THIRD AMENDMENT TO LOAN AGREEMENT



     This Third Amendment to Loan Agreement (this "Third  Amendment") is entered
into as of this 30th day of June, 2002 by and between UGLY DUCKLING CORPORATION,
a Delaware corporation  ("Company") and CYGNET CAPITAL  CORPORATION,  an Arizona
corporation ("Lender").

                                    Recitals.

A.   Lender  holds and owns that certain loan payable by Company in the original
     principal  amount  of  $15,000,000.00  (the  "Loan")  evidenced  by a  Loan
     Agreement  dated  February 12, 1998 (the "Loan  Agreement")  and  documents
     executed   pursuant  to  the  Loan   Agreement,   as   thereafter   amended
     (collectively, the "Loan Documents").

B.   The  Company  and  Lender  desire  to  amend  the Loan  Agreement  and Loan
     Documents on the terms and conditions set forth in this Third Amendment.

NOW, THEREFORE,  in  consideration  of the  mutual  agreements,  provisions  and
     covenants contained herein, the parties agree as follows:

1    Defined Terms.  Unless otherwise  specified  herein,  all capitalized terms
     used in this  Third  Amendment  shall have the same  meaning  given to such
     terms in the Loan Agreement and Loan Documents, as applicable.

2.   Amendment to Section 1.01.  Effective as of the date hereof, the definition
     of  "Maturity  Date" in the Loan  Agreement  is amended in its  entirety to
     provide as follows:

     "Maturity Date" means February 12, 2005.

3.   Amendment  to  Section 2 of the Loan  Agreement.  Effective  as of the date
     hereof,  a new Section 2.09 shall be added to the Loan  Agreement and shall
     provide as follows:

          "2.09 Principal Payments By Company. Without demand by Lender, Company
     shall pay to Lender each calendar quarter a principal  payment equal to the
     retained earning of the Company for the calendar quarter as reported in the
     Form 10-Q filed by the  Company  (the  "Earnings  Payment").  The  Earnings
     Payment shall be paid on or before the date the Company publicly  announces
     its  earnings  for a  quarter.  No  Earnings  Payment  shall  be due if the
     Earnings  Payment  shall  constitute  a  default  under,  or  is  otherwise
     prohibited  by, any  agreement  with any other  voluntary  creditor  of the
     Company ("Other Creditors"). The Earnings payment for any quarter shall not
     exceed  $1,000,000.00  unless all Other  Creditors  consent to an  Earnings
     Payment for a quarter in excess of $1,000,000.00."
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4.   Warrants.  Lender acknowledges the termination of the Warrant Agreement and
     all  references to the Warrant and Warrant  Agreement in the Loan Agreement
     and Loan Documents are hereby deleted in their entirety.

5.   Incorporation  of Amendment.  The parties  acknowledge  and agree that this
     Third Amendment is incorporated into and made a part of, as applicable, the
     Loan  Agreement,  the terms and provisions of which are hereby affirmed and
     ratified and remain in full force and effect,  except as amended hereby. To
     the extent that any term or provision of this Third  Amendment is or may be
     deemed  inconsistent  with any term or provision of the Loan Agreement,  as
     applicable, the terms and provisions of this Third Amendment shall control.
     Each reference to the Loan  Agreement,  shall be a reference to the Loan as
     amended by this Third Amendment. This Third Amendment,  taken together with
     the provisions of the Loan  Agreement,  which are all affirmed and ratified
     by the Company,  contains the entire agreement among the parties  regarding
     the  transactions  described  herein and supersedes  all prior  agreements,
     written or oral, with respect thereto.

6.   Assignments, Participation, etc. Lender acknowledges that it is currently a
     Lender  under the Loan  Agreement,  that it has  authority  to execute  and
     deliver this Third Amendment and that it has not assigned any of its rights
     under the Loan Agreement, except to another Lender which is a party to this
     Third Amendment.

7.   Execution  in  Counterparts.  This Third  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.


Company:                            UGLY DUCKLING CORPORATION,
                                    a Delaware corporation

                                    By:      __________________________________
                                    Name:    __________________________________
                                    Its:     __________________________________



Lender:                             Cygnet Capital Corporation,
                                    an Arizona corporation

                                    By:      __________________________________
                                    Name:    __________________________________
                                    Its:     __________________________________