Smart Choice Automotive Group, Inc.
                           Subordinated Loan Agreement
                          Dated as of January 31, 1999


BORROWER:                    Smart Choice Automotive Group, Inc. ("SMCH" or 
                             "Company")

LENDERS:                     High  Capital  Funding,  LLC and  other  purchasers
                             (collectively  "Purchaser(s)").   All  Purchaser(s)
                             shall be "accredited  investors" as defined by Rule
                             501 of Regulation D.

NOTES:                       Subordinated  notes  maturing on January 31,  2000.
                             The subordinated notes will be issued in one series
                             designated as "Smart Choice  Automotive Group, Inc.
                             1999 Series A Subordinated  Notes (the  "Note(s)").
                             The  Note(s)  will  be  substantially  in the  form
                             (except for the security and collateral provisions)
                             of the  Promissory  Note dated  September  30, 1997
                             between SMCH's subsidiary Eckler Industries, Inc. 
                             and Stephens Inc.

INVESTMENT SIZE:            $3,000,000. $2,000,000 of Notes shall be purchased 
                            at the Initial Closing and an additional $1,000,000 
                            may be purchased on or before April 30, 1999.

INTEREST:                    15%  annual  rate,  payable  monthly  in arrears in
                             cash. Interest shall be payable on the first day of
                             each month. The interest rate shall increase to
                             18% on May 1, 1999 and to 22% on October 1, 1999.

SUBORDINATION:               The  Note(s)  shall be  subordinated  to the Senior
                             Debt listed on the Schedule of Senior Debt attached
                             hereto.

GUARANTORS:                  The Note(s)  shall be  guaranteed  by SMCH's  
                             subsidiaries,  First Choice Auto Finance,  Inc.  
                             and SC  Holdings,  Inc. The  guarantee  will be  
                             substantially (except  for  the  security  and  
                             collateral  provisions)  in the  form of the
                             guarantee  used in the  loan  transaction  between
                             SMCH's  subsidiary  Eckler Industries, Inc. and 
                             Stephens Inc. on September 30, 1997.

PREPAYMENT:                  The Notes may be prepaid in whole or in part at any
                             time or times, without premium or penalty.

TRANSFERABILITY:             The   Notes   shall  be  freely   transferable   by
                             Purchaser(s)    or   any    subsequent    holder(s)
                             ("Holders") provided such transfer is in compliance
                             with applicable  United States and state securities
                             laws, and further  provided that the  Purchaser(s),
                             and any subsequent  Holders,  represent and warrant
                             that they have  acquired  the Notes for  investment
                             purposes  only, and not with a view toward making a
                             public offering.            

ESCROW OF NOTE(S):           To  facilitate  the  delivery  of the  Note(s)  
                             upon  receipt of payment  from Purchaser(s), the 
                             Company shall deliver to David A. Rapaport, Esq.,
                             as  escrow  agent  (the  "Escrow Agent") within
                             one (1) day of the mutual  execution of this
                             Term  Sheet,  twent-five (25) Notes which have
                             been duly  executed  by the  Company  but which are
                             blank as to name and  address of the  Purchaser(s),
                             principal  amount  and  date  of  issuance  ("Issue
                             Date").

                             The Escrow  Agent shall upon  receipt of good funds
                             for the  purchase  of a Note  fill in the  name and
                             address of the  Purchaser(s),  principal amount and
                             Issue  Date.  The Escrow  Agent  shall  deliver the
                             completed Note to the Purchaser(s) and the escrowed
                             funds together with a copy of the completed Note to
                             the Company. Upon issuance of the entire $3,000,000
                             of Notes, the Escrow Agent shall return any 
                             remaining unissued blank Notes to the Company.

REPRESENTATIONS,                               
WARRANTIES AND COVENANTS 
OF SMCH:                     SMCH makes the following representations and 
                             warranties to the Purchaser(s):

                             (a)  ORGANIZATION,  GOOD  STANDING AND POWER. The
                             Company is a corporation duly incorporated, validly
                             existing and in good standing under the laws of the
                             State of Florida  and has the  requisite  corporate
                             power to own,  lease and operate its properties and
                             assets and to  conduct  its  business  as it is now
                             being conducted.

                             (b) AUTHORIZATION; ENFORCEMENT. The Company has the
                             requisite  corporate  power and  authority to enter
                             into and perform this  Subordinated  Loan Agreement
                             and the Escrow  Agreement and to issue and sell the
                             Note(s) in accordance  with the terms  hereof.  The
                             execution,   delivery  and   performance   of  this
                             Subordinated   Loan   Agreement   and  the   Escrow
                             Agreement by the Company and the consummation by it
                             of the transactions contemplated hereby and thereby
                             have  been  duly  and  validly  authorized  by  all
                             necessary   corporate   action  on  behalf  of  the
                             Company, and no further consent or authorization of
                             the   Company   or  its  Board  of   Directors   or
                             stockholders is required.  This  Subordinated  Loan
                             Agreement  has been duly  executed and delivered by
                             the  Company.   Each  of  this   Subordinated  Loan
                             Agreement and the Escrow Agreement constitutes,  or
                             shall  constitute  when duly executed and delivered
                             by  all  parties  thereto,   a  valid  and  binding
                             obligation of the Company  enforceable  against the
                             Company in  accordance  with its  terms,  except as
                             such  enforceability  may be limited by  applicable
                             bankruptcy, insolvency, reorganization, moratorium,
                             liquidation,   conservatorship,   receivership   or
                             similar laws  relating  to, or affecting  generally
                             the enforcement of,  creditor's rights and remedies
                             or  by  other   equitable   principles  of  general
                             application.


                             (c)  SENIOR  INDEBTEDNESS.   SMCH  represents  and
                             warrants  that the Schedule of Senior  Indebtedness
                             attached   hereto  is  full  and  complete  in  all
                             material respects and that there is no indebtedness
                             to which the Notes will be subordinated not 
                             listed on such schedule.
    
                             (d)  ISSUANCE OF NOTE(S).  The Note(s) to be  
                             delivered  to the Escrow  Agent have been duly
                             authorized by all necessary corporate action.

                             (e)   INVENTORY   MAINTENANCE.   The  SMCH  "DAILY
                             INV-DRAFT  REPORT"  (the  "Report")  as of the date
                             hereof,  is  attached  to  this  Subordinated  Loan
                             Agreement.  SMCH agrees to maintain an inventory of
                             used   cars   ("Inventory")   of  not   less   than
                             $13,000,000  (as  listed  under  the   "Accounting"
                             column  of  the  Report)   while  any  Note(s)  are
                             outstanding.  SMCH  agrees  to fax to HCF a copy of
                             the  Report  for  each  day  any   Note(s)   remain
                             outstanding.  If at any time, or from time to time,
                             the   value   of  the   Inventory   is  less   than
                             $13,000,000,  HCF,  on behalf of  Holder(s),  shall
                             have  the  right on seven  (7) days  prior  written
                             notice  (the  "Mandatory   Prepayment  Notice")  to
                             require  SMCH to  reduce  the  aggregate  principal
                             amount of Note(s) then outstanding by the amount by
                             which  the  Inventory  is  less  than   $13,000,000
                             ("Mandatory  Prepayment").  SMCH shall remit to the
                             Escrow Agent the amount of the Mandatory Prepayment
                             within such seven (7) day period.  HCF shall notify
                             the Escrow  Agent in writing  (with a copy to SMCH)
                             within  two days of Escrow  Agent's  receipt of any
                             such  Mandatory  Prepayment as to the allocation of
                             the  aggregate   Mandatory   Prepayment  among  the
                             Holders,  and the Escrow Agent shall make  payments
                             to the Holders in accordance with such  allocation.
                             The failure by SMCH to make a Mandatory  Prepayment
                             to the Escrow Agent in accordance  with a Mandatory
                             Prepayment  Notice  shall  be  a  material  default
                             resulting   in   immediate   acceleration   of  all
                             principal and interest under the Note(s).

 REPRESENTATIONS,            HCF hereby makes the following representations and 
 WARRANTIES AND COVENANTS    warranties to the Company:
 OF HCF:                  
                             (a)  ACCREDITED  PURCHASER.  HCF and  each of the
                             other  Purchasers  of the  Notes is an  "accredited
                             investor" as defined in  Regulation  D  promulgated
                             under the Securities Act.

                             (b) ORGANIZATION, GOOD STANDING AND POWER. HCF is
                             a  limited  liability  company  organized,  validly
                             existing and in good standing under the laws of the
                             State of Delaware  and has the  requisite  power to
                             own,  lease and operate its  properties  and assets
                             and to conduct its business as it is now being
                             conducted.
    
                             (c)  AUTHORIZATION;   ENFORCEMENT.   HCF  has  the
                             requisite  power and  authority  to enter  into and
                             perform this  Subordinated  Loan  Agreement and the
                             Escrow  Agreement  and to  purchase  the Note(s) in
                             accordance  with the terms hereof.  The  execution,
                             delivery and performance of this  Subordinated Loan
                             Agreement  and the Escrow  Agreement by HCF and the
                             consummation by it of the transactions contemplated
                             hereby  and  thereby  have  been  duly and  validly
                             authorized by all necessary action,  and no further
                             consent or authorization of HCF, its manager or its
                             members  is  required.   This   Subordinated   Loan
                             Agreement  has been duly  executed and delivered by
                             HCF. Each of this  Subordinated  Loan Agreement and
                             the Escrow Agreement constitutes, or shall 
                             constitute  when duly  executed and  delivered by 
                             all parties thereto, a valid and binding obligation
                             of HCF enforceable against HCF in accordance with
                             its terms, except as such enforceability may be
                             limited by applicable bankruptcy, insolvency, 
                             reorganization, moratorium, liquidation, 
                             conservatorship,   receivership   or
                             similar laws  relating  to, or affecting  generally
                             the enforcement of,  creditor's rights and remedies
                             or  by  other   equitable   principles  of  general
                             application.

EVENT OF DEFAULT:            Normal   and   customary    events   of   default:
                             non-payment  of  interest,  bankruptcy,  breach  of
                             representations  and  warranties,  etc.  Failure of
                             SMCH to maintain an  inventory  of used cars of not
                             less than $13,000,000.  Failure of SMCH to make any
                             Mandatory Prepayment.

PURCHASE OF NOTE(S):         (a)  Purchaser(s)  shall  deposit  with the Escrow
                             Agent  $2,000,000  for the  purchase  of the  first
                             Note(s)  ("Initial  Note(s)")  within two  business
                             days of the mutual  execution of this  Subordinated
                             Loan Agreement.  The Escrow Agent shall wire to the
                             Company  the  $2,000,000  purchase  price  for  the
                             Initial  Note(s)  within  one  business  day of the
                             later of (i) the  receipt  from SMCH of the  twenty
                             (20)  executed  Note(s);   (ii)  the  receipt  from
                             Purchaser(s) of the initial  $2,000,000;  and (iii)
                             the receipt of the legal opinion of Robert J.
                             Downing, Esq., Chief Legal Counsel of SMCH,  
                             satisfactory in form and  substance to HCF and its
                             counsel, to the matters set forth in subsections
                             (a), (b), (c) and (d) of the above SMCH  
                             Representations,  Warranties and Covenants section.

                             (b) Purchaser(s) may deposit with the Escrow Agent
                             up to an additional $1,000,000 on or before March
                             31, 1999.

NO DEBT OR SECURITIES                 
ISSUANCE OR REPURCHASE:      (a) SMCH shall not incur any indebtedness nor issue
                             any  debt  securities  in an  amount  greater  than
                             $100,000   in  any   transaction   or   series   of
                             transactions, except to existing lenders or holders
                             of   its   debt   securities,   including   without
                             limitation floor plan financing,  without the prior
                             written  consent  of HCF.  SMCH shall not issue any
                             equity   securities   generally  (except  upon  the
                             exercise or  conversion  of  presently  outstanding
                             options, warrants, convertible notes or convertible
                             preferred   stock,   or  except  to   employees  or
                             directors,  or except to  consultants  pursuant  to
                             shareholder approved plans or agreements) while the
                             Note(s) is  outstanding  without the prior  written
                             consent of HCF.

                             (b)  SMCH   shall   not   repurchase   any  of  its
                             outstanding  securities  or prepay any  outstanding
                             indebtedness  which is pari passu or subordinate to
                             the  Note(s)   while  there  is  any  principal  or
                             interest outstanding under the Note(s).
JURISDICTION AND CHOICE 
OF LAW:                      This Subordinated  Loan Agreement,  the Note(s) and
                             the Escrow  Agreement shall be governed by the laws
                             of the state of Georgia  and all of the  parties to
                             such  agreements and Note(s) agree to submit to the
                             personal  jurisdiction  of the  state  and  Federal
                             courts located in Fulton County, Georgia.

LEGAL:                       FEES:  SMCH  shall  pay the fees of  HCF's  outside
                             counsel not to exceed $5,000.  


BINDING AGREEMENT:           The parties shall be
                             legally  bound by the above terms and shall execute
                             such  further  documents  as  may  be  required  to
                             implement the provisions of this  Subordinated Loan
                             Agreement,   including   without   limitation   the
                             Note(s), the Guarantee Agreements and the Escrow 
                             Agreement.

Agreed to and Accepted by:

Smart Choice Automotive Group, Inc.
                                            MARCH 19, 1999 as of
BY: /s/ Lillian Clover                      JANUARY 31, 1999
------------------------------------------------------------
Lillian Clover                                    Date
Assistant Secretary


High Capital Funding, LLC

                                            MARCH 19, 1999 as of
BY: /s/ Latrobe Laidlaw                     JANUARY 31, 1999
------------------------------------------------------------
Latrobe Laidlaw                                     Date
Director of Operations

                                           MARCH 19, 1999 as of
/s/ David A. Rapaport                      JANUARY 31, 1999
-----------------------------------------------------------
David A. Rapaport, Esq.                             Date
Escrow Agent