October 12, 2000

SAI Investment Adviser, Inc.
1 SunAmerica Center, 34th Floor
Century City
Los Angeles, CA 90067-6022

SunAmerica Life Insurance Company
1 SunAmerica Center, 34th Floor
Century City
Los Angeles, CA 90067-6022

KZH Soleil-2 LLC
c/o The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, New York 10001

The Bank of New York, as Collateral Agent
2 North LaSalle Street

Chicago, IL  60602

Ladies and Gentlemen:

         Reference is made to that certain Senior  Secured Loan Agreement  dated
as of May 14, 1999 (the "Loan  Agreement")  among Ugly Duckling  Corporation,  a
Delaware    corporation    ("Borrower"),    The    Bank   of   New    York   (as
successor-in-interest  to Harris Trust & Savings Bank), as Collateral Agent (the
"Collateral   Agent")  and  the  Lenders  party  thereto  (together  with  their
respective successors and assigns, "Lenders"). All capitalized terms used herein
and not  otherwise  defined  shall have the meanings  given to such terms in the
Loan Agreement.

         Borrower has previously  advised Collateral Agent and Lenders that with
respect to the month of  September  2000,  Borrower  is not in  compliance  with
Section 6.16 of the Loan Agreement (entitled "Minimum B Piece Cash Flows").

         By  countersigning  this letter,  Collateral  Agent and Lenders  hereby
permanently waive such failure to comply with Section 6.16 of the Loan Agreement
for such month (and only for such month) and agree that such  failure  shall not
constitute a Default or Event of Default  pursuant to the Loan  Agreement or the
other Loan Documents.

         In  consideration  of the  foregoing  waiver  and for  other  good  and
valuable  consideration,   the  receipt  and  sufficiency  of  which  is  hereby
acknowledged,  the Loan Documents  are, upon (i) execution  hereof by Collateral
Agent and the  Required  Lenders  and (ii)  compliance  with the  provisions  of
Section  3.1  of  the  Loan  Agreement  with  respect  to  the  2000-B  Included
Certificates (as defined below), hereby amended as follows:

1.       Section 6.16 of the Loan Agreement is hereby amended and restated in
         its entirety to read as follows:

                  6.16 Minimum B-Piece Cash Flows. Not permit aggregate  B-Piece
                  Cash Flows deposited to the Collateral Account with respect to
                  any month to be less than the following amounts  determined as
                  of the applicable  Payment Date (it being  understood that for
                  purposes of determining  compliance with this Section 6.16 the
                  amount  deemed  deposited  with respect to any B-Piece may not
                  exceed the B-Piece Cash Flow with respect to such B-Piece):

                           (a) For Payment Dates through and including September
                  15, 1999 (which  represent  B-Piece Cash Flows with respect to
                  months through August 1999), $2,000,000.

                           (b) For Payment Dates from and including  October 15,
                  1999,  through and including  March 15, 2000,  $900,000 (which
                  represent  B-Piece  Cash  Flows with  respect  to months  from
                  September 1999 through February 2000).

                           (c) For the  Payment  Date on April 15,  2000  (which
                  represents  B-Piece  Cash Flows  with  respect to the month of
                  March 2000), $1,200,000.

                           (d) For the Payment  Dates from and including May 15,
                  2000,   through  and  including   September  15,  2000  (which
                  represent  B Piece Cash Flows with  respect to the months from
                  April 2000 through August 2000), $2,000,000.

                           (e) For the Payment Dates from and including  October
                  15,  2000,   through  and  including  March  15,  2001  (which
                  represent  B Piece Cash Flows with  respect to the months from
                  September 2000 through February 2001), $900,000.

                           (f)      For  the  Payment  Date  on  April  15,
                  2001,  and  for  each  Payment  Date  thereafter $2,000,000.

2.  Notwithstanding  the terms and provisions of the Loan  Agreement,  the other
Loan  Documents,  and the Letter  Agreement  dated August 30,  2000,  the 2000-B
Included  Certificates shall, subject to the last paragraph of the definition of
the term "Borrowing Base" set forth in the Loan Agreement, constitute Additional
Class B Certificates  and shall be included in the  computation of the Borrowing
Base even though not issued  during the  Securitization  Period.  The  foregoing
shall not be deemed to extend the  Securitization  Period.  As used herein,  the
term "2000-B Included  Certificates"  means all of the "Class B Notes," "Class C
Certificates"  and "Class D  Certificates"  issued in connection with the 2000-B
Securitization  excluding  the  "Class  C  Certificate"  in the face  amount  of
$2,600,599.98  issued to Ugly Duckling Finance  Corporation.  As used herein the
term "2000-B  Securitization" means the securitization  accomplished pursuant to
the following documents:

                           (a) Sale and Servicing  Agreement  dated as of August
                  28, 2000 (the "2000-B  SSA") among Ugly  Duckling  Receivables
                  Corp. II (formerly  known as Champion  Receivables  Corp.  II)
                  ("UDRC II"), Duck Auto Owner Trust 2000-B, a Delaware business
                  trust, as Issuer (the "2000-B  Issuer"),  Ugly Duckling Credit
                  Corp.  (formerly  known as  Champion  Acceptance  Corporation)
                  ("UDCC"),  and The Bank of New York, as Indenture Trustee (the
                  "2000-B Indenture Trustee").

                           (b) Trust  Agreement  (Duck Owner Trust 2000-B) dated
                  as of August 28, 2000 (the  "2000-B  Owner  Trust  Agreement")
                  between UDRC II, as Seller,  and Wilmington Trust Company,  as
                  Owner Trustee (the "2000-B Owner Trustee").

                           (c)  Indenture  dated  as of  August  28,  2000  (the
                  "2000-B  Indenture")  between the 2000-B Issuer and the 2000-B
                  Indenture Trustee.

         Except as  specifically  modified by this waiver and agreement,  all of
the terms and  provisions  of the Loan  Agreement,  each other Loan Document and
each of the documents  referred to therein or delivered in connection  therewith
shall  remain in full force and effect.  The waivers set forth  herein  shall be
limited  precisely as written and shall not be deemed,  except as expressly  set
forth herein,  (a) to be a consent to any  modification or waiver of other terms
or  conditions  of the Loan  Agreement,  any other Loan  Document  or any of the
documents  referred to therein or  delivered in  connection  therewith or (b) to
prejudice any right,  remedy,  power or privilege  which any party hereto or any
party consenting hereto now has or may have in the future under or in connection
with the  Loan  Agreement,  any  other  Loan  Document  or any of the  documents
referred to therein or delivered in connection  therewith.  Without limiting the
generality of the  foregoing,  the Security  Documents and all of the Collateral
described  therein do and shall,  to the extent set forth  therein,  continue to
secure the payment of all  obligations and liabilities of the Borrower under the
Loan Agreement  and/or any of the other Loan Documents,  in each case as amended
hereby.

         Concurrently  with the execution and delivery of this letter  agreement
and as a condition  precedent  to the  effectiveness  thereof,  UDC shall pay to
Lenders  an  aggregate  waiver/modification  fee  of  $25,000,  which  shall  be
distributed to the Lenders on a pro rata basis.

         The Borrower shall promptly pay the reasonable  out-of-pocket  expenses
incurred  by the  Collateral  Agent  and the  Lenders  in  connection  with  the
preparation  of  this  waiver  and  agreement  including  the  reasonable  fees,
disbursements and other charges of its counsel.

         This letter  agreement shall be governed by and construed in accordance
with the laws of the State of New York.

         Borrower hereby represents and warrants to Collateral Agent and Lenders
as follows:

         (i) The execution, delivery and performance of this Letter Agreement by
Borrower and  Guarantor  has been duly  authorized  by all  necessary  corporate
action of Borrower and Guarantor.

         (ii) This Letter  Agreement  has been duly  executed  and  delivered by
Borrower and Guarantor and constitutes the legal,  valid and binding  obligation
of Borrower and Guarantor in accordance  with its terms,  except as  enforcement
may  be  limited  by  equitable   principles  or  by   bankruptcy,   insolvency,
reorganization,  moratorium,  or similar laws relating to or limiting creditors'
rights generally.

         (iii) As of the date hereof,  the  representations  and  warranties  of
Borrower and Guarantor  set forth in the Loan  Documents are true and correct in
all material respects.

         (iv) As of the date hereof and after giving effect to the execution and
delivery of this Letter Agreement by Borrower,  Collateral Agent and Lenders, no
Default or Event of Default has occurred and is continuing.

         This  Agreement  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.

         Please sign and return the enclosed copy of this letter.

                                                     Very truly yours,

                                                     UGLY DUCKLING CORPORATION,
                                                     a Delaware corporation

                                                     By:
                                                     Name:
                                                     Title:


<PAGE>


CONSENTED AND AGREED:


GALAXY CLO 1999-1, LTD.

By:      SAI Investment Adviser, Inc.,
         its Collateral Manager

         By:
         Name:
         Title:


SUNAMERICA LIFE INSURANCE
COMPANY

By:
Name:
Title:

KZH SOLEIL-2 LLC

By:
Name:
Title:


THE BANK OF NEW YORK,
as Collateral Agent

By:
Name:
Title:



<PAGE>


         Guarantor  hereby  consents and agrees to the foregoing and agrees that
the  Guaranty  remains  in  full  force  and  effect  and  that  the  Guaranteed
Obligations (as defined in the Guaranty) include, without limitation, payment of
the obligations of Borrower  pursuant to the foregoing  Letter Agreement and the
Loan Documents as amended by the foregoing Letter Agreement.

                                                     UGLY DUCKLING CAR SALES AND
                                                     FINANCE CORPORATION,
                                                     an Arizona corporation

                                                     By:
                                                     Name:
                                                     Title: