Amendment No. 3 to Amended and Restated Motor Vehicle Installment Contract
                           Loan and Security Agreement

        This Amendment is entered into by and between Ugly Duckling Corporation,
successor in interest to Ugly  Duckling  Holdings,  Inc.  ("Ugly  Duckling"),  a
Delaware   corporation;   Ugly  Duckling  Car  Sales  and  Finance   Corporation
("UDCSFC"),  an Arizona corporation formerly known as Duck Ventures,  Inc.; Ugly
Duckling  Credit  Corporation  ("UDCC")  formerly  known as Champion  Acceptance
Corporation, an Arizona corporation; Ugly Duckling Car Sales, Inc. ("Sales"); an
Arizona corporation;  Champion Financial Services, Inc. ("Champion"), an Arizona
corporation;  Ugly Duckling Car Sales  Florida,  Inc. ("Car Sales  Florida"),  a
Florida corporation;  Ugly Duckling Car Sales Texas, L.L.P. ("Car Sales Texas"),
an Arizona limited  liability  partnership;  Ugly Duckling Car Sales New Mexico,
Inc. ("Car Sales New Mexico"), a New Mexico corporation; Ugly Duckling Car Sales
California,  Inc.  ("Car Sales  California"),  a  California  corporation;  Ugly
Duckling Car Sales Georgia,  Inc. ("Car Sales Georgia"),  a Georgia  corporation
(all of the  foregoing  entities  collectively  referred to herein as  "Existing
Borrower");  Cygnet Financial  Corporation  ("Cygnet"),  a Delaware corporation;
Cygnet Dealer Finance, Inc. ("Dealer Finance"),  an Arizona corporation;  Cygnet
Finance Alabama, Inc. ("Cygnet Alabama"), an Arizona corporation; Cygnet Support
Services, Inc. ("Services"), an Arizona corporation;  Cygnet Financial Services,
Inc. ("Cygnet Services"),  an Arizona  corporation;  Cygnet Financial Portfolio,
Inc.  ("Cygnet  Portfolio"),  an Arizona  corporation  (Cygnet,  Dealer Finance,
Cygnet Alabama,  Services,  Cygnet Services,  and Cygnet Portfolio  collectively
referred  to  herein  as "New  Borrower";  Existing  Borrower  and New  Borrower
collectively  referred to herein as "Borrower");  and General  Electric  Capital
Corporation, a New York corporation ("Lender").

                                    RECITALS

     A.  Existing  Borrower  and Lender are parties to an Amended  and  Restated
Motor  Vehicle  Installment  Contract  Loan and Security  Agreement  dated as of
August 15, 1997,  as amended by an  Assumption  and  Amendment  Agreement  dated
October 23, 1997, Amendment No. 1 dated December 22, 1997, Amendment No. 2 dated
September 9, 1998 (the Amended and Restated Motor Vehicle  Installment  Contract
Loan  and  Security  Agreement  as so  amended  is  referred  to  herein  as the
"Agreement")  pursuant  to which  Lender  agreed to make  Advances  to  Existing
Borrower on the terms and conditions set forth in the Agreement.

     B. Existing Borrower and Lender desire to add New Borrower to the Agreement
and to amend certain provisions of the Agreement pursuant to the terms set forth
in this Amendment.

     In consideration of the premises and other good and valuable consideration,
the receipt of which is hereby  acknowledged by each of the parties hereto,  the
parties agree as follows:

     1. Defined Terms.  Unless otherwise specified herein, all capitalized terms
used in this Amendment  shall have the same meaning given to such term(s) in the
Agreement.

     2. New Borrower.  Without  releasing  Existing  Borrower from  liability to
Lender  for  all  obligations  existing  or in  the  future  arising  under  the
Agreement, New Borrower hereby assumes obligations as a Borrower to Lender under
the  Agreement  and all  obligations  to Lender  under all other  documents  and
instruments  executed by Existing Borrower in connection with the Agreement.

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By executing  this  Amendment,  New Borrower  shall become a Borrower  under the
Agreement with all rights and obligations attendant to such status. New Borrower
grants to Lender all of the  conveyances  and rights granted to Lender under the
Agreement,  including but not limited to a security  interest in all  collateral
described  therein and all rights and remedies set forth therein  (including but
not limited to rights of termination, acceleration and foreclosure).

     3. Amendments to Agreement.  Effective as of the date hereof, the Agreement
is hereby amended as follows.

        Definitions.

     a. Borrowing  Base. The definition of Borrowing Base in Section 16.0 of the
Agreement is amended to be as follows:

     Borrowing  Base:  the  amount  equal  to  the  lesser  of (i)  One  Hundred
Twenty-five Million Dollars  ($125,000,000.00)  minus the Guaranty Liability, or
(ii) an  amount  equal  to (A)  sixty  five  percent  (65%)  of the  Outstanding
Principal  Balance of all Originated  Eligible  Contracts (but not to exceed one
hundred  fifteen  percent (115%) of the NADA average  wholesale Black Book value
for all such  Contracts in the  aggregate)  during the time they are included in
the Borrowing Base pursuant to Section 3.1; plus (B) eighty-six percent (86%) of
the Outstanding Principal Balance of all Champion Eligible Contracts (but not to
exceed one hundred  seven  percent  (107%) of wholesale  Kelly Blue Book for all
such  Contracts  in the  aggregate)  during  the time they are  included  in the
Borrowing Base pursuant to Section 3.1; plus (C)  seventy-five  percent (75%) of
the Outstanding  Principal Balance of all Seminole Eligible Contracts during the
time they are included in the  Borrowing  Base pursuant to Section 3.1; plus (D)
the Inventory  Advance  Value;  plus (E) during the term of the Dealer  Contract
Facility,  the Dealer  Contract  Advance  Value.  At Lender's  sole and absolute
discretion  and  Borrower's  request,  Lender may agree to include Bulk Purchase
Contracts as part of the Borrowing Base hereunder. The amount of advance against
Bulk  Purchase  Contracts,  if any,  shall  be at  Lender's  sole  and  absolute
discretion. With respect to section (ii) (A) of this definition, compliance with
the parenthetical  test based on Black Book values shall be measured by Lender's
sample of 100 or more Contracts and not on a Contract-by-Contract basis.

     b. Contract  Rights.  The following  sentence is added to the definition of
Contract Rights in Section 16.0 of the Agreement:

     With respect to Dealer  Contracts,  Contract  Rights are all of  Borrower's
interests and rights in, under and with respect to, Dealer Contracts,  including
but not limited to rights in collateral  securing Dealer Contracts and rights to
payments under Dealer Contracts.

     c. Cygnet  Borrower.  The following  definition is added to Section 16.0 of
the Agreement:

     Cygnet Borrower:  one or more of Cygnet Financial  Corporation,  a Delaware
corporation; Cygnet Dealer Finance, Inc., an Arizona corporation; Cygnet Finance
Alabama, Inc., an Arizona corporation; Cygnet Support Services, Inc., an Arizona
corporation; Cygnet Financial Services, Inc., an Arizona corporation; and Cygnet
Financial Portfolio, Inc., an Arizona corporation.

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<PAGE>

     d. Dealer  Contract.  The following  definition is added to Section 16.0 of
the Agreement:

     Dealer  Contract:  a contract  between Cygnet  Borrower and a motor vehicle
dealer for (i) a revolving loan under Cygnet Borrower's Asset Based Loan Program
by Cygnet  Borrower  to the dealer with  advances  based on and secured by motor
vehicle  installment  contracts (which installment  contracts are secured by the
motor  vehicle),  and with servicing to be performed by the dealer,  or (ii) the
purchase of motor vehicle installment contracts (which installment contracts are
secured by the motor vehicle) under Cygnet Borrower's Dealer Collection  Program
by Cygnet  Borrower from the dealer,  and with  servicing to be performed by the
dealer.

     e. Dealer Contract  Advance.  The following  definition is added to Section
16.0 of the Agreement:

     Dealer  Contract  Advance Value:  the lesser of (i) Fifteen Million Dollars
($15,000,000)  and (ii) fifty  percent of Cygnet  Borrower's  net  investment in
Eligible  Dealer  Contracts.  For the  purpose  of this  definition,  (i) Cygnet
Borrower's  net  investment in Eligible  Dealer  Contracts is equal to the gross
finance  receivable for the underlying  installment  contracts  minus the sum of
unearned interest,  Cygnet Borrower discounts and refundable reserves,  and (ii)
Cygnet  Borrower's net investment in Eligible Dealer Contracts shall not include
the balances  outstanding  under a Dealer Contract with respect to motor vehicle
installment  contracts  which  are more  than 45 days  past due or which are not
included  by  Cygnet  Borrower  in the  active  outstandings  under  the  Dealer
Contract.

     f. Dealer Contract Facility.  The following  definition is added to Section
16.0 of the Agreement:

     Dealer Contract Facility: the loan Facility described in Section 2.1 (C).

     g. Eligible Dealer Contract . The following  definition is added to Section
16.0 of the Agreement:

     Eligible Dealer Contract: a Dealer Contract (i) which was, and continues to
be,  originated,  underwritten,  documented,  and administered  under the Dealer
Collection  Program or Asset  Based Loan  program in all  material  respects  in
accordance with the June 10, 1998 Cygnet Dealer Finance,  Inc. Business Plan and
Summary of Operations (including exhibits),  or as otherwise approved in writing
by Lender,  (ii) under which  installment  contracts  outstanding  are less than
Three Million Five Hundred Thousand Dollars  ($3,500,000),  unless the dealer is
DCT or Texas Auto Outlet, (iii) under which not more than 15% of the outstanding
installment  contracts are more than 45 days past due, (iv) for which the dealer
is  servicing  the  installment  contracts,  (v) which is not in  default by the
Dealer or Cygnet Borrower,  (vi) with a dealer which is actively in business and
not in a reorganization or liquidation proceeding,  (vii) with a dealer approved
by Lender,  (viii) which is valid,  and enforceable by Cygnet Borrower and which
is for installment contracts which are valid and enforceable, and (ix) for which
Cygnet Borrower has a first priority perfected security interest or ownership of
all installment  contracts (and of the security interest in the underlying motor
vehicle) outstanding under the Dealer Contract.

     h. Facility. The definition of Facility is amended to be:

     Facility: the Installment Contract Facility, the Inventory Facility, or the
Dealer Contract Facility, as applicable.

     i. Loan Availability: The definition of "Loan Availability" in Section 16.0
of the Agreement is amended to be:

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<PAGE>

     Loan Availability:  as to the Installment Contract Facility,  the amount by
which the Borrowing  Base exceeds the Loan; as to the  Inventory  Facility,  the
amount of the Inventory Advance Value; as to the Dealer Contract  Facility,  the
amount of the Dealer Contract Advance Value.

          j.   Single Loan. Section 2.0 of the Agreement is amended to be:

              Section 2.0. Single Loan. All Advances by Lender to Borrower under
              Sections  2.1(A),  2.1(B) and 2.1(C) shall constitute one loan and
              all  indebtedness  and obligations of Borrower to Lender under the
              Loan Documents shall constitute an obligation  secured by Lender's
              security interest in all of the Collateral.  In no event shall the
              Loan exceed One  Hundred  Twenty-five  Million  ($125,000,000.00).
              Borrower's  obligation  to pay  the  Loan  is  evidenced  by  this
              Agreement.  Borrower shall pay Lender when due all Indebtedness in
              accordance  with  the  terms  of  this  Agreement  whether  or not
              Borrower  has  executed  a  promissory  note.  The  actual  amount
              Borrower is obligated to pay Lender  hereunder shall be determined
              by this  Agreement  and the records of Lender,  regardless  of the
              terms of any  promissory  note.  Any  promissory  note executed in
              connection  with the  Indebtedness  need not be amended to reflect
              changes made to this Agreement.

          k.   Loan Facilities. Section 2.1 of the Agreement is amended to be:

              Section 2.1. Loan Facilities.

              (A) Installment Contract Facility. Subject to all of the terms and
                  conditions  of this  Agreement,  Lender  agrees to loan  funds
                  up to One Hundred Twenty-five   Million  ($125,000,000.00)  to
                  Borrower  against  Eligible  Contracts from time to time  in a
                  series of Advances  during the term of this  Agreement.  Funds
                  may be borrowed, repaid and  reborrowed  on a revolving  basis
                  subject  to  the  terms  and  conditions  set  forth  in  this
                  Agreement,  provided  that the  amount  outstanding  under the
                  Installment Contract Facility shall not at any time exceed the
                  Borrowing Base.

              (B) Inventory Facility. Subject to all of the terms and conditions
                  of this  Agreement,  Lender  agrees to loan funds up to Twenty
                  Million   ($20,000,000.00)   to  Borrower   against   Eligible
                  Inventory from time to time in a series of Advances during the
                  term of this  Agreement.  Funds may be  borrowed,  repaid  and
                  reborrowed  on a  revolving  basis  subject  to the  terms and
                  conditions  set  forth in this  Agreement,  provided  that the
                  amount  outstanding under the Inventory  Facility shall not at
                  any time exceed the Inventory Advance Value.

              (C) Dealer  Contract  Facility.  Subject  to all of the  terms and
                  conditions of this  Agreement,  Lender agrees to loan funds up
                  to  Fifteen  Million   ($15,000,000.00)  to  Borrower  against
                  Eligible  Dealer  Contracts  from  time to time in a series of
                  Advances  during  the term of the  Dealer  Contract  Facility.
                  Funds may be borrowed,  repaid,  and reborrowed on a revolving
                  basis  subject to the terms and  conditions  set forth in this
                  Agreement,  provided  that the  amount  outstanding  under the
                  Dealer  Contract  Facility  shall not at any time  exceed  the
                  Dealer Contract Advance Value. The term of the Dealer Contract
                  Facility  shall  commerce on January 15, 1999 and shall expire
                  on July 14, 1999.  Borrower may terminate the Dealer  Contract
                  Facility  at any time  prior to July  14,  1999 by  Borrower's
                  delivery  to Lender of written  notice of  termination  of the
                  Dealer   Contract   Facility   and   payment  of  all  amounts


                                     Page-4
<PAGE>
                  outstanding   under  the  Dealer   Contract   Facility.   Upon
                  expiration or termination of the Dealer Contract  Facility and
                  provided Borrower is not then in default under this Agreement,
                  Cygnet  Borrower  shall  be  released  of all  obligations  as
                  Borrower under this Agreement,  all Dealer  Contracts shall be
                  released as Collateral and Lender shall execute and deliver to
                  Borrower  all  documents  reasonably  required to evidence the
                  release  of  Cygnet   Borrower  and  Dealer   Contracts.   The
                  expiration  or  termination  of the Dealer  Contract  Facility
                  shall  not  effect  the  Loan  Term  or  the  guaranty  of the
                  obligations in this Agreement by Cygnet Dealer Finance, Inc.



     l. Dealer Contract Facility Fee. Section 2.2 of the Agreement is amended by
adding the following Section 2.2 (D):

          (D) On the fifteenth day of each month beginning in February, 1999 and
     continuing during the term of the Dealer Contract Facility,  Borrower shall
     pay to Lender a Dealer  Contract  Facility fee of Twenty  Thousand  Dollars
     ($20,000).

     m.  Determination  of  Eligibility.  The  content  of  Section  3.1  of the
Agreement is amended to be Section  3.1(A) and the following is added as Section
3.1(B) :

     Section 3.1(B)  Borrower shall from time to time deliver to Lender Eligible
Dealer Contracts which Borrower desires to be included in the Borrowing Base. An
Eligible  Dealer  Contract shall be included in the Borrowing Base only when and
for so long as, in Lender's sole determination,  each of the requirements in the
definition of Eligible  Dealer Contract  continues to be satisfied.  If a Dealer
Contract is  determined by Lender to be, or is treated by Lender as, an Eligible
Dealer  Contract,  Lender  reserves  the right to change  its  determination  or
treatment and to remove the Dealer  Contract from the Borrowing Base if it later
determines  that  the  Dealer  Contract  is not or was  not an  Eligible  Dealer
Contract. A determination by Lender that a Dealer Contract is an Eligible Dealer
Contract  is not a waiver by Lender of, or an  admission  by Lender of the truth
of, any of Borrower's representations and warranties in this Agreement.

     n. Procedure for Borrowing.  Section 3.2.(A) of the Agreement is amended to
be:

     Section 3.2.  Procedure for Borrowing.  (A) Borrower shall  designate under
which  Facility it is  requesting  an Advance.  If no Facility is  specified  by
Borrower  at the time of the  request,  then  Lender  may,  at its  option,  (i)
designate the Facility  under which the Advance shall be made, or (ii) request a
designation  from  Borrower.  The first  Advance  shall not exceed the Borrowing
Base.  Subsequent  Advances shall not be made more frequently  than daily.  Each
subsequent Advance shall not exceed the applicable Loan Availability  determined
at Lender's  election either as of the end of the most recent  Accounting Period
for which Lender has received the monthly  reports  required by Section 5.1 (C),
or,  as of such  other  date  thereafter  designated  by  Lender.  Lender is not
obligated  to make an Advance if the amount  available or requested is less than
Twenty-Five  Thousand Dollars  ($25,000.00).  Lender is not obligated to make an
Advance unless Borrower provides Lender with sufficient information to calculate
the Loan Availability.  Lender's use of the information  provided by Borrower to
determine the amount  available for Advances is not an admission by Lender as to
the  accuracy of the  information,  and Lender  reserves the right to verify the
information and redetermine the amount available for Advances.

     o. Borrower Administration.  Sections 5.1 (C), (D) and (E) of the Agreement
are amended to be:


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<PAGE>


     (C) Borrower  shall furnish to Lender such reports in such form that Lender
determines  are  necessary  for it to track and monitor  the Pledged  Contracts,
Remittances,  Financed  Vehicles,  Dealer Contracts and insurance.  Such reports
shall be in a format and on a medium readable by Lender's computer software,  or
such other format or medium acceptable to Lender.  The reports shall include but
not be limited to those reports set forth on Exhibit 5.1(C)  attached hereto and
made a part hereof,  and shall be delivered  to Lender in  accordance  with such
Exhibit.

     (D)  Notwithstanding  anything  herein to the contrary,  (i) Borrower shall
remain liable under all Contracts and Dealer Contracts,  and any other contracts
and agreements with Contract  Rights Payors or otherwise  included in or related
to the Collateral,  to the extent set forth therein to perform all of its duties
and obligations  thereunder to the same extent as if this Agreement had not been
executed,  and (ii) the  exercise by Lender of any rights  under any of the Loan
Documents shall not release Borrower from any of its duties or obligations under
the Contracts or Dealer  Contracts,  or the other contracts and agreements,  and
(iii) Lender shall not have any  obligation or liability  under the Contracts or
Dealer  Contracts,  or the other contracts and  agreements,  nor shall Lender be
obligated to perform any of the obligations or duties of Borrower  thereunder or
to take any action to collect or enforce any rights thereunder.

     (E) Borrower shall administer the Contracts and Dealer Contracts at its own
expense.  In the event  that  Borrower  fails to  administer  the  Contracts  in
accordance  with Section  5.1(A),  or fails to  administer  Dealer  Contracts in
accordance with (i) the Dealer Collection Program or Asset Based Loan program as
described in the June 10, 1998 Cygnet  Dealer  Finance,  Inc.  Business Plan and
Summary of  Operations  (including  exhibits),  (ii)  applicable  law, and (iii)
reasonable and prudent procedures in a way that, in Lender's determination, does
not  adversely  affect  the  value  of the  Collateral,  or there is an Event of
Default or a Pre-Default  Event,  Lender may in Lender's or Borrower's name take
over all or part of the  Contract  administration  Borrower  is required by this
Agreement  to  perform  and all or part of the  Dealer  Contract  Administration
performed by Borrower.  If Lender takes over all or part of such administration,
Borrower  shall pay to Lender on demand  all  out-of-pocket  costs  incurred  by
Lender in the performance of Borrower's administration obligations, and Borrower
shall pay Lender for the  administration  performed by Lender an  administration
fee (exclusive of out-of-pocket  costs) established by Lender, and until so paid
such costs and fee shall be part of the Loan.

     p. Security  Interest.  The description of Collateral in Section 6.0 of the
Agreement is amended to include the following:

     Dealer Contracts; all rights of Borrower, and all assets owned by Borrower,
arising  under its  Dealer  Collection  Program  and Asset  Based  Loan  Program
(including but not limited to all  receivables  from dealers to Borrower and all
rights of Borrower under agreements with dealers)

     q. Right to Notify and Endorse.  Section 6.4 of the Agreement is amended to
be:

     Right to Notify and Endorse.  Borrower hereby irrevocably authorizes Lender
to notify any or all  Contract  Debtors,  dealers  under Dealer  Contracts,  and
Contract Rights Payors that Lender has a security interest in Contracts,  Dealer
Contracts,  Contract Rights, and other items of Collateral at any time (i) prior
to the  occurrence  of an Event of Default,  in the name of  Borrower,  and (ii)
after the occurrence of an Event of Default, in Lender's or Borrower's name. Any
such notice shall, at Lender's  election,  be signed by Borrower and may be sent
on Borrower's stationery.


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<PAGE>

     r. Lender Appointed Attorney-in-Fact.  The first sentence in Section 6.5 of
the Agreement is amended by adding the following:

          and (v) to exercise  Borrower's  rights with respect to bank  accounts
     into which  payments are deposited for  installment  contracts  outstanding
     under Dealer  Contracts  and to perfect the  assignment of such accounts to
     Lender.

     s. Contract Delivery Documents.  Section 6.9 of the Agreement is amended by
adding the following sentence:

     Until Lender notifies Borrower to deliver the Contract  Delivery  Documents
to Lender,  in which case  Borrower  shall  immediately  deliver them to Lender,
Borrower may maintain  possession  of the Contract  Delivery  Documents  for the
installment  contracts underlying Dealer Contracts if an assignment to Lender is
attached to each installment contract,  and if requested by Lender (in the event
Lender  determines  stamping  is  appropriate  to protect  its  interests)  each
contract is stamped "pledged to GECC" (rather than attaching an assignment.)

     t. Notice Regarding  Contracts.  The following sentence is added to Section
7.0 (B) of the Agreement:

     After an Eligible Dealer Contract is included in the Borrowing Base, in the
event that Borrower becomes aware that one of the requirements in the definition
of Eligible  Dealer  Contract is no longer  satisfied,  Borrower  shall  provide
Lender with written  notice  thereof  within five (5) Business  Days of Borrower
becoming aware,  explaining in detail the timing and reasons why the requirement
is not satisfied.

     u. Assignment of Bank Accounts. Article VIII of the Agreement is amended by
adding the following Section 8.3:

     Section 8.3  Assignment  of Bank  Accounts.  In  addition  to the  security
interest granted in Section 6.0,  Borrower hereby  absolutely  assigns to Lender
Borrower's  interest  in and right to all bank  accounts,  and all funds in such
accounts, which are established in connection with Dealer Contracts for payments
under installment contracts.

     v. Conditions to Each Advance.  Section 9.0 (A) of the Agreement is amended
to be as follows:

     For each  Eligible  Contract,  Borrower  shall have  included  the Eligible
Contract on a List of Contracts delivered to Lender and, subject to Section 6.9,
shall have delivered to Lender the Contract Delivery Documents;  except that, if
a Certificate of Title has not been issued and Borrower has provided Lender with
proof  acceptable  to Lender that a  Certificate  of Title has been applied for,
then the  Certificate  of Title must be delivered to Lender  within  ninety (90)
days of the Contract date;

     w. Conditions of Dealer Contracts. Section 10.0 of the Agreement is amended
by adding the following Section 10.0(q):

     Section 10.0(q) Dealer Contracts.  Each Dealer Contract presented to Lender
for inclusion in the Borrowing Base meets all of the requirements  listed in the
definition  of  Eligible  Dealer   Contract,   except  that  Borrower  makes  no
representation  or  warranty   as to whether  the  Dealer  Contract  meets  such


                                     Page-7
<PAGE>

requirements to Lender's satisfaction. No selection procedures adverse to Lender
have been utilized in selecting the Dealer Contracts presented to Lender.

     x. Cygnet  Finance,  Inc.  The sentence in Section  13.15 of the  Agreement
regarding Borrower's investment in Cygnet Finance Inc. is amended to be:

     Ugly Duckling  Corporation shall not invest more than Sixty Million Dollars
($60,000,000) in Cygnet Finance Inc.

     y. Borrower  Agent.  Article XIII of the Agreement is amended by adding the
following new section 13.17:

     Section 13.17.  Borrower Agent.  Borrower hereby irrevocably  appoints Ugly
Duckling  Corporation  as its agent  for the  purpose  of  dealing  with  Lender
(including  receiving  notices from Lender and making  requests for Advances) in
connection with the Loan and this Agreement.  This appointment and authorization
is for the  convenience of the parities and does not relieve any Borrower of any
of its obligations to Lender.

     z.  Subordination  and Dealer  Contracts.  Section 14.3 of the Agreement is
amended by adding the following sentences:

     All obligations  and security  interests owned by any Borrower with respect
to any other  Borrower are  subordinated  to the Loan and the Lender's  security
interest in the  Collateral.  Borrower shall not have loans or purchases of more
than Three Million Five Hundred  Dollars  ($3,500,000)  outstanding  at the same
time under any Dealer Contract, except for DCT and Texas Auto Outlet.

     4. Conditions Precedent To Effectiveness Of Amendment No.3.

     New  Borrower  shall have  delivered to Lender on or before the date hereof
the following  duly executed  documents in form and  substance  satisfactory  to
Lender, delivery of which shall be a condition precedent to the effectiveness of
this Amendment:

               (A)  This Amendment;

               (B)  UCC-1 Financing Statements of New Borrower;

               (C)  Duly adopted  resolutions  of the Board of Directors of each
                    New Borrower;

               (D)  Copies  of New  Borrower's  Articles  of  Incorporation  and
                    By-laws,  certified  as a  true  and  correct  copy  by  the
                    Secretary of New Borrower as true and correct;

               (E)  Certificates  of good standing for each New Borrower  issued
                    by the Secretary of State of its state of incorporation;

               (F)  A power of attorney of New Borrower;


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<PAGE>


               (G)  A  copy  of a  letter  delivered  by  New  Borrower  to  its
                    accountants  instructing  them to disclose to Lender any and
                    all financial  statements and other  information of any kind
                    relating to New Borrower's business, financial condition and
                    other affairs that Lender may request;

               (H)  Two  certificates  of the  chief  financial  officer  of New
                    Borrower;

               (I)  Assignment of bank accounts;

               (J)  An initial fee of One Hundred  Thousand  Dollars  ($100,000)
                    for the Dealer Contract Facility, and the Line Fees for 1998
                    (as to the  $25,000,000  increase in September  1998) in the
                    amount of $19,349.31 and 1999 in the amount of $312,500; and

               (K)  Such  additional  information  and  materials  as Lender may
                    reasonably request.


     5. Incorporation of Amendment:  The parties acknowledge and agree that this
Amendment is incorporated  into and made a part of the Agreement,  the terms and
provisions  of which,  unless  expressly  modified  herein,  or unless no longer
applicable by their terms,  are hereby  affirmed and ratified and remain in full
force and effect.  To the extent that any term or provision of this Amendment is
or may be  deemed  expressly  inconsistent  with  any term or  provision  of the
Agreement,  the terms and  provisions  of this  Amendment  shall  control.  Each
reference to the  Agreement  shall be a reference to the Agreement as amended by
this  Amendment.  This  Amendment,  taken together with the Agreement,  which is
affirmed  and  ratified by Borrower,  contains  the entire  agreement  among the
parties  regarding the  transactions  described  herein and supersedes all prior
agreements, written or oral, with respect thereto.

     6. Borrower Remains Liable. Borrower hereby confirms that the Agreement and
each document executed by Borrower in connection  therewith continue  unimpaired
and in full  force and  effect  and shall  cover and  secure  all of  Borrower's
existing and future obligations to Lender.

     7.  Headings.  The paragraph  headings  contained in this Amendment are for
convenience  of  reference  only  and  shall  not be  considered  a part of this
Amendment in any respect.

     8.  Governing  Law.  This  Amendment  shall be governed by and construed in
accordance with the laws of the State of Arizona.  Nothing herein shall preclude
Lender from bringing suit or taking other legal action in any jurisdiction.

     9. Execution in Counterparts.  This Amendment may be executed in any number
of counterparts and by different parties hereto in separate  counterparts,  each
of which when so executed  and  delivered  shall be deemed to be an original and
all of which taken together shall constitute one and the same instrument.


                                     Page-9
<PAGE>



IN WITNESS  WHEREOF,  the  undersigned  have entered  into this  Amendment as of
January 18, 1999.

GENERAL ELECTRIC CAPITAL CORPORATION    UGLY DUCKLING CAR SALES, INC.

By: ______________________________      By:  /S/ JON EHLINGER
                                             ----------------
Title:  ____________________________    Title:  Secretary

UGLY DUCKLING CORPORATION               UGLY DUCKLING CAR SALES NEW MEXICO, INC.
By: /S/ STEVEN P. JOHNSON               By: /S/ JON EHLINGER
    ---------------------                   ----------------
Title:  Senior Vice President           Title:  Secretary

UGLY DUCKLING CAR SALES AND             CHAMPION FINANCIAL SERVICES, INC.
FINANCE CORPORATION

By:  /S/ JON EHLINGER                   By: /S/ JON EHLINGER
     ----------------                       ----------------
Title:  Secretary                       Title: Secretary

UGLY DUCKLING CAR SALES FLORIDA, INC.   UGLY DUCKLING CREDIT CORPORATION

By: /S/ JON EHLINGER                    By: /S/ JON EHLINGER
    ----------------                        ----------------
Title: Secretary                        Title: Secretary

UGLY DUCKLING CAR SALES TEXAS,L.L.P.    UGLY DUCKLING CAR SALES CALIFORNIA, INC.
By: Ugly Duckling Car Sales, Inc.
Its:  General Partner                   By: /S/ JON EHLINGER
                                            ----------------
                                        Title: Secretary
By: /S/ JON EHLINGER
    ----------------
Title: Secretary                        UGLY DUCKLING CAR SALES GEORGIA,INC.

                                        By: /S/ JON EHLINGER
                                            ----------------
                                        Title: Secretary

CYGNET FINANCIAL CORPORATION            CYGNET DEALER FINANCE, INC.

By: /S/ STEVEN P. JOHNSON               By: /S/ JUDITH A. BOYLE
    ---------------------                   -------------------
Title: Senior Vice President            Title: Secretary

CYGNET FINANCE ALABAMA, INC.            CYGNET SUPPORT SERVICES, INC.

By: /S/ JUDITH A. BOYLE                 By: /S/ JUDITH A. BOYLE
    -------------------                     -------------------
Title: Secretary                        Title: Secretary

CYGNET FINANCIAL SERVICES, INC.         CYGNET FINANCIAL PORTFOILIO, INC.

By: /S/ JUDITH A. BOYLE                 By: /S/ JUDITH A. BOYLE
    -------------------                     -------------------
Title: Secretary                        Title: Secretary