August  6,  1997



Mr.  Steven  A.  Tesdahl
9501  North  46th  Place
Phoenix,  Arizona    85028


     Re:          Terms  of  Employment

Dear  Steve:

     I  am pleased that you have accepted the offer of employment made by Ugly
Duckling  Corporation  ("Ugly  Duckling").  The  purpose  of this letter is to
confirm  the  terms  and  conditions  under  which  you  will  be  employed.

POSITION:          You will serve as Senior Vice President - Chief Information
Officer  of  Ugly  Duckling.  You will be a member of the executive management
group  of  Ugly  Duckling  and will report to the Chief Executive Officer. You
will be employed on a full-time basis and will devote all of your working time
and  efforts  exclusively  to  Ugly  Duckling.

LOCATION:          Your  office  will  be located at 2525 East Camelback Road,
Phoenix,  Arizona  85016. The location of your office may be changed from time
to  time.  Also,  you may be required to provide services from time to time at
other  Ugly  Duckling  locations.  You  may  also be required to travel in the
performance  of  services.

SALARY:      You will receive a salary at the rate of $175,000.00 per year. On
each  anniversary  of commencement of employment your salary will be increased
by  a  minimum  of  ten  percent.

BENEFITS:      Enclosed is a summary of Ugly Duckling's employee benefits. You
will  be  entitled to these benefits as an employee of Ugly Duckling. However,
in  lieu  of  standard  vacation leave, you will be entitled to four weeks (20
business  days)  of  paid  vacation  leave  each  year during the term of your
employment,  prorated  for  any  partial  year.

<PAGE>

STOCK  OPTIONS:     You will receive a nonqualified option to purchase 100,000
shares  of  common  stock  of  Ugly  Duckling on September 1, 1997 (the "Stock
Options").  The  Stock Options are granted to provide you an incentive to work
in  a  manner  that  adds as much value as possible to Ugly Duckling. However,
Ugly Duckling makes no representations or warranties as to, and, shall have no
liability  for, the value of the Stock Options or the price of common stock of
Ugly  Duckling  at any time. You acknowledge that the issuance and/or exercise
of  the  Stock  Options  may  constitute  compensation to you and you shall be
responsible  for  paying  all  income taxes assessed on said compensation. The
Stock  Options  are  granted pursuant to the Ugly Duckling Long Term Incentive
Plan  (the  "Incentive  Plan")  and a Nonqualified Stock Option Agreement (the
"Option  Agreement").  A  copy  of the Incentive Plan and Option Agreement are
enclosed  with  this  letter. The Stock Options will vest over five years from
the  date  of  grant  and  be  subject  to  other  terms and conditions of the
Incentive  Plan  and  Option  Agreement.


<PAGE>75
STOCK GRANT:     As a signing bonus, you will receive on January 15, 1998 that
number  of shares of common stock of Ugly Duckling at the closing market price
on  September  1,  1997  equal  to  $100,000  (the  "Restricted  Stock").  The
Restricted Stock is granted to induce you to bear all risk of terminating your
current  employment  with Andersen Consulting, L.L.P. and accepting employment
with  Ugly  Duckling  under  the  terms of this letter. However, Ugly Duckling
makes  no  representations  or  warranties as to, and, shall have no liability
for,  the  value or price of the Restricted Stock at any time. You acknowledge
that the issuance of the Restricted Stock will constitute compensation for you
and  you  shall  be  responsible  for paying all income taxes assessed on said
compensation.  You  authorize  Ugly  Duckling  to withhold from the Restricted
Stock  at the time of issuance that number of shares with a value equal to the
withholdings  required  by  applicable  law.  If any withholdings are required
prior  to  the issuance of the Restricted Stock you authorize Ugly Duckling to
make  the  withholdings  from  your  Salary.  The Restricted Stock will not be
registered  under  the  Securities Act of 1933 and will be subject to transfer
restrictions  under  Rule  144  of  the  Securities  Act  of  1933.

TERM:      Your employment will commence on or before September 1, 1997. There
is  no  minimum  term  for  your employment. You are employed at will and your
employment  may  be  terminated  at any time for any lawful reason, all at the
discretion  and  will  of  Ugly  Duckling.  However,  if  your  employment  is
terminated  by  Ugly  Duckling  without cause prior to September 1, 1998, then
your  Salary,  but not any other benefits, will be continued for 12 months. If
your  employment  is terminated by Ugly Duckling without cause after September
1,  1998  and  prior to September 1, 1999, then your Salary, but not any other
benefits,  will be continued for 9 months. If your employment is terminated by
Ugly Duckling without cause after September 1, 1999 and prior to September 1, 
2000,  then  your  Salary, but not any other benefits, will be continued for 6
months. If your employment  is  terminated  (a) by Ugly Duckling without cause
after September 1, 2000; (b) by Ugly Duckling at any time for cause; or (c) by
you at any time, then your Salary will not be continued after the termination.
The continuation of your Salary, if required, will be a severance benefit (the
"Severance Benefit") and the Severance Benefit will be your exclusive benefit
and  remedy  for  the termination of your employment by Ugly Duckling without 
cause.  For  purposes of this letter and the termination of your employment by
Ugly  Duckling  without  cause, "without cause" shall mean termination for any
reason  other  than  your  (a)  illegal  conduct; (b) gross misconduct; or (c)
willful  failure  to  perform  your duties after receipt of written demand for
performance  of  your  duties.

CHANGE  OF  CONTROL:     If a change in control of Ugly Duckling occurs during
the term of your employment and your employment by Ugly Duckling is either (a)
terminated  by  you  within  12  months  after  the  change of control; or (b)
terminated  by  Ugly Duckling without cause within 90 days prior to the change
of  control  or  within  12 months after the change of control, then in either
event  you  will  receive a termination fee equal to 200% of your then current
salary (the "Termination Fee"). If your employment is terminated without cause
more than 90 days prior to a change of control or with cause at any time, then
no  Termination  Fee  shall  be  payable  to  you.  If you are entitled to the
Termination  Fee,  then you shall not be entitled to the Severance Benefit. In
addition,  at  the  time of any change of control all Stock Options granted to
you  pursuant to this letter that are not yet vested at the time of the change
of  control  shall automatically be fully vested without any further action or
authority of the Board of Directors of Ugly Duckling. The vesting of all Stock
Options in connection with a change in control shall be included in the Option
Agreement.  For purposes of this letter, change of control shall be defined by
the  Plan but shall include the removal and/or resignation of Ernest C. Garcia
II  as  the  Chairman of the Board of Directors and Chief Executive Officer of
Ugly  Duckling.
OTHER TERMS:     There are no material terms and conditions of your employment
other  than  as stated in this letter. This letter and the agreements enclosed
with  this  letter  constitute legally binding and enforceable contracts under
Arizona  law. You acknowledge that you have received the advice of independent
legal  counsel  prior  to you signing this letter and the enclosed agreements.

     If  these  terms and conditions of employment are acceptable to you, then
please  acknowledge  your  acceptance  by signing this letter and the enclosed
agreements  and  returning  them  to me. If you have any questions or comments
regarding  these terms and conditions of your employment, please contact me or
Ernie  Garcia.

     I  look  forward  to  working  with  you.

                              Cordially,


                              /s/  Steven  P.  Johnson
                              Steven  P.  Johnson
                              General  Counsel

SPJ:ag

Accepted  this  6th  day  of  August,  1997.


/s/  Steven  A.  Tesdahl
Steven  A.  Tesdahl

Social  Security  No.  ###-##-####





DV.PM:TESDAHL.DOC