  The various companies involved in this transaction currently
are  reviewing  the  Company's business plan to determine whether the business
plan  could be modified for additional opportunities which may be available as
a  result  of  the  association  with  Pacific  USA.

     Implementation  of the foregoing strategy will be dependent upon a number
of  factors including but not limited to: (i) competition; (ii) the ability of
the  Company to acquire contracts at a price commensurate with estimated risk,
through  its  Dealer  Network  and  portfolio  purchases;  (iii)  maintain and
increase  its  capital  and  warehouse lines of credit; (iv) and, successfully
complete  securitizations  of  its  portfolio.

COMPETITION
-----------
     In  connection  with  its  business  of  financing vehicle purchases, the
Company  competes  with  entities, many of whom may 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,  Delaware,  Florida, Georgia, Illinois, Iowa, Maryland,
Michigan, Mississippi, Missouri, Nevada, New Mexico, North Carolina, Nebraska,
Oklahoma,  Oregon,  Pennsylvania,  South  Carolina,  South  Dakota, 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,  1997, the Company employed 137  persons on a full time
basis,  including 7 executive officers, 35  in credit, funding and compliance,
44  in  collections  and  asset recovery and remarketing, 12 in accounting and
human  resources, 15 in marketing, 8 in MIS-computer department, 4 in risk and
12  in  administrative  functions.

     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 $43,312 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, plus occupancy
costs,  under  a  sublease  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, certain 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
$15,238  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, 1998 with monthly rent of $1,800 on a triple net basis.
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.  In  January  1997,  the  Company  extended  the lease for an additional
three-year period through March 2000. The Company may, at its sole discretion,
extend  the  lease  for  an  additional  3-year period 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 closed Company Dealerships as described in Item 1.,
"Description  of  Business  -  Employees  and  Facilities,"  above.

ITEM  3.    LEGAL  PROCEEDINGS.
-------------------------------
     Although not subject to any material litigation at this time, the Company
and  its  Subsidiaries  at  times are subject to various legal proceedings and
claims  that  arise  in  the  ordinary  course  of business. In the opinion of
management  of the Company, based in part on the advice of counsel, the amount
of  any  ultimate  liability with respect to these actions will not materially
affect  the  results  of  operations,  cash flows or financial position of the
Company. It is the Company's and its Subsidiaries' policy to vigorously defend
litigation,  however,  the  Company  and its Subsidiaries have, and may in the
future,  enter  into settlements of claims where management deems appropriate.

ITEM  4.    SUBMISSION  OF  MATTERS  TO  A  VOTE  OF  SECURITY  HOLDERS.
------------------------------------------------------------------------
     On  March  4,  1998, a special meeting of shareholders of the Company was
held  for  the  following  purposes:

1.         To consider and approve the issuance of (i) 2,433,457 shares of the
Company's  8%  Cumulative  Convertible  Preferred  Stock,  Series 1998-1, (ii)
811,152  shares  of  the  Company's Class A Common Stock and (iii) a presently
unknown  number  of  shares  of Class A Common Stock, the issuance of which is
contingent  upon  future  operations,  to NAFCO Holding Company LLC, Advantage
Funding  Group,  Inc.,  and/or  Pacific  Southwest  Bank,  or their respective
designees,  all  of  which  are  subsidiaries  of  Pacific  USA Holdings Corp.
("Pacific  USA"),  as  partial  consideration  for certain of the transactions
under  the Amended and Restated Asset Purchase Agreement among the Company and
Pacific  USA  and  those  and  other  of its affiliates dated January 8, 1998.

2.          To  consider and approve an amendment to the Company's Articles of
Incorporation  to  (i)  increase  the  number  of authorized shares of Class A
Common  Stock to 30,000,000 shares, and (ii) increase the number of authorized
shares of Preferred Stock to 10,000,000 shares having preferences, limitations
and  relative rights as may be determined by the Company's board of directors.

     The  aforementioned  proposals  were  passed  with  the  following votes,
respectively:

1. 7,016,151 FOR; 3,392,279 WITHHELD; 521,029 AGAINST; and 95,165 ABSTAIN.

2. 9,853,312 FOR; 466,881 WITHHELD;   612,846 AGAINST; and 91,585 ABSTAIN.


  12
<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 the NASDAQ Stock Market 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 03/31/97  $  1.750  $   2.500
Quarter Ending 06/30/97  $  1.125  $   2.063
Quarter Ending 09/30/97  $  0.625  $   1.250
Quarter Ending 12/31/97  $  0.688  $   1.938
<FN>

</TABLE>



     As  of  February  3, 1998, there were approximately 295 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.

     Commencing  February  23, 1998, the requirements for continued trading of
securities  on  the  NASDAQ National Market and on the NASDAQ Small Cap Market
were changed to include requirements that (i) the minimum bid price for common
stock must be $1.00 or more per share, and (ii) the market value of the public
float must be $5 million or more for a National Market security and $1 million
or  more  for a Small Cap Market security. If a deficiency exists for a period
of  30  consecutive  business  days, NASDAQ is required to promptly notify the
issuer, which will have a period of 90 calendar days from such notification to
achieve  compliance.  Compliance  can  be  achieved  by meeting the applicable
standard  for  a  minimum  of  ten consecutive business days during the 90-day
compliance  period.

     The  Company's  Class  A  Common  Stock is presently traded on the NASDAQ
National  Market. The bid price of the Class A Common Stock has been less than
$1.00  per  share  since  mid-December 1997. By letter dated Februay 27, 1998,
NASDAQ  advised  the Company that it was not in compliance with the new market
value  of  public  float  and  bid price requirements and that the Company has
until  May  28,  1998, to meet these requirements. Should the bid price of the
Class A Common Stock fail to reach $1.00 per share for ten consecutive trading
days  by  that  date,  then  the  Company  will not meet the minimum bid price
requirements  for  either  the National Market or the Small Cap Market and its
Class A Common Stock could be delisted from NASDAQ. In that event, the Class A
Common  Stock  probably  would  trade  on the OTC Bulletin Board. Stocks which
trade  on  the  OTC  Bulletin  Board generally are much less liquid than those
traded  on  certain  other markets. In addition, stocks traded on the National
Market  enjoy  certain  other  benefits  described  below.

     "Public  float" is defined as outstanding shares other than those held by
officers,  directors  and  beneficial  owners  of more than ten percent of the
total shares outstanding. From  February 23, 1998 to March 30, 1998 the lowest
number  of  shares  comprising  the  Company's  public  float has consisted of
approximately  5,677,109  shares of Class A Common Stock. To meet the National
Market  requirement of $5 million in public float, the market price would have
to  be  approximately  $.88  per  share  and  to  meet  the  Small  Cap Market
requirement  of  $1 million in public float, the market price would have to be
approximately $.18 per share. Since February 22, 1998, the market value of the
public  float  has  been less than $5 million, but greater than $1 million. If
the  minimum  bid  price  requirement  is satisfied, the Company will meet the
public  float  requirement for the National Market. National Market securities
qualify  for  secondary  trading  exemptions  in  many  states  and states are
precluded  from  review  of offerings of National Market securities. Small Cap
Market  securities  do  not  have  these  benefits.

     Should the Company fail to timely meet NASDAQ's requirements, then NASDAQ
will  issue  a  delisting  letter,  which  will identify the review procedures
available  to  the Company. The Company may request review at that time, which
will  generally  stay  delisting.

     Management  is  considering  various solutions, including a reverse stock
split  and/or the sale of additional shares of Class A Common Stock to persons
other  than  officers,  directors or more than 10% stockholders, both of which
could  require  shareholder approval. No assurance can be given, however, that
the  Company  will be able to maintain the listing of the Class A Common Stock
on  either  the  NASDAQ  National  Market  or  the  NASDAQ  Small  Cap Market.

  13
<PAGE>
                                    ------
     ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
     -----------------------------------------------------------------------
                             RESULTS OF OPERATION
                             --------------------

FORWARD-LOOKING  STATEMENTS
---------------------------
     This  Annual  Report  on form 10-KSB contains forward-looking statements.
Statements  that  are  not  historical  facts,  including  statements  about
management's  expectations  for  fiscal  1998  and beyond, are forward-looking
statements.  Without  limiting  the  foregoing, the words "believe," "expect,"
"anticipate,"  "intends,"  "forecast,"  "project"  and  similar  expressions
generally  identify  forward-looking  statments.  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,  adequacy  of the
allowance  for  credit losses, availability of Contracts meeting the Company's
desired  risk  parameters,  capital expenditures, plans for future operations,
financing  needs, plans or availability, 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. Such factors
include,  but  are  not  limited  to, the Company's dependence upon additional
capital  to  expand  operations,  its  reliance  on debt financing, its recent
losses  and  the  effect  of the discontinuance of the CarMart operations, its
reliance  on securitizations, its cost of capital and associated interest rate
risks,  the  risks  of  lending  to higher-risk borrowers, the risk of adverse
economic  changes,  the  risk  associated  with  delayed  repossessions,  the
potential  inadequacy  of  its  loan  loss  reserves, the risk associated with
extensive  regulation, supervision and licensing, the possibility of uninsured
losses,  the  risk  associated with substantial competition, its dependence on
key  personnel,  insurance risks, "Year 2000" risks, the effect of outstanding
options  and  warrants,  the fact that the Company has, to date, not paid cash
dividends on its Common Stock, the risk associated with not meeting the NASDAQ
maintenance  requirements  and  the  risk  associated  with  one  controlling
shareholder.

SUMMARY
-------
     The  Company's  revenues  and (loss) from continuing operations primarily
are  derived  from  the  Company's  loan  portfolio  consisting  of  Contracts
purchased  from  the  Dealer  Network,  Contracts  purchased  from third-party
originators,  Contracts  financed  from  vehicle  sales  at  the  Company's
Dealerships  and  Contracts  purchased  through  portfolio  acquisitions.

     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 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  average  discount  on all Contracts purchased pursuant to discounted
Finance  Programs during the fiscal years ended December 31, 1997 and 1996 was
approximately  6.8%  and  6.6%,  respectively. The Company services all of the
loans  that  it owns. However, from time to time, the Company may acquire loan
portfolios  under  short-term,  third  party interim servicing agreements. The
loan  portfolio  at  December  31, 1997, carries a contract  annual percentage
rate of interest that averages approximately 23%, before discounts, and has an
original  weighted average term of approximately 52 months. The average amount
financed  per  Contract  for  the  years  ended December 31, 1997 and 1996 was
approximately  $10,432  and  $10,390,  respectively.

  15
<PAGE>

RESULTS  OF  OPERATION
----------------------
<TABLE>

<CAPTION>


OVERVIEW
--------
                                                                  INCOME  STATEMENT  DATA
                                                                Years  ended  December  31,
                                                                ---------------------------

<S>                                                                <C>          <C>
 (dollars in thousands, except share amounts) . . . . . . . . . .        1997         1996
                                                                   -----------  -----------
Total revenues. . . . . . . . . . . . . . . . . . . . . . . . . .  $   12,639   $   13,501
Total costs and expenses. . . . . . . . . . . . . . . . . . . . .  $   21,994   $   17,449
Income (loss) from continuing operations before income taxes
   and cumulative effect of a change in accounting principle. . .     ($9,355)     ($3,948)
Income tax expense (benefit). . . . . . . . . . . . . . . . . . .           -      ($1,477)
Income (loss) from continuing operations before cumulative
    effect of a change in accounting principle. . . . . . . . . .     ($9,355)     ($2,471)
(Loss) on disposal of discontinued business, net of income taxes.           -        ($302)
Cumulative effect of a change in accounting principle . . . . . .           -      ($4,913)
Net (loss). . . . . . . . . . . . . . . . . . . . . . . . . . . .     ($9,355)     ($7,686)
Net (loss) per common share - basic and assuming dilution . . . .      ($1.18)      ($1.10)
Weighted average number of common shares outstanding. . . . . . .   7,912,732    6,965,485
<FN>

</TABLE>


  16
<PAGE>



<TABLE>

<CAPTION>

                                                        INCOME  STATEMENT  DATA
                                               AS A % OF OUTSTANDING LOAN PORTFOLIO
                                                       YEARS  ENDED  DECEMBER  31,
                                                       ----------------------------

<S>                                                      <C>           <C>
                                                                1997          1996
                                                         ------------  ------------
Average Interest Bearing Loan Portfolio Balance . . . .  $76,924,302   $70,977,202
                                                         ============  ============
Interest Income . . . . . . . . . . . . . . . . . . . .         16.1%         19.0%
Interest Expense. . . . . . . . . . . . . . . . . . . .          7.4%          6.7%
                                                         ------------  ------------
                                                                 8.7%         12.3%
Operating Expenses. . . . . . . . . . . . . . . . . . .         16.2%         16.6%
Provision for Credit Losses . . . . . . . . . . . . . .          5.0%          1.3%
Other Income. . . . . . . . . . . . . . . . . . . . . .        (0.3%)            -
                                                         ------------  ------------
                                                                20.9%         17.9%
Loss from continuing operations before income taxes . .       (12.2%)        (5.6%)
Income Tax Benefit. . . . . . . . . . . . . . . . . . .            -         (2.1%)
                                                         ------------  ------------
Loss from continuing operations . . . . . . . . . . . .       (12.2%)        (3.5%)
Loss on disposal of discontinued business, net of taxes            -         (0.4%)
Cumulative effect of change in accounting principle . .            -         (6.9%)
                                                         ------------  ------------
Net Loss. . . . . . . . . . . . . . . . . . . . . . . .       (12.2%)       (10.8%)
                                                         ============  ============

<FN>
</TABLE>




<TABLE>

<CAPTION>

                                             BALANCE  SHEET  DATA
                                                    December  31,
                                                    -------------
<S>                          <C>         <C>        <C>
                                                   1997 PRO FORMA
 (dollars in thousands) . .       1997       1996    (see Note 9)
                             ----------  ---------  -------------
Total assets. . . . . . . .  $  90,598   $ 95,264   $    171,014
Total liabilities . . . . .  $  82,076   $ 80,262   $    156,003
Retained earnings (deficit)   ($16,489)   ($7,134)      ($16,489)
Stockholders' equity. . . .  $   8,522   $ 15,002   $     15,011
<FN>
</TABLE>



     The  Company's  revenues decreased 6% from $13.5 million in 1996 to $12.6
million  in  1997. Net (loss) from continuing operations increased from ($2.5)
million  in  1996  to  ($9.4)  million  in  1997. (Loss) per common share from
continuing  operations  for  1996  were ($0.35), based on 7.0 million weighted
average  common  shares  outstanding,  compared with ($1.18) per common share,
based on 7.9 million weighted average common shares outstanding, for 1997. Net
(loss)  increased  from  ($7.7) million in 1996 to a loss of ($9.4) million in
1997  while  net  (loss)  per  common share increased  from ($1.10) in 1996 to
($1.18)  in  1997 primarily due to a $6.9 million decrease in 1997 income from
continuing  operations  partially  offset  by a 1996 charge for the cumulative
effect  of  a  change  in  accounting  principle  of    $4.9  million.


  17
<PAGE>


CONTINUING  OPERATIONS
----------------------
<TABLE>
<CAPTION>


                                           SELECTED  OPERATING  DATA
                                          Years  ended  December  31,
                                          ---------------------------

<S>                                                <C>       <C>
(dollars in thousands, except where noted). . . .     1997      1996
                                                   --------  --------
Interest income . . . . . . . . . . . . . . . . .  $12,394   $13,471
Other income. . . . . . . . . . . . . . . . . . .  $   245   $    30
Provision for credit losses . . . . . . . . . . .  $ 3,874   $   911
Operating expenses. . . . . . . . . . . . . . . .  $12,446   $11,801
Interest expense. . . . . . . . . . . . . . . . .  $ 5,674   $ 4,737
Operating expenses as a % of average receivables.       16%       17%
Contracts from Dealer Network . . . . . . . . . .    3,189     6,126
Contracts from Company Dealerships. . . . . . . .        -       147
                                                   --------  --------
 Total contracts. . . . . . . . . . . . . . . . .    3,189     6,273
Average amount financed (dollars) . . . . . . . .  $10,432   $10,390
<FN>
</TABLE>




REVENUES
--------
     Total  revenues  for  the  year  ended  December 31, 1997, decreased $0.9
million  when  compared to 1996 primarily due to a decrease of $1.1 million in
interest  income.    The  rate  of  interest  income earned for the year ended
December  31,  1997  was  16.1% based on an average interest bearing portfolio
balance  of  $76,924,302  as  compared  to a rate of interest income earned of
19.0%  based  on  an average interest bearing portfolio balance of $70,977,202
for  the  year  ended  December  31,  1996.    The decrease in effective yield
reported by the Company for the year ended December 31, 1997, when compared to
1996, was due primarily to changes in the Company's ability to more accurately
estimate  risk  adjusted yields as a result of the Company's implementation of
its  credit  scoring  system in late 1996. Acquisition of Contracts with lower
interest  rates  and  discounts  due to increased competition in the sub-prime
automobile  finance  industry and the Company's strategy to acquire loans with
perceived  higher  credit quality also adversely affected risk adjusted yields
in  1997.  The  Company's  management  believes  the yields for the year ended
December  31, 1997, should be representative of loans purchased for 1998 using
similar  programs and buying criteria which are subject to change based on the
Company's future business plans.  Other income for the year ended December 31,
1997  increased $0.2 million when compared to 1996 primarily due to a one-time
other  income credit of $0.1 million from the Company's forced place insurance
provider  in  1997.

     The lower reported interest rate of 16.1% in 1997 and 19.0% in 1996, when
compared to the contract annual percentage rate of interest (22.6% at December
31,  1997  and  23.4% at December 31, 1996), results from the Company's use of
the  excess interest method of accounting.  Under this method the Company uses
part  of its interest income as well as contract discounts and a provision for
credit  losses  to  establish its allowance for credit losses on its portfolio
over  their  entire  life.

     During  1997,  the  Company's  net  Automobile Receivables decreased from
$81.9  million  at  December  31,  1996 to $74.3 million at December 31, 1997.
During 1997, the Company originated 3,189 loans totaling $33.3 million with an
average  amount  financed of $10,432 as compared to loan originations of 6,273
totaling  $65.2  million  with an average amount financed of $10,390 for 1996.
The  average  discount  on  all  Contracts purchased was 6.8% and 6.6% for the
years  ended  December  31,  1997  and  1996,  respectively.

     The  decline  in  the number and dollar value of loan originations during
1997,  as  compared  to  1996,  of  49% and 49%, respectively, resulted from a
change in the Company's business philosophy in the latter part of 1996 and for
1997.    This change resulted from the completion of the Company's proprietary
credit  scoring  system,  the  closing  its CarMart retail sales and financing
operations  and  the  ceasing  of its deep discount loan acquisition programs.
All  of  these measures were in accordance with the Company's loan acquisition
strategy  to  acquire  loans  that  the Company believes have increased credit
quality.

     At  December 31, 1997, only $1.4 million of the Company's Auto Receivable
Loan  Portfolio  was  generated  from  the  discontinued CarMart operations as
compared  to  $4.7  million  of  its  portfolio  at  December  31,  1996.

COSTS  AND  EXPENSES
--------------------
     The  provision for credit losses increased $3.0 million from $0.9 million
in  1996  to  $3.9  million  in  the comparable 1997 period. The provision for
credit  losses represents estimated current losses based on the Company's risk
analysis of historical trends and expected future results. The increase in the
provisions  for  credit  losses  primarily  was due to the recording of a $3.6
million  provision  in  the  fourth  quarter  of 1997 related to the Company's
static  pooling  reserve analysis, partially offset by the introduction of the
excess  interest  method  to  record allowances effective January 1, 1995 (see
Note  2),  as  well  as  changes  in  certain  of  the Company's programs. Net
charge-offs  as  a  percentage of Average Net Automobile Receivables decreased
from  19.5%  in  1996 to 15.2% in 1997. Although the Company believes that its
allowance  for  credit  losses  is  sufficient  for  the  life  of its current
portfolio,  a provision for credit losses may be charged to future earnings in
an  amount  sufficient  to maintain the allowance. The Company had 1.6% of its
loan  portfolio  over 60 days past due at December 31, 1997 compared with 2.2%
at  December  31,  1996.

     The Company believes that the decrease in net charge-offs as a percentage
of  Average  Net  Automobile  Receivables  is  due  to  the following factors:
1.       Portfolio mix: Changes in the composition of the Company's portfolio,
due  specifically  to closing the CarMart retail stores and elimination of the
high  interest  rate,  deep-discount  programs,  may  reduce  charge-offs as a
percentage  of  average  automobile  receivables.
2.        Credit quality: All originations subsequent to August 31, 1996, were
acquired  using the Company's proprietary credit scoring system including more
stringent credit criteria. These Contracts may result in lower net charge-offs
and  higher  risk adjusted yields in the future than for comparable periods in
1996  and  1997.
3.        Collections, recovery and remarketing: In February 1997, the Company
reorganized  its  collections,  recovery  and  remarketing  departments. These
changes  included  the  hiring  of new managers and upgrading of the Company's
collections,  recovery  and  remarketing  systems.

     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.

     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.

     Operating expenses increased $0.6 million, or 5.4%, from $11.8 million in
1996  to $12.4 million in 1997. This increase primarily was due to an increase
of $869,000 due to lower loan origination fees and an increase in depreciation
and  amortization  of  $662,000 partially offset by a decrease in salaries and
benefits  of  $925,000.  The  major  components  of  the increase in operating
expenses  are  as  follows:

<TABLE>
<CAPTION>

                                      YEARS  ENDED  DECEMBER  31,
<S>                                <C>         <C>       <C>
(dollars in thousands). . . . . .                        INCREASE
                                        1997      1996    (DECR.)
                                   ----------  --------  --------
Salaries and benefits . . . . . .  $   5,350   $ 6,275     ($925)
Depreciation and amortization . .      1,983     1,321       662
Consulting and professional fees.      2,591     2,539        52
Telephone . . . . . . . . . . . .        508       487        21
Travel and entertainment. . . . .        223       404      (181)
Loan origination fees . . . . . .       (286)   (1,155)      869
Rent/Office Supplies/Postage. . .      1,114     1,077        37
All other . . . . . . . . . . . .        963       853       110
                                   ----------  --------  --------
                                   $  12,446   $11,801   $   645
                                   ==========  ========  ========
<FN>
</TABLE>



     Interest  expense  increased  $0.9  million, or 20%, from $4.7 million in
1996  to  $5.6 million in 1997. This increase primarily was due to an increase
in  borrowings  on the LaSalle Revolving Line of Credit at an interest rate of
2.75%  over  LIBOR,  a  paydown of the Company's automobile receivables-backed
notes at interest rates between 6.45% and 7.6% and borrowings on the warehouse
line  of credit with Daiwa at interest rates of  2.5% over LIBOR on 85% of the
amount  advanced  and  12%  on  the remaining 15% of the amount advanced. From
December  31, 1996 through December 31, 1997, net increases (decreases) in the
Company's  debt  were  as  follows:

<TABLE>

<CAPTION>

 (dollars  in  thousands)
<S>                                   <C>
Notes payable - LaSalle. . . . . . .  $  1,126
Warehouse note payable - Daiwa . . .    30,000
Installment note payable . . . . . .    (3,000)
Promissory  note payable . . . . . .     1,135
Convertible senior subordinated debt    (1,667)
Automobile receivables-backed notes.   (26,735)
                                      ---------
     Total . . . . . . . . . . . . .  $    859
                                      =========
<FN>

</TABLE>



     The  average  annualized interest rate on the Company's debt was 7.4% for
1997  versus  7.1%  for  1996.   This increase was primarily due to additional
borrowings  on the Company's lines of credit at higher interest rates than the
Company's  automobile  receivables-backed notes that were redeemed or paid off
in  1997.

     The  annualized  net  interest  margin  percentage,  representing  the
difference  between  interest  income  and interest expense divided by average
finance  receivables,  decreased  from  12.3%  in  1996  to 8.7% in 1997. This
decrease  was  due primarily to the amortization of excess interest receivable
as  described  in Note 2 of the Notes to Consolidated Financial Statements and
an  increase  in  the  average annualized interest rate on the Company's debt.

NET  INCOME  (LOSS)
-------------------
     Net  loss  increased   $1.7 million from $(7.7) million in 1996 to $(9.4)
million  in  1997.  This  increase  in loss was primarily due to the following
changes  on  the  Consolidated  Statements  of  Operations:

<TABLE>

<CAPTION>

                             (INCREASE) DECREASE TO NET (LOSS)

                                                  YEARS  ENDED
                                                 DECEMBER  31,
                                                 -------------
<S>                                                     <C>
(in millions of dollars)
Interest  and other income . . . . . . . . . . . . . .  $(0.9)
Provision for credit losses. . . . . . . . . . . . . .   (3.0)
Operating expenses . . . . . . . . . . . . . . . . . .   (0.6)
Interest expense . . . . . . . . . . . . . . . . . . .   (0.9)
Income tax expense . . . . . . . . . . . . . . . . . .   (1.5)
Loss on disposal of discontinued business. . . . . . .    0.3
Cumulative effect of a change in accounting principle.    4.9
                                                        ------
 Net (increase) to net (loss). . . . . . . . . . . . .  $(1.7)
                                                        ======
<FN>
</TABLE>





DISCONTINUED  OPERATIONS
------------------------
     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 expected disposal date of the CarMart
business  from  April  30,  1996  to  May  31,  1996.

     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 1996 loss from operations of
CarMart.


LIQUIDITY  AND  CAPITAL  RESOURCES
----------------------------------
     The Company's cash flows for the years ended 1997 and 1996 are summarized
as  follows:
<TABLE>


<CAPTION>

                                               CASH  FLOW  DATA
                                          YEARS ENDED DECEMBER 31,
<S>                                            <C>       <C>
(dollars in thousands). . . . . . . . . . . .     1997       1996
                                               --------  ---------
Cash flows provided by (used in):
Operating activities. . . . . . . . . . . . .  $ 1,055   $  2,377
Investing activities. . . . . . . . . . . . .     (309)   (30,004)
Financing activities. . . . . . . . . . . . .   (1,216)    21,607
                                               --------  ---------
Net (decrease)  in cash and cash equivalents.  $  (470)  $ (6,020)
                                               ========  =========
<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  and  the  purchase  of existing loan portfolios. These
purchases have been financed through the Company's capital, warehouse lines of
credit,  securitizations  and  cash flows from operations. It is the Company's
intent  to  use  its  warehouse lines of credit, as described in detail below,
together  with periodic securitizations of Contracts, to provide the liquidity
to  finance  the  purchase  of  additional  installment  Contracts.

     In  order to further insure the Company's ability to finance the purchase
of  installment  contracts and thereby continue to grow, the Company continues
to  seek  to  obtain  additional  warehouse  credit  facilities  on terms more
favorable  than  those  currently  in  place  as  described  in  Note 4 to the
Company's  Consolidated Financial Statements.  If the Company is successful in
obtaining  such  facilties,  they  will  provide  the  Company with additional
working  capital  to  the  extent  that  the  new  cash advance terms are more
favorable  than those the Company currently has in place.  No assurance can be
given  as  to  if,  or  when,  the  Company  would  be able to consummate such
transactions.

     The  Company  also  is  dependent upon securitizations, the proceeds from
which  are used to pay down its warehouse lines, thereby creating availability
under  such  warehouse  lines to purchase additional Contracts. The ability to
consummate securitizations is based on many factors, including ones out of the
Company's  control.  In  the  event  the  Company  is unable to securitize its
Contracts,  its  ability  to  acquire  new  contracts  will  be  limited.

     The  Company  on  November  1, 1996, obtained a $3 million term loan from
Pacific  USA Holdings Corp., which was converted to 1,500,000 shares of  Class
A  Common  Stock as of April 25, 1997, as described in Note 4 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
Warehouse  Line  of  Credit with Daiwa Finance Corp., described below, contain
certain  covenants  which, if not complied with, could materially restrict the
Company's  liquidity.  Furthermore, if Net Charge-Offs increase in the future,
the  Company's liquidity and its ability to increase its loan portfolio may be
impacted  negatively.  Under the terms of the Revolving Note and the Warehouse
Line  of Credit approximately 80% and 90%, respectively, 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 4
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, was
due  March 1, 1998. On March 1, 1998, the Company repaid $692,500 of principal
amount  of  the  Notes. The maturity date of the remaining principal amount of
the  Notes  of  $692,500  was extended to April 15, 1998, without penalty. 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,
July  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 I"), 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  accrued  interest  at  a  fixed  rate  of  7.6%  per  annum.

     On  July 24, 1997, the Company redeemed the outstanding principal balance
of its Series 1994-A Notes.  The bonds were redeemed at their principal amount
of  $1,220,665.33  plus accrued interest to July 24, 1997.  Upon redemption of
the  Series  1994-A  Notes,  the  underlying  automobile  receivables  of
approximately $2.5 million were pledged under the terms of the Revolving Note.

     In  May  of  1995,  MF I issued its Floating Rate Auto Receivables-Backed
Note  (Revolving  Note" or "Series 1995-A Note"). MF I 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 I
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  all  future  Contracts  acquired  by  MF  I.

     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  maximum  limit  for  the  Series  1995-A Note is $40 million.

     On  December  4,  1997,  the  Company  redeemed the outstanding principal
balance of its Series 1995-A Note.  The bonds were redeemed at their principal
amount  of  $12,271,457  plus  accrued  interest  to  December  4, 1997.  Upon
redemption  of  the  Series 1995-A Note, the underlying automobile receivables
were  pledged under the terms of the Warehouse Line of Credit. At December 31,
1997,  the  1995-A  Note  did  not  have  an  outstanding  principal  balance.

     On  September 15, 1995, MF I issued the Series 1995-B Term Notes ("Series
1995-B  Notes") in the amount of $35,552,602.  The Series 1995-B Notes accrued
interest  at  a  fixed  note  rate  of  6.45%  per  annum.

     On  December  12,  1997,  the  Company redeemed the outstanding principal
balance  of  its  Series  1995-B  Notes.    The  bonds  were redeemed at their
principal  amount  of  $5,822,934  plus accrued interest to December 12, 1997.
Upon  redemption  of  the  Series  1995-B  Notes,  the  underlying  automobile
receivables  were pledged under the terms of the Warehouse Line of Credit with
Daiwa  Finance  Corporation.

     In  June  1997, MF Receivables Corp. II ("MF II"), a wholly owned special
purpose  subsidiary  of the Company, sold, in a private placement, $42,646,534
of  Class  A  automobile  receivables-backed  notes ("Series 1997-1A Notes" or
"Term  Note")  to  an  outside  investor  and $2,569,068 of Class B automobile
receivables-backed  notes  ("Class  B  Notes")  to  Monaco  Funding  Corp.,  a
wholly-owned  special  purpose  subsidiary of the Company.  The Series 1997-1A
Notes  accrue  interest at a fixed rate of 6.71% per annum and are expected to
be fully amortized by December 2002; however, the debt maturities are based on
principal payments received on the underlying receivables, which may result in
a different final maturity.  An Indenture and Servicing Agreement require that
the  Company  and  MF  II  maintain certain financial ratios, as well as other
representations,  warranties  and  covenants.

     In  connection  with  the  purchase  of the Class B Notes, Monaco Funding
Corp.  borrowed  $2,525,000  from a financial institution ("Promissory Note").
The  Promissory  Note accrues interest at a fixed rate of 16% per annum and is
collateralized by the proceeds from the Class B Notes.   The Class B Notes are
expected  to be fully amortized by December 2002; however, the debt maturities
are  based on principal payments received on the underlying receivables, which
may result in a different final maturity.  Monaco Funding Corp. is required to
maintain  certain  covenants  and  warranties  under  the  Pledge  Agreement.

     As of December 31, 1997, the Series 1997-1A Notes and the Promissory Note
had a note balance of $32,421,076 and $1,135,232, respectively. The underlying
receivables  backing  the  1997-1A  notes  had  a balance of $37,323,549 as of
December  31,1997.

     The  assets  of MF I, MF II and Monaco Funding Corp. 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  1995-A  Note  and Series 1997-1A 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 1995-A, Series 1997-1A
and Promissory Note noteholders and other general disbursements are paid to MF
I  and  MF  II  on  a  monthly  basis.

     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"). This agreement was
subsequently  amended  and  passed  by  the  Company's  Board  of Directors on
September,  10, 1996. 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 $4.00 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 on or before September 10, 1998,
with  an  initial  conversion  price  of  $3.00  per  share.

     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  was extended from January 1, 1998 to March 23, 1998, at which time the
outstanding  balance  on the line of credit was paid in full. At the option of
the  Company,  the interest rate charged on the loans was either .5% in excess
of  the  prime rate charged by lender or 2.75% over the applicable LIBOR rate.
The  Company  was 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 was subject to standard conditions. The collateral
securing  payment  consisted  of all Contracts pledged and all other assets of
the  Company. The Company had agreed to maintain certain restrictive financial
covenants.    As  of  December  31,  1997, the Company had borrowed $6,375,549
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.

     On April 25, 1997, the Company executed a Conversion and Rights Agreement
(the  "Conversion  Agreement")  with  Pacific.      The  Conversion  Agreement
converted  the  entire  $3,000,000  outstanding  principal  amount  of  the
installment  note  made  by Pacific to the Company into 1.5 million restricted
shares  of  the Company's Class A Common Stock.  The Conversion Agreement also
released  the  Company from all liability under the Loan Agreement executed on
October  29,  1996  between  the  Company and Pacific pursuant to which the $3
million  loan  was  made.

     In  December  1997,  MF  Receivables Corp. III ("MF III"), a wholly owned
special  purpose  subsidiary  of  the  Company,  entered  into  a  $75 million
Warehouse  Line  of  Credit  with  Daiwa  Finance  Corporation ("Daiwa").  All
advances  received  under  the  line  of  credit  are secured by eligible loan
Contracts  and  all  proceeds  received  from  those Contracts.  The scheduled
maturity  date  in  respect  to  any  advance  under the line of credit is the
earlier  of  364  days  following the date of the advance or December 3, 1999.
Under  the Credit Agreement, 85% of the amount advanced to the Company accrues
interest  at  a rate equal to LIBOR plus 2.5% per annum.  The remaining 15% of
the  amount advanced accrues interest at a rate of 12% per annum.  The Company
is obligated to pay Daiwa an unused facility fee equal to .375% of the average
daily  unused  portion of the credit agreement.  The Credit Agreement requires
the  Company  to  maintain certain standard ratios and covenants.  At December
31,  1997, the Company had borrowed $30.0 million against this line of credit.

     The  assets  of  MF III are not available to pay general creditors of the
Company.  All  cash  collections in excess of disbursements to Daiwa and other
general  disbursements  are  paid  to  MF  III  on  a  monthly  basis.

     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, 1997, 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  Class  A  Common  Stock  is traded on the NASDAQ National
Market.    Commencing  February  23,  1998, the requirements for the continued
trading  of  securities  on  the  NASDAQ  National  Market  were changed.  The
Company's  ability  to raise capital, including, but not limited to, both debt
and/or equity, could be adversely affected should the Company fail to meet the
new  requirements.    See  Item  5.  -  Market  for  Common Equity and Related
Stockholder  Matters for further discussion of the new NASDAQ requirements and
the  Company's  status  concerning  such  requirements.

     The  Company's  cash needs will, in part, continue to be funded through a
combination  of earnings and cash flow from operations, its existing Warehouse
Line  of  Credit  and  securitizations.  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 future
business  activities  and  could,  in  the future, require the Company to sell
certain  of  the  Loans  in  its Portfolio to meet its liquidity requirements.

SUBSEQUENT  EVENTS
------------------
     In  connection  with  its  portfolio  acquisition  strategy,  the Company
entered  into  an  Amended  and  Restated Asset Purchase Agreement dated as of
January  8,  1998  (the "Asset Purchase Agreement"), with Pacific USA Holdings
Corp.  ("Pacific  USA")  and  certain  of  its wholly-owned or partially-owned
subsidiaries  -  Pacific  Southwest  Bank  ("PSB"),  NAFCO Holding Company LLC
("NAFCO"),  Advantage Funding Group, Inc. ("Advantage") and PCF Service, LLC -
providing  for,  among  other things, the purchase by the Company of sub-prime
automobile  loans  from NAFCO and Advantage having an unpaid principal balance
of  approximately  $81,115,233  for  a  purchase price of $77,870,623 of which
$73,003,709  was  paid  in  cash.  Financing  was  provided  by  Daiwa Finance
Corporation.  The Company also agreed to issue Daiwa warrants for the purchase
of  250,000  shares of Class A Common Stock. The balance of the purchase price
of  $4,866,914  was  paid  through  the  issuance  of  2,433,457 shares of the
Company's  8%  Cumulative  Convertible  Preferred  Stock,  Series  1998-1 (the
"Preferred  Stock")  valued  at $2.00 per share. Each share of Preferred Stock
will  be  convertible at any time into one-half share of Class A Common Stock,
or  an  aggregate of up to 1,216,728 shares of Class A Common Stock. Thus, the
effective  cost  to  Pacific  USA  of  the  Class A Common Stock issuable upon
conversion  of  the  Preferred  Stock  will  be  $4.00  per  share.

     As required by the Asset Purchase Agreement, PSB entered into a Loan Loss
Reimbursement  Agreement  whereby it agreed to reimburse the Company for up to
15%  of  any  losses  incurred  by  the  Company  in connection with the loans
acquired  from  NAFCO  and  Advantage.  In consideration therefor, the Company
issued  811,152  shares  of  Class  A  Common  Stock.  The  Company  allocated
$1,622,304  to  the  cost  of  the purchased loans, which represents the value
assigned  to  the  common  shares.

     Also,  the  Company may be obligated to make additional payments to NAFCO
based  on  the  performance  of  certain  potential  relationships  with  loan
originators  previously  associated  with  NAFCO.  If  there  are  any pre-tax
earnings  associated  with  these operations for calendar years 1998 and 1999,
the  Company  is obligated to pay NAFCO shares of the Company's Class A Common
Stock  valued  at  the average daily closing price of such stock on the NASDAQ
Stock Market for the last ten days of such calendar year. The number of shares
of Class A Common Stock, if any, which the Company may be required to issue to
NAFCO  pursuant  to  these  agreements  cannot  be  determined  at  present.

     The  Company filed the required documents under the Hart-Scott-Rodino Act
("HSR  Act")  on  January 15, 1998, and received the necessary approvals under
the  HSR  Act  on  or  about  February  10,  1998.

     Pacific  USA  was  the record owner of 1,500,000 shares of Class A Common
Stock  as  of  December  31, 1997. As a result of the Option Agreement, it was
granted  the  power  to  vote  the  830,000  shares  of  Class  B Common Stock
beneficially  owned  by  the  Messrs.  Ginsburg  and  Sandler  (President  and
Executive  Vice  President, respectively, of the Company) ("the Shareholders")
and  a limited power to direct the voting of shares subject to proxies held by
the  Shareholders. Also, under the terms of the Asset Purchase Agreement dated
January  8, 1998, Pacific USA was issued 811,152 shares of the Company's Class
A  Common  Stock.  As  of the date of this report, 8,014,631 shares of Class A
Common Stock are issued and outstanding and 1,273,715 shares of Class B Common
Stock  are  issued  and outstanding. The Class A Common Stock has one vote per
share  while  the  Class B Common Stock has three votes per share. The Class A
and  Class B Common Stock vote together as one class. Accordingly, Pacific USA
may be deemed to be the beneficial owner of approximately 38.6% of the Class A
and  Class B Common Stock and controls approximately 51.8% of the total voting
power. Pacific USA has an option expiring in December 2000 to purchase 830,000
shares  of  Class  B  Common  Stock,  owned  by  the  Shareholders,  while the
Shareholders  have  an option, also expiring in December 2000, to require that
Pacific  USA  purchase  all  of  such  shares. Upon exercise of either the put
option  or  the  call  option,  the Class B Common Stock purchased by CFH will
automatically  convert  into  Class A Common Stock thereby reducing the voting
power  of  Pacific  USA.

     As  a  result  of  the  Asset  Purchase  Agreement dated January 8, 1998,
Stockholders'  Equity  increased  to  $15.0  million.

OTHER
-----

ACCOUNTING  PRONOUNCEMENTS
--------------------------
     In  June  1996,  the Financial Accounting Standards Board issued SFAS No.
125,  Accounting  for  Transfers  and  Servicing  of  Financial  Assets  and
Extinguishments  of  Liabilities  (subsequently amended by SFAS No. 127). SFAS
No.  125  is  effective  for  transfers  and servicing of financial assets and
extinguishments  of liabilities occurring after December 31, 1996 and is to be
applied  prospectively.  This  Statement  provides  accounting  and  reporting
standards  for transfers and servicing of financial assets and extinguishments
of  liabilities  based  on  consistent  application  of a financial-components
approach  that  focuses  on  control.  It distinguishes transfers of financial
assets  that  are sales from transfers that are secured borrowings. Management
of  the  Company  does  not  expect that adoption of SFAS No. 125 will have  a
material impact on the Company's financial position, results of operations, or
liquidity.

     In  February  1997,  the  Financial  Accounting  Standards Board ("FASB")
issued  Statement No. 128, Earnings per Share, ("SFAS 128") which requires the
presentation of basic and diluted earnings per share on the face of the income
statement  for  entities with a complex capital structure.  Basic earnings per
share is calculated by dividing net income attributable to common shareholders
by  the  weighted  average  number  of  common  shares  outstanding.  Dilutive
earnings  per share is computed similarly, but also gives effect to the impact
convertible  securities, such as convertible debt, stock options and warrants,
if dilutive, would have on net income and average common shares outstanding if
converted  at  the  beginning  of  the  year.    SFAS  128  also  requires  a
reconciliation  of  the  numerator  and  denominator of the basic earnings per
share  computation  to  the  numerator and denominator of diluted earnings per
share  computation.    The  Company  implemented  SFAS  128 effective with its
December  31,  1997,  financial  statements.

     In  June  1997,  the Financial Accounting Standards Board issued SFAS No.
130,  "Reporting  Comprehensive  Income"  and SFAS No. 131, "Disclosures about
Segments  of  an  Enterprise  and  Related Information", both of which are not
applicable  to  the  Company.

INFLATION
---------
     Inflation  was not a material factor in either the sales or the operating
expenses  of  the  Company  from  inception  to  December  31,  1997.

YEAR  2000  ISSUE
-----------------
     The  "Year  2000" issue affects the Company's installed computer systems,
network  elements,  software applications and other business systems that have
time-sensitive  programs  that  may not properly reflect or recognize the Year
2000.    Because  many computers and computer applications define dates by the
last  two  digits of the year, "00" may not be properly identified as the Year
2000.    This  error  could  result  in  miscalculations  or  system failures.

     The  Company  is  conducting a review of its computer systems to identify
those  areas that could be affected by the "Year 2000" issue and is developing
an  implementation  plan  to  ensure  compliance.    The Company is using both
internal and external sources to identify, correct and reprogram, and test its
systems  for  Year  2000 compliance. Because third party failures could have a
material  impact  on  the Company's ability to conduct business, confirmations
are  being requested from our processing vendors and suppliers to certify that
plans  are  being  developed  to  address  the  Year  2000  issue. The Company
presently believes that, with modification to existing software and investment
in  new  software, the Year 2000 problem will not pose significant operational
concerns  nor  have  a material impact on the financial position or results of
operation  in any given year.  The total cost of modifications and conversions
is  not  expected  to  be  material  and  will  be  expensed  as  incurred.

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) increasing the
number of loans acquired from the Dealer Network; (2) purchasing portfolios of
loans  originated by third parties; (3) continuing its efforts to increase the
credit  quality of its portfolio and reduce credit losses and charge-offs; (4)
decreasing  the  percentage of operating expenses to average gross receivables
by  increasing  the  portfolio  while  decreasing  operating expenses; and (5)
securitizing  portfolios  of  auto  loans.

     To  further  promote  its  growth  and  profitability,  the  Company will
continue  to  pursue  its  growth  strategy  based  on  the  following:

     MARKET  FOCUS: The Company targets the middle range of the Sub-prime auto
finance  market.  Auto loans can be classified as follows:  (A) Prime loans to
borrowers  with  no credit blemishes; (B) Almost prime loans to borrowers with
generally  good credit and a few minor blemishes; (C+) The highest category of
sub-prime borrowers who have suffered reversals in the past but are current on
all  obligations  and  have  demonstrated  the  ability  and  willingness  to
reestablish  their  credit  in  the higher categories; (C) Similar to (C+) but
present  a  slightly  greater  risk due to higher debt-to-income ratios, lower
salaries,  prior  bankruptcy  etc.;  (C-)  Borrowers  with  substantially more
adverse  credit  history,  but  appear  to  have the wherewithal to meet their
credit  obligations;  (D)  First time borrowers or borrowers with little or no
past  credit  history,  borrowers  with  recent  bankruptcies or those lacking
stability  in  employment  etc.,  Monaco  Finance  Inc.,  is  focusing  on all
categories  of (C) credit with  the emphasis on obtaining more (C+) borrowers.
The  Company  will  purchase  few,  if  any,  (D)  loans.

     The  Company  also  targets  late  model  used vehicles, which have lower
depreciation  rates  than  either  new vehicles or used vehicles that are over
three  years old and have high mileage.  In addition, the Company concentrates
on  acquiring  loans  from new car franchised dealers because, generally, such
dealers  are  stronger  financially  and  can  better  perform  on  their
representations  and  warranties,  offer  higher  quality  vehicles, and often
provide  better  repair  service  than  independent  used  car  dealers.

     During  1997,  the  Company  acquired  contracts  from  approximately 375
dealers in 28 states, the majority of which were purchased in five states.  In
order  to increase efficiency and reduce operating expenses, in the first half
of 1997, the Company temporarily reduced its marketing representatives from 16
to  6.  In  August  1997,  the  Company initiated its strategy to increase its
Dealer Network by hiring two regional marketing managers. At December 31, 1997
the  Company  had  increased  its  marketing  representatives  to  16.

     PORTFOLIO  ACQUISITIONS:  The  Company  plans to continue the purchase of
loan  portfolios previously originated by third parties.  In 1997, the Company
acquired, at a discount, two such portfolios with a face value of $12 million.
In  January  1998, the Company announced that it had completed the acquisition
of  $81  million  in auto loans from affiliates of Pacific USA and in February
1998 the Company acquired approximately $14 million of auto loans from another
third  party.   The Company actively is seeking to acquire other portfolios of
auto  loans.

     FUNDING  AND  FINANCING STRATEGIES: In December 1997, the Company entered
into  a  warehouse  line  with   Daiwa Finance Corporation, under the terms of
which,  up  to 90% of the face amount of loans can be financed.  This facility
allows the Company to acquire loans on a leveraged basis and increase the size
of its portfolio with its current capital.  Periodic rated securitizations are
also  part  of the Company's financing strategies. Securitizations lock in low
interest  rates  and  free up the Company's warehouse line and capital for new
loan  acquisitions.    The Company makes all efforts to obtain sufficient cash
from a securitization to repay all warehouse debt collateralized by the loans.
In the event funds obtained from a securitization are not sufficient to retire
the  corresponding  debt,  the  securitization may adversely affect liquidity.

     RISK  EVALUATION  AND UNDERWRITING: As discussed in more detail elsewhere
herein,  the  Company  has  developed  proprietary  credit  scoring  and  risk
evaluation  systems  which predicts the frequency of default and the resultant
predicted  loss after repossession and sale of financed vehicles.  This system
assists  the  Company's  credit buyers and underwriters in pricing loans to be
acquired.    Credit  buyers  can negotiate interest rates, loan term, purchase
discount and fees and terms of the deal, including such items as down payment,
in  order to achieve a desired risk adjusted rate of return for each Contract.

     CENTRALIZED  OPERATING  STRUCTURE: Management believes the centralization
of  all  operations  in  one  location results in a consistent, cost effective
means  of  operating  a  sub-prime  automobile  loan  business.  Sales
representatives,of  course,  are  disbursed  throughout  the  country  to deal
directly  with  dealers.

     COLLECTIONS MANAGEMENT: Management believes that collections and recovery
are vital to the successful operation of the Company. The Company has invested
substantial  amounts  of  time, money and resources in developing an efficient
collections department.  The results of the Company's efforts are evidenced by
its  percentage of delinquent contracts, which at February 28, 1998, was 6.95%
over  30  days past due. This percentage consisted of 5.84% 30 to 59 days past
due,  1.11%  60  to  89 days past due and 0.0% over 90 days past due.  Further
additions  and improvements to its collections department and systems, both in
personnel  and  automated  equipment,  would enable the Company, for the first
time, to seek out servicing and collections of Sub-prime auto loans for others
in  similar businesses which could result in creating a new revenue source for
the  Company.

     CONTROLLING  INTEREST:  As a result of the Asset Purchase Agreement dated
January  8,  1998,  Pacific  USA  Holdings Corp. ("Pacific USA") increased its
voting  power in the Company to 51.8%.  Pacific USA is the beneficial owner of
38.6% of the Company's outstanding voting stock. Pacific USA is a diverse U.S.
holdings  company,  100%  owned by Pacific Electric Wire & Cable, Ltd. of Hong
Kong.    Pacific  USA  is  a  multi-billion  dollar company which owns various
business  including  but  not  limited  to home building, home equity lending,
sub-prime  auto  finance, loan servicing and also is the 100% owner of Pacific
Southwest  Bank.  The various companies involved in this transaction currently
are  reviewing  the  Company's business plan to determine whether the business
plan  could be modified for additional opportunities which may be available as
a  result  of  the  association  with  Pacific  USA.

Implementation  of  the  foregoing strategy will be dependent upon a number of
factors including but not limited to: (i) competition; (ii) the ability of the
Company  to  acquire  contracts  at  a price commensurate with estimated risk,
through  its  Dealer  Network  and  portfolio  purchases;  (iii)  maintain and
increase  its  capital  and  warehouse lines of credit; (iv) and, successfully
complete  securitizations  of  its  portfolio.

<PAGE>

ITEM  7.    FINANCIAL  STATEMENTS.
----------------------------------

                     MONACO FINANCE, INC. AND SUBSIDIARIES

TABLE  OF  CONTENTS
                                                                   PAGE
                                                                   ----
Independent Auditors' Report                                         30
Consolidated Balance Sheets - December 31, 1997 and 1996             31
Consolidated  Statements of Operations  - For the Years Ended
December 31, 1997 and 1996                                           32
Consolidated  Statements of Stockholders' Equity - For the
Years Ended December 31, 1997 and 1996                               33
Consolidated  Statements  of Cash  Flows - For the Years Ended
December 31, 1997 and 1996                                           34
Notes to the Consolidated Financial Statements                    35-57

  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, 1997 and 1996, 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, 1997 and 1996, and the results
of  their  operations  and  their  cash  flows  for  the  years  then ended in
conformity  with  generally  accepted  accounting  principles.

     As  disclosed  in  Note  1  to the consolidated financial statements, the
Company  changed  its  method  of  computing  earnings  per  share.


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


March  30,  1998
Denver,  Colorado


  30
<PAGE>

<TABLE>
<CAPTION>
                     MONACO FINANCE, INC. AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS
                          DECEMBER 31, 1997 AND 1996

                                                                          DECEMBER 31,
                                                                     1997           1996
                                                                --------------  ------------
<S>                                                             <C>             <C>
ASSETS
     Cash and cash equivalents . . . . . . . . . . . . . . . .  $     757,541   $ 1,227,441
     Restricted cash . . . . . . . . . . . . . . . . . . . . .      8,080,033     4,463,744
     Automobile receivables - net (Notes 2 and 4). . . . . . .     74,324,431    81,890,935
     Repossessed vehicles held for sale. . . . . . . . . . . .      1,738,331     2,314,869
     Income tax receivable (Note 6). . . . . . . . . . . . . .              -       350,000
     Deferred income taxes (Note 6). . . . . . . . . . . . . .      1,579,779     1,581,651
     Furniture and equipment, net of accumulated
       depreciation of $2,095,450 (1997) and $1,326,215 (1996)      2,055,774     2,055,902
     Other assets. . . . . . . . . . . . . . . . . . . . . . .      2,061,832     1,379,526
                                                                --------------  ------------
          Total assets . . . . . . . . . . . . . . . . . . . .  $  90,597,721   $95,264,068
                                                                ==============  ============

LIABILITIES AND STOCKHOLDERS' EQUITY
     Accounts payable. . . . . . . . . . . . . . . . . . . . .  $   1,537,791   $   851,838
     Accrued expenses and other liabilities. . . . . . . . . .        888,309       619,125
     Notes payable (Note 4). . . . . . . . . . . . . . . . . .      6,375,549     5,250,000
     Warehouse note payable (Note 4) . . . . . . . . . . . . .     30,000,000             -
     Promissory note payable (Note 4). . . . . . . . . . . . .      1,135,232             -
     Installment note payable (Note 4) . . . . . . . . . . . .              -     3,000,000
     Convertible subordinated debt (Note 4). . . . . . . . . .      1,385,000     1,385,000
     Senior subordinated debt (Note 4) . . . . . . . . . . . .      3,333,332     5,000,000
     Convertible senior subordinated debt (Note 4) . . . . . .      5,000,000     5,000,000
     Automobile receivables-backed notes (Note 4). . . . . . .     32,421,076    59,156,101
                                                                --------------  ------------
          Total liabilities. . . . . . . . . . . . . . . . . .     82,076,289    80,262,064
Commitments and contingencies (Note 3)
Stockholders' equity (Note 5)
       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, 7,203,479 shares (1997) and
         5,648,379 shares (1996) issued. . . . . . . . . . . .         72,035        56,484
       Class B common stock, $.01 par value; 2,250,000
         shares authorized, 1,273,715 shares (1997) and
         1,323,715 shares (1996) issued. . . . . . . . . . . .         12,737        13,237
       Additional paid-in capital. . . . . . . . . . . . . . .     24,925,466    22,066,089
       Retained earnings (deficit) . . . . . . . . . . . . . .    (16,488,806)   (7,133,806)
                                                                --------------  ------------
Total stockholders' equity . . . . . . . . . . . . . . . . . .      8,521,432    15,002,004
                                                                --------------  ------------
Total liabilities and stockholders' equity . . . . . . . . . .  $  90,597,721   $95,264,068
                                                                ==============  ============
<FN>

     See  notes  to  consolidated  financial  statements.
</TABLE>



 31
<PAGE>

<TABLE>
<CAPTION>
                     MONACO FINANCE, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                FOR THE YEARS  ENDED DECEMBER 31, 1997 AND 1996


                                                                                   YEARS  ENDED  DECEMBER  31,
<S>                                                                               <C>            <C>
                                                                                          1997           1996
                                                                                  -------------  -------------

REVENUES:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 12,394,091   $ 13,470,631
Other income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       244,816         30,122
                                                                                  -------------  -------------
     Total revenues. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    12,638,907     13,500,753

COSTS AND EXPENSES:
Provision for credit losses (Note 2) . . . . . . . . . . . . . . . . . . . . . .     3,873,719        910,558
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    12,445,704     11,800,782
Interest expense (Note 4). . . . . . . . . . . . . . . . . . . . . . . . . . . .     5,674,484      4,737,375
                                                                                  -------------  -------------
     Total costs and expenses. . . . . . . . . . . . . . . . . . . . . . . . . .    21,993,907     17,448,715
                                                                                  -------------  -------------

(Loss) from continuing operations before income taxes. . . . . . . . . . . . . .    (9,355,000)    (3,947,962)
Income tax (benefit) (Note 6). . . . . . . . . . . . . . . . . . . . . . . . . .             -     (1,476,538)
                                                                                  -------------  -------------

(Loss) from continuing operations. . . . . . . . . . . . . . . . . . . . . . . .    (9,355,000)    (2,471,424)

(Loss) on disposal of discontinued business, net of
   applicable income taxes (Note 7). . . . . . . . . . . . . . . . . . . . . . .             -       (301,451)

Cumulative effect of a change in accounting principle (Note 2) . . . . . . . . .             -     (4,912,790)
                                                                                  -------------  -------------

Net (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   ($9,355,000)   ($7,685,665)
                                                                                  =============  =============


EARNINGS (LOSS) PER COMMON SHARE - BASIC AND ASSUMING DILUTION (NOTES 1 AND 5):

(Loss) from continuing operations. . . . . . . . . . . . . . . . . . . . . . . .        ($1.18)        ($0.35)
(Loss) on disposal of discontinued business. . . . . . . . . . . . . . . . . . .             -          (0.04)
Cumulative effect of a change in accounting principle. . . . . . . . . . . . . .             -          (0.71)
                                                                                  -------------  -------------

Net (loss) per common share - basic and assuming dilution. . . . . . . . . . . .        ($1.18)        ($1.10)
                                                                                  =============  =============

Weighted average number of common shares outstanding . . . . . . . . . . . . . .     7,912,732      6,965,485


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



  32
<PAGE>

<TABLE>

<CAPTION>
                                         MONACO FINANCE, INC. AND SUBSIDIARIES
                                        CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                        FOR THE YEARS  ENDED DECEMBER 31, 1997 AND 1996

                                               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, 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
Exercise of stock options. . . . . . .      5,100        51           -         -         9,377               -         9,428
Conversion of shares . . . . . . . . .     50,000       500     (50,000)     (500)            -               -             0
Conversion of installment note payable  1,500,000    15,000           -         -     2,850,000               -     2,865,000
Net (loss) for the year. . . . . . . .          -         -           -         -             -      (9,355,000)   (9,355,000)
                                        ----------  -------   ----------  -------   ------------  --------------  ------------
Balance - December 31, 1997. . . . . .  7,203,479   $72,035   1,273,715   $12,737   $24,925,466    ($16,488,806)  $ 8,521,432
                                        ==========  =======   ==========  =======   ============  ==============  ============


<FN>

See  notes  to  consolidated  financial  statements.

</TABLE>

  33
<PAGE>




<TABLE>

<CAPTION>

                               MONACO FINANCE, INC. AND SUBSIDIARIES
                               CONSOLIDATED STATEMENTS OF CASH FLOWS
                          FOR THE YEARS  ENDED DECEMBER  31, 1997 AND 1996

                                                                        YEARS  ENDED  DECEMBER  31,
                                                                           1997           1996
                                                                       -------------  -------------
<S>                                                                    <C>            <C>
Cash flows from operating activities:
---------------------------------------------------------------------
     Loss from continuing operations. . . . . . . . . . . . . . . . .   ($9,355,000)   ($7,384,214)
     Adjustments to reconcile loss from continuing operations to
       net cash provided by operating activities:
          Depreciation. . . . . . . . . . . . . . . . . . . . . . . .       936,055        575,539
          Provision for credit losses . . . . . . . . . . . . . . . .     3,873,719        910,558
          Cumulative effect of a change in accounting principle . . .             -      4,912,790
          Amortization of excess interest . . . . . . . . . . . . . .     4,532,301      3,704,234
          Amortization of other assets. . . . . . . . . . . . . . . .     1,046,693        745,258
          Deferred tax asset. . . . . . . . . . . . . . . . . . . . .         1,872     (1,538,893)
          Other . . . . . . . . . . . . . . . . . . . . . . . . . . .        (8,611)        77,154
                                                                       -------------  -------------
                                                                          1,027,029      2,002,426
     Change in assets and liabilities:
          Receivables . . . . . . . . . . . . . . . . . . . . . . . .      (995,897)    (1,570,892)
          Prepaid expenses. . . . . . . . . . . . . . . . . . . . . .      (175,180)      (104,365)
          Accounts payable. . . . . . . . . . . . . . . . . . . . . .       685,953        300,761
          Accrued liabilities and other . . . . . . . . . . . . . . .       513,202        727,425
                                                                       -------------  -------------
     Net cash flows from continuing operations. . . . . . . . . . . .     1,055,107      1,355,355
     Net cash flows from discontinued operations. . . . . . . . . . .             -      1,021,611
                                                                       -------------  -------------
Net cash provided by operating activities . . . . . . . . . . . . . .     1,055,107      2,376,966
                                                                       -------------  -------------
Cash flows from investing activities:
---------------------------------------------------------------------
     Retail installment sales contracts - purchased . . . . . . . . .   (37,458,258)   (65,973,183)
     Retail installment sales contracts - originated. . . . . . . . .             -     (1,519,376)
     Proceeds from payments on contracts - purchased. . . . . . . . .    36,708,113     33,818,222
     Proceeds from payments on contracts - originated . . . . . . . .     1,356,268      4,611,648
     Purchase of furniture and equipment. . . . . . . . . . . . . . .      (926,322)      (937,644)
     Equipment deposits and other . . . . . . . . . . . . . . . . . .        10,726         (3,614)
                                                                       -------------  -------------
Net cash (used in) investing activities . . . . . . . . . . . . . . .      (309,473)   (30,003,947)
                                                                       -------------  -------------
Cash flows from financing activities:
---------------------------------------------------------------------
     Net borrowings under lines of credit . . . . . . . . . . . . . .    31,125,549      5,250,000
     Net decrease (increase) in restricted cash . . . . . . . . . . .    (3,616,289)      (768,858)
     Borrowings on asset-backed notes . . . . . . . . . . . . . . . .    62,496,526     42,348,989
     Repayments on asset-backed notes . . . . . . . . . . . . . . . .   (89,231,550)   (32,863,015)
     Repayments on senior subordinated debentures . . . . . . . . . .    (1,666,668)             -
     Proceeds from  issuance of convertible senior subordinated notes             -      5,000,000
     Proceeds from  issuance of installment note. . . . . . . . . . .             -      3,000,000
     Purchases of treasury stock and other adjustments. . . . . . . .             -        (59,042)
     Proceeds from  exercise of stock options . . . . . . . . . . . .         9,428              -
     Proceeds from  issuance of promissory note . . . . . . . . . . .     2,525,000              -
     Repayments on promissory note. . . . . . . . . . . . . . . . . .    (1,389,768)             -
     Increase in debt issue and conversion costs. . . . . . . . . . .    (1,467,762)      (301,322)
                                                                       -------------  -------------
Net cash (used in) provided by financing activities . . . . . . . . .    (1,215,534)    21,606,752
                                                                       -------------  -------------
Net decrease in cash and cash equivalents . . . . . . . . . . . . . .      (469,900)    (6,020,229)
Cash and cash equivalents, January 1. . . . . . . . . . . . . . . . .     1,227,441      7,247,670
                                                                       -------------  -------------
Cash and cash equivalents, December 31. . . . . . . . . . . . . . . .  $    757,541   $  1,227,441
                                                                       =============  =============
<FN>

     See  notes  to  consolidated  financial  statements.
</TABLE>



 34
<PAGE>


MONACO FINANCE INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  1  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES
----------------------------------------------------------

     Monaco  Finance,  Inc.  (the  "Company")  is a specialty consumer finance
company  engaged  in  the  business  of underwriting, acquiring, servicing and
securitizing  automobile  retail  installment  contracts  ("Contract(s)"). The
Company  provides special finance programs (the "Program(s)") to purchasers of
vehicles  who  do not qualify for traditional sources of bank financing due to
their  adverse  credit history, or for other reasons which may indicate credit
or economic risk ("Sub-prime Customers). The Company also purchases portfolios
of sub-prime loans from third parties other than dealers. In 1997, the Company
acquired  Contracts  in  connection  with  the  sale of used and, to a limited
extent,  new  vehicles, to customers, from automobile dealers (the "Dealer(s)"
or the "Dealer Network") located in twenty-eight states, the majority of which
were  acquired  from five states. At December 31, 1997 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, 1997, the
Company's  loan  portfolio  had  an  outstanding  balance of approximately $81
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. 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 ("MF I"), MF Receivables Corp.
II  ("MF  II"),  and MF Receivables Corp. III ("MF III") (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  and  the  Warehouse  Line of Credit (Note 5).  On a
monthly  basis,  all  cash  collections  in  excess  of  disbursements  to the
noteholders  of  the Automobile Receivables-Backed Notes, or to  Daiwa Finance
Corporation, and other general disbursements, are  paid to MF I, MF II, and MF
III. At December 31, 1997 and 1996, the Company had $1,652,596 and $3,329,031,
respectively,  of  its  restricted  cash  balances  invested in overnight 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.  In 1997, the Company
also  purchased  loan  portfolios  of  previously  originated  automobiles. At
December  31, 1997 and 1996, approximately $1.4 million, or 2% , $4.7 million,
or  6%,  of  the Automobile Receivables loan portfolio were generated from the
CarMart  operations.

REPOSSESSED  VEHICLES  HELD  FOR  RESALE
----------------------------------------
     Repossessed  vehicles  held  for  resale  consist of repossessed vehicles
awaiting  liquidation.  Repossessed  vehicles  are carried at estimated actual
cash  value.    At  December  31,  1997  and  1996,  approximately 484 and 651
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), certain of the value of
which  may  be  recovered  from  insurance  proceeds.

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
--------------------
     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 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,  net of estimated recoveries, all Contracts
over  100  days  contractually  past  due.

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).    Subsequent receipts of excess
interest  are  applied  to  reduce  excess  interest  receivable.

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.

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, 1997 and 1996 exceeded the amount by $9,840,730 and
$5,666,759,  respectively.


EARNINGS  PER  SHARE
--------------------
     In  February  1997,  the  Financial  Accounting  Standards  Board  issued
Statement  No.  128,  Earnings  per  Share,  ("SFAS  128")  which requires the
presentation of basic and diluted earnings per share on the face of the income
statement  for  entities with a complex capital structure.  Basic earnings per
share is calculated by dividing net income attributable to common shareholders
by  the  weighted  average  number  of  common  shares  outstanding.  Dilutive
earnings  per share is computed similarly, but also gives effect to the impact
convertible  securities, such as convertible debt, stock options and warrants,
if dilutive, would have on net income and average common shares outstanding if
converted  at  the  beginning  of  the  year.    SFAS  128  also  requires  a
reconciliation  of  the  numerator  and  denominator of the basic earnings per
share  computation  to  the  numerator and denominator of diluted earnings per
share  computation.    The  Company  implemented  SFAS  128 effective with its
December  31, 1997, financial statements.   The Company has incurred losses in
each  of the periods covered in these financial statements, thereby making the
inclusion  of  convertible  securities  in  the 1996 primary and fully diluted
earnings  per  share  computations  and  the  1997 dilutive earnings per share
computations  antidilutive.   Accordingly, convertible securities have already
been  excluded from the previously reported primary and fully diluted earnings
per share amounts and do not require restatement.  Basic and dilutive earnings
per  share  are  the  same for each period presented.  See Note 9 - Subsequent
Events  for  a  description  of  additional  shares  issued  in  1998.

<TABLE>

<CAPTION>

                     ANTIDILUTIVE SECURITIES EXCLUDED FROM DILUTIVE EARNINGS PER SHARE


<S>                                     <C>              <C>          <C>
                                           EXERCISE OR    POTENTIALLY
                                           CONVERSION      DILUTIVE
Security                                     PRICE          SHARES       EXPIRATION DATE
                                        ---------------  -----------  --------------------
  Stock Options. . . . . . . . . . . .  $0.531 - $6.625    1,402,500  1/6/2002 - 8/25/2007
  Warrants . . . . . . . . . . . . . .  $  1.00 - $6.00      244,000   3/15/98 -12/31/2000
  Convertible Subordinated Debenture .  $          3.42      404,970                3/1/98
  Convertible Senior Subordinated Note  $          4.00    1,250,000              1/9/2001
<FN>

</TABLE>




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.

     In  connection with the purchase of Contracts, the Company is required to
estimate  the number and dollar amount of loans expected to result in defaults
and  to  estimate the amount of loss that will be incurred under each default.
The  Company  currently  provides  allowances  for  these  losses based on the
historical  performance of the Contracts which are tracked by the Company on a
static pool basis. The actual losses incurred could differ materially from the
amounts  that  the  Company  has  estimated  in  preparing  the  historical
consolidated  financial  statements.

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.

SUPPLEMENTAL  DISCLOSURES  OF  CASH  FLOW  INFORMATION
------------------------------------------------------

<TABLE>

<CAPTION>
<S>                 <C>         <C>
                          1997        1996
                    ----------  ----------
Cash Payments for:
Interest . . . . .  $5,562,880  $4,535,614
Income Taxes . . .  $    3,108  $    1,455

<FN>

</TABLE>



     Non-cash  investing  and  financing  activities:
In  May 1996, the Company issued a note for $107,407 for the sale of furniture
and  equipment.
In  April  1997,  Pacific  USA Holdings Corp. ("Pacific") converted the entire
$3,000,000 outstanding principal amount of an installment note payable made by
Pacific to the Company into 1.5 million shares of the Company's Class A Common
Stock.  See  Note  4.

TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENTS OF LIABILITIES
------------------------------------------------------------------------------
     In  June  1996,  the Financial Accounting Standards Board issued SFAS No.
125,  Accounting  for  Transfers  and  Servicing  of  Financial  Assets  and
Extinguishments  of  Liabilities  (subsequently amended by SFAS No. 127). SFAS
No.  125  is  effective  for  transfers  and servicing of financial assets and
extinguishments  of liabilities occurring after December 31, 1996 and is to be
applied  prospectively.  This  Statement  provides  accounting  and  reporting
standards  for transfers and servicing of financial assets and extinguishments
of  liabilities  based  on  consistent  application  of a financial-components
approach  that  focuses  on  control.  It distinguishes transfers of financial
assets  that  are sales from transfers that are secured borrowings. Management
of  the  Company  does  not  expect that adoption of SFAS No. 125 will have  a
material impact on the Company's financial position, results of operations, or
liquidity.

RECENTLY  ISSUED  ACCOUNTING  STANDARDS
---------------------------------------
     In  June  1997,  the Financial Accounting Standards Board issued SFAS No.
130,  "Reporting  Comprehensive  Income"  and SFAS No. 131, "Disclosures about
Segments  of  an  Enterprise  and  Related Information", both of which are not
applicable  to  the  Company.

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

NOTE  2  -  AUTOMOBILE  RECEIVABLES
-----------------------------------
<TABLE>

<CAPTION>

Automobile  receivables  consist  of  the  following:


                                                          DECEMBER 31,
<S>                                                <C>             <C>
                                                            1997          1996
                                                   --------------  ------------
Retail installment sales contracts. . . . . . . .  $  37,103,262   $11,777,343
Retail installment sales contracts-Trust (Note 4)     37,323,549    71,129,192
Excess interest receivable. . . . . . . . . . . .      4,849,209     6,555,682
Other . . . . . . . . . . . . . . . . . . . . . .        777,749       616,230
Accrued interest. . . . . . . . . . . . . . . . .      1,121,161     1,331,450
                                                   --------------  ------------
Total finance receivables . . . . . . . . . . . .     81,174,930    91,409,897
Allowance for credit losses . . . . . . . . . . .     (6,850,499)   (9,518,962)
                                                   --------------
Automobile receivables - net. . . . . . . . . . .  $  74,324,431   $81,890,935
                                                   ==============  ============
<FN>

</TABLE>



     At December 31, 1997, the accrual of interest income was not suspended on
any  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
predicted  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.  A provision for credit losses is
charged  to  earnings  in an amount sufficient to maintain the allowance. This
allowance  is  reported  as  a  reduction  to  Automobile  Receivables.

<TABLE>

<CAPTION>




<S>                                                    <C>
                                                       ALLOWANCE FOR
                                                       CREDIT LOSSES
                                                       ---------------
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
Provisions for credit losses. . . . . . . . . . . . .       3,873,719
Unearned interest income. . . . . . . . . . . . . . .       2,825,819
Unearned discounts. . . . . . . . . . . . . . . . . .       2,354,792
Retail installment sale contracts charged off . . . .     (22,643,864)
Recoveries. . . . . . . . . . . . . . . . . . . . . .      10,921,071
                                                       ---------------
Balance as of December 31, 1997 . . . . . . . . . . .  $    6,850,499
                                                       ===============

<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. Also, the 1997 provision for credit
losses  includes a $3.6 million fourth quarter charge for a change in estimate
related  to  its  static  pooling  reserve  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).  Subsequent  receipts  of excess
interest  are  applied  to  reduce  excess interest receivable.  For the years
ended  December 31, 1997 and 1996, $4,532,301 and $3,704,234, respectively, of
excess  interest  income  was  amortized  against  interest  receivable.


<PAGE>
The  December  31, 1997, excess interest receivable balance of $4,849,209 will
be  amortized  as  follows:
<TABLE>

<CAPTION>

<S>     <C>

         AMORTIZATION
        -------------
1998        2,892,271
1999        1,302,242
2000          519,749
2001          125,072
2002            9,875
        -------------
           $4,849,209
        =============
<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
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>
As Reported: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         1996
----------------------------------------------------------------------------  ------------
Income (loss) from continuing operations
   before cumulative effect of a change in accounting principle. . . . . . .  ($2,471,424)
(Loss) on disposal of discontinued business (net of taxes) . . . . . . . . .     (301,451)
Cumulative effect on prior years
    of changing to a different reserve method. . . . . . . . . . . . . . . .   (4,912,790)
                                                                              ------------

Net (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  ($7,685,665)
                                                                              ============

EARNINGS (LOSS) PER COMMON SHARE (BASIC AND ASSUMING DILUTION):
----------------------------------------------------------------------------

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

Net (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       ($1.10)
                                                                              ============

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

(Loss) from continuing operations. . . . . . . . . . . . . . . . . . . . . .  ($2,471,424)
(Loss) per common  share-basic and assuming dilution . . . . . . . . . . . .       ($0.35)

Net (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  ($2,772,875)
(Loss) per common  share-basic and assuming dilution . . . . . . . . . . . .       ($0.40)
<FN>

</TABLE>




NOTE  3  -  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.

     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 $43,312 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, plus occupancy
costs,  under  a  sublease ending November 30, 2000. This 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  its  seven-year  lease to include the
property at 894 S. Havana, Aurora, Colorado 80010.  The Company currently pays
$15,238  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 was extended for a three-year period through March
2000.  The Company may, at its sole discretion, extend the Englewood, Colorado
lease  for  an  additional  three-year period through March 2003.  The Company
currently  pays  $9,833  per month. The Company currently pays monthly rent of
$1,800  on  a  triple  net  basis  on  the  Colorado Springs, Colorado  lease.
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.

     At  December  31,  1997,  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
-------------  -------------  ----------  -----------
1998. . . . .  $   1,000,926  $  277,240  $   723,686
1999. . . . .        897,037     277,490      619,547
2000. . . . .        318,948     191,498      127,450
2001. . . . .         46,866      37,800        9,066
Thereafter. .              -           -            -
               -------------  ----------  -----------
               $   2,263,777  $  784,028  $ 1,479,749
               =============  ==========  ===========
<FN>

</TABLE>



     Total  net  lease  expense for the years ended December 31, 1997 and 1996
was  $697,080  and  $631,931,  respectively.

CONTINGENCIES
-------------
     Although not subject to any material litigation at this time, the Company
and  its  Subsidiaries  at  times are subject to various legal proceedings and
claims  that  arise  in  the  ordinary  course  of business. In the opinion of
management  of the Company, based in part on the advice of counsel, the amount
of  any  ultimate  liability with respect to these actions will not materially
affect  the  results  of  operations,  cash flows or financial position of the
Company. It is the Company's and its Subsidiaries' policy to vigorously defend
litigation,  however,  the  Company  and its Subsidiaries have, and may in the
future,  enter  into settlements of claims where management deems appropriate.

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 $310,000  and
$290,000,  respectively, under their Employment Agreements and are eligible to
receive  medical  and  hospitalization  insurance and other fringe benefits as
provided  to  the  Company's  other  executive-level  employees,  including
participating  in  stock  option  grants  by  the  Company.    The  Employment
Agreements  have  three-year terms which began in December, 1997. Upon written
notice, the Company may terminate the Employment Agreement for cause.  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.  In  exchange for the non-compete agreement, each
individual  is  to  be  paid a non-competition payment of $300,000, to be paid
equally  in  arrears  at  the  end  of  each  of  the  two years following the
individuals'  employment.

LOANS  IN  FUNDING  (COMMITMENTS)
---------------------------------
     As  of December 31, 1997, there were no 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  $24,728  and  $26,239  in  1997  and  1996,  respectively.

NOTE  4  -  DEBT
----------------

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  was extended from January 1, 1998 to March 23, 1998, at which time the
outstanding  balance  on the line of credit was paid in full. At the option of
the  Company,  the interest rate charged on the loans was either .5% in excess
of  the  prime rate charged by lender or 2.75% over the applicable LIBOR rate.
The  Company  was 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 was subject to standard conditions. The collateral
securing  payment  consisted  of all Contracts pledged and all other assets of
the  Company. The Company had agreed to maintain certain restrictive financial
covenants.    As  of  December  31,  1997, the Company had borrowed $6,375,549
against  this  line  of  credit.

WAREHOUSE  LINE  OF  CREDIT  -  DAIWA  FINANCE  CORPORATION
-----------------------------------------------------------
     In  December  1997,  MF  Receivables Corp. III ("MF III"), a wholly owned
special  purpose  subsidiary  of  the  Company,  entered  into  a  $75 million
Warehouse  Line  of  Credit  with  Daiwa  Finance  Corporation ("Daiwa").  All
advances  received  under  the  line  of  credit  are secured by eligible loan
Contracts  and  all  proceeds  received  from  those Contracts.  The scheduled
maturity  date  in  respect  to  any  advance  under the line of credit is the
earlier  of  364  days  following the date of the advance or December 3, 1999.
Under  the Credit Agreement, 85% of the amount advanced to the Company accrues
interest  at  a rate equal to LIBOR plus 2.5% per annum.  The remaining 15% of
the  amount advanced accrues interest at a rate of 12% per annum.  The Company
is obligated to pay Daiwa an unused facility fee equal to .375% of the average
daily  unused  portion of the credit agreement.  The Credit Agreement requires
the  Company  to  maintain certain standard ratios and covenants.  At December
31,  1997, the Company had borrowed $30.0 million against this line of credit.

     The  assets  of  MF III are not available to pay general creditors of the
Company.  All  cash  collections in excess of disbursements to Daiwa and other
general  disbursements  are  paid  to  MF  III  on  a  monthly  basis.

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.

     On April 25, 1997, the Company executed a Conversion and Rights Agreement
(the  "Conversion  Agreement")  with  Pacific.      The  Conversion  Agreement
converted  the  entire  $3,000,000  outstanding  principal  amount  of  the
installment  note  made  by Pacific to the Company into 1.5 million restricted
shares  of  the Company's Class A Common Stock.  The Conversion Agreement also
released  the  Company from all liability under the Loan Agreement executed on
October  29,  1996  between  the  Company and Pacific pursuant to which the $3
million  loan  was  made.

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.  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
principal  amount  of  the Notes, plus accrued and unpaid interest, was due on
March  1, 1998. On March 1, 1998, the Company repaid one-half, or $692,500, of
the  then  outstanding principal amount of the Notes. The maturity date of the
remaining  principal  amount  of  notes  of $692,500 was extended to April 15,
1998, without penalty. 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.

<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,  July  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.

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"). This agreement was
subsequently  amended  and  approved  by  the Company's Board of Directors and
passed  by  the  Company's Shareholders on September 10, 1996. 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  $4.00  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  September  10,  1998,  between the Company and Black Diamond Advisors,
Inc.  ("Black  Diamond"),  one  of  the  initial  purchasers,  with an initial
conversion  price  of  $3.00  per  share.

AUTOMOBILE  RECEIVABLES  -  BACKED  NOTES
-----------------------------------------
     In  November 1994, MF Receivables Corp. I. ("MF I"), 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  accrued  interest  at  a  fixed  rate  of  7.6%  per  annum.

     On  July 24, 1997, the Company redeemed the outstanding principal balance
of its Series 1994-A Notes.  The bonds were redeemed at their principal amount
of  $1,220,665.33  plus accrued interest to July 24, 1997.  Upon redemption of
the  Series  1994-A  Notes,  the  underlying  automobile  receivables  of
approximately $2.5 million were pledged under the terms of the Revolving Note.

     In  May  of  1995,  MF I issued its Floating Rate Auto Receivables-Backed
Note  (Revolving  Note" or "Series 1995-A Note"). MF I 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 I
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  all  future  Contracts  acquired  by  MF  I.

     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  maximum  limit  for  the  Series  1995-A Note is $40 million.

     On  December  4,  1997,  the  Company  redeemed the outstanding principal
balance of its Series 1995-A Note.  The bonds were redeemed at their principal
amount  of  $12,271,457  plus  accrued  interest  to  December  4, 1997.  Upon
redemption  of  the  Series 1995-A Note, the underlying automobile receivables
were  pledged under the terms of the Warehouse Line of Credit. At December 31,
1997,  the  1995-A  Note  did  not  have  an  outstanding  principal  balance.

     On  September 15, 1995, MF I issued the Series 1995-B Term Notes ("Series
1995-B  Notes") in the amount of $35,552,602.  The Series 1995-B Notes accrued
interest  at  a  fixed  note  rate  of  6.45%  per  annum.

     On  December  12,  1997,  the  Company redeemed the outstanding principal
balance  of  its  Series  1995-B  Notes.    The  bonds  were redeemed at their
principal  amount  of  $5,822,934  plus accrued interest to December 12, 1997.
Upon  redemption  of  the  Series  1995-B  Notes,  the  underlying  automobile
receivables  were  pledged  under  the  terms of the Warehouse Line of Credit.

     In  June  1997, MF Receivables Corp. II ("MF II"), a wholly owned special
purpose  subsidiary  of the Company, sold, in a private placement, $42,646,534
of  Class  A  automobile  receivables-backed  notes ("Series 1997-1A Notes" or
"Term  Note")  to  an  outside  investor  and $2,569,068 of Class B automobile
receivables-backed  notes  ("Class  B  Notes")  to  Monaco  Funding  Corp.,  a
wholly-owned  special  purpose  subsidiary of the Company.  The Series 1997-1A
Notes  accrue  interest at a fixed rate of 6.71% per annum and are expected to
be fully amortized by December 2002; however, the debt maturities are based on
principal payments received on the underlying receivables, which may result in
a different final maturity.  An Indenture and Servicing Agreement require that
the  Company  and  MF  II  maintain certain financial ratios, as well as other
representations,  warranties  and  covenants.

     In  connection  with  the  purchase  of the Class B Notes, Monaco Funding
Corp.  borrowed  $2,525,000  from a financial institution ("Promissory Note").
The  Promissory  Note accrues interest at a fixed rate of 16% per annum and is
collateralized by the proceeds from the Class B Notes.   The Class B Notes are
expected  to be fully amortized by December 2002; however, the debt maturities
are  based on principal payments received on the underlying receivables, which
may result in a different final maturity.  Monaco Funding Corp. is required to
maintain  certain  covenants  and  warranties  under  the  Pledge  Agreement.

     The  assets  of MF I, MF II and Monaco Funding Corp. 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  1995-A  Note  and Series 1997-1A 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 1995-A, Series 1997-1A
and Promissory Note noteholders and other general disbursements are paid to MF
I  and  MF  II  on  a  monthly  basis.

     As of December 31, 1997, the Series 1997-1A Notes and the Promissory Note
had a note balance of $32,421,076 and $1,135,232, respectively. The underlying
receivables  backing  the  1997-1A  notes  had  a balance of $37,323,549 as of
December  31,1997.

TOTAL  DEBT  MATURITIES
-----------------------
     Estimated  aggregate  debt  maturities  for the years ending December 31,
1998  through  2002    are  as  follows:
<TABLE>

<CAPTION>



<S>          <C>          <C>         <C>         <C>
1998. . . .         1999        2000        2001   2002
-----------  -----------  ----------  ----------  -----
$18,758,578  $10,851,303  $8,664,759  $5,000,000  $   0
<FN>

</TABLE>




NOTE  5  -  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 on June 30, 2002,
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, 1997 and 1996, the Company has granted options to acquire a total
of 1,402,500 and 840,300 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 $0.53 to $6.63 a share, which
represents  bid  prices  of  the  Company's Common Stock at the date of grant.
Through  December  31,  1997,  5,100  of  these  options  have been exercised.

<TABLE>

<CAPTION>



<S>                                      <C>            <C>
                                         OPTION PRICE
                                         PER SHARE      OPTIONS
                                         -------------  ----------
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
Granted . . . . . . . . . . . . . . . .  $0.53 - $2.44    691,700
Canceled. . . . . . . . . . . . . . . .  $1.88 - $6.63   (124,400)
Exercised . . . . . . . . . . . . . . .  $0.53 - $1.88     (5,100)
                                         -------------  ----------
Outstanding December 31, 1997 . . . . .  $  0.53-$6.63  1,402,500
                                                        ==========
Weighted Average Option Price Per Share                 $     1.71
                                                        ==========
<FN>

</TABLE>



     Prior to January 1, 1996, the Company accounted for its stock option plan
in  accordance  with  the  provisions  of  Accounting Principles Board ("APB")
Opinion  No.  25,  Accounting  for  Stock  Issued  to  Employees,  and related
interpretations.  As  such, compensation expense would be recorded on the date
of grant only if the current market price of the underlying stock exceeded the
exercise  price.  On  January  1,  1996,  the  Company  adopted  SFAS No. 123,
Accounting  for  Stock-Based Compensation, which permits entities to recognize
as expense over the vesting period the fair value of all stock-based awards on
the  date  of  grant.

     Alternatively, SFAS No. 123 also allows entities to continue to apply the
provisions  of  APB  Opinion No. 25 and provide pro forma net earnings and pro
forma  earnings per share disclosures for employee stock option grants made in
1995  and  future  years as if the fair-value-based method defined in SFAS No.
123  had  been  applied.  The  Company  has  elected  to continue to apply the
provisions  of  APB  Opinion  No.  25  and  provide  the  pro forma disclosure
provisions  of  SFAS  No.  123.

     The  Company  uses one of the most widely used option pricing models, the
Black-Scholes  model  (the  Model),  for purposes of valuing its stock options
grants. The Model was developed for use in estimating the fair value of traded
options  which  have  no  vesting  restrictions and are fully transferable. In
addition,  it  requires  the  input of highly subjective assumptions including
the  expected  stock price volatility, expected dividend yields, the risk free
interest rate, and the expected life. Because the Company's stock options have
characteristics  significantly  different  from  those  of traded options, and
because changes in subjective input assumptions can materially affect the fair
value  estimate, in management's opinion, the value determined by the Model is
not  necessarily  indicative  of  the  ultimate  value of the granted options.

     Had compensation cost for the Company's stock option plan been determined
based  on  the fair value at the grant date for awards in 1997 consistent with
the  provisions  of  FAS  123,  the  Company's  1997  net  loss  and basic and
dilutitive  loss  per  common share would have been increased to the pro forma
amounts  indicated  below:

<TABLE>

<CAPTION>
<S>                                    <C>

Net (loss) - as reported. . . . . . .  ($9,355,000)
Net (loss) - pro forma. . . . . . . .  ($9,604,329)
(Loss) per common share - as reported       ($1.18)
(Loss) per common share - pro forma .       ($1.21)
<FN>

</TABLE>



     Of the 691,700 options granted in 1997, 327,396 options were vested as of
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 1997:  dividend yield of 0.0%; expected
average annual volatility of 156.6%; average annual risk-free interest rate of
5.6%;  and  expected  lives  of  10  years.

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.

OTHER
-----
     On or about December 4, 1997, Consumer Finance Holdings, Inc. ("CFH") and
Morris  Ginsburg,  the Company's President, Sandler Family Partners, Ltd., and
Irwin  L.  Sandler,  the Company's Executive Vice President, (collectively the
"Shareholders")  entered  into  an Option Agreement effective as of that date.
CFH  is  a  wholly-owned  subsidiary  of  Pacific USA Holdings Corp. ("Pacific
USA"). Pursuant to the Option Agreement, the Shareholders granted a three-year
option  to  CFH (the "Call Option") to purchase all, but not less than all, of
the  830,000  shares  of  Class  B Common Stock owned by the Shareholders (the
"Option  Shares")  at  a  purchase price of $4.00 per share. Concurrently, CFH
granted  to  each  Shareholder  a three-year option (the "Put Option") to sell
that portion of the Option Shares held by each Shareholder at a price of $4.00
per  share.  The  Put  Option is exercisable with respect to 50% of the Option
Shares  during  the  30-day  period  following  the  second anniversary of the
effective  date  and  50%  during  the  30-day  period  following  the  third
anniversary  of the effective date. The Call Option and Put Option both expire
on  the  third anniversary date of the effective date, or on December 4, 2000.
In  the event that CFH or any of its affiliates exercises the Call Option, and
within  180 days after closing thereof, sells or agrees to sell any portion of
the  Option  Shares  to  a  person  who is not an affiliate of CFH for a price
greater  than  $4.00  per  share,  the  seller  shall  be obligated to pay the
Shareholders  50%  of such excess. The Shareholders agreed not to pledge, sell
or  otherwise  transfer  the  Option Shares at any time during the term of the
Call Option except to the extent of exercise of the Put Option. The obligation
of  CFH under the Put Option is secured by funds in a segregated bank account.

     Pursuant  to the Option Agreement, each Shareholder granted CFH the right
to  vote  all  Option  Shares  and to direct the exercise of all consensual or
other  voting  rights  with  respect to any additional shares of the Company's
capital  stock  as  to  which any Shareholder holds a proxy granted by a third
party,  subject  to  any fiduciary duty owed to the grantor of any such proxy.
The  Shareholders  retain all other incidents of ownership with respect to the
Option  Shares, including, but not limited to, the right to receive dividends.

     The  Option Agreement further provides that CFH shall vote or cause to be
voted  shares  of the Company's capital stock, including the Option Shares, to
maintain  Messrs.  Ginsburg  and  Sandler  as  directors  of  the Company. The
Shareholders  agree to use their best efforts to provide CFH with the right to
designate four directors to the Company's board or such larger number as shall
then  be  sufficient to provide CFH with effective control of the board. As of
the  date  hereof,  the  board  consists  of  four  members.

     Pacific  USA  is  the  record owner of 1,500,000 shares of Class A Common
Stock.  As  a result of the Option Agreement, it was granted the power to vote
the  830,000  shares  of  Class B Common Stock owned by the Shareholders and a
limited  power  to  direct the voting of shares subject to proxies held by the
Shareholders.    As  of  December 31, 1997, 7,203,479 shares of Class A Common
Stock  are issued and outstanding and 1,273,715 shares of Class B Common Stock
are  issued  and  outstanding. The Class A Common Stock has one vote per share
while  the  Class  B  Common  Stock has three votes per share. The Class A and
Class  B Common Stock vote together as one class. Accordingly, Pacific USA may
be deemed to be the beneficial owner of approximately 32.7% of the Class A and
Class  B  Common  Stock  and  controls approximately 48.3% of the total voting
power.  Upon exercise of either the Put Option or the Call Option, the Class B
Common  Stock  purchased by CFH will automatically convert into Class A Common
Stock  thereby  reducing  the  voting  power  of  Pacific  USA.

     On  or  about  May  14,  1993,  the Company, Sandler Family Partners, and
Messrs.  Ginsburg  and  Sandler  entered into a Buy-Sell Agreement  giving the
Company the right to buy all shares of its capital stock owned by Mr. Ginsburg
upon  his  death and all shares of its capital stock beneficially owned by Mr.
Sandler  upon his death. In addition, the Company had a right of first refusal
to  purchase  any  such  stock  desired  to be sold by Mr. Ginsburg or Sandler
Family  Partners.  This  right  of first refusal was exercisable by either the
Issuer  or  the non-selling Shareholder. The parties to the Buy-Sell Agreement
have  agreed  that  the  purchase  rights  and  obligations  under  the Option
Agreement  shall  supersede the purchase and right of first refusal provisions
contained  in  the Buy-Sell Agreement during the term of the Option Agreement.

NOTE  6  -  INCOME  TAXES
-------------------------
     The  Company is required to measure current and deferred tax consequences
of  all  events  recognized  in  the  financial  statements  by  applying  the
provisions  of  enacted  tax  laws to determine the amount of taxes payable or
refundable  currently  or  in  future  years.  The measurement of deferred tax
assets is reduced, if necessary, by the amount of any tax benefits that, based
on  available evidence, are not expected to be realized. The major and primary
source  of  any  differences  is  due to the Company accounting for income and
expense  items  differently  for  financial reporting and income tax purposes.

<TABLE>

<CAPTION>

     The  provision  for  income  taxes  is  summarized  as  follows:



                                    FOR THE YEARS ENDED
                                         DECEMBER 31,
                                    --------------------
                                    1997              1996
                            --------------------  ------------
<S>                         <C>                   <C>
Current expense (benefit)
Federal. . . . . . . . . .  $                  -  $  (350,000)
State. . . . . . . . . . .                     -            -
                            --------------------  ------------
                            $                  -  $  (350,000)
                            --------------------
Deferred expense (benefit)
Federal. . . . . . . . . .  $                  -  $(1,164,007)
State. . . . . . . . . . .                     -     (166,080)
                            --------------------  ------------
                            $                  -  $(1,330,087)
                            --------------------  ------------
TOTAL. . . . . . . . . . .  $                  -  $(1,680,087)
                            ====================  ============
<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>
                                                                      1997          1996
                                                                  ------------   ------------
Computed income taxes (benefit) at statutory rate - 34%. . . . .  $ (3,180,700)  $(3,184,356)
State income taxes (benefit), net of Federal income tax benefit.      (318,070)     (333,114)
Change in valuation allowance. . . . . . . . . . . . . . . . . .      3,498,770    1,837,383
                                                                  -------------  ------------
                                                                  $           -  $(1,680,087)
                                                                  =============  ============
<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:
<TABLE>

<CAPTION>



                                                    DECEMBER 31,
                                                   --------------
<S>                                      <C>             <C>
                                                  1997          1996
                                         --------------  ------------
Deferred tax assets:
---------------------------------------
Federal and State NOL tax carry-forward  $   8,460,033   $ 5,143,530
Other . . . . . . . . . . . . . . . . .         45,931        48,296
                                         --------------  ------------
                                             8,505,964     5,191,826
    Valuation allowance . . . . . . . .     (5,336,154)   (1,837,383)
                                         --------------  ------------
Total deferred tax assets . . . . . . .      3,169,810     3,354,443
                                         --------------  ------------
Deferred tax liabilities:
---------------------------------------
Depreciation. . . . . . . . . . . . . .        (68,057)      (90,768)
Allowances and loan origination fees. .     (1,521,974)   (1,682,024)
                                         --------------  ------------
Total deferred tax liability. . . . . .     (1,590,031)   (1,772,792)
                                         --------------  ------------
Net deferred tax asset. . . . . . . . .  $   1,579,779   $ 1,581,651
                                         ==============  ============
<FN>

</TABLE>



     The  net  deferred 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,  1997,  the  Company  had  a  net  operating  loss
carryforward  of  approximately $22.1 million for federal income tax reporting
purposes  which,  if  unused,  will  expire  in  2011  and  2012.

     The  Company's ability to generate future taxable income will depend upon
its  ability  to  implement  its  growth  strategy.    At  September 30, 1997,
management has estimated that it is more likely than not that the Company will
have some future net taxable income within the net operating loss carryforward
period.  Accordingly, a valuation allowance against the deferred tax asset has
been  established  such  that  operating  loss  carryforwards will be utilized
primarily to the extent of estimated future taxable income.  The need for this
allowance is subject to periodic review.  Should the allowance be increased in
a future period, the tax benefits of the carryforwards will be recorded at the
time as an increase to the Company's income tax expense.  Should the allowance
be  reduced  in a future period, the tax benefits of the carryforwards will be
recorded  at  the  time  as  an reduction to the Company's income tax expense.

     The  increase of approximately $3.5 million in the valuation allowance in
1997  was  primarily  due to a $3.3 million increase in net operating loss tax
carryforward  and a $0.1 million  decrease in deferred tax liabilities related
to  Allowances  and  Loan  Origination  Fees.

NOTE  7  -  DISCONTINUED  OPERATIONS
------------------------------------
     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 expected disposal date of the CarMart
business  from  April  30,  1996  to  May  31,  1996.

     Effective  May 31, 1996, the Company entered into a sublease agreement on
all  of  its former CarMart properties for the entire lease terms at an amount
approximately  equal  to  the  Company's  obligation.

     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 1996 loss from operations of
CarMart.

NOTE  8-  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, 1997 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, 1997 approximates fair value at that
date.

PROMISSORY  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,  1997  were  as  follows:

<TABLE>
<CAPTION>


                                                      December  31,  1997
                                                      -------------------
<S>                                             <C>                <C>
                                                CARRYING AMOUNT    FAIR VALUE
                                                -----------------  ------------
Financial Assets:
----------------------------------------------
Cash and Cash Equivalents and Restricted Cash.  $      8,837,574   $ 8,837,574
Automobile Receivables . . . . . . . . . . . .        81,174,930    81,174,930
Less: Allowance for Credit Losses. . . . . . .        (6,850,499)   (6,850,499)
                                                -----------------  ------------
     Total . . . . . . . . . . . . . . . . . .  $     83,162,005   $83,162,005
                                                =================  ============
Financial Liabilities:
----------------------------------------------
Accrued Interest Payable (included in
   Accrued expenses and other liablities). . .  $        462,265   $   462,265
Promissory Note Payable. . . . . . . . . . . .         1,135,232     1,135,232
Convertible Subordinated Debt. . . . . . . . .         1,385,000     1,385,000
Senior Subordinated Debt . . . . . . . . . . .         3,333,332     3,333,332
Convertible Senior Subordinated Debt . . . . .         5,000,000     5,000,000
Automobile Receivables-backed Notes. . . . . .        32,421,076    32,421,076
                                                -----------------  ------------
     Total . . . . . . . . . . . . . . . . . .  $     43,736,905   $43,736,905
                                                =================  ============
<FN>

</TABLE>



NOTE  9  -  SUBSEQUENT  EVENTS
------------------------------
     In  connection  with  its  portfolio  acquisition  strategy,  the Company
entered  into  an  Amended  and  Restated Asset Purchase Agreement dated as of
January  8,  1998  (the "Asset Purchase Agreement"), with Pacific USA Holdings
Corp.  ("Pacific  USA")  and  certain  of  its wholly-owned or partially-owned
subsidiaries  -  Pacific  Southwest  Bank  ("PSB"),  NAFCO Holding Company LLC
("NAFCO"),  Advantage Funding Group, Inc. ("Advantage") and PCF Service, LLC -
providing  for,  among  other things, the purchase by the Company of sub-prime
automobile  loans  from NAFCO and Advantage having an unpaid principal balance
of  approximately  $81,115,233  for  a  purchase price of $77,870,623 of which
$73,003,709  was  paid  in  cash.  Financing  was  provided  by  Daiwa Finance
Corporation.  The Company also agreed to issue Daiwa warrants for the purchase
of  250,000  shares of Class A Common Stock. The balance of the purchase price
of  $4,866,914  was  paid  through  the  issuance  of  2,433,457 shares of the
Company's  8%  Cumulative  Convertible  Preferred  Stock,  Series  1998-1 (the
"Preferred  Stock")  valued  at $2.00 per share. Each share of Preferred Stock
will  be  convertible at any time into one-half share of Class A Common Stock,
or  an  aggregate of up to 1,216,728 shares of Class A Common Stock. Thus, the
effective  cost  to  Pacific  USA  of  the  Class A Common Stock issuable upon
conversion  of  the  Preferred  Stock  will  be  $4.00  per  share.

     As required by the Asset Purchase Agreement, PSB entered into a Loan Loss
Reimbursement  Agreement  whereby it agreed to reimburse the Company for up to
15%  of  any  losses  incurred  by  the  Company  in connection with the loans
acquired  from  NAFCO  and  Advantage.  In consideration therefor, the Company
issued  811,152  shares  of  Class  A  Common  Stock.  The  Company  allocated
$1,622,304  to  the  cost  of  the purchased loans, which represents the value
assigned  to  the  common  shares.

     Also,  the  Company may be obligated to make additional payments to NAFCO
based  on  the  performance  of  certain  potential  relationships  with  loan
originators  previously  associated  with  NAFCO.  If  there  are  any pre-tax
earnings  associated  with  these operations for calendar years 1998 and 1999,
the  Company  is obligated to pay NAFCO shares of the Company's Class A Common
Stock  valued  at  the average daily closing price of such stock on the NASDAQ
Stock Market for the last ten days of such calendar year. The number of shares
of Class A Common Stock, if any, which the Company may be required to issue to
NAFCO  pursuant  to  these  agreements  cannot  be  determined  at  present.

     The  Company filed the required documents under the Hart-Scott-Rodino Act
("HSR  Act")  on  January 15, 1998, and received the necessary approvals under
the  HSR  Act  on  or  about  February  10,  1998.

     Pacific  USA  was  the record owner of 1,500,000 shares of Class A Common
Stock  as  of  December  31, 1997. As a result of the Option Agreement, it was
granted  the  power  to  vote  the  830,000  shares  of  Class  B Common Stock
beneficially  owned  by  the  Messrs.  Ginsburg  and  Sandler  (President  and
Executive  Vice  President, respectively, of the Company) ("the Shareholders")
and  a limited power to direct the voting of shares subject to proxies held by
the  Shareholders. Also, under the terms of the Asset Purchase Agreement dated
January  8, 1998, Pacific USA was issued 811,152 shares of the Company's Class
A  Common  Stock.  As  of the date of this report, 8,014,631 shares of Class A
Common Stock are issued and outstanding and 1,273,715 shares of Class B Common
Stock  are  issued  and outstanding. The Class A Common Stock has one vote per
share  while  the  Class B Common Stock has three votes per share. The Class A
and  Class B Common Stock vote together as one class. Accordingly, Pacific USA
may be deemed to be the beneficial owner of approximately 38.6% of the Class A
and  Class B Common Stock and controls approximately 51.8% of the total voting
power. Pacific USA has an option expiring in December 2000 to purchase 830,000
shares  of  Class  B  Common  Stock,  owned  by  the  Shareholders,  while the
Shareholders  have  an option, also expiring in December 2000, to require that
Pacific  USA  purchase  all  of  such  shares. Upon exercise of either the put
option  or  the  call  option,  the Class B Common Stock purchased by CFH will
automatically  convert  into  Class A Common Stock thereby reducing the voting
power  of  Pacific  USA.

     On  a  pro  forma  basis, Stockholders' Equity increased to approximately
$15.0  million  as  a  result of the Asset Purchase Agreement dated January 8,
1998.



 57
<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, 1998:

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, 1997 and 1996                      31
Consolidated  Statements  of  Operations For the Years Ended December 31,
  1997  and  1996                                                           32
Consolidated  Statements  of  Stockholders'  Equity  For  The Years Ended
  December  31,  1997  and  1996                                            33
Consolidated  Statements  of  Cash Flows For The Years Ended December 31,
  1997  and  1996                                                           34
Notes to Consolidated Financial Statements                               35-57

  58
<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)
3.3      Articles of Amendment to the Articles of Incorporation increasing the
          number  of  authorized shares of Class A Common Stock and Preferred
          Stock (19)
4.4      Form of Mergers and Acquisitions Agreement with the Underwriter (1)
4.5      Preferences,  Limitations  and  Relative  Rights of 8% Cumulative
          Convertible  Preferred  Stock,  Series  1998-1  (19)
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
          dated  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)
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)
10.53    Trust and Security Agreement related to the placement of $42,646,534
          and  $2,569,068  aggregate  principal  amount of automobile
          recievables-backed Class  A  Certificates  and  Class  B
          Certificates, respectively  (16)
10.54    Form  of  Class A Certificate issued by MF Receivables Corp. II
          related  to  the  private  placement  of  $42,646,534  of  6.71%
          automobile receivables-backed  notes  (16)
10.55    Form  of  Class B Certificate issued by MF Receivables Corp. II
          related to the placement of $2,569,068 of  automobile receivables-
          backed notes (16)
10.56    Loan Agreement dated June 26, 1997, between Monaco Funding Corp. and
          Heartland Bank relating to the $2,525,000 Promissory Note (16)
10.57    Option Agreement effective as of December 4, 1997, by and between
          Consumer  Finance Holdings, Inc. and Morris Ginsburg, Sandler Family
          Partners, Ltd.,  and  Irwin  L.  Sandler  (17)
10.58    Irrevocable Proxy and Power of Attorney dated December 4, 1997,
          granted  by  Morris  Ginsburg  (17)
10.59    Irrevocable Proxy and Power of Attorney dated December 4, 1997,
          granted  by  Sandler  Family  Partners,  Ltd.  (17)
10.60    Executive  Employment  Agreement  between Registrant and Morris
          Ginsburg  (17)
10.61    Executive  Employment Agreement between Registrant and Irwin L.
          Sandler  (17)
10.62    First  Amendment  to  Buy-Sell  Agreement  (17)
10.63    Amended and Restated Asset Purchase Agreement dated January 8, 1998,
          by  and  among  the  Company,  Pacific  USA Holdings Corp., and
          certain of its wholly-owned  or  partially-owned  subsidiaries  (18)
10.64    Loan  Purchase  Agreement dated January 8, 1998 among Advantage
          Funding Group, Inc., a Delaware corporation, the Company, Pacific
          USA Holdings Corp., a Texas corporation, and Pacific Southwest Bank,
          a federal savings bank (18)
10.65    Loan Loss Reimbursement Agreement dated January 8, 1998. between, on
          the  one  hand,  Pacific  Southwest  Bank, a federally chartered
          savings bank, NAFCO  Holding  Company,  LLC,  a  Delaware  limited
          liability  company,  and Advantage Funding Group, Inc., a Delaware
          corporation, and, on the other hand, the  Company  (18)
10.66    Loan Purchase Agreement dated January 8, 1998 among NAFCO Holding
          Company,  L.L.C.,  a  Delaware limited liability company, the
          Company, Pacific USA Holdings Corp., a Texas corporation, and
          Pacific Southwest Bank, a federal savings  bank  (18)
10.67    Interim Servicing Agreement dated as of January 8, 1998, between, on
          the  one  hand,  the  Company and, on the other hand, Advantage
          Funding Group, Inc., a Delaware corporation, Pacific USA Holdings
          Corp., a Texas corporation, and  Pacific  Southwest  Bank,  a
          federally  chartered  savings  bank  (18)
10.68    Interim Servicing Agreement dated as of January 8, 1998, between, on
          the  one hand, the Company and, on the other hand, NAFCO Holding
          Company, LLC, a  Delaware  limited  liability  company,  Pacific
          USA Holdings Corp., a Texas corporation,  and  Pacific  Southwest
          Bank, a federally chartered savings bank (18)
11       Statement  Re:  Computation  of  Earnings  Per  Share  -  PAGE  63
23       Consent  of  Independent  Certified  Accountants  -  PAGE  64
99      Cautionary Statement Regarding Forward-looking statements- PAGES 65-75


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.

(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.

(16) Incorporated by reference to the Registrant's Form 10-QSB for the quarter
ended  June  30,  1997.

(17)  Incorporated by reference to the Registrant's Form 8-K dated December 4,
1997.

(18)  Incorporated  by reference to the Registrant's Form 8-K dated January 8,
1998.

(19)  Incorporated  by  reference  to the Registrant's Form 8-K dated March 4,
1998.

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

     A  Form  8-K dated October 3, 1997, was filed announcing the execution of
an  Asset  Purchase  Agreement  to  acquire  certain assets from affiliates of
Dallas-based  Pacific  USA  Holdings  Corp.

A Form 8-K dated December 4, 1997, was filed announcing a change in control of
the  Registrant.

     A  Form  8-K  dated  January  8,  1998,  was  filed  announcing  that the
Registrant  had  entered into an Amended and Restated Asset Purchase Agreement
with  Pacific  USA  Holdings  Corp.,  and  certain  of  its  wholly-owned  and
partially-owned  subsidiaries, providing for, among other things, the purchase
by  the  Registrant  of  $81.1  million  of  sub-prime  auto  loans.

     A  Form  8-K  dated March 4, 1998 was filed announcing the voting results
from  the  special  meeting  of  shareholders  held  on  March  4,  1998.


<PAGE>

<TABLE>

<CAPTION>

                                           EXHIBIT 11
                              MONACO FINANCE, INC. AND SUBSIDIARIES
                              -------------------------------------
                         COMPUTATION OF EARNINGS (LOSS) PER COMMON SHARE
                         -----------------------------------------------

                                                                      YEAR  ENDED  DECEMBER  31,
<S>                                                                   <C>           <C>
                                                                             1997          1996
                                                                      ------------  ------------
EARNINGS (LOSS) PER COMMON SHARE - BASIC AND ASSUMING DILUTION

NET EARNINGS (LOSS)
--------------------------------------------------------------------

(Loss) from continuing operations. . . . . . . . . . . . . . . . . .  ($9,355,000)  ($2,471,424)
(Loss) on disposal of discontinued business. . . . . . . . . . . . .            -      (301,451)
Cumulative effect of a change in accounting principle. . . . . . . .            -    (4,912,790)
                                                                      ------------  ------------
Net (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  ($9,355,000)  ($7,685,665)
                                                                      ============  ============

AVERAGE COMMON SHARES OUTSTANDING
--------------------------------------------------------------------

Weighted average common shares outstanding - basic . . . . . . . . .    7,912,732     6,965,485
Shares issuable from assumed exercise of stock options (a) . . . . .           (b)           (b)
Shares issuable from assumed exercise of stock warrants (a). . . . .           (b)           (b)
Shares issuable from assumed conversion of 7% subordinated debt. . .           (b)           (b)
Shares issuable from assumed conversion of senior subordianted note.           (b)           (b)
                                                                      ------------  ------------
Weighted average common shares outstanding - assuming dilution . . .    7,912,732     6,965,485
                                                                      ============  ============

EARNINGS (LOSS) PER COMMON SHARE - BASIC AND ASSUMING DILUTION
--------------------------------------------------------------------

(Loss) from continuing operations. . . . . . . . . . . . . . . . . .       ($1.18)       ($0.35)
(Loss) on disposal of discontinued business. . . . . . . . . . . . .            -         (0.04)
Cumulative effect of a change in accounting principle. . . . . . . .            -         (0.71)
                                                                      ------------  ------------
(Loss) per common share - basic and assuming dilution. . . . . . . .       ($1.18)       ($1.10)
                                                                      ============  ============


<FN>

     Notes:
     ------
(a)          Dilutive  potential  common  shares are calculated using the treasury stock method.
(b)          The  computation  of  earnings per common share assuming dilution excludes dilutive
potential  common  shares  that  have  an  anti-dilutive  effect  on  earnings  per  share.
</TABLE>



<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  30,  1998,  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,  1998
Denver,  Colorado


<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 and to purchase
portfolios of previously originated sub-prime auto loans. Further expansion of
the  Company's  business  and the Company's longer-term liquidity requirements
may  require  additional  debt  or equity financing. 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
debt or equity financing may be used for working capital and general corporate
purposes,  including  repayment  of  current 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,  1997,  consists  of a $75 million warehouse line of credit with
Daiwa  Finance  Corporation which expires on December 3, 1999. The Company has
an  additional facility with Daiwa Finance Corporation to finance the purchase
of  up  to  $83  million  of  loans  purchased from Pacific USA Holdings Corp.
("Pacific  USA")  and certain of its wholly owned subsidiaries. This warehouse
line of credit, which expires January 4, 1999, was drawn down $73.9 million on
January 7, 1998, as a result of the acquisition of $81.1 million of loans from
Pacific  USA.  The  warehouse lines of credit are secured by Contracts and all
proceeds  received  from  those Contracts. A third line of credit with LaSalle
National  expired  on  March  23,  1998.  The  Company's  Floating  Rate  Auto
Receivables-Backed  Note,  issued in May 1995, under which the Company has the
ability  to  borrow  up to an aggregate of $150 million will expire on May 16,
1998.  The  ability  of  the  Company  to  receive  additional advances on its
warehouse  lines  of  credit  and to secure new financing sources is dependent
upon  compliance  with  loan  covenants and other factors. 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, 1996, and 1997, the Company
sustained  losses  of $1,341,095, $7,685,665, and $9,355,000, respectively. Of
this  amount,  approximately  $1,878,498  and  $301,451  in  1995  and  1996,
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 and from portfolio purchases.
Operating  expenses  were  approximately  12% of average gross receivables for
fiscal  1995  and  increased to approximately 17% of average gross receivables
for fiscal 1996. For fiscal 1997, operating expenses were approximately 16% of
average  gross  receivables.  During  1995, the Company expanded its staff and
other  services  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  reduced  the  volume of Contracts
acquired  by  the  Company  in  late  1996  and  the  entire  year  of  1997.

     In  the  latter  part  of  1996,  and  for  the  entire year of 1997, the
Company's policy of acquiring loans through its Dealer Network, which meet its
credit  criteria  and  provide  acceptable risk adjusted yields based upon the
Company's scoring and risk models, reduced substantially the number and amount
of new loans purchased by the Company during these periods.  The difficulty in
acquiring loans was further exacerbated by intense competition in the industry
that  drove  down  yields  for  higher-quality  Contracts to levels which were
unacceptable  to the Company.  At the same time the Company was developing the
infrastructure  and  platform  to  underwrite,  service,  and  collect  a
substantially  greater  portfolio  of  contracts. The interest spread from the
Company's approximately $75 million loan balance at December 31, 1997, was not
sufficient  to  cover  costs  of  doing  business.    As a result of portfolio
purchases  in  late  1997  and  1998  totaling approximately $100 million, the
Company increased its loan portfolio significantly. These portfolio purchases,
together  with  the  Company's  ongoing  auto loan purchases, will result in a
significant increase in interest income and have a positive impact on earnings
for  1998.

     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,
1996  and 1997, the Company's interest expense as a percentage of revenues was
35.1%  and  44.9%,  respectively. Net interest margin percentage, representing
the difference between interest income and interest expense divided by average
finance  receivables,  decreased  from  12.3%  in  1996  to  8.7% in 1997. 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.

     RELIANCE  ON  SECURITIZATIONS.  The  Company  relies  significantly  on
periodically  financing  Contracts  through  asset-backed  securitizations.
Proceeds  from securitizations are used to repay warehouse borrowings, thereby
making  such  facilities  available  for  additional  warehouse  financing.

     The  Company's  ability  to access such securitizations depends upon many
factors,  certain  of  which  are beyond the Company's control.  These factors
among  other  things include delays in completing transactions, willingness of
investors to buy automobile-backed paper, rating agencies providing investment
grade ratings and the ability to obtain credit enhancement provide by monoline
assurance  companies.    If  the Company were unable to securitize its finance
contracts,  and  did  not have sufficient credit available under its warehouse
lines  it  may  impact  its  liquidity  and  ability  to  grow.

     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 are purchased 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.  Decreases in sales of vehicles as a result of a weakness in
the  economy or for other reasons may have an  adverse affect on the Company's
business  and  that  of  the  Dealers  from  which  it  purchases  Contracts.

     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 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 and the Board of Directors, provides
adequately  for  current  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  differing  from  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 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.  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". In the fourth
quarter  of  1997,  the Company increased its Allowance for Credit losses $3.6
million  as  a  result  of  its  static  pooling  reserve  analysis.

     YEAR  2000  ISSUE.  The "Year 2000" issue affects the Company's installed
computer  systems,  network elements, software applications and other business
systems  that  have  time-sensitive  programs that may not properly reflect or
recognize  the  Year  2000.   Because many computers and computer applications
define  dates  by  the  last  two digits of the year, "00" may not be properly
identified  as  the  Year 2000.  This error could result in miscalculations or
system  failures.

     The  Company  is  conducting a review of its computer systems to identify
those  areas that could be affected by the "Year 2000" issue and is developing
an  implementation  plan  to  ensure  compliance.    The Company is using both
internal and external sources to identify, correct and reprogram, and test its
systems  for  Year  2000 compliance. Because third party failures could have a
material  impact  on  the Company's ability to conduct business, confirmations
are  being requested from our processing vendors and suppliers to certify that
plans  are  being  developed  to  address  the  Year  2000  issue. The Company
presently believes that, with modification to existing software and investment
in  new  software, the Year 2000 problem will not pose significant operational
concerns  nor  have  a material impact on the financial position or results of
operation  in any given year.  The total cost of modifications and conversions
is  not  expected  to  be  material  and  will  be  expensed  as  incurred.

     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
owned  by  either  of them upon death (the "Buy-Sell Agreement"). 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, 1997, the book value of the
stock  was approximately $1.01 per share, while the closing price of the stock
on  December  31,  1997,  was  $0.75 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. During
the term of the Option Agreement noted in "Voting Power of Class A and Class B
Common  Stock"  below,  the parties to the Buy-Sell Agreement have agreed that
the  purchase  rights  and  obligations under the Option Agremeent, also noted
below,  shall  supersede  the  purchase  and right of first refusal provisions
contained  in the Buy-Sell Agreement during the terms of the Option Agreement.
     The  Company  also  maintains a traveler's accidental death policy on the
lives  of  Messrs.  Ginsburg and Sandler 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.

     EFFECT  OF  OUTSTANDING OPTIONS AND WARRANTS. For the respective terms of
the  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.

     NASDAQ  MAINTENANCE  REQUIREMENTS.  Commencing  February  23,  1998,  the
requirements for continued trading of securities on the NASDAQ National Market
and  on  the NASDAQ Small Cap Market were changed to include requirements that
(i)  the  minimum  bid price for common stock must be $1.00 or more per share,
and (ii) the market value of the public float must be $5 million or more for a
National  Market  security  and  $1  million  or  more  for a Small Cap Market
security. If a deficiency exists for a period of 30 consecutive business days,
NASDAQ  is required to promptly notify the issuer, which will have a period of
90  calendar days from such notification to achieve compliance. Compliance can
be  achieved  by  meeting  the  applicable  standard  for  a  minimum  of  ten
consecutive  business  days  during  the  90-day  compliance  period.

     The  Company's  Class  A  Common  Stock is presently traded on the NASDAQ
National  Market. The bid price of the Class A Common Stock has been less than
$1.00  per  share  since  mid-December 1997. By letter dated Februay 27, 1998,
NASDAQ  advised  the Company that it was not in compliance with the new market
value  of  public  float  and  bid price requirements and that the Company has
until  May  28,  1998, to meet these requirements. Should the bid price of the
Class A Common Stock fail to reach $1.00 per share for ten consecutive trading
days  by  that  date,  then  the  Company  will not meet the minimum bid price
requirements  for  either  the National Market or the Small Cap Market and its
Class A Common Stock could be delisted from NASDAQ. In that event, the Class A
Common  Stock  probably  would  trade  on the OTC Bulletin Board. Stocks which
trade  on  the  OTC  Bulletin  Board generally are much less liquid than those
traded  on  certain  other markets. In addition, stocks traded on the National
Market  enjoy  certain  other  benefits  described  below.

     "Public  float" is defined as outstanding shares other than those held by
officers,  directors  and  beneficial  owners  of more than ten percent of the
total shares outstanding. From February 23, 1998 to March 30, 1998, the lowest
number  of  shares  comprising  the  Company's  public  float has consisted of
approximately  5,677,109  shares of Class A Common Stock. To meet the National
Market  requirement of $5 million in public float, the market price would have
to  be  approximately  $.88  per  share  and  to  meet  the  Small  Cap Market
requirement  of  $1 million in public float, the market price would have to be
approximately $.18 per share. Since February 22, 1998, the market value of the
public  float  has  been less than $5 million, but greater than $1 million. If
the  minimum  bid  price  requirement  is satisfied, the Company will meet the
public  float  requirement for the National Market. National Market securities
qualify  for  secondary  trading  exemptions  in  many  states  and states are
precluded  from  review  of offerings of National Market securities. Small Cap
Market  securities  do  not  have  these  benefits.

     Should the Company fail to timely meet NASDAQ's requirements, then NASDAQ
will  issue  a  delisting  letter,  which  will identify the review procedures
available  to  the Company. The Company may request review at that time, which
will  generally  stay  delisting.

     Management  is  considering  various solutions, including a reverse stock
split  and/or the sale of additional shares of Class A Common Stock to persons
other  than  officers,  directors or more than 10% stockholders, both of which
could  require  shareholder approval. No assurance can be given, however, that
the  Company  will be able to maintain the listing of the Class A Common Stock
on  either  the  NASDAQ  National  Market  or  the  NASDAQ  Small  Cap Market.

     VOTING  POWER  OF  CLASS  A  AND CLASS B COMMON STOCK. As of December 31,
1997,  1,273,715  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, 1997, holders of the Class A Common Stock owned
approximately  85%  of  the aggregate issued and outstanding shares of Class A
and Class B Common Stock, but had the power to cast approximately 65.3% of the
combined  votes  of  both  classes.

     On or about December 4, 1997, Consumer Finance Holdings, Inc. ("CFH") and
Morris  Ginsburg,  the Company's President, Sandler Family Partners, Ltd., and
Irwin  L.  Sandler,  the Company's Executive Vice President, (collectively the
"Shareholders")  entered  into  an Option Agreement effective as of that date.
CFH  is  a  wholly-owned  subsidiary  of  Pacific USA Holdings Corp. ("Pacific
USA"). Pursuant to the Option Agreement, the Shareholders granted a three-year
option  to  CFH (the "Call Option") to purchase all, but not less than all, of
the  830,000  shares  of  Class  B Common Stock owned by the Shareholders (the
"Option  Shares")  at  a  purchase price of $4.00 per share. Concurrently, CFH
granted  to  each  Shareholder  a three-year option (the "Put Option") to sell
that portion of the Option Shares held by each Shareholder at a price of $4.00
per  share.  The  Put  Option is exercisable with respect to 50% of the Option
Shares  during  the  30-day  period  following  the  second anniversary of the
effective  date  and  50%  during  the  30-day  period  following  the  third
anniversary  of the effective date. The Call Option and Put Option both expire
on  the  third anniversary date of the effective date, or on December 4, 2000.
In  the event that CFH or any of its affiliates exercises the Call Option, and
within  180 days after closing thereof, sells or agrees to sell any portion of
the  Option  Shares  to  a  person  who is not an affiliate of CFH for a price
greater  than  $4.00  per  share,  the  seller  shall  be obligated to pay the
Shareholders  50%  of such excess. The Shareholders agreed not to pledge, sell
or  otherwise  transfer  the  Option Shares at any time during the term of the
Call Option except to the extent of exercise of the Put Option. The obligation
of  CFH under the Put Option is secured by funds in a segregated bank account.

     Pursuant  to the Option Agreement, each Shareholder granted CFH the right
to  vote  all  Option  Shares  and to direct the exercise of all consensual or
other  voting  rights  with  respect to any additional shares of the Company's
capital  stock  as  to  which any Shareholder holds a proxy granted by a third
party,  subject  to  any fiduciary duty owed to the grantor of any such proxy.
The  Shareholders  retain all other incidents of ownership with respect to the
Option  Shares, including, but not limited to, the right to receive dividends.

     The  Option Agreement further provides that CFH shall vote or cause to be
voted  shares  of the Company's capital stock, including the Option Shares, to
maintain  Messrs.  Ginsburg  and  Sandler  as  directors  of  the Company. The
Shareholders  agree to use their best efforts to provide CFH with the right to
designate four directors to the Company's board or such larger number as shall
then  be  sufficient to provide CFH with effective control of the board. As of
the  date  hereof,  the  board  consists  of  four  members.

     On  March 4, 1998, the Company held a special meeting of its shareholders
to  consider  and  vote  upon  the  proposals set forth in the Company's Proxy
Statement  dated  February  3,  1998.  The  following proposals were approved:

1.         The issuance of (i) 2,433,457 shares of the Company's 8% Cumulative
Convertible  Preferred  Stock,  Series  1998-1,  (ii)  811,152  shares  of the
Company's  Class A Common Stock and (iii) a presently unknown number of shares
of  Class  A  Common  Stock,  the  issuance of which is contingent upon future
operations,  to  NAFCO  Holding  Company  LLC,  Advantage Funding Group, Inc.,
and/or Pacific Southwest Bank, or their respective designees, all of which are
subsidiaries  of  Pacific  USA  Holdings  Corp.  ("Pacific  USA"),  as partial
consideration  for  certain of the transactions under the Amended and Restated
Asset Purchase Agreement among the Company, Pacific USA and those and other of
its  affiliates  dated  January  8,  1998.

2.          An  amendment  to  the  Company's  Articles  of Incorporation  (i)
increasing  the  number  of  authorized  shares  of  Class  A  Common Stock to
30,000,000  shares,  and  (ii)  increasing  the number of authorized shares of
Preferred  Stock to 10,000,000 shares having such preferences, limitations and
relative  rights  as  may  be  determined by the Company's board of directors.

     Pacific  USA  was  the record owner of 1,500,000 shares of Class A Common
Stock  as  of  December  31, 1997. As a result of the Option Agreement, it was
granted  the power to vote the 830,000 shares of Class B Common Stock owned by
the Shareholders and a limited power to direct the voting of shares subject to
proxies  held  by  the  Shareholders.  Also, as a result of the Asset Purchase
Agreement  dated January 8, 1998, Pacific USA was issued 811,152 shares of the
Company's  Class  A  Common  Stock.  As  of the date of this report, 8,014,631
shares of Class A Common Stock are issued and outstanding and 1,273,715 shares
of  Class  B Common Stock are issued and outstanding. The Class A Common Stock
has  one  vote  per  share  while the Class B Common Stock has three votes per
share.  The  Class  A  and  Class  B  Common Stock vote together as one class.
Accordingly,  Pacific  USA  may  be  deemed  to  be  the  beneficial  owner of
approximately  38.6%  of the Company's outstanding voting stock. Upon exercise
of  either  the  put  option  or  the  call  option,  the Class B Common Stock
purchased  by CFH will automatically convert into Class A Common Stock thereby
reducing  the  voting power of Pacific USA. Currently, Pacific USA has control
of  51.8%  of  the  voting  power.

     EFFECT  OF ISSUANCE OF PREFERRED STOCK. As a result of the Asset Purchase
Agreement  dated  January  8,  1998,  the Company is authorized to issue up to
10,000,000  shares  of  preferred  stock, no par value and did issue 2,433,457
shares of Cumulative Convertible Preferred Stock, Series 1998-1(the "Preferred
Stock")  to  affiliates  of  Pacific  USA.

     So  long  as not less than 1,500,000 shares of Preferred Stock are issued
and  outstanding,  the  holders of the Preferred Stock, voting separately as a
class,  are  entitled to elect one member of the Company's board of directors.
Holders  of  the Preferred Stock otherwise have no voting rights except as may
be  required  by  the laws of the State of Colorado and except with respect to
any  amendment  to  the Company's Articles of Incorporation which would change
any  of  the rights or preferences enjoyed by such stock. Any corporate action
that  requires a vote of the holders of the Preferred Stock of the class shall
be  deemed to have been approved upon the affirmative vote by the holders of a
majority  of the issued and outstanding Preferred Stock unless a higher voting
requirement  is  imposed  by  Colorado  law.

     The  holders  of the Preferred Stock are entitled to receive when, as and
if declared by the board of directors, out of any funds of the Company legally
available  for that purpose, cumulative dividends from the date of issuance at
the rate of 8% ($.16) per share of Preferred Stock per year, payable quarterly
in  shares  of  the Company's Preferred Stock valued at $2.00 per share (or in
cash  if no preferred shares are available for that purpose). Dividends on the
Preferred  Stock  are cumulative whether or not the Company is legally able to
pay such dividends in whole or in part. No dividends (other than those payable
solely  in  common  stock) may be paid with respect to the common stock of the
Company  unless  all  accumulated  and unpaid dividends on the Preferred Stock
shall  have  been  declared  and  paid.

     The  Preferred Stock may be converted in whole or in part at any time and
from time to time into shares of Class A Common Stock at the rate of one share
of  Class  A  Common Stock for each two shares of Preferred Stock so converted
(the "Conversion Ratio"). In the event the closing price of the Class A Common
Stock on the NASDAQ Stock Market shall equal or exceed $6.00 per share on each
trading  day  during  any  period  of 60 consecutive calendar days, all of the
Preferred Stock shall be automatically converted into shares of Class A Common
Stock  at  the Conversion Ratio. The Conversion Ratio shall be proportionately
adjusted as appropriate to reflect the effect of stock splits or combinations.

     Upon  liquidation,  dissolution or winding up of the Company, the holders
of  the  Preferred  Stock  then  issued  and  outstanding shall be entitled to
receive  an  amount  equal  to  $2.00  per  share  of Preferred Stock plus any
accumulated  but  unpaid  dividends  before any payment or distribution of the
assets of the Company is made to or set apart for the holders of Common Stock.

     Any  additional  issuances  of preferred stock could affect the rights of
the  holders  of  Class  A  Common  Stock  and therefore reduce its 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.  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.
The  Company  has no plans for the issuance of any additional preferred stock.

     EFFECT  OF  CONVERTIBLE SECURITIES, OPTIONS, WARRANTS AND OTHER RIGHTS TO
PURCHASE.  As  of  March  30,  1998,  the Company had issued, or had agreed to
issue,  options, warrants and other rights for the purchase of up to 1,809,000
shares  of Class A Common Stock at exercise prices ranging from $0.53 to $6.63
per  share.  In  addition,  the  Company has issued convertible securities and
options  to  purchase  convertible  securities for 4,133,394 shares of Class A
Common  Stock at conversion prices ranging from $3.00 to $4.00  per share. The
shares  of  Class  A Common Stock underlying these securities (the "Underlying
Shares") will be, when issued, "restricted securities" as that term is defined
in  Rule  144  under  the  Securities  Act of 1933, and, unless registered for
public sale, subject to a one-year holding period. However, in many cases, the
Company  has  either  registered the Underlying Shares, as with employee stock
options,  or  has  agreed to register the Underlying Shares upon the demand of
the  holder.  Additionally,  the Company has agreed to give the holders "piggy
back"  registration   rights with respect to their Underlying Shares which, if
available,  would allow registration of the Underlying Shares for public sale.
Upon  effectiveness  of  a registration statement, the shares of stock covered
thereby  can  be  sold  immediately.

     As  of  March  30,  1998,  8,014,631  shares  of Class A common Stock and
1,273,715  shares  of Class B Common Stock (convertible on a one-for-one basis
into shares of Class A Common Stock) were issued and outstanding. The options,
warrants,  other  rights  and  convertible securities described above cover an
aggregate  of  approximately  5,942,394  shares  of  Class A Common Stock. Any
significant  exercise  or  conversion  of these securities could substantially
dilute  the  voting  power  of  the then outstanding Class A Common Stock, and
could  result  in  dilution  to  earnings  and  book  value  per  share.

     In  addition,  the  trading market for Class A Common Stock is relatively
thin.  The  average  weekly  trading volume for 1997 was approximately 134,000
shares.  Thus,  any significant sales of the Underlying Shares could adversely
affec  the  market  price  of  the  Class  A  Common  Stock.

     ABILITY  OF  THE  COMPANY TO IMPLEMENT ITS BUSINESS STRATEGY. In order to
implement  its  business  strategy  as set for in the business section of this
Form  10-KSB, the Company must be able to accomplish the following: (1) Expand
the  number  of  dealerships in its Dealer Network; (2) Increase its number of
sales representatives and the number of deals acquired per representative; (3)
Increase  the  volume  of  contracts  acquired  from  its  Dealer Network; (4)
Maintain  and  increase  its  warehouse  facilities  for  financing  Contracts
purchased; (5) Execute efficient and cost effective securitizations; (6) Hire,
train  and  retain  employees  skilled  in  areas  of credit, collections, and
recoveries; and (7) Compete successfully with other companies in the sub-prime
auto  finance  industry.    The Company's failure to accomplish some or all of
these factors may have an adverse effect on the implementation of its business
strategy,  which  may adversely effect its results of operations and financial
condition.


76
<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,  1998          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,  1998          /s/  Morris  Ginsburg
                          ---------------------
                          Morris  Ginsburg,  President,
                          Chief  Executive  Officer  and
                          Director

March  31,  1998          /s/  Irwin  L.  Sandler
                          -----------------------
                          Irwin  L.  Sandler
                          Executive  Vice  President,
                          Secretary/Treasurer  and
                          Director

March  31,  1998          /s/  Brian  M.  O'Meara
                          -----------------------
                          Brian  M.  O'Meara,
                          Director

March  31,  1998          /s/  David  M.  Ickovic
                          -----------------------
                          David  M.  Ickovic,
                          Director

March  31,  1998          /s/  Michael  Feinstein
                          -----------------------
                          Michael  Feinstein,
                          Senior  Vice  President,
                          Chief  Financial  Officer