THIRD ARTICLES OF AMENDMENT
                                       TO
                            ARTICLES OF INCORPORATION
                                       OF
                       SMART CHOICE AUTOMOTIVE GROUP, INC.

     Pursuant to the provision of Sections  607.1006 and 607.0602 of the Florida
Business  Corporation  Act, the  Corporation  adopts the  following  Articles of
Amendment to its Articles of Incorporation:


FIRST:

                                   ARTICLE V

     Article V of the Articles of  Incorporation  of the  Corporation  is hereby
amended by inserting the following words at the end of such article:

                      Series B Convertible Preferred Stock

     Three hundred (300) shares of the authorized  and unissued  shares of $0.01
par value per share Preferred  Stock of the  Corporation  are hereby  designated
"Series B Convertible Preferred Stock" (the "Series B Preferred Stock") with the
following powers,  preferences and rights, and the  qualifications,  limitations
and restrictions hereon:

          Rank.  The  Series B  Preferred  Stock  shall  rank,  with  respect to
     dividend rights and rights upon  liquidation,  dissolution or winding up of
     the  Corporation,  senior to the Common Stock and any subsequent  issues of
     stock, whether common or preferred.

          Dividends. Each holder of shares of the Series B Preferred Stock ( the
     "Holder",  collectively, the "Holders") shall be entitled to receive out of
     the assets of the Corporation legally available  therefor,  cumulative cash
     dividends at the rate per share  (based on the stated  value of  $10,000.00
     per share) of $91.67 per month, accruing from the date of original issuance
     ("Original  Issuance  Date") which  dividends  are due and payable  monthly
     commencing on the first day of the month  following  the Original  Issuance
     Date. Such dividends  shall accrue from the Original  Issuance Date. In the
     event that a Holder is not paid  dividends on a timely basis in  accordance
     with the foregoing, such Holder shall be entitled to accrue interest on the
     accrued  and unpaid  dividends  at the rate per share  (based on the stated
     value  of  $10,000.00  per  share)  of 15% per  annum,  until  all  accrued
     dividends  have been  paid.  If the  Corporation  remains in default on the
     monthly  dividend  payments  to the  Holders  for a period of greater  than
     ninety (90) days,  and such  default is  continuing  for a period of thirty
     (30) days  after  written  notice of such  default  is sent by a Holder the
     Corporation, and further provided that the Holders of at least seventy-five
     (75%) percent of the then outstanding  Series B Preferred Stock so agree, a
     Holder  may,  at its  option,  receive an amount  which is equal to (i) the
     number of shares of Series B Preferred  Stock which have not been converted
     by such Holder as of such date, times, (ii) $10,000.00, plus all unpaid and
     accrued  dividends  and  interest in  exchange  for such shares of Series B
     Preferred Stock. Unless full cumulative dividends on the Series B Preferred
     Stock to which  Holders are  entitled  have been paid or are declared and a
     sum sufficient  for the payment  thereof has been set apart for the payment
     of such  unpaid  dividends,  no  dividend  shall be declared or paid or set
     aside for  payment or other  distribution  declared or made upon the Common
     Stock of the Corporation or on any other stock of the  Corporation  ranking
     junior to or on parity with the Series B Preferred Stock as to dividends or
     upon  liquidation  be redeemed,  purchased  or  otherwise  acquired for any
     consideration  or any monies to be paid to or made  available for a sinking
     fund for the redemption of any share of such stock by the Corporation.

          Liquidation  Preference.  In the event of any voluntary or involuntary
     liquidation,  dissolution or winding up of the affairs of the  Corporation,
     the Holders are entitled to receive,  out of the assets of the  Corporation
     available for  distribution  to  stockholders,  before any  distribution of
     assets is made to holders of Common  Stock,  or any other  holders of stock
     ranking junior to the Series B Preferred Stock,  liquidating  distributions
     in the amount of  $10,000.00  per share plus accrued and unpaid  dividends.
     If, upon any  liquidation,  dissolution,  or winding up of the Corporation,
     the amounts  payable to the  Holders are not paid in full,  then the entire
     assets of the Corporation  shall be distributed  ratably among the Holders.
     After payment of the full amount of the  liquidating  distribution to which
     they are  entitled,  the  Holders  shall  not be  entitled  to any  further
     participation  in  any  distribution  of  assets  by  the  Corporation.   A
     consolidation  or  merger  of the  Corporation,  with  or  into  any  other
     corporation or corporations,  or a sale of all or substantially  all of the
     assets  of the  Corporation,  shall  not  be  deemed  to be a  liquidation,
     dissolution, or winding up within the meaning of this section.

          Conversion.  The Holders shall have conversion  rights as follows (the
     "Conversion Rights"):

         (i) Right to Convert.  At any time or times after the Original Issuance
         Date of the shares of Series B  Preferred  Stock,  any Holder  shall be
         entitled to convert his shares of Series B Preferred  Stock into shares
         of Common Stock of the  Corporation at the  Conversion  Rate, as herein
         defined,  without the payment of any  additional  consideration  by the
         Holder thereof,  at the office of the Corporation or any transfer agent
         for such shares.

         (ii)  Conversion  Rate.  The number of shares of Common Stock  issuable
         upon conversion of each of the shares of Series B Preferred Stock shall
         be  determined  according to the  following  formula  (the  "Conversion
         Rate"):

                                Conversion Amount
                                Conversion Price

               For  purposes of this section of Article V, the  following  terms
          shall have the following meanings:

               (a)  "Conversion  Price"  means (A) the average last closing sale
          price per share of the  Common  Stock on the  NASDAQ  SmallCap  Market
          ("Market Price") for the ten (10) consecutive trading days immediately
          preceding the Original  Issuance Date, plus (B) $.50. If any shares of
          Series B Preferred Stock (other than the shares authorized hereby) are
          issued  at a price per share  that is less than the  Conversion  Price
          applicable on the earliest  Original  Issuance  Date,  the  Conversion
          Price shall be reduced to that lower price.

               (b) "Conversion  Amount" means the amount equal to (A) the number
          of shares of Series B  Preferred  Stock that the Holder is  converting
          times (B) $10,000.

               (iii)  Mechanics  of  Conversion.  The  Board  of  Directors  may
          determine in its sole discretion  whether  fractional shares of Common
          Stock will be issued  upon any  conversion  of the Series B  Preferred
          Stock.  If the Board of Directors  determines not to issue  fractional
          shares of Common Stock at the conversion, the Corporation will pay, in
          lieu of any fractional  shares to which the Holder would  otherwise be
          entitled,  cash equal to such fraction  multiplied  by the  Conversion
          Price then in effect.  Before any Holder  shall be entitled to convert
          the Series B  Preferred  Stock into full  shares of Common  Stock,  he
          shall  surrender the certificate or certificates of Series B Preferred
          Stock for shares of Common Stock to be issued in that conversion.  The
          Corporation  shall,  as  soon as  practicable  thereafter,  issue  and
          deliver at such office to such Holder,  or to his nominee or nominees,
          a certificate or certificates for the number of shares of Common Stock
          and/or fractional shares of Common Stock, if any, to which he shall be
          entitled as aforesaid, together with cash in lieu of any fraction of a
          share,  if any, to which the Holder may be entitled.  Such  conversion
          shall be deemed to have  been made  immediately  prior to the close of
          business on the date of such  surrender  of the shares of the Series B
          Preferred Stock to be converted and the person or persons  entitled to
          receive the shares of Commons Stock issuable upon conversion  shall be
          treated  for all  purposes  as the  record  holder or  holders of such
          shares of Common Stock on such date. Any unpaid and accrued  dividends
          and interest due and payable at  conversion  shall be paid to a Holder
          by the  Corporation  in  cash  or its  equivalent  or  other  mutually
          agreeable form.

               (iv) No Impairment. The Corporation will not, by amendment of its
          Articles of  Incorporation  or Bylaws or through  any  reorganization,
          transfer of assets, consolidation,  merger, dissolution, issue or sale
          of securities or any other  voluntary  action,  avoid or seek to avoid
          the  observance or  performance  of any of the terms to be observed or
          performed  hereunder by the  Corporation but will at all times in good
          faith assist in the carrying out of all the provisions of this section
          and  in the  taking  of  all  such  action  as  may  be  necessary  or
          appropriate in order to protect the  conversion  rights of the Holders
          against impairment.

               (v) Common Stock Reserved. The Corporation shall reserve and keep
          available out of its authorized but unissued  Common Stock such number
          of shares of Common Stock as shall from time to time be  sufficient to
          effect conversion of all issued and outstanding shares of the Series B
          Preferred Stock.

     (5)  Unauthorized  Distributions.  Notwithstanding  any other  provision of
these Articles,  the  Corporation  will not make any payment due with respect to
the Series B Preferred  Stock if (a) after giving  effect to that  payment,  the
Corporation  would not be able to pay its debts as they  become due in the usual
course  of  business;   or  (b)  after  giving  effect  to  that  payment,   the
Corporation's  total assets would be less than the sum of its total  liabilities
plus (unless the Corporation's  articles of incorporation  permit otherwise) the
amount that would be needed, if the Corporation were to be dissolved at the time
of the  payment,  to satisfy the  preferential  rights upon  dissolution  of any
shareholders whose  preferential  rights are superior to the Holders of Series B
Preferred  Stock;  or (c) the  Corporation is otherwise  prohibited  (under then
existing  laws)  from  making  any  payment  due with  respect  to the  Series B
Preferred Stock.  Nothing contained herein shall amend,  alter, change or repeal
any of the  powers,  designations,  preferences  and  rights  of  the  Series  A
Preferred Shares.

     (6) Redemption by Corporation. At any time or times more than eighteen (18)
months  after the  Original  Issuance  Date of  Series B  Preferred  Stock,  the
Corporation  may at its option and in the sole  discretion of the  Corporation's
Board of  Directors,  (i) call any or all then  outstanding  shares  of Series B
Preferred  Stock for cash at the price of  $10,000.00  per share plus any unpaid
and accrued dividends and interest as provided above, or (ii) convert any or all
of the then outstanding shares of Series B Preferred Stock into shares of Common
Stock of the Corporation as provided above;  provided however,  that in no event
may the  Corporation  convert the Series B Preferred  Stock unless and until (a)
the  Corporation  gives the Holder thirty (30) days prior written  notice of its
intent to call or convert,  and (b) the Market  Price of the Common Stock equals
or exceeds one and one-half (1.5) times the Conversion  Price for a period of at
least twenty (20) consecutive trading days prior to the date of such notice, and
(c) the shares of Common Stock into which the shares of Series B Preferred Stock
are to be so called or converted have been registered as provided  herein.  Upon
any such call or  conversion  such Holder shall  surrender  the  certificate  or
certificates  for the shares of Series B Preferred Stock so called or converted.
If the Corporation  elects to convert,  the Corporation  shall issue such Holder
shares of Common Stock for the shares of Series B Preferred  Stock so converted.
If a Holder has elected not to register  its shares of Common Stock after notice
from the Corporation, as contemplated hereby, then the restrictions set forth in
subsection (c) of this Section on the  Corporation's  ability to call or convert
that Holder's Series B Preferred Stock shall not apply.

     (7) Voting  Rights.  Except as expressly  required by  applicable  law, the
Holders  will not be entitled to vote.  However,  upon  conversion  of shares of
Series B  Preferred  Stock as  provided  above,  the holder of the Common  Stock
received  pursuant  to such  conversion  shall be  entitled to one vote for each
share of Common Stock received upon such conversion.

     (8) Certain  Adjustments.  If the outstanding shares of Common Stock of the
Corporation are increased,  decreased, changed into or exchanged for a different
number  or kind  of  shares  or  securities  of the  Corporation  or of  another
corporation  or entity or shares of a  different  par value or without par value
through a recapitalization,  stock dividend, stock split, reverse stock split or
a  reorganization  under which the Corporation is not the surviving  entity,  an
appropriate or proportionate  adjustment shall be made in the number and/or kind
of securities allocated to the Series B Preferred Stock.

     (9)  Term.  If a  Holder  has not  converted  all its  shares  of  Series B
Preferred Stock within twenty-four (24) months after the Original Issuance Date,
and such shares have not otherwise been redeemed by the  Corporation,  then such
Holder may, at its option, receive an amount which is equal to (i) the number of
shares of Series B Preferred  Stock which have not been converted or redeemed by
the  Corporation  as of such date  times  (ii)  $10,000.00,  plus all unpaid and
accrued  dividends.  Exercise  of these  rights is subject to the consent of the
Company, which shall not be unreasonably withheld.

     (10) Registration Rights.

         (a)      Piggyback Rights.

                  (i) If the Corporation at any time after the Original Issuance
         Date elects or proposes to register  any of its shares of Common  Stock
         (the "Registration Shares") under the 1933 Act on Forms S-1, S-2 or S-3
         or any  other  form in  effect  at such  time for the  registration  of
         securities to be sold for cash (a  "Registration  Statement")  with the
         Securities and Exchange Commission (the "SEC") pursuant to which shares
         of Common Stock owned by any other  shareholder of the  Corporation are
         to be registered, the Corporation shall give prompt written notice (the
         "Registration  Notice") to the Holders of its intention to register the
         Registration Shares.

                  (ii) Within  fifteen (15) days after a Holder may give written
         notice to the  Corporation  of exercise  of all,  or a portion,  of its
         right  to  convert  the  Series  B  Preferred  Stock  (the  "Conversion
         Notice"),  stating  the  number  of  shares  such  Holder  elects to be
         included among the Registration Shares (which number may include shares
         held by Holder as a result of prior  exercises  of its right to convert
         the Series B Preferred  Stock,  or otherwise)  (the "Holder's  Included
         Shares").

                  (iii) The Corporation shall use reasonable efforts to register
         the Holder's  Included  Shares under the Securities Act of 1933 and any
         applicable  state  securities  acts, if  necessary,  designated by such
         Holder in the Conversion  Notice.  The Corporation shall have the right
         to withdraw  and  discontinue  registration  of the  Holder's  Included
         Shares at any time  prior to the  effective  date of such  Registration
         Statement if the registration of the  Registration  Shares is withdrawn
         or discontinued.

                  (iv) The Corporation shall not be required to include any of a
         Holder's  Included  Shares in any  Registration  Statement  unless such
         Holder agrees,  if so requested by the  Corporation,  to: (i) offer and
         sell the Holder's Included Shares to or through an underwriter selected
         by the Corporation  and, to the extent possible,  on substantially  the
         same terms and conditions under which the Registration Shares are to be
         offered  and  sold;  (ii)  comply  with  any  arrangements,  terms  and
         conditions with respect to the offer and sale of the Holder's  Included
         Shares to which the  Corporation  may be required  to agree;  and (iii)
         enter into any underwriting  agreement  containing  customary terms and
         conditions.  The  foregoing  shall not  require  the Holder to sell the
         Holder's  Included  Shares  at the time of  registration  through  such
         underwriter.

                  (v)  If  the  offering  of  the  Registration  Shares  by  the
         Corporation is, in whole or in part, an underwritten  public  offering,
         and if the managing underwriter  determines and advises the Corporation
         in writing that the inclusion in such Registration  Statement of all of
         a Holder's  Included  Shares,  together with the stock of other persons
         who have a right to include their stock in the  Registration  Statement
         (collectively  referred to as the "Aggregate Shares"),  would adversely
         affect the  marketability of the offering of the  Registration  Shares,
         then such Holder and such other  holders  shall be entitled to register
         the  portion  of  such  number  of  Aggregate  Shares  as the  managing
         underwriter  determines  may be included  without such adverse  effects
         (collectively,  "Aggregate Underwriter Shares"),  subject to the terms,
         exceptions and conditions of this section.

                  (vi) The  Corporation  shall  bear all costs and  expenses  of
         registration of the Registration  Shares,  including  Holder's Included
         Shares.

                  (vii) It shall be a condition  precedent to the  Corporation's
         obligation  to  register  any of a Holder's  Included  Shares that such
         Holder provide the Corporation with all information and documents,  and
         shall execute,  acknowledge,  seal and deliver all documents reasonably
         necessary,  to enable the  Corporation to comply with the 1933 Act, any
         applicable  state  securities  acts, and all applicable laws, rules and
         regulations of the SEC or of any state securities law authorities.

     (b) Demand Right.

                  (i) If at any  time on or  after  nine (9)  months  after  the
         Original  Issuance Date the Corporation  shall receive from the Holders
         of at  least  seventy-five  (75%)  of the  then  outstanding  Series  B
         Preferred  Stock,  a written  request that the  Corporation  effect any
         registration  with respect to such Holders'  Holder's  Included Shares,
         the Corporation  will, as soon as practicable,  use its best efforts to
         effect  such  registration  (including,   without  limitation,   filing
         post-effective amendments,  appropriate qualifications under applicable
         blue sky or other state  securities  laws, and  appropriate  compliance
         with the  1933  Act) and as would  permit  or  facilitate  the sale and
         distribution of all or such portion of Holder's  Included Shares as are
         specified in such request. The Corporation shall be required to effect,
         pursuant to this Section 10(b),  only one (1)  registration of Holder's
         Included Shares pursuant to this Section 10(b).

                  (ii)  Proviso.  The  Corporation  shall  not be  obligated  to
         effect, or to take any action to effect, any such registration pursuant
         to this Section 10(b):

                           (a) in  any  particular  jurisdiction  in  which  the
         Corporation  would be required to execute a general  consent to service
         of  process  in  effecting   such   registration,   qualification,   or
         compliance,  unless the  Corporation  is already  subject to service in
         such jurisdiction and except as may be required by the 1933 Act; or

                           (b) during the period  starting with the date fifteen
         (15) days prior to the Corporation's good faith estimate of the date of
         filing of, and ending on a date  ninety  (90) days after the  effective
         date  of,  a  Corporation-initiated  registration,  provided  that  the
         Corporation is actively  employing in good faith all reasonable efforts
         to cause such registration statement to become effective.

                  (iii) Deferral of Registration.  The Corporation  shall file a
         registration  statement  covering Holder's Included Shares so requested
         to be registered as soon as practicable after receipt of the request of
         the Holder;  provided,  however, that if (a) in the good faith judgment
         of the Board of Directors of the Corporation such registration would be
         materially detrimental to the Corporation because there exist bona fide
         financing,  acquisition or other  activities of the Corporation and the
         Board of Directors of the Corporation  concludes,  as a result, that it
         is essential to defer the filing of such registration statement at such
         time, and (b) the Corporation shall furnish to the Holder a certificate
         signed by the  President  of the  Corporation  stating that in the good
         faith judgment of the Board of Directors of the  Corporation,  it would
         be materially  detrimental  to the  Corporation  for such  registration
         statement  to be filed in the near  future  and that it is,  therefore,
         essential to defer the filing of such registration statement,  then the
         Corporation  shall  have the  right to defer  such  filing  (except  as
         provided in subsection  10(ii)(b)  above) for a period of not more than
         ninety  (90) days after  receipt of the  request  of the  Holder,  and,
         provided  further,  that the Corporation shall not defer its obligation
         in this manner more than once in any twelve-month period.

                  The  registration  statement  filed pursuant to the request of
         the Holder may,  subject to the  provisions  of Section 10(a) and 10(b)
         hereof,  include other securities of the  Corporation,  with respect to
         which registration rights have been granted, and may include securities
         of the  Corporation  being  sold for the  account  of the  Corporation,
         provided  all the  Holder's  Included  Shares  for which the Holder has
         requested  registration shall be covered by such registration statement
         before any other securities are included.

                  (iv) Procedures.  In any registration pursuant to this Section
         10(b), if the Corporation  shall request  inclusion of securities to be
         sold for its own account,  or if other  persons  entitled to incidental
         registrations shall request inclusion in such registration,  the Holder
         shall offer to include  such  securities  in the  underwriting  and may
         condition such offer on the acceptance by the Corporation or such other
         persons of the further  applicable  provisions  hereof. The Corporation
         shall  (together  with all such other  persons  proposing to distribute
         their securities through such underwriting)  enter into an agreement in
         customary  form  with  the   representative   of  the   underwriter  or
         underwriters  acceptable to the Corporation.  Notwithstanding any other
         provision of this Section,  if the  representative  of the underwriters
         advises  the  Holder of the need to offer  for sale only the  Aggregate
         Underwriter  Shares,  the  number  of  shares  to be  included  in  the
         underwriting or registration shall be allocated as set forth in Section
         10(a)(v) hereof.


     (11)  Limitations on Issuances of Additional  Shares of Series A Redeemable
Convertible  Preferred Stock and Series B Preferred Stock and Other  Convertible
Preferred  Stock.  The Corporation will not (i) issue or re-issue any additional
shares of Series A Redeemable  Convertible  Preferred Stock,  including  without
limitation, any such shares which have been converted to shares of Common Stock,
nor (ii)  issue or  re-issue  shares of Series B  Preferred  Stock such that the
number of issued and outstanding shares of Series B Preferred Stock would exceed
Four Hundred and Twenty (420) (based on a stated value per share of $10,000.00),
nor (iii) issue any shares of  Convertible  Preferred  Stock  which  rank,  with
respect to dividend rights and rights upon liquidation,  dissolution and winding
up of the corporation,  senior to the Series B Preferred Stock, provided however
that if either (a) at least seventy-five (75%) percent of the shares of Series B
Preferred Stock issued on the Original Issuance Date have been converted, called
or otherwise  redeemed as provided above, or are no longer outstanding or (b) if
the shares of Series B Preferred  Stock issued on the Original  Issuance Date to
James W. Walter have been  converted,  called or otherwise  redeemed,  or are no
longer  outstanding,  the  restrictions  set forth in  Section  11 (ii) shall no
longer apply.


                                    SECOND:

     Pursuant  to Section  607.0602 of the Florida  Business  Act,  the Board of
Directors  adopted this Amendment to Article V of the Articles of  Incorporation
effective as of May 5, 1998 without shareholder action.

     IN WITNESS WHEREOF,  the undersigned  authorized officer of the Corporation
has executed this instrument this 5th day of May, 1998.




                                           /s/ Joseph E. Mohr             
                                           -------------------------------
                                           Joseph E. Mohr
                                           Executive Vice President and
                                           Chief Financial Officer