EXHIBIT 10.3


                                                                  EXECUTION COPY




                                 LOAN AGREEMENT


                           Dated as of March 18, 1999


                                 by and between


                   GREENWICH CAPITAL FINANCIAL PRODUCTS, INC.
                             a Delaware corporation
                                   ("Lender")


                                       and


                           UGLY DUCKLING CORPORATION,
                             a Delaware corporation
                                  ("Borrower")


                         $20,000,000 Collateralized Loan





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                                TABLE OF CONTENTS



ARTICLE I
         DEFINITIONS...........................................................1
         1.1      Defined Terms................................................1
         1.2      Other Interpretive Provisions...............................10
         1.3      Accounting Principles.......................................11
         1.4      Times.......................................................11

ARTICLE II
          THE LOAN............................................................11
         2.1      The Loan....................................................11
         2.2      Payment Upon Collections....................................12
         2.3      Payment Upon Maturity.......................................12
         2.4      Interest....................................................12
         2.5      Voluntary Prepayments.......................................12
         2.6      Application of Payments.....................................13
         2.7      Prepayment..................................................13
         2.8      Fees........................................................13
         2.9      Fees and Interest...........................................13
         2.10     Payments by Borrower........................................13

ARTICLE III
           SECURITY AGREEMENT AND COLLATERAL..................................14
         3.1      Security for Obligations....................................14
         3.2      Security Documents..........................................14
         3.3      Lender's Duty Regarding Collateral..........................14
         3.4      Borrower's Duties Regarding Collateral......................15
         3.5      Power of Attorney...........................................15
         3.6      Collateral Inspections......................................16

ARTICLE IV
          CONDITIONS PRECEDENT; TERM OF AGREEMENT.............................16
         4.1      Conditions Precedent........................................16
         4.2      Receipt of Documents. ......................................16
         4.3      Term........................................................18
         4.4      Effect of Termination.......................................18
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ARTICLE V
         REPRESENTATIONS AND WARRANTIES.......................................18
         5.1      No Encumbrances.............................................18
         5.2      Location of Chief Executive Office; FEIN....................18
         5.3      Due Organization and Qualification; Subsidiaries............19
         5.4      Due Authorization: No Conflict..............................19
         5.5      Litigation..................................................20
         5.6      Financial Statements; No Material Adverse Change............20
         5.7      Securitization Documents.  .................................20
         5.8      ERISA.......................................................20
         5.9      Environmental and Safety Matters............................21
         5.10     Tax Matters.................................................21

ARTICLE VI
          AFFIRMATIVE COVENANTS...............................................21
         6.1      Financial Statements and Other Documents....................21
         6.2      Inspection of Property......................................22
         6.3      Default Disclosure..........................................22
         6.4      Notices to Lender...........................................23
         6.5      Books and Records...........................................23
         6.6      Compliance and Preservation.................................23
         6.7      Perfection of Liens.........................................23
         6.8      Cooperation.................................................23
         6.9      Use of Proceeds.............................................23
         6.10     Securitizations.............................................24
         6.11     Compliance with Covenants...................................24
         6.12     Payment of Indebtedness.....................................24
         6.13     Tangible Net Worth..........................................24
         6.14     Debt to Tangible Net Worth..................................24

ARTICLE VII
           NEGATIVE COVENANTS.................................................24
         7.1      Liens.......................................................24
         7.2      Indebtedness................................................24
         7.3      Restrictions on Fundamental Changes.........................24
         7.4      Disposal of Collateral......................................25
         7.5      Change Name.................................................25

<PAGE>


         7.6      Amendments..................................................25
         7.7      Change of Control...........................................25
         7.8      Distributions...............................................25
         7.9      Standing Dividend Resolutions...............................25
         7.10     Change in Location of Chief Executive Office................25
         7.11     No Prohibited Transactions Under ERISA......................25
         7.12     Stock Buyback Program.......................................26
         7.13     Verde Subordinated Debt.....................................26

ARTICLE VIII
            EVENTS OF DEFAULT/REMEDIES........................................27
         8.1      Event of Default............................................27
         8.2      Lender's Rights and Remedies................................28

ARTICLE IX 
           MISCELLANEOUS......................................................29
         9.1      Amendments and Waivers......................................29
         9.2      Notices.....................................................29
         9.3      No Waiver: Cumulative Remedies..............................30
         9.4      Costs and Expenses..........................................31
         9.5      Indemnity...................................................31
         9.6      Marshaling: Payments Set Aside..............................32
         9.7      Successors and Assigns......................................32
         9.8      Set-off.....................................................32
         9.9      Counterparts................................................32
         9.10     Severability................................................32
         9.11     No Third Parties Benefited..................................32
         9.12     Time........................................................33
         9.13     Governing Law and Jurisdiction..............................33
         9.14     Entire Agreement............................................33
         9.15     Interpretation..............................................33
         9.16     Assignment..................................................34
         9.17     Revival and Reinstatement of Obligations....................34



<PAGE>


                             SCHEDULES AND EXHIBITS

Schedule A                 Borrower's Subsidiaries

Schedule B                 Warrants, Options, etc.

Schedule C                 Litigation

Schedule D                 Exceptions to Financial Statements

Schedule E                 Permitted Liens

Schedule F                 Class B Certificates

Schedule G                 Subordinated Indebtedness

Exhibit A                  UDRC and UDRCII Securitization Documents


<PAGE>






                                 LOAN AGREEMENT


     This LOAN  AGREEMENT  (the  "Agreement"),  is entered  into as of March 18,
1999, between GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., a Delaware corporation
("Lender"),  with a place of business located at 600 Steamboat Road,  Greenwich,
Connecticut  06830  and  UGLY  DUCKLING  CORPORATION,   a  Delaware  corporation
("Borrower"),  with a place of  business  located at 2525 East  Camelback  Road,
Suite 500, Phoenix, Arizona 85016.

     Lender has agreed to make to Borrower a  collateralized  loan (the  "Loan")
upon the terms and conditions set forth in this Agreement.

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

                                    ARTICLE I

                                   DEFINITIONS

     I.1  Defined  Terms.  In addition to the terms  defined  elsewhere  in this
Agreement, the following terms have the following meanings:

     "1998-D Spread Account  Reduction  Amount" means the amount (if any, but in
any event not to exceed  2.00% of the Pool  Balance)  that is released  from the
Spread Account under the 1998-D PSA on a one-time basis (by means of a reduction
in the  percentage  specified  in the  definition  of Specified  Spread  Account
Amount)  with  the  consent  of the  Insurer.  Capitalized  terms  used  in this
definition and not otherwise  defined in this Agreement  shall have the meanings
they are given in the 1998-D PSA.

     "1998-D PSA" means the Pooling and Servicing Agreement dated as of December
22,  1998 among UDRC II, UDCC and Harris Bank & Trust  Company,  as
trustee.

     "Affiliate"  means, as to any Person,  any other Person which,  directly or
indirectly, is in control of, is controlled by, or is under common control with,
such  Person.  A  Person  shall be  deemed  to  control  another  Person  if the
controlling  Person  possesses,  directly or indirectly,  the power to direct or
cause the direction of the management and policies of the other Person,  whether
through the ownership of voting  securities,  by contract or otherwise.  Without
limitation,  any  director,  executive  officer  or  beneficial  owner of twenty
percent  (20%) or more of the equity of a Person  shall for the purposes of this
Agreement,  be deemed to control the other  Person.  In no event shall Lender be
deemed an "Affiliate" of Borrower.


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     "Agreement" means this Loan Agreement, as amended, supplemented or modified
from time to time in accordance with the terms hereof.

     "Attorney  Costs" means and includes all fees and  disbursements of any law
firm or other external counsel.

     "Bankruptcy  Code" means the United States Bankruptcy Code (11 U.S.C.ss.101
et seq.), as amended, and any successor statute.

     "Bond  Insurance  Policy"  shall mean a  financial  guaranty  or  financial
insurance  policy issued by MBIA or any of its Affiliates or any other financial
guarantor  in respect of one or more classes of investor  certificates  or other
interests issued by a Securitization Trust.

     "Borrower's  Books" means all of  Borrower's  books and records  including:
ledgers, records indicating, summarizing, or evidencing Borrower's properties or
assets (including the Collateral and the assets of any Subsidiaries of Borrower)
or liabilities;  all information  relating to Borrower's  business operations or
financial condition;  and all computer programs,  disk or tape files, printouts,
runs, or other computer prepared information.

     "Business  Day" means any day other  than a  Saturday,  Sunday or  national
holiday.

     "CERCLA" shall mean the Comprehensive Environmental Response,  Compensation
and Liability Act (49 U.S.C. Section 9601, et seq.).

     "Change  of  Control"  shall be deemed to have  occurred  at such time as a
"person" or "group"  (within the meaning of Sections  13(d) and  14(d)(2) of the
Securities Exchange Act of 1934) becomes, after the date of this Agreement,  the
"beneficial  owner" (as defined in Rule 13(d)(3) under the  Securities  Exchange
Act of 1934), directly or indirectly, of more than 25% of the total voting power
of all classes of stock then  outstanding  of  Borrower  entitled to vote in the
election of directors.

     "Closing Date" means the date on which all  conditions  precedent set forth
in Section  4.1 are either  satisfied  or waived by Lender and Lender  makes the
Loan.

     "Code"  means  the  Internal  Revenue  Code of 1986,  as  amended,  and any
regulations promulgated thereunder.

     "Collateral" means all of the outstanding capital stock of UDRC and UDRCII.

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     "Collections"  means all proceeds of,  payments or other  distributions  of
principal,  interest or other  amounts on, and other  amounts  received by or on
behalf of Borrower in respect of the  Collateral,  including all amounts paid to
Lender pursuant to the UDRC Dividend  Direction  Letter and the UDRC II Dividend
Direction  Letter,  but excluding (so long as no Default or Event of Default has
occurred and is  continuing at the time it is paid to UDRC II) the 1998-D Spread
Account Reduction Amount, if any.

     "Debt" or  "Indebtedness"  means (i) indebtedness for borrowed money,  (ii)
obligations  evidenced  by  bonds,   debentures,   notes,  matured  reimbursable
obligations  under  letters  of  credit  or  other  similar  instruments,  (iii)
obligations  to pay the deferred  purchase  price of property or services  other
than  trade  payables  incurred  in  the  ordinary  course  of  business,   (iv)
obligations  as lessee  under  leases  that  shall  have  been or should  be, in
accordance with GAAP recorded as capital leases, (v) obligations under direct or
indirect guaranties in respect of, and obligations  (contingent or otherwise) to
purchase or otherwise acquire, or otherwise to assure a creditor against loss in
respect of,  indebtedness  or  obligations of others of the kinds referred to in
clauses (i) through (iv),  and (vi)  liabilities  in respect of unfunded  vested
benefits under Pension Plans covered by Title IV of ERISA.

     "Default" means any event or circumstance which, with the giving of notice,
the  lapse of  time,  or  both,  would  (if not  cured  or  otherwise  remedied)
constitute an Event of Default.

     "Dollars", "dollars" and "$" each mean lawful money of the United States.

     "Environmental  and Safety Laws" means all  Federal,  state and local laws,
regulations and ordinances,  relating to the discharge, handling, disposition or
treatment of Hazardous  Materials and other  substances or the protection of the
environment or of employee health and safety,  including  CERCLA,  the Hazardous
Materials  Transportation  Act (49 U.S.C.  Section 1801, et seq.),  the Resource
Conservation  and Recovery Act (42 U.S.C.  Section 7401, et seq.), the Clean Air
Act (42 U.S.C.  Section 7401,  et seq.),  the Toxic  Substances  Control Act (15
U.S.C. Section 2601, et seq.), the Occupational Safety and Health Act (29 U.S.C.
Section 651, et seq.) and the Emergency Planning and Community Right-To-Know Act
(42  U.S.C.  Section  11001,  et  seq.),  each as the  same may be  amended  and
supplemented.

     "Environmental  Liabilities  and  Costs"  means,  as  to  any  Person,  all
liabilities, obligations,  responsibilities,  remedial actions, losses, damages,
punitive damages,  consequential  damages,  treble damages,  contribution,  cost
recovery,  costs and expenses (including all fees, disbursements and expenses of
counsel,  expert and consulting fees, and costs of investigation and feasibility
studies),  fines, penalties,  sanctions and interest incurred as a result of any
claim or demand,  by any Person,  whether  based in contract,  tort,  implied or
express warranty, strict liability,  criminal or civil statute, permit, order or
agreement  with any  Federal,  state or local  governmental  authority  or other
Person, arising from environmental,  health or safety conditions, or the release
or threatened release of a contaminant, pollutant or Hazardous Material into the
environment,  resulting from the operations of such Person or its  subsidiaries,
or breach of any  Environmental  and Safety Law or for which such  Person or its
subsidiaries is otherwise liable or responsible.


                                     Page 3
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     "Equity  Interests"  means,  with  respect to a Person,  any common  stock,
preferred  stock,  partnership  interest  (whether  general or limited) or other
equity or participating interest in such Person.

     "ERISA"  means the Employee  Retirement  Income  Security  Act of 1974,  as
amended from time to time, and regulations promulgated thereunder.

     "Event of Default"  means any of the events or  circumstances  specified in
Section 8.1.

     "FEIN" means Federal Employer Identification Number.

     "Financing  Statements"  means  the  Financing  Statements  on  Form  UCC-1
relating to the Collateral filed in connection with the Pledge Agreement,  dated
as of November 12, 1998, between Pledgor and Lender.

     "Fiscal Quarter" means a fiscal quarter of Borrower.

     "Fiscal Year" means a fiscal year of Borrower.

     "GAAP" means generally accepted  accounting  principles set forth from time
to time in the opinions and  pronouncements  of the Accounting  Principles Board
and the American  Institute of Certified  Public  Accountants and statements and
pronouncements  of the Financial  Accounting  Standards  Board (or agencies with
similar  functions of  comparable  stature and authority  within the  accounting
profession),  or in such  other  statements  by such  other  entity as may be in
general use by significant segments of the U.S. accounting profession, which are
applicable to the circumstances as of the date of determination.

     "GECC" means General Electric Capital Corporation, a New York corporation.

     "GECC  Agreement"  shall  mean  the  Amended  and  Restated  Motor  Vehicle
Installment  Contract Loan and Security Agreement,  dated as of August 15, 1997,
by and  between  Borrower,  GECC and  certain  other  parties  thereto,  as such
agreement may be amended from time to time.

     "Governing   Documents"  means,   with  respect  to  Borrower,   Borrower's
certificate of incorporation and bylaws.


                                     Page 4
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     "Governmental Authority" means any nation or government, any state or other
political  subdivision  thereof,  any  central  bank  (or  similar  monetary  or
regulatory authority) thereof, any entity, body, authority,  bureau,  department
or instrumentality exercising executive,  legislative,  judicial,  regulatory or
administrative functions of or pertaining to government,  and any corporation or
other  entity  owned or  controlled,  through  stock  or  capital  ownership  or
otherwise, by any of the foregoing.

     "Hazardous  Materials"  means (a) any material or  substance  defined as or
included  in the  definition  of  "hazardous  substances,"  "hazardous  wastes,"
"hazardous  materials," "toxic substances" or any other formulations intended to
define, list or classify  substances by reason of their deleterious  properties,
(b) any  oil,  petroleum  or  petroleum  derived  substance,  (c) any  flammable
substances or explosives,  (d) any  radioactive  materials,  (e) asbestos in any
form,  (f)  electrical  equipment  that  contains  any oil or  dielectric  fluid
containing  levels of  polychlorinated  biphenyls  in excess of fifty  parts per
million,  (g)  pesticides  or (h) any other  chemical,  material  or  substance,
exposure to which is prohibited, limited or regulated by any governmental agency
or  authority  or which may or could  pose a hazard to the  health and safety of
persons in the vicinity thereof.

     "Indemnified Liabilities" has the meaning specified in Section 9.5.

     "Indemnified Person" has the meaning specified in Section 9.5.

     "Initial  Principal  Amount"  means the  amount of Twenty  Million  Dollars
($20,000,000).

     "Interest  Accrual  Period"  shall  mean  the  one-month  period  from  and
including a Payment Date to the close of business on the day  preceding the next
Payment Date,  except that the first  Interest  Accrual Period shall commence on
the  Closing  Date and end at the close of  business  on the day  preceding  the
Payment Date.

     "Lender  Costs" or  "Lender  Expenses"  means  all:  (a) costs or  expenses
(including taxes and insurance  premiums)  required to be paid by Borrower under
any of the Loan  Documents  that are paid or incurred by Lender;  (b) reasonable
out-of-pocket  fees or charges  paid or  incurred by Lender in  connection  with
Lender's   transactions   with   Borrower,   including,   fees  or  charges  for
photocopying, notarization, couriers and messengers,  telecommunication,  public
record searches  (including tax lien,  litigation and UCC searches and including
searches  with the patent and  trademark  office,  the  copyright  office or the
department of motor vehicles), filing, recording,  publication,  appraisals, due
diligence,  actual  out-of-pocket  costs and expenses  incurred by Lender in the
disbursement  of funds to Borrower (by wire transfer or  otherwise);  (c) actual
out-of-pocket  charges paid or incurred by Lender resulting from the dishonor of
checks;  (d)  reasonable  out-of-pocket  costs and expenses  paid or incurred by
Lender to correct any default or enforce any provision of the Loan Documents, or
in gaining possession of, maintaining,  handling, preserving, storing, shipping,
selling,  preparing  for sale, or  advertising  to sell the  Collateral,  or any


                                     Page 5
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portion thereof,  irrespective of whether a sale is consummated;  (e) reasonable
costs and expenses paid or incurred by Lender in examining Borrower's Books; (f)
reasonable  out-of  pocket costs and expenses of third party claims or any other
suit paid or incurred by Lender in enforcing or defending the Loan  Documents or
in  connection  with the  transactions  contemplated  by the Loan  Documents  or
Lender's relationship with Borrower;  and (g) Lender's reasonable Attorney Costs
incurred in advising, structuring, drafting, reviewing, administering, amending,
terminating,   enforcing,   defending,   or  concerning   the  Loan   Documents,
irrespective of whether suit is brought.

     "LIBOR" shall mean, with respect to an Interest  Accrual  Period,  the rate
per annum  equal to the rate  appearing  on  Bloomberg  on the first day of such
Interest Accrual Period,  for the one-month term  corresponding to such Interest
Accrual Period,  or if such rate shall not be so quoted then the applicable rate
appearing at page 3750 of the Telerate  Screen on the first day of such Interest
Accrual Period,  or if neither such rate shall be so quoted,  the rate per annum
at which Lender is offered Dollar deposits at or about 11:00 a.m., New York City
time, on such date by prime banks in the interbank  eurodollar  market where the
eurodollar  and foreign  currency  exchange  operations of Lender are then being
conducted, for delivery on the first day of such Interest Accrual Period for the
number of days in such Interest Accrual Period,  and in an amount  comparable to
the amount of the Loan on such day.

     "Lien or Encumbrance"or  "Liens and Encumbrances" means any mortgage,  deed
of trust,  pledge,  hypothecation,  assignment,  charge or deposit  arrangement,
encumbrance, lien (statutory or other) or preference, priority or other security
interest or preferential arrangement of any kind or nature whatsoever (including
those created by,  arising under or evidenced by any  conditional  sale or other
title  retention  agreement,  the  interest  of a lessor  under a capital  lease
obligation, any financing lease having substantially the same economic effect as
any of the foregoing,  or the filing of any financing statement naming the owner
of the  asset to  which  such  lien  relates  as  debtor,  under  the UCC or any
comparable  law) and any  contingent  or other  agreement  to provide any of the
foregoing.

     "Loan Documents" means this Agreement, the Stock Pledge Agreement, the UDRC
Dividend  Direction Letter, the UDRC II Dividend Direction Letter, the Financing
Statements, and all documents delivered to Lender in connection therewith.

     "Material  Adverse  Change" or "Material  Adverse  Effect" means a material
adverse change in, or a material adverse effect upon, any of (a) the operations,
business,  properties,  condition  (financial  or  otherwise)  or  prospects  of
Borrower or an  Affiliate  of  Borrower,  (b) the ability of Borrower to perform
under any Loan  Document  and avoid any Event of Default,  or (c) the  legality,
validity, binding effect or enforceability of any Loan Document.

     "Maturity Date" shall mean December 15, 1999.

     "MBIA" shall mean MBIA Insurance Corporation.


                                     Page 6
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     "Obligations" means all Debt, advances,  debts,  liabilities,  obligations,
covenants and duties owing by Borrower to Lender, of any kind or nature, present
or future,  whether or not evidenced by any note,  guaranty or other instrument,
arising  under this  Agreement  or under any other Loan  Document,  absolute  or
contingent,  due or to become due, now existing or hereafter arising and however
acquired.

     "Outstanding Principal Amount" means the Initial Principal Amount minus all
amounts applied to the repayment of the Loan pursuant to Section 2.6(c).

     "Payment  Date"  shall mean the 15th day of each  month  during the term of
this Agreement.

     "Permitted Liens" means (a) Liens held by Lender and (b) each lien existing
at or prior to the date of this  Agreement  that is  identified on Schedule E to
this Agreement.

     "Person" means a natural person, partnership,  corporation, business trust,
joint  stock  company,  trust,  unincorporated  association,  limited  liability
company, joint venture or Governmental Authority.

     "Repayment  Date"  means the earlier of (i) the  Maturity  Date or (ii) the
date that the Outstanding  Principal Amount of the Loan  outstanding  hereunder,
together with all accrued interest in respect thereof and all other Obligations,
has been reduced to zero.

     "Requirement  of  Law"  means,  as to any  Person,  any law  (statutory  or
common),  treaty,  rule or regulation or  determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its property or to which the Person or any of its property is subject.

     "Responsible Officer" means the chief executive officer or the president of
Borrower,  or any other  officer  having  substantially  the same  authority and
responsibility  or,  with  respect to  financial  matters,  the chief  financial
officer or the treasurer of Borrower,  or any other officer having substantially
the same authority and responsibility.

     "Security Documents" means the writings described in Article III hereof, as
they may  hereafter  be amended,  modified  and/or  supplemented,  and all other
writings  now or  hereafter  executed  to create,  evidence  and/or  perfect any
Lien(s) to secure the Loan or any portion(s) thereof.

     "Securitization Default" means any default or event of default, or event or
occurrence  which,  with the  passage  of time or the  giving of notice or both,
would  become a default or event of default,  by UDRC,  UDRC II or any seller to
UDRC or UDRC II in their respective  obligations  under the UDRC  Securitization
Documents  or the UDRC II  Securitization  Documents,  which has not been  cured
within any applicable period thereunder.


                                     Page 7
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     "Securitization Trust" shall mean any trust formed pursuant to a purchasing
agreement or a pooling and servicing  agreement specified on Exhibit A hereto or
contemplated in clause (iii) of the definitions of UDRC Securitization Documents
and UDRC II Securitization Documents.

     "Stock Pledge Agreement" means that certain Stock Pledge  Agreement,  dated
as of the date hereof, among UDCS as Pledgor,  Borrower and Lender,  pursuant to
which UDCS grants Lender a security  interest in one hundred  percent  (100%) of
the issued and outstanding capital stock of each of UDRC and UDRC II.

     "Subordinated  Debt"  shall  mean the Debt set forth on  Schedule G and any
Debt  incurred  after the date hereof as to which the repayment of principal and
interest is  subordinated  to  repayment of the Loan  pursuant to  subordination
provisions that have been approved in writing by Lender.

     "Subsidiary"  of  a  Person  means  a  corporation,   partnership,  limited
liability partnership,  limited liability company, or other entity in which that
Person  directly or  indirectly  owns or  controls  the shares of stock or other
ownership  interests  having  ordinary  voting  power to elect a majority of the
board of directors (or appoint other comparable  managers) of such  corporation,
partnership,  limited liability partnership, limited liability company, or other
entity.

     "Tangible Net Worth" of Borrower shall mean the total of Borrower's and its
consolidated  Subsidiaries'   shareholders'  equity  (including  capital  stock,
additional  paid-in  capital and retained  earnings) plus  Subordinated  Debt of
Borrower  and its  consolidated  Subsidiaries,  less (i) the total amount of all
Indebtedness owing to Borrower from its consolidated  Subsidiaries,  Affiliates,
shareholders, officers or employees, and (ii) the total amount of any intangible
assets of Borrower  and its  consolidated  Subsidiaries,  including  unamortized
discounts, deferred charges and goodwill.

     "Tax" means any federal,  state,  local or foreign income,  gross receipts,
license, payroll,  employment,  excise, severance,  stamp, occupation,  premium,
windfall profits,  environmental,  customs,  duties,  capital stock,  franchise,
profits, withholding,  social security (or similar),  unemployment,  disability,
real property, personal property,  intangible, ad valorem, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated or other tax
or other  governmental  charge of any kind  whatsoever,  including any interest,
penalty or additions thereto.

     "Trustee" means Harris Trust and Savings Bank.

     "UCC" means the Uniform  Commercial  Code as in effect from time to time in
the State of Arizona,  and in any and all other states in which Borrower  and/or
any of its Subsidiaries conduct, or are authorized to conduct business.

     "UDCC" means Ugly Duckling  Credit Corp., an Arizona  corporation  formerly
known as Champion Acceptance Corporation.



                                     Page 8
<PAGE>



     "UDCS" means Ugly  Duckling Car Sales and Finance  Corporation,  an Arizona
corporation formerly known as Duck Ventures, Inc.

     "UDRC" shall mean Ugly Duckling Receivables Corp., a Delaware corporation.

     "UDRC II"  shall  means  Ugly  Duckling  Receivable  Corp.  II, a  Delaware
corporation.

     "UDRC Class B Certificates"  shall mean the issued and outstanding  Class B
Certificates issued by each  Securitization  Trust with respect to which UDRC is
the seller, including those set forth on Schedule F, which constitute all of the
UDRC Class B Certificates in existence on the Closing Date.

     "UDRC  II  Class B  Certificates"  shall  mean  the  currently  issued  and
outstanding,  and all further issued and then outstanding,  Class B Certificates
issued by each of  Securitization  Trust  with  respect  to which UDRC II is the
seller,  including  those set forth on Schedule F, which  constitute  all of the
UDRCII Class B Certificates in existence on the Closing Date.

     "UDRC Dividend  Direction  Letter" means the letter dated March 18, 1999 in
which  Lender,  UDRC,  UDCC  and  Trustee  agree  that  Trustee  shall  pay  all
distributions in respect of the UDRC Class B Certificates directly to Lender.

     "UDRC II Dividend  Direction  Letter" means the letter dated March 18, 1999
in which  Lender,  UDRC II, UDCC and Trustee  agree that  Trustee  shall pay all
distributions (other than the 1998-D Spread Account Reduction Amount, if any) in
respect of the UDRC II Class B Certificates directly to Lender.

     "UDRC  Securitization  Documents"  shall  mean  each  of (i)  the  purchase
agreements listed on Exhibit A hereto, (ii) the pooling and servicing agreements
listed on Exhibit A hereto, (iii) any similar purchase agreements or pooling and
servicing agreements entered into or acknowledged by Borrower, UDCC, UDRC or any
Affiliate of any of them after the date hereof,  and (iv) the other  agreements,
instruments,   certificates  and  documents  entered  into  or  acknowledged  by
Borrower,  UDCC,  UDRC or any  Affiliate  of any of them or by a  Securitization
Trust.

     "UDRC II  Securitization  Documents"  shall  mean each of (i) the  purchase
agreements listed on Exhibit A hereto, (ii) the pooling and servicing agreements
listed on Exhibit A hereto, (iii) any similar purchase agreements or pooling and
servicing agreements entered into or acknowledged by Borrower,  UDCC, UDRC II or
any  Affiliate  of any of them  after  the  date  hereof,  and  (iv)  the  other
agreements, instruments, certificates and documents entered into or acknowledged
by  Borrower,  UDCC,  UDRC  II  or  any  Affiliate  of  any  of  them  or  by  a
Securitization Trust.


                                     Page 9
<PAGE>



     "UDRC Standing Dividend  Resolution"  shall mean the resolution  adopted on
January  27,  1998  by  the  board  of  directors  of  UDRC  (formerly  Champion
Receivables  Corp.) to the effect that any amounts  received as distributions on
the UDRC Class B Certificates should be promptly distributed to Lender.

     "UDRC II Standing Dividend Resolution" shall mean the resolution adopted on
January  27,  1998 by the  board  of  directors  of UDRC II  (formerly  Champion
Receivables  Corp. II) to the effect that any amounts  received as distributions
on the UDRC II Class B Certificates should be promptly distributed to Lender.

     "Ugly  Duckling  Collateral"  shall  mean  any  installment   contracts  or
conditional sales contracts, with any amendments thereto, originated by Borrower
or its Subsidiaries  pursuant to which a person has: (i) purchased a new or used
motor vehicle,  (ii) granted a security interest in the motor vehicle, and (iii)
agreed  to pay the  unpaid  purchase  price and a  finance  charge  in  periodic
installments.

     "United States" and "U.S." each means the United States of America.

     "Voidable Transfer" has the meaning set forth in Section 9.17.

     I.2 Other Interpretive Provisions.

     (a) Defined Terms. Unless otherwise specified herein or therein,  all terms
defined in this  Agreement  shall  have the  defined  meanings  when used in any
certificate or other document made or delivered  pursuant hereto. The meaning of
defined  terms shall be equally  applicable  to the singular and plural forms of
the defined terms. Terms (including  uncapitalized  terms) not otherwise defined
herein,  and  that are  defined  in the UCC  shall  have  the  meanings  therein
described.

     (b) The Agreement. The words "hereof",  "herein",  "hereunder" and words of
similar  import when used in this  Agreement  shall refer to this Agreement as a
whole  and not to any  particular  provision  of this  Agreement;  and  section,
schedule  and  exhibit   references  are  to  this  Agreement  unless  otherwise
specified.

     (c) Certain Common Terms.

     (i)......The term "documents" includes any and all instruments,  documents,
agreements,  certificates,  indentures,  notices  and  other  writings,  however
evidenced.

     (ii).....The term "including" is not limiting and means "including  without
limitation".

     (iii)....The term "or" has, except where otherwise indicated, the inclusive
meaning represented by the phrase "and/or".


                                    Page 10
<PAGE>


     (d) Performance; Time. Whenever any performance obligation hereunder (other
than a payment obligation) shall be stated to be due or required to be satisfied
on a day other than a Business Day, such performance  shall be made or satisfied
on the next succeeding  Business Day. In the computation of periods of time from
a specified  date to a later  specified  date,  the word "from"  means "from and
including";  the words "to" and "until"  each mean "to but  excluding";  and the
word  "through"  means "to and  including".  If any provision of this  Agreement
refers to any action taken or to be taken by any Person, or which such Person is
prohibited from taking, such provision shall be interpreted to encompass any and
all means, direct or indirect, of taking, or not taking, such action.

     (e) Contracts.  Unless otherwise  expressly provided herein,  references to
agreements  and other  contractual  instruments  shall be deemed to include  all
subsequent  amendments and other modifications  thereto,  but only to the extent
such amendments and other  modifications  are not prohibited by the terms of any
Loan Document.

     (f) Laws.  References to any statute or  regulation  are to be construed as
including all  statutory  and  regulatory  provisions  consolidating,  amending,
replacing, supplementing or interpreting the statute or regulation.

     (g)  Captions.  The  captions  and  headings  of  this  Agreement  are  for
convenience  of  reference  only and shall not affect the  construction  of this
Agreement.

     (h) Independence of Provisions. The parties acknowledge that this Agreement
and  other  Loan  Documents  may use  several  different  limitations,  tests or
measurements to regulate the same or similar matters, and that such limitations,
tests and  measurements  are  cumulative  and must each be performed,  except as
expressly stated to the contrary in this Agreement.

     I.3 Accounting Principles.

     (a) Unless the context otherwise clearly requires, all accounting terms not
expressly  defined  herein shall be construed,  and all  financial  computations
required  under  this  Agreement   shall  be  made,  in  accordance  with  GAAP,
consistently  applied.  In the event that GAAP  changes  during the term of this
Agreement  such  that the  covenants  contained  in  Article  VI  would  then be
calculated in a different manner or with different components,  (i) Borrower and
Lender  agree to amend this  Agreement  in such  respects  as are  necessary  to
conform  those  covenants  as  criteria  for  evaluating   Borrower's  financial
condition to  substantially  the same criteria as were  effective  prior to such
change in GAAP and (ii) Borrower  shall be deemed to be in  compliance  with the
covenants  contained in Article VI  following  any such change in GAAP if and to
the extent that Borrower would have been in compliance  therewith  under GAAP as
in effect immediately prior to such change.

     (b) References  herein to "fiscal year" and "fiscal  quarter" refer to such
fiscal periods of Borrower.



                                    Page 11
<PAGE>


     I.4 Times. All times of the day herein are New York City time.


                                   ARTICLE II

                                    THE LOAN

     II.1 The Loan.  Lender,  on the terms and conditions  hereinafter set forth
and the conditions  precedent pursuant to Section 4.1 of this Agreement,  agrees
to make the Loan to Borrower  in the  Initial  Principal  Amount.  Lender  shall
retain $1,520,888.86 of the Initial Principal Amount and shall apply it to repay
the sum of the outstanding principal amount and accrued interest thereon and any
other accrued and unpaid  Obligations  with respect  thereto through the Closing
Date  (such sum,  the "1998  Remaining  Amount"),  of the loan made by Lender to
Borrower  pursuant to the Loan  Agreement  dated as of November 12, 1998 between
Borrower and Lender, whereupon such Loan Agreement shall terminate.

     II.2 Payment Upon Collections.  Upon Borrower's receipt of any Collections,
Borrower  shall promptly (and in any event within one (1) Business Day) pay such
Collections to Lender.  Lender shall apply such  Collections and any Collections
paid directly to Lender by Trustee in accordance  with the  procedures set forth
in Section 2.6.

     II.3 Payment Upon  Maturity.  On the Maturity  Date,  Borrower  will pay to
Lender an amount equal to the Outstanding Principal Amount of the Loan, together
with all  accrued  and unpaid  interest  on the Loan and any other  accrued  and
unpaid Obligations.

     II.4 Interest.

     (a)  Interest  Rate.  Interest  shall accrue on the  Outstanding  Principal
Amount of the Loan during each Interest Accrual Period at a rate per annum equal
to LIBOR for such Interest  Accrual  Period plus five hundred (500) basis points
(the "Initial Interest Rate").  In addition,  after the occurrence of and during
the continuance of any Event of Default under Section 8.1 of this Agreement, the
Outstanding  Principal  Amount of the Loan  together with all accrued and unpaid
interest  on the Loan and any  other  accrued  and  unpaid  Obligations  due and
payable to Lender under this  Agreement  shall bear interest at a rate per annum
which shall be five hundred (500) basis points above the Initial Interest Rate.


                                    Page 12
<PAGE>


     (b)  Limitation on Interest Rate.  The  obligations  of Borrower  hereunder
shall be subject to the  limitation  that  payments of interest,  plus any other
amounts paid in connection herewith,  shall not be required,  to the extent (but
only to the extent) that  contracting  for or  receiving  such payment by Lender
would be contrary to the provisions of any law applicable to Lender limiting the
highest  rate of  interest  which may be  lawfully  contracted  for,  charged or
received by Lender,  and in such event  Borrower  shall pay Lender  interest and
other amounts at the highest rate permitted by applicable law.

     II.5 Voluntary  Prepayments.  Borrower shall have the right, at its option,
to prepay its  obligations  under the Loan in whole or in part at any time (in a
minimum amount of $100,000 and an integral  multiple of $10,000,  or such lesser
amount as is then outstanding). Borrower shall give Lender at least one Business
Day prior notice of its intention to prepay, specifying the date of payment, the
total  amount and  portion of the Loan to be paid on such date and the amount of
interest to be paid with such prepayment.

     II.6  Application  of Payments.  All payments on the Loan shall be applied,
without duplication, in the following order:

     (a)  First,  to  Lender  for   application  to  overdue   interest  on  the
Obligations;

     (b)  Second,   to  Lender  for  application  to  accrued  interest  on  the
Obligations;

     (c) Third, to Lender for application to the Outstanding Principal Amount;

     (d)  Fourth,  to  Lender  for any and all sums  advanced  by  Lender as are
reasonably  necessary  in order  to  preserve  the  Collateral  or its  security
interest in the  Collateral  and all  reasonable  expenses  of taking,  holding,
preparing for sale or lease,  selling or otherwise  disposing of or realizing on
the Collateral or of any exercise by Lender of its rights under this  Agreement,
together with reasonable Attorney Costs; and

     (e) Fifth, to all other accrued and unpaid Obligations.

     II.7  Prepayment.  Upon any  prepayment of the Loan,  Borrower shall pay to
Lender the principal amount to be prepaid,  together with all accrued and unpaid
interest on the Loan through the date of prepayment. Notice of prepayment having
been given in  accordance  with Section 2.5, the amount  specified to be prepaid
shall become due and payable on the date specified for prepayment.

     II.8 Fees.

     (a)  Commitment  Fee.  Borrower  has paid to Lender  Two  Hundred  Thousand
Dollars  ($200,000),  of  which  amount  Lender  shall  apply  $184,791.11  as a
commitment  fee.  The balance of such amount  shall be retained by Lender to pay
Lender Expenses and, if not used for such purposes,  shall be remitted by Lender
to Borrower on the first  Payment Date or, at the  Borrower's  election,  netted
against the interest due on such Payment Date.


                                    Page 13
<PAGE>


     (b) Late Payment Fee. In the event the Outstanding  Principal Amount of the
Loan,  together  with all accrued and unpaid  interest on the Loan and any other
accrued  and unpaid  Obligations  are not paid in full on or prior to the second
business date following the Maturity Date, Borrower shall pay Lender Two Hundred
Fifty Thousand Dollars ($250,000) as a late payment fee.

     II.9 Fees and Interest.  All  computations  of fees and interest under this
Agreement  shall be made on the basis of a 360-day year and actual days elapsed,
which  results in more  interest  being paid than if  computed on the basis of a
365-day year. Interest and fees shall accrue during each Interest Accrual Period
during which  interest or such fees are  computed  from the first day thereof to
the last day  thereof.  Borrower  shall pay to Lender  all  accrued  and  unpaid
interest on each Payment Date.

     II.10 Payments by Borrower.

     (a) All payments (including  prepayments) to be made by Borrower on account
of principal,  interest, fees and other amounts required hereunder shall be made
without  set-off,  deduction,  recoupment or counterclaim  and shall,  except as
otherwise expressly provided herein, be made to Lender at Lender's office as set
forth in the preamble hereto, in dollars and in immediately  available funds, no
later than 3:00 p.m. on the date specified herein. Any payment which is received
by Lender  later  than 3:00 p.m.  shall be deemed to have been  received  on the
immediately  succeeding  Business Day and any  applicable  interest or fee shall
continue to accrue.

     (b)  Whenever  any  payment  hereunder  shall be stated to be due on a day,
other than a Business  Day,  such payment  shall be made on the next  succeeding
Business  Day, and such  extension of time shall in such case be included in the
computation of interest or fees, as the case may be.

     (c) If any  payment of  interest  or Lender  Expenses  is not  received  by
Lender,  within ten (10) days of the date when the same is due,  Borrower  shall
pay to  Lender a late  charge  in an amount  equal to five  percent  (5%) of the
amount not so paid.


                                   ARTICLE III

                        SECURITY AGREEMENT AND COLLATERAL


Page 14
<PAGE>


     III.1 Security for Obligations. As security for the payment and performance
of the Obligations  under this Agreement and all other present and future debts,
obligations and liabilities of any nature whatsoever of Borrower to Lender,  and
all modifications,  renewals,  replacements and extensions  thereof,  UDCS shall
grant Lender a security interest in the Collateral  pursuant to the Stock Pledge
Agreement.  Borrower  shall cause UDCS to execute  and deliver the Stock  Pledge
Agreement and to perform its obligations thereunder.  Borrower will execute, and
shall cause UDCS to execute,  any security agreements,  collateral  assignments,
financing  statements  for filing  and/or  recording and any other Lien writings
reasonably  required  by Lender to evidence  and perfect the Liens and  security
interests of Lender.  A carbon,  photographic  or other  reproduced copy of this
Agreement and/or any financing statement relating hereto shall be sufficient for
filing and/or recording as a financing statement.

     III.2 Security Documents.  The Financing Statements shall remain on file in
the appropriate jurisdictions and Borrower shall promptly execute or cause to be
executed any other financing statements and notices as are necessary to properly
perfect Lender's security interest in the Collateral.

     III.3  Lender's  Duty  Regarding  Collateral.  Lender shall have no duty or
obligation  to  protect,  insure,  collect or  realize  upon the  Collateral  or
preserve rights in it against prior parties.  Borrower releases Lender from, and
shall indemnify Lender against,  any liability for any act or omission  relating
to the  Collateral,  except for any liability  directly  resulting from Lender's
gross negligence or willful misconduct.

     III.4 Borrower's Duties Regarding Collateral. Borrower agrees as follows:

     (a)  General  Maintenance  of  Collateral.  Borrower:  (i)  shall  keep the
Collateral  free from all Liens  (other  than the Liens of ad  valorem  property
taxes which are not delinquent, any statutory landlords' liens which are covered
by lien waivers satisfactory to Lender,  mechanic's liens,  Permitted Liens, and
any Liens in favor of  Lender);  (ii) shall  defend the  Collateral  against all
claims and legal  proceedings by persons other than Lender;  (iii) shall pay and
discharge when due all taxes, levies and other charges upon the Collateral; (iv)
shall cause UDCS not to sell, lease or otherwise dispose of the Collateral;  and
(v) shall not permit the  Collateral to be used in violation of any  Requirement
of Law or any policy of insurance.

     (b) Perfection and Priority.  Borrower shall pay all Lender's Expenses and,
upon  Lender's  request,  execute  all  writings  and  take  all  other  actions
reasonably  deemed  advisable  by  Lender  to  preserve  the  Collateral  or  to
establish,  and  determine  priority of,  perfection,  continued  perfection  or
enforce Lender's interest in the Collateral.

     (c) Records and Inspections. Upon reasonable notice to Borrower, Lender may
examine and conduct audits of the Collateral,  and Borrower's and UDCS's records
concerning it, wherever  located,  and make copies of such records,  at any time
during  normal  business  hours,  and Borrower  shall assist Lender in so doing.
Borrower  shall keep  accurate,  complete  and current  records  respecting  the
Collateral.  In addition to the specific  requirements of Section 6.1,  Borrower
shall, within ten (10) Business Days of any request by Lender, furnish to Lender
a detailed statement, certified as being substantially accurate by a Responsible
Officer,  setting  forth the current  status,  value and  location of all or any
portion of the Collateral.


                                    Page 15
<PAGE>


     III.5 Power of Attorney.  Borrower  hereby makes,  constitutes and appoints
Lender the true and lawful  attorney-in-fact of Borrower, in the name, place and
stead of Borrower,  or  otherwise,  upon the  occurrence of any Event of Default
which remains uncured following the receipt of a notice pursuant to Section 9.2:

     (a) To take all actions and to execute, acknowledge, obtain and deliver any
and all writings  necessary  or deemed  advisable by Lender in order to exercise
any rights of Borrower with respect to the  Collateral or to receive and enforce
any payment or performance due to Borrower with respect to the Collateral;

     (b) To give any notices, instructions or other communications to any person
or entity in connection with the Collateral;

     (c) To demand and receive all performances due under or with respect to the
Collateral  and to take all lawful  steps to enforce  such  performances  and to
compromise  and settle any claim or cause of action of Borrower  arising from or
related to the Collateral and give  acquittances and other  discharges  relating
thereto; and

     (d) To file any claim or  proceeding  or to take any other  action,  in the
name of Lender,  Borrower or  otherwise,  to enforce  performances  due under or
related  to the  Collateral  or to protect  and  preserve  the right,  title and
interest of Lender thereunder.

     The  foregoing  power of attorney is a power  coupled  with an interest and
shall be  irrevocable  and unaffected by the disability of the principal so long
as any portion of the Obligations remains contingent,  unmatured,  unliquidated,
unpaid or  unperformed.  Lender shall have no  obligation to exercise any of the
foregoing rights and powers in any event.

     III.6  Collateral  Inspections.  Lender  shall  have the right (but not the
obligation) to do a physical  on-site  examination of the Collateral.  All costs
and expenses associated therewith shall be included in Lender Expenses.


                                   ARTICLE IV

                     CONDITIONS PRECEDENT; TERM OF AGREEMENT

         IV.1 Conditions Precedent.  Lender shall not make the Loan hereunder if
Borrower has not fulfilled to the  satisfaction of Lender and its counsel,  each
of the following  conditions on or before the Closing Date;  provided,  however,
that Lender, in its sole and absolute discretion, may waive any of the following
conditions.


                                    Page 16
<PAGE>


         IV.2  Receipt of  Documents.  Lender  shall have  received  each of the
following  documents,  duly  executed,  and each such document  shall be in full
force and effect:

     (a)  This Agreement executed by Borrower and Lender;

     (b)  The Stock Pledge Agreement;

     (c)  The UDRC Dividend Direction Letter;

     (d)  The UDRC II Dividend Direction Letter;

     (e)  The UDRC Standing Dividend Resolution certified by UDRC's Secretary;

     (f)  The  UDRC II  Standing  Dividend  Resolution  certified  by UDRC  II's
          Secretary;

     (g)  A consent and  subordination  from GECC  consenting to the  execution,
          delivery and  performance  by Borrower and UDCS of the Loan  Documents
          and  subordinating  to Lender  GECC's Lien on any assets  constituting
          Collateral;

     (h)  A consent by MBIA to the pledge of the Collateral to Lender;

     (i)  Certified  copies  of the  resolutions  of the board of  directors  of
          Borrower  approving  and  authorizing  the  execution,   delivery  and
          performance by Borrower of this Agreement and the other Loan Documents
          to be delivered  hereunder,  and authorizing the Loan, certified as of
          the  Closing  Date  by the  Secretary  or an  Assistant  Secretary  of
          Borrower;

     (j)  A  certificate  of the  Secretary or  Assistant  Secretary of Borrower
          certifying  the names and true  signatures of the officers of Borrower
          authorized  to  execute,  deliver and  perform,  as  applicable,  this
          Agreement,  the Stock Pledge Agreement and all other Loan Documents to
          be delivered hereunder;

     (k)  Certified  copies of the resolutions of the board of directors of UDCS
          approving and authorizing  the execution,  delivery and performance by
          UDCS of the  applicable  Loan  Documents  to be  delivered  hereunder,
          certified  as of the Closing  Date by the  Secretary  or an  Assistant
          Secretary of UDCS;

     (l)  A  certificate  of  the  Secretary  or  Assistant  Secretary  of  UDCS
          certifying  the  names and true  signatures  of the  officers  of UDCS
          authorized to execute,  deliver and perform the Stock Pledge Agreement
          and all other applicable Loan Documents to be delivered hereunder;


                                    Page 17
<PAGE>


     (m)  Copies of each of Borrower's, UDCS's, UDRC's and UDRC II's certificate
          of  incorporation  certified  by the  Secretary  of the State of their
          respective  jurisdictions  of  incorporation  and bylaws  certified by
          their respective Secretaries or Assistant Secretaries;

     (n)  Good standing  certificates for the jurisdiction of incorporation  and
          the  jurisdiction in which the chief  executive  office is located for
          each of Borrower, UDCS, UDRC and UDRC II;

     (o)  A copy  of lien  searches,  completed  as of a  recent  date,  against
          Borrower and UDCS, in such  jurisdictions  as shall be satisfactory to
          Lender and its counsel;

     (p)  Legal   opinions  from  counsel  for  Borrower  with  respect  to  the
          transactions contemplated by the Loan Documents,  which opinions shall
          be in form and  substance  satisfactory  to  Lender  and from  counsel
          satisfactory to Lender.

     (q)  An engagement  letter  executed by Borrower in which Borrower  engages
          Lender to act as an underwriter with respect to certain securitization
          transactions.

     (r)  A commitment  letter  executed by Borrower in which Borrower agrees to
          engage Lender as the initial  purchaser of a surety-wrapped  warehouse
          note  created  pursuant  to  a  revolving  credit  agreement   between
          Borrower, Lender and MBIA.

     IV.3 Term.  This  Agreement  shall become  effective upon the execution and
delivery  hereby by  Borrower  and Lender and shall  continue  in full force and
effect for a term ending on the earliest of (a) the  Repayment  Date, or (b) the
date of  termination  of this  Agreement in accordance  with its terms after the
occurrence and during the continuation of an Event of Default.

     4.4  Effect  of  Termination.  Upon  termination  of  this  Agreement,  all
Obligations shall become due and payable  immediately  without notice or demand.
No termination of this Agreement,  however,  shall relieve or discharge Borrower
of  Borrower's  duties,   Obligations,  or  covenants  hereunder,  and  Lender's
continuing  security interest in the Collateral shall remain in effect until all
Obligations have been fully and finally discharged.


                                    ARTICLE V

                         REPRESENTATIONS AND WARRANTIES


                                    Page 18
<PAGE>


     In order to induce  Lender to enter into this  Agreement and make the Loan,
Borrower makes the following representations and warranties which shall be true,
correct,  and complete in all respects as of the date hereof, and shall be true,
correct,  and  complete in all  respects as of the Closing  Date  (except to the
extent that such  representations  and  warranties  relate  solely to an earlier
date) and such  representations  and warranties  shall survive the execution and
delivery of this Agreement:

     V.1  No  Encumbrances.   UDCS  has  good  and  indefeasible  title  to  the
Collateral, free and clear of Liens except for Permitted Liens.

     V.2 Location of Chief Executive Office; FEIN. The chief executive office of
Borrower is located at the address  indicated in the preamble to this  Agreement
and Borrower's FEIN is 86-0721358.

     V.3 Due Organization and Qualification; Subsidiaries.

     (a) Borrower is duly  organized and existing and in good standing under the
laws of the jurisdiction of its  incorporation  and qualified and licensed to do
business  in,  and in good  standing  in, any state  where the  failure to be so
licensed or qualified  reasonably  could be expected to have a Material  Adverse
Effect.

     (b) Set forth on Schedule A is a complete and accurate  list of  Borrower's
direct  and  indirect  Subsidiaries,  showing:  (i) the  jurisdiction  of  their
incorporation;  (ii) the  number  of shares  of each  class of Equity  Interests
authorized  for  each  of  such  Subsidiaries;  and  (iii)  the  number  and the
percentage  of the  outstanding  shares of each such  class  owned  directly  or
indirectly by Borrower.  All of the  outstanding  Equity  Interests of each such
Subsidiary have been validly issued and are fully paid and non-assessable.

     (c)  Except  as set  forth  on  Schedule  B, no  Equity  Interests  (or any
securities,  instruments,  warrants,  options,  purchase  rights,  conversion or
exchange rights, calls,  commitments or claims of any character convertible into
or  exercisable  for Equity  Interests) of any direct or indirect  Subsidiary of
Borrower  is subject  to the  issuance  of any  security,  instrument,  warrant,
option,  purchase right, conversion or exchange right, call, commitment or claim
of any right, title, or interest therein or thereto.

     V.4 Due Authorization: No Conflict.

     (a)  The execution, delivery, and performance by Borrower of this Agreement
          and  the  Loan  Documents  to  which  it is a  party  have  been  duly
          authorized by all necessary corporate action.


                                    Page 19
<PAGE>


     (b)  The execution, delivery, and performance by Borrower of this Agreement
          and the Loan  Documents to which it is a party do not and will not (i)
          violate any  provision of federal,  state,  or local law or regulation
          (including  Regulations  G, T, U, and X of the Federal  Reserve Board)
          applicable to Borrower,  the Governing  Documents of Borrower,  or any
          order,  judgment,  or  decree  of  any  court  or  other  Governmental
          Authority binding on Borrower,  (ii) conflict with, result in a breach
          of, or constitute (with due notice or lapse of time or both) a default
          under  any  material  contractual  obligation  or  material  lease  of
          Borrower, (iii) result in or require the creation or imposition of any
          Lien of any nature  whatsoever  upon any  properties or assets of such
          Borrower,  other than Permitted Liens, or (iv) require any approval of
          stockholders  or any  approval  or  consent  of any  Person  under any
          material contractual obligation of Borrower.

     (c)  Other than the taking of any other  action  expressly  required  under
          this Agreement and the Loan Documents,  the execution,  delivery,  and
          performance  by Borrower of this  Agreement and the Loan  Documents to
          which Borrower is a party do not and will not require any registration
          with,  consent,  or approval of, or notice to, or other action with or
          by, any federal,  state,  foreign, or other Governmental  Authority or
          other Person.

     (d)  This   Agreement,   the  Loan   Documents  and  all  other   documents
          contemplated  hereby and  thereby,  when  executed  and  delivered  by
          Borrower,  will  be the  legally  valid  and  binding  obligations  of
          Borrower,  enforceable  against  Borrower  in  accordance  with  their
          respective  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.

     (e)  The Pledge Agreement and the Stock Powers, when executed and delivered
          by  UDCS,  will  be the  legally  valid  and  binding  obligations  of
          Borrower,  enforceable  against  Borrower  in  accordance  with  their
          respective  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.

     (f)  The Lien granted by UDCS on the  Collateral  is a validly  created and
          perfected Lien,  subject to no other Liens other than Lien in favor of
          Lender.

     V.5 Litigation.  Except as set forth in Schedule C, there are no actions or
proceedings  pending by or against  Borrower before any court or  administrative
agency  and  Borrower  does  not  have  knowledge  or  belief  of  any  pending,
threatened,  or imminent  litigation,  governmental  investigations,  or claims,
complaints, actions, or prosecutions involving Borrower, except for: (a) ongoing
collection  matters in which  Borrower is the plaintiff and (b) matters that, if
decided adversely to Borrower, would not have a Material Adverse Effect.

     V.6  Financial  Statements;  No  Material  Adverse  Change.  All  financial
statements  relating to Borrower,  UDRC and UDRC II that have been  delivered by
Borrower to Lender have been  prepared in accordance  with GAAP (except,  in the
case of unaudited  financial  statements,  for the lack of  footnotes  and being
subject  to  year-end  audit  adjustments)  and  fairly  present  the  financial
condition  as of the date thereof and the results of  operations  for the period
then ended for Borrower and its consolidated  Subsidiaries,  except as disclosed
on Schedule  D. There has not been a Material  Adverse  Change  with  respect to
Borrower since the date of the latest financial  statements  submitted to Lender
on or before the Closing Date.



                                    Page 20
<PAGE>



     V.7 Securitization Documents.  Borrower, UDRC and UDRC II and each of their
Affiliates are in full compliance with their  respective  obligations  under the
UDRC Securitization  Documents and the UDRC II Securitization  Documents, and no
Securitization Default exists.

     V.8 ERISA. No accumulated  funding deficiency (as defined in Section 302 of
ERISA and Section 412 of the Code),  whether or not waived,  exists with respect
to any plan (other  than a  multiemployer  plan).  No  liability  to the Pension
Benefit Guaranty  Corporation has been or is expected by Borrower to be incurred
with respect to any plan (other than a multiemployer  plan) by Borrower which is
or would have a Material  Adverse Effect.  Borrower has not incurred or does not
presently expect to incur any withdrawal  liability under Title IV of ERISA with
respect to any  multiemployer  plan which is or would be  materially  adverse to
Borrower.  The  execution  and  delivery  of this  Agreement  and the other Loan
Documents will not involve any transaction  which is subject to the prohibitions
of  Section  406 of ERISA or in  connection  with  which a tax could be  imposed
pursuant to section  4975 of the Code.  For the purpose of this Section 5.8, the
term "plan" shall mean an "employee pension benefit plan" (as defined in section
3 of  ERISA)  which  is or has  been  established  or  maintained,  or to  which
contributions  are or have been made,  by Borrower or by any trade or  business,
whether or not  incorporated,  which,  together with  Borrower,  is under common
control,  as  described  in  Section  414(b)  or (c) of the  Code;  and the term
"multiemployer  plan"  shall mean any plan which is a  "multiemployer  plan" (as
such term is defined in Section  4001(a)(3) of ERISA). No plan providing welfare
benefits to retired  former  employees  of Borrower has been  established  or is
maintained for which the present value of future benefits payable,  in excess of
irrevocably  designated  funds for such  purpose,  is or would  have a  Material
Adverse Effect.

     V.9  Environmental  and Safety  Matters.  Borrower  (a) has complied in all
material  respects with all applicable  material  Environmental and Safety Laws,
and Borrower  has not received (i) notice of any material  failure so to comply,
(ii) any  letter or  request  for  information  under  Section  104 of CERCLA or
comparable  state  laws or (iii) any  information  that would lead it to believe
that  it is the  subject  of  any  Federal  or  state  investigation  concerning
Environmental and Safety Laws; (b) does not manage, generate, discharge or store
any Hazardous Materials in material violation of any material  Environmental and
Safety Laws; (c) does not own, operate or maintain any underground storage tanks
or surface  impoundments;  and (d) except as disclosed to Lender in writing,  is
not aware of any conditions or  circumstances  associated  with its currently or
previously  owned or leased  properties or operations  (or those of its tenants)
which may give rise to any Environmental  Liabilities and Costs which could have
a Material Adverse Effect.

     V.10 Tax Matters.  .....Each of Borrower and its Subsidiaries has filed all
tax returns that it was required to file.  All such tax returns were correct and
complete in all  material  respects.  All Taxes owed by any of Borrower  and its
Subsidiaries have been paid.


                                    Page 21
<PAGE>


                                   ARTICLE VI

                              AFFIRMATIVE COVENANTS

     Borrower  covenants and agrees that, so long as any credit  hereunder shall
be available  and until full and final  payment of the  Obligations,  and unless
Lender  shall  otherwise  consent  in  writing,  Borrower  shall  do  all of the
following:

     VI.1 Financial  Statements and Other  Documents.  Borrower shall deliver to
Lender in form and detail satisfactory to Lender:

     (a)  Within 45 days of the end of each fiscal quarter, Borrower's unaudited
          financial statements for such quarter,  and, within 90 days of the end
          of Borrower's fiscal year, Borrower's audited financial statements for
          such  period,  certified  by  Borrower's  Chief  Financial  Officer or
          Treasurer as fairly presenting in all material respects, in accordance
          with GAAP (subject, in the case of unaudited financial statements,  to
          ordinary,  good  faith  year-end  adjustments  and to the  absence  of
          footnote disclosure), the financial position and results of operations
          of Borrower;

     (b)  Promptly upon receipt  thereof,  any financial  statements of Borrower
          distributed to other lenders or financing parties;

     (c)  Promptly upon  preparation  thereof,  a copy of each other report,  if
          any,  submitted to Borrower by  independent  accountants in connection
          with any annual, interim or special audit made by them of the books of
          Borrower;

     (d)  Promptly  after its  submission,  copies of any other  information  or
          documents  regularly  provided by Borrower to any of its other lenders
          or holders of Borrower's Debt;

     (e)  Promptly  upon receipt  thereof,  copies of any other  information  or
          documents  received  by Borrower  pursuant to the UDRC  Securitization
          Documents and the UDRC II Securitization Documents;

     (f)  With  reasonable  promptness,  such other financial data as Lender may
          reasonably request; and

     (g)  Promptly  upon  receipt  thereof,  (i) copies of any  federal  revenue
          agent's reports (so called "thirty-day letter") issued by the IRS, and
          copies  of  any   equivalent   documents   from  state  or  local  tax
          authorities;   (ii)  copies  of  any  federal   notice  of  deficiency
          (so-called  "ninety-day letters") issued by the IRS, and copies of any
          equivalent  documents from state or local tax  authorities;  and (iii)
          copies of any information  requests or document requests received from
          federal,  state or local tax authorities  that are not in the ordinary
          course of business.


                                    Page 22
<PAGE>


         VI.2   Inspection  of  Property.   Borrower  shall  permit  any  Person
designated by Lender in writing,  to visit and inspect any of the  properties of
Borrower,  to examine the corporate books and financial  records of Borrower and
make copies thereof or extracts  therefrom and to discuss the affairs,  finances
and accounts of any of such corporations with the principal officers of Borrower
and its independent  public  accountants,  all at such  reasonable  times and as
often as Lender may reasonably request.

     VI.3 Default Disclosure.

     (a)  Borrower  shall  forthwith,  upon a  Responsible  Officer of  Borrower
          obtaining  knowledge  of an  Event of  Default  or  Default,  promptly
          deliver to Lender a certificate  of a Responsible  Officer  specifying
          the nature and period of  existence  thereof and what action  Borrower
          proposes to take with respect thereto.

     (b)  Borrower  shall  forthwith,  upon a  Responsible  Officer of  Borrower
          obtaining knowledge of a Securitization  Default,  promptly deliver to
          Lender a certificate  of a Responsible  Officer  specifying the nature
          and period of  existence  thereof,  what action the  defaulting  party
          proposes  to take  with  respect  thereto,  and what  action  Borrower
          proposes to take with respect thereto.

     VI.4 Notices to Lender.  Borrower shall  promptly  notify Lender in writing
          of:

     (a)  Any  lawsuit  over One Hundred  Thousand  Dollars  ($100,000)  against
          Borrower;

     (b)  Any  substantial   dispute  between   Borrower  and  any  Governmental
          Authority; or

     (c)  Any change in Borrower's name, address, or legal structure.

     VI.5 Books and Records. Borrower shall maintain adequate books and records.

     VI.6 Compliance and Preservation. Borrower shall:

     (a)  Comply  with  the  laws   (including  any  fictitious  name  statute),
          regulations  and orders of any  government  body with  authority  over
          Borrower's business;

     (b)  Maintain and preserve all privileges and franchises  Borrower now has;
          and

     (c)  Make any repairs,  renewals,  or replacements  reasonably necessary to
          keep Borrower's properties in good working condition.


                                    Page 23
<PAGE>


         VI.7  Perfection  of Liens.  Borrower  shall help  Lender  perfect  and
protect its security interests and liens.

         VI.8  Cooperation.  Borrower shall take any reasonable action requested
by Lender to carry out the intent of this Agreement.

         VI.9 Use of Proceeds.  Borrower  shall use the proceeds of the Loan for
(i) repayment of the 1998  Remaining  Amount,  (ii) general  working  capital to
facilitate  ongoing growth in Borrower's core operations and (iii) to the extent
permitted by Section 7.12, the repurchase of common stock of the Borrower.

         VI.10 Securitizations.  Any securitizations of Ugly Duckling Collateral
executed during the term of this Agreement shall be executed through either UDRC
II or a New Issuer (as  defined in the Stock  Pledge  Agreement)  that meets the
requirements  of Section 7(c) of the Stock Pledge  Agreement (and Borrower shall
ensure that  Pledgor  performs  its  obligations  pursuant  to the Stock  Pledge
Agreement).  Borrower shall continue to execute quarterly securitizations of the
Ugly Duckling Collateral during the term of this Agreement.

         VI.11  Compliance  with  Covenants.  Borrower  shall  perform,  keep or
observe any term,  provision,  condition or covenant or  agreement  contained in
each  Bond  Insurance  Policy,  the  GECC  Agreement  and  any  other  agreement
evidencing Indebtedness.

         VI.12  Payment of  Indebtedness.  Borrower  shall  timely pay and shall
cause its Subsidiaries to timely pay all Indebtedness  which, if not paid, could
result in the imposition of a Lien on any of the assets of UDRC or UDRC II.

     VI.13 Tangible Net Worth.  Borrower shall maintain a consolidated  Tangible
Net Worth of not less than $100,000,000.

         VI.14 Debt to Tangible Net Worth.  Borrower  shall  maintain a ratio of
(i) the principal amount of Debt of Borrower and its  consolidated  Subsidiaries
to (ii) Tangible Net Worth of no greater than 2.1 to 1.

                                   ARTICLE VII

                               NEGATIVE COVENANTS

     Borrower  covenants and agrees that, so long as any credit  hereunder shall
be available and until full and final payment of the Obligations,  Borrower will
not do any of the following without Lender's prior written consent:


                                    Page 24
<PAGE>


         VII.1 Liens.  Create,  incur,  assume, or permit to exist,  directly or
indirectly,  any lien on or with  respect  to any of the assets of UDRC and UDRC
II,  including the UDRC Class B Certificates,  the UDRC II Class B Certificates,
or any income or profits from any of the foregoing,  except for Permitted  Liens
listed on Schedule E or liens of Lender.

         VII.2 Indebtedness.  Permit UDRC or UDRC II to incur, assume, or permit
to exist, directly or indirectly any Indebtedness.

         VII.3  Restrictions  on  Fundamental  Changes.  Enter into any  merger,
consolidation,  reorganization,  or recapitalization,  or reclassify its capital
stock,  or liquidate,  wind up, or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, assign, lease, transfer, or otherwise dispose of,
in one transaction or a series of  transactions,  all or any substantial part of
its property or assets.

         VII.4  Disposal of  Collateral.  Except as  expressly  consented  to by
Lender in writing, sell, lease, assign, transfer, or otherwise dispose of any of
the Collateral.

         VII.5  Change  Name.  Without  giving  thirty  (30) days prior  written
notification  to Lender,  change  Borrower's  name,  FEIN,  corporate  structure
(within the meaning of Section 9402(7) of the Code), or identity, or add any new
fictitious name.

         VII.6  Amendments.  Except  as  expressly  consented  to by  Lender  in
writing,  directly or indirectly,  amend, modify, alter, increase, or change any
of the terms or conditions of the UDRC  Securitization  Documents or the UDRC II
Securitization Documents.

         VII.7  Change  of  Control.  Cause,  permit,  or  suffer,  directly  or
indirectly, any Change of Control.

         VII.8  Distributions.  Make  any  distribution  or  declare  or pay any
dividends (in cash or other property, other than capital stock) on, or purchase,
acquire,  redeem,  or retire  any of  Borrower's  capital  stock,  of any class,
whether  now or  hereafter  outstanding,  for cash,  other  than the  buyback of
1,000,000 shares of Borrower's  common stock  previously  approved by Borrower's
Board of Directors.

         VII.9 Standing  Dividend  Resolutions.  Permit UDRC to rescind,  amend,
modify,  revoke or alter the UDRC Standing Dividend Resolution or permit UDRC II
to  rescind,  amend,  modify,  revoke  or alter  the UDRC II  Standing  Dividend
Resolution.


                                    Page 25
<PAGE>


         VII.10 Change in Location of Chief Executive Office. Relocate its chief
executive  office to a new  location  without  providing  30 days prior  written
notification  thereof  to  Lender  and so long as,  at the time of such  written
notification,  Borrower  provides any financing  statements  or fixture  filings
necessary to perfect and continue perfected Lender's security interests and also
provides  to Lender a  Collateral  access  agreement  with  respect  to such new
location.

         VII.11  No Prohibited Transactions Under ERISA. Directly or indirectly:

          (a)  Engage,  or permit any  Subsidiary of Borrower to engage,  in any
               prohibited  transaction which is reasonably likely to result in a
               civil penalty or excise tax described in Sections 406 of ERISA or
               4975 of the Code for which a statutory or class  exemption is not
               available or a private exemption has not been previously obtained
               from the Department of Labor;

          (b   Permit to exist with respect to any Benefit Plan any  accumulated
               funding  deficiency  (as defined in Sections 302 of ERISA and 412
               of the Code), whether or not waived;

          (c   Fail, or permit any Subsidiary of Borrower to fail, to pay timely
               required contributions or annual installments due with respect to
               any waived funding deficiency to any Benefit Plan;

          (d   Terminate, or permit any Subsidiary of Borrower to terminate, any
               Benefit  Plan where such event would  result in any  liability of
               Borrower or any of its Subsidiaries under Title IV of ERISA;

          (e   Fail,  or permit any  Subsidiary of Borrower to fail, to make any
               required contribution or payment to any Multiemployer Plan;

          (f   Fail,  or permit any  Subsidiary  of Borrower to fail, to pay any
               required  installment or any other payment required under Section
               412 of the Code on or before the due date for such installment or
               other payment;

          (g   Amend,   or  permit  any  Subsidiary  of  Borrower  to  amend,  a
               retirement plan resulting in an increase in current liability for
               the plan year such that either of Borrower or any  Subsidiary  of
               Borrower is required to provide  security to such retirement plan
               under Section 401 (a)(29) of the Code; or

          (h   Withdraw, or permit any Subsidiary of Borrower to withdraw,  from
               any Multiemployer Plan where such withdrawal is reasonably likely
               to result in any  liability  of any such entity under Title IV of
               ERISA.

         VII.12 Stock Buyback  Program.  Repurchase  more than 928,000 shares of
common stock (adjusted,  as appropriate,  for any stock split, stock dividend or
other  comparable  issuance of shares) during the calendar year ending  December
31,  1999,  unless  (i)  Borrower  has  effected  an  offering  of debt which is
subordinated  to the  Obligations  (in a manner that is satisfactory in form and
substance to Lender) and (ii) such  offering  raises net proceeds to Borrower in
excess of $10,000,000.

                                    Page 26
<PAGE>


     VII.13 Verde  Subordinated  Debt. Repay any portion of the $10 million loan
from Verde Investments without Lender's prior written consent.


                                  ARTICLE VIII

                           EVENTS OF DEFAULT/REMEDIES

     VIII.1 Event of Default. Any of the following shall constitute an "Event of
Default":

          (a   If Borrower  fails to pay when due and  payable or when  declared
               due and  payable,  any  portion of the  Obligations  (whether  of
               principal,  interest, fees and charges due Lender,  reimbursement
               of Lender Costs, or other amounts constituting Obligations);

          (b   If  Borrower  fails  to  perform,  keep,  or  observe  any  term,
               provision,  condition,  covenant,  or agreement contained in this
               Agreement,  in any of the Loan Documents,  or in any other future
               agreement between Borrower and Lender;

          (c   If there is a Material  Adverse  Change with respect to Borrower,
               UDRC or UDRC II (the occurrence or  non-occurrence of which shall
               be  determined  by  Lender  in the  exercise  of  its  reasonable
               discretion);

          (d   If  Borrower  is  enjoined  or  restrained,  by court  order from
               continuing  to conduct all or any  material  part of its business
               affairs, unless such order is stayed;

          (e   If notices of any Lien, levy, or assessment in excess of $250,000
               other than of Permitted Liens are filed of record with respect to
               any of Borrower's  properties or assets which have not been cured
               within ten (10) days after the Lien has been filed;

          (f   If a judgment or other claim in excess of $250,000 becomes a Lien
               or encumbrance upon any material portion of Borrower's properties
               or assets and such judgment is not removed or released  within 15
               days of the entry of such judgment;

          (g   If Borrower makes any payment on account of Indebtedness that has
               been  contractually  subordinated  in  right  of  payment  to the
               payment of the Obligations,  except to the extent such payment is
               permitted by the terms of the subordination provisions applicable
               to such Indebtedness;

          (h   If any material  misstatement or misrepresentation  exists now or
               hereafter in any warranty,  representation,  statement, or report
               made to Lender by Borrower or any officer,  employee,  agent,  or
               director of Borrower  which has not been corrected to date, or if
               any such warranty or representation is withdrawn;

                                    Page 27
<PAGE>


          (i   If Borrower  rescinds,  amends,  alters,  revokes or modifies (or
               permits  UDRC or UDRC II to  rescind,  amend,  alter,  revoke  or
               modify)  the UDRC  Standing  Dividend  Resolution  or the UDRC II
               Standing Dividend Resolution in any respect;

          (j   If a default or event of default  occurs under the GECC Agreement
               or under  the  terms  of any  other  Indebtedness  in  excess  of
               $1,000,000 or there is a termination event under the terms of any
               Bond  Insurance  Policy (or the policy of another bond  insurer),
               regardless of whether such default or termination event is waived
               or amended; or

          (k   If Borrower or any of its Subsidiaries makes a general assignment
               for the benefit of creditors,  or an order, judgment or decree is
               entered  adjudicating  the  Company  or any  of its  Subsidiaries
               bankrupt or  insolvent,  or any order for relief with  respect to
               the Company is entered  under the  Federal  Bankruptcy  Code,  or
               Borrower or any of its  Subsidiaries  petitions or applies to any
               tribunal for the appointment of a custodian, trustee, receiver or
               liquidator  of  Borrower  or any of  its  Subsidiaries  or of any
               substantial  part  of the  assets  of the  Company  or any of its
               Subsidiaries, or commences any proceeding relating to the Company
               or any of its Subsidiaries under any bankruptcy,  reorganization,
               arrangement,  insolvency,  readjustment  of debt,  dissolution or
               liquidation  law of any  jurisdiction,  or any such  petition  or
               application is filed, or any such proceeding is commenced against
               the Company or any of its Subsidiaries.

         VIII.2  Lender's Rights and Remedies.  Subject to the  occurrence,  and
during the continuation,  of an Event of Default,  Lender shall provide Borrower
with written  notice  thereof and the option to cure. If Borrower  fails to cure
such  Event of  Default  within ten (10) days  after  delivery  of such  written
notice, Lender may, at its sole and absolute discretion, without further notice,
do any one or more of the following, all of which are authorized by Borrower:

          (a   Declare all Obligations,  whether evidenced by this Agreement, by
               any of the other Loan  Documents,  or otherwise,  immediately due
               and payable;

          (b   Terminate  this  Agreement and any of the other Loan Documents as
               to any future  liability  or  obligation  of Lender,  but without
               affecting   Lender's   rights  and  security   interests  in  the
               Collateral and without affecting the Obligations;

          (c   Without notice to or demand upon Borrower, make such payments and
               do such acts as  Lender  considers  necessary  or  reasonable  to
               protect its security interests in the Collateral;

          (d   Without notice to Borrower (such notice being expressly  waived),
               and  without  constituting  a  retention  of  any  collateral  in
               satisfaction  of an  obligation  (within  the  meaning of Section
               9-505 of the UCC), set off and apply to the  Obligations  any and
               all (i) balances and deposits of Borrower held by Lender, or (ii)
               indebtedness  at any  time  owing  to or for  the  credit  or the
               account of Borrower held by Lender; or



                                    Page 28
<PAGE>


          (e   Collect, receive, appropriate and realize upon the Collateral, on
               such terms as Lender, in its sole and absolute discretion,  deems
               appropriate  without any liability for any loss due a decrease in
               the  market  value of the  Collateral  during  the  period  held,
               without demand of performance or other demand,  advertisement  or
               notice  of any  kind,  except  as  specified  below,  to or  upon
               Borrower  or any  other  person  (all and each of which  demands,
               advertisements  and/or notices are hereby expressly waived to the
               extent  permitted  by law).  If any  notification  to Borrower of
               intended  disposition  of the Collateral is required by law, such
               notification  shall be deemed  reasonable  and properly  given if
               mailed  to  Borrower,  postage  prepaid,  at least  ten (10) days
               before  any  such   disposition  at  the  address   indicated  by
               Borrower's  signature.  Any  disposition of the Collateral or any
               part thereof  shall be free of any equity or right of  redemption
               in Borrower, which right of equity is, to the extent permitted by
               applicable law, hereby  expressly waived or released by Borrower.
               Borrower  further  agrees  that such sale or sales made under the
               foregoing  circumstances  shall be  deemed to have been made in a
               commercially  reasonable manner. Lender shall not be obligated to
               make any sale or other  disposition of the  Collateral  permitted
               under  this Loan  Agreement,  unless the terms  thereof  shall be
               satisfactory to Lender.

Lender's rights and remedies under this Agreement,  the Loan Documents,  and all
other  agreements  shall be  cumulative.  No  exercise by Lender of one right or
remedy  shall be  deemed  an  election,  and no waiver by Lender of any Event of
Default shall be deemed a continuing waiver. No delay by Lender shall constitute
a waiver, election, or acquiescence by it.


                                   ARTICLE IX

                                  MISCELLANEOUS

         IX.1 Amendments and Waivers. No amendment or waiver of any provision of
this  Agreement or any other Loan  Document,  and no consent with respect to any
departure by Borrower therefrom,  shall be effective unless the same shall be in
writing  and  signed by Lender  and  Borrower,  and then  such  waiver  shall be
effective only in the specific  instance and for the specific  purpose for which
given.

         IX.2     Notices.

     (a   All notices,  requests and other communications provided for hereunder
          shall be in writing (including, unless the context expressly otherwise
          provides,  by  facsimile  transmission,  provided,  that,  any  matter
          transmitted  by  facsimile  (i) shall be  immediately  confirmed  by a
          telephone call to the recipient,  and (ii) shall be followed  promptly
          by a hard copy original  thereof by over-night  courier to the address
          set forth below;  or to such other  address as shall be  designated by
          such party in a written notice to the other party,  and as directed to
          each other  party,  at such other  address as shall be  designated  by
          Lender or Borrower in a written notice to Borrower and Lender.


                                    Page 29
<PAGE>


                  If to Borrower:...Ugly Duckling Corporation
                                            2525 East Camelback Road
                                            Suite 500
                                            Phoenix, Arizona  85016
                                            Attn: Steven P. Johnson
                                            Facsimile: (602) 552-3139

                  With a copy to:...Snell & Wilmer L.L.P.
                                            One Arizona Center
                                            Phoenix, Arizona  85004-0001
                                            Attn: Timothy W. Moser
                                            Facsimile: (602) 382-6070

                  If to Lender:.....Greenwich Capital Financial Products, Inc.
                                            600 Steamboat Road
                                            Greenwich, Connecticut  06830
                                            Attn:  Ira J. Platt
                                            Facsimile:  (203) 622-2090

                  With a copy to:...Kirkland & Ellis
                                            200 East Randolph
                                            Chicago, Illinois  60601
                                            Attn: Kenneth P. Morrison
                                            Facsimile: (312) 861-2200

     (b   All such notices,  requests and communications shall, when transmitted
          by  overnight  delivery or faxed,  be  effective  when  delivered  for
          overnight  (next day)  delivery,  transmitted  by  facsimile  machine,
          respectively,  or if  delivered,  upon  delivery,  except that notices
          pursuant to Article II shall not be effective until actually  received
          by Lender.

     (c   Borrower  acknowledges  and  agrees  that any  agreement  of Lender to
          receive  certain  notices by telephone and facsimile is solely for the
          convenience  and at the request of Borrower.  Lender shall be entitled
          to rely on the  authority  of any  Person  purporting  to be a  Person
          authorized  by Borrower to give such notice and Lender  shall not have
          any  liability to Borrower or to other Person on account of any action
          taken or not taken by  Lender in  reliance  upon  such  telephonic  or
          facsimile notice.  The obligations of Borrower  hereunder shall not be
          affected  in any way or to any  extent  by any  failure  by  Lender to
          receive written  confirmation of any telephonic or facsimile notice or
          the receipt by Lender of a confirmation  which is at variance with the
          terms  understood  by  Lender to be  contained  in the  telephonic  or
          facsimile notice.


                                    Page 30
<PAGE>


         IX.3 No Waiver:  Cumulative  Remedies.  No failure to  exercise  and no
delay  in  exercising,  on the  part of  Lender,  any  right,  remedy,  power or
privilege hereunder,  shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further  exercise  thereof or the exercise of any other right,  remedy,
power or privilege.

         IX.4  Costs  and  Expenses.   Borrower   shall,   whether  or  not  the
transactions contemplated hereby shall be consummated:

     (a   pay or reimburse Lender within ten (10) Business Days after demand for
          all  Lender  Costs   incurred  by  Lender  in   connection   with  the
          development,  preparation,  delivery,  administration and execution of
          (and any amendment, supplement, waiver or modification to in each case
          whether or not consummated), this Agreement, any Loan Document and any
          other documents prepared in connection herewith, or therewith, and the
          consummation  of the  transactions  contemplated  hereby and  thereby,
          including  the  reasonable  Attorney  Costs  incurred  by Lender  with
          respect thereto;

     (b   pay or reimburse Lender within ten (10) Business Days after demand for
          all  Lender  Costs   incurred  by  Lender  in   connection   with  the
          enforcement,  attempted enforcement,  or preservation of any rights or
          remedies under this Agreement,  any other Loan Document,  and any such
          other  documents,  including  reasonable  Attorney  Costs  incurred by
          Lender; and

     (c   pay or reimburse Lender within ten (10) Business Days after demand for
          all  reasonable  appraisal  (including  the allocated cost of internal
          appraisal   services),   audit,  due  diligence,   monitoring  review,
          environmental  inspection and review  (including the allocated cost of
          such internal  services),  search and filing costs, fees and expenses,
          incurred or sustained by Lender in connection  with the Loan, the Loan
          Documents,  any of the Obligations  and the matters  referred to under
          (a) and (b) of this Section 9.4.

         IX.5 Indemnity.  Borrower shall pay,  indemnify,  and hold Lender,  its
Affiliates  and  Subsidiaries,   and  their  respective   officers,   directors,
employees, counsel, agents and attorneys-in-fact (each, an "Indemnified Person")
harmless from and against any and all liabilities, obligations, losses, damages,
penalties,  actions, judgments, suits, costs, charges, expenses or disbursements
(including  Attorney Costs) of any kind or nature whatsoever with respect to the
execution,  delivery,  enforcement,   performance  and  administration  of  this
Agreement and any other Loan Documents, or the transactions  contemplated hereby
and thereby,  and with respect to any  investigation,  litigation  or proceeding
related to this Agreement or the use of the proceeds thereof, whether or not any
Indemnified  Person is a party  thereto (all the  foregoing,  collectively,  the
"Indemnified Liabilities"); provided, however, Borrower shall have no obligation
hereunder  to any  Indemnified  Person with respect to  Indemnified  Liabilities
arising  from the gross  negligence,  bad faith or  willful  misconduct  of such
Indemnified  Person or the breach by Lender of its  obligations  hereunder.  The
agreements  in this Section 9.5 shall survive  payment of all other  Obligations
and the termination of this Agreement.


                                    Page 31
<PAGE>


         IX.6  Marshaling:  Payments  Set Aside.  Lender  shall not be under any
obligation  to marshal any assets in favor of  Borrower  or any other  Person or
against  or in  payment of any or all of the  Obligations.  To the  extent  that
Borrower makes a payment or payments to Lender, or to the extent Lender enforces
its Liens or  exercises  its rights of set-off,  and such payment or payments or
the proceeds of such enforcement or set-off or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a  trustee,  receiver  or any other  party in  connection  with any
bankruptcy,  or otherwise, then to the extent of such recovery the obligation or
part thereof originally  intended to be satisfied shall be revived and continued
in  full  force  and  effect  as if  such  payment  had  not  been  made or such
enforcement or set-off had not occurred.

         IX.7 Successors and Assigns.  The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors  and assigns,  except that Borrower may not assign or transfer any of
its  rights or  delegate  obligations  under this  Agreement  or any of the Loan
Documents without the prior written consent of Lender.

         IX.8 Set-off. In addition to any rights and remedies of Lender provided
by law, if an Event of Default exists,  and Borrower fails to cure such Event of
Default within five (5) days after delivery of written notice thereof, Lender is
authorized at any time and from time to time,  without prior notice to Borrower,
any such notice being waived by Borrower to the fullest extent permitted by law,
to set off and apply any and all  monies or  deposits  at any time held by,  and
other  indebtedness  at any time  owing by,  Lender to or for the  credit or the
account of Borrower  against  any and all  Obligations  owing to Lender,  now or
hereafter existing, irrespective of whether or not Lender shall have made demand
under this Agreement or any Loan Document and although such  Obligations  may be
contingent or unmatured.  Lender agrees  promptly to notify  Borrower  after any
such  set-off and  application  made by Lender;  provided,  however,  that,  the
failure to give such notice  shall not affect the  validity of such  set-off and
application.  The rights of Lender under this Section 9.8 are in addition to the
other rights and remedies  (including  other rights of set-off) which Lender may
have.

         IX.9 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement in any number of separate counterparts, each of which,
when so  executed,  shall be deemed an  original,  and all of said  counterparts
taken together shall be deemed to constitute but one and the same instrument.  A
set of the copies of this Agreement  signed by both parties shall be lodged with
Borrower and Lender.

         IX.10 Severability. The illegality or unenforceability of any provision
of this Agreement or any instrument or agreement required hereunder shall not in
any way  affect  or impair  the  legality  or  enforceability  of the  remaining
provisions of this Agreement or any instrument or agreement required hereunder.


                                    Page 32
<PAGE>


         IX.11 No Third Parties  Benefited.  This  Agreement is made and entered
into for the sole protection and legal benefit of Borrower and Lender, and their
permitted  successors  and  assigns,  and no other  Person  shall be a direct or
indirect legal beneficiary of, or have any direct or indirect cause of action or
claim in connection  with,  this  Agreement or any of the other Loan  Documents.
Lender shall have no obligation  to any Person not a party to this  Agreement or
other Loan Documents.

         IX.12 Time. Time is of the essence as to each term or provision of this
Agreement and each of the other Loan Documents.

         IX.13    Governing Law and Jurisdiction.

                  THE VALIDITY OF THIS  AGREEMENT AND THE OTHER LOAN  DOCUMENTS,
THE CONSTRUCTION,  INTERPRETATION,  AND ENFORCEMENT HEREOF AND THEREOF,  AND THE
RIGHTS OF THE PARTIES  HERETO AND THERETO  WITH  RESPECT TO ALL MATTERS  ARISING
HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED  UNDER,
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
IT BEING THE INTENT OF THE  PARTIES  THAT THE LAW OF THE STATE OF NEW YORK SHALL
GOVERN THE RIGHTS AND DUTIES OF THE PARTIES  HERETO  WITHOUT REGARD TO CHOICE OR
CONFLICTS OF LAW PRINCIPLES;  EXCEPT THAT THE PROVISIONS  HEREIN THAT PERTAIN TO
THE  PERFECTION OR THE EFFECT OF PERFECTION OF SECURITY  INTERESTS IN COLLATERAL
SHALL BE GOVERNED BY THE LAWS OF SUCH STATE AS ARE  SPECIFIED IN SECTION 9103 OF
THE UCC.

                  BORROWER AND LENDER HEREBY WAIVE THEIR RESPECTIVE  RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION  BASED UPON OR ARISING  OUT OF ANY OF
THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS  CONTEMPLATED  THEREIN,  INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY  CLAIMS.  BORROWER AND LENDER  REPRESENT  THAT EACH HAS REVIEWED  THIS
WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION  WITH LEGAL  COUNSEL.  IN THE EVENT OF  LITIGATION,  A COPY OF THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

         IX.14 Entire  Agreement.  This Agreement,  together with the other Loan
Documents,  embodies the entire Agreement and  understanding  among Borrower and
Lender and supersedes all prior or contemporaneous agreements and understandings
of such Persons,  verbal or written,  relating to the subject  matter hereof and
thereof and any prior  arrangements made with respect to the payment by Borrower
(or any indemnification for) any Lender Costs incurred (or to be incurred) by or
on behalf of Lender.


                                    Page 33
<PAGE>


         IX.15  Interpretation.  This  Agreement  is the result of  negotiations
between and has been reviewed by counsel to Lender,  Borrower and other parties,
and is the product of all parties  hereto.  Accordingly,  this Agreement and the
other Loan  Documents  shall not be construed  against  Lender merely because of
Lender's involvement in the preparation of such documents and agreements.

         IX.16 Assignment.  Lender may assign its rights hereunder and under the
Loan  Documents  without the  consent of  Borrower.  Borrower  may not assign or
delegate any of its rights,  interest or  obligations  hereunder or under any of
the Loan Documents.

         IX.17 Revival and  Reinstatement  of Obligations.  If the incurrence or
payment of the  Obligations by Borrower or the transfer by Borrower to Lender of
any  property  of  either  or  both  of  such  parties  should  for  any  reason
subsequently  be declared to be void or voidable  under any state or federal law
relating to  creditors'  rights,  including  provisions of the  Bankruptcy  Code
relating  to  fraudulent  conveyances,   preferences,   and  other  voidable  or
recoverable  payments  of  money  or  transfers  of  property  (collectively,  a
"Voidable Transfer"), and if Lender is required to repay or restore, in whole or
in part,  any such  Voidable  Transfer,  or elects to do so upon the  reasonable
advice of its counsel,  then,  as to any such Voidable  Transfer,  or the amount
thereof  that Lender is  required  or elects to repay or restore,  and as to all
reasonable costs,  expenses,  and Attorney Costs of Lender related thereto,  the
liability of Borrower automatically shall be revived,  reinstated,  and restored
and shall exist as though such Voidable Transfer had never been made.

               *          *           *          *         *





                                    Page 34
<PAGE>




                       [Signature Page to Loan Agreement]

                  IN WITNESS  WHEREOF,  the  parties  hereby  have  caused  this
Agreement to be executed as of the date first written above.


                           UGLY DUCKLING CORPORATION,
                             a Delaware corporation


                             By:      /S/ DONALD L. ADDINK
                                      --------------------

                             Name:  Donald L. Addink
                             Title:   Senior Vice President



                           GREENWICH CAPITAL FINANCIAL PRODUCTS, INC., 
                             a Delaware corporation


                             By:      /S/ IRA PLATT
                                      -------------

                             Name: Ira Platt
                             Title:   Vice President







                                    Page 35
<PAGE>






                         SCHEDULES AND EXHIBITS OMITTED