<PAGE>
                        THIS REPORT HAS BEEN FILED WITH
                    THE SECURITIES AND EXCHANGE COMMISSION
                                  VIA EDGAR
 -----------------------------------------------------------------------------
                      SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C.   20549
 -----------------------------------------------------------------------------
                                FORM 10-Q

[  X  ] QUARTERLY  REPORT  PURSUANT  TO  SECTION  13  OR 15(d) OF THE
                    SECURITIES  EXCHANGE  ACT  OF  1934
                                   OR
[     ]    TRANSITION  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE
                    SECURITIES  EXCHANGE  ACT  OF  1934

                        FOR THE QUARTERLY PERIOD ENDED

                              SEPTEMBER 30, 1996

                       Commission File Number 000-20841

              U G L Y   D U C K L I N G   C O R P O R A T I O N
           (Exact name of registrant as specified in its charter)

              Delaware                                        86-0721358
    (State or other jurisdiction of                      (I.R.S. employer
    incorporation or organization)                     identification no.)

                           2525 E. Camelback Road,
                                  Suite 1150
                          Phoenix, Arizona    85016

             (Address of principal executive offices)  (Zip Code)

      Registrant's telephone number, including area code: (602) 852-6600

Indicate  by  check  mark  whether  the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934  during  the  preceding  12  months  (or for such shorter period that the
registrant  was  required  to  file such reports), and (2) has been subject to
such  filing  requirements  for  the  past  90  days.

                       Yes    X                  No
                           -------                  -------

INDICATE  THE  NUMBER  OF  SHARES  OUTSTANDING  OF  EACH CLASS OF THE ISSUER'S
CLASSES  OF  COMMON  STOCK,  AS  OF  THE  LATEST  PRACTICABLE  DATE:

At November 12, 1996, there were 12,706,344 shares of Common Stock, $0.001 par
value,  outstanding.









<PAGE> 1





                          UGLY DUCKLING CORPORATION

                                  FORM 10-Q

                              TABLE OF CONTENTS

                       Part I.  - FINANCIAL STATEMENTS


                                                                           Page
Item  1          FINANCIAL STATEMENTS

Condensed Consolidated Balance Sheets - September 30, 1996 and
     December 31, 1995........................................................3
Condensed Consolidated Statements of Operations - Three Months and 
     Nine Months Ended September 30, 1996 and September 30, 1995..............4
Condensed Consolidated Statements of Cash Flows - Nine Months Ended
     September 30, 1996 and September 30, 1995................................5
Notes to Condensed Consolidated Financial Statements..........................6

Item  2.         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS..........................9



                       Part II. -  OTHER INFORMATION

Item  1.        LEGAL PROCEEDINGS............................................26

Item  2.        CHANGES IN SECURITIES........................................26

Item  3.        DEFAULTS UPON SENIOR SECURITIES..............................26

Item  4.        SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..........26

Item  5.        OTHER INFORMATION............................................26

Item  6.        EXHIBITS AND REPORTS ON FORM 8-K.............................26


SIGNATURES..................................................................S-1













<PAGE> 2
<TABLE>
<CAPTION>
                    UGLY DUCKLING CORPORATION AND SUBSIDIARIES
                       CONDENSED CONSOLIDATED BALANCE SHEETS
                         (In thousands, except share data)
<S>                                                 <C>              <C>
                                                     September 30,   December 31,
                                                         1996            1995
                                                    ---------------  -------------
                                                      (Unaudited)      (Note 1)
Assets
  Cash and  Cash Equivalents                        $          684          1,419 
  Finance Receivables:
     Principal Balances, Net                                52,930         49,226 
     Less: Allowance for Credit Losses                      (6,626)        (8,500)
                                                    ---------------  -------------
         Finance Receivables, Net                           46,304         40,726 

  Residual in Finance Receivables Sold                       6,904              - 
  Investments Held in Trust                                  2,059              - 
  Inventory, at Cost                                         5,889          6,329 
  Property and Equipment, Net                               11,023          8,883 
  Deferred and Refundable Income Taxes                       1,091          1,775 
  Other Assets                                               3,443          1,658 
                                                    ---------------  -------------

                                                    $       77,397         60,790 
                                                    ===============  =============

 Liabilities and Stockholders' Equity
   Liabilities:
     Accounts Payable and Accrued Liabilities       $        6,599          5,169 
     Notes Payable and Other Liabilities                    30,622         33,184 
     Subordinated Notes Payable                             14,000         17,553 
                                                    ---------------  -------------
         Total Liabilities                                  51,221         55,906 

 Stockholders' Equity:
  Preferred Stock, $.001 Par Value; Authorized
    10,000,000 Shares; 1,000,000 and 1,000,000
    Shares Issued and Outstanding at September 30,
     1996 and December 31, 1995, respectively               10,000         10,000 
  Common Stock, $.001 Par Value; Authorized
    20,000,000 Shares; 8,691,264 and 5,579,600
    Shares Issued and Outstanding at September 30,
    1996 and December 31, 1995, respectively.               18,120            127 
   Accumulated Deficit                                      (1,944)        (5,243)
                                                    ---------------  -------------

         Total Stockholders' Equity                         26,176          4,884 
                                                    ---------------  -------------

                                                    $       77,397         60,790 
                                                    ===============  =============
</TABLE>


 See  accompanying  notes  to  Condensed  Consolidated  Financial  Statements.

<PAGE> 3
<TABLE>
<CAPTION>
                        UGLY DUCKLING CORPORATION AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
               (In thousands, except earnings per common share - Unaudited)
                                              Three Months Ended      Nine Months Ended
                                                 September 30,           September 30,
                                            ----------------------  ----------------------
<S>                                         <C>         <C>         <C>         <C>
                                               1996        1995        1996        1995
                                            ----------  ----------  ----------  ----------
Dealership Revenues:
  Sales of Used Cars                        $  12,320      13,991      42,497      36,439 
  Income on Finance Receivables                 2,198       2,290       7,368       5,765 
  Gain on Sales of Finance Receivables          1,400           -       2,578           - 
                                            ----------  ----------  ----------  ----------
                                               15,918      16,281      52,443      42,204 
                                            ----------  ----------  ----------  ----------
Cost of Dealership Revenues:
  Cost of Used Cars Sold                        6,977       8,713      23,835      20,601 
  Provision for Credit Losses                   2,541       2,372       7,713       6,776 
                                            ----------  ----------  ----------  ----------
                                                9,518      11,085      31,548      27,377 
                                            ----------  ----------  ----------  ----------
  Net Revenues from Dealership Activities       6,400       5,196      20,895      14,827 
Other Income                                    2,341         664       5,293       1,261 
                                            ----------  ----------  ----------  ----------
  Income before Operating Expenses              8,741       5,860      26,188      16,088 
Operating Expenses                              5,584       5,368      17,594      13,984 
                                            ----------  ----------  ----------  ----------
  Operating Income                              3,157         492       8,594       2,104 
Interest Expense:
  Subordinated Notes Payable                      352         929       1,589       2,523 
  Other                                           838         732       2,890       1,498 
                                            ----------  ----------  ----------  ----------
                                                1,190       1,661       4,479       4,021 
                                            ----------  ----------  ----------  ----------
 Income (Loss) before Income Taxes              1,967      (1,169)      4,115      (1,917)
 Income Tax Expense (Benefit)                       -           -           -           - 
                                            ----------  ----------  ----------  ----------
  Net Earnings (Loss)                           1,967      (1,169)      4,115      (1,917)
  Preferred Stock Dividend                       (250)          -        (817)          - 
                                            ----------  ----------  ----------  ----------
Net Earnings (Loss) Available
  to Common Shares                          $   1,717      (1,169)      3,298      (1,917)
                                            ==========  ==========  ==========  ==========
 Earnings (Loss) per Common Share:
     Primary                                $    0.19   $   (0.20)  $    0.47   $   (0.33)
                                            ==========  ==========  ==========  ==========
     Fully Diluted                          $    0.19   $   (0.20)  $    0.46   $   (0.33)
                                            ==========  ==========  ==========  ==========
Weighted Average Common and Common
  Equivalent Shares Outstanding:
     Primary                                    9,089       5,892       7,066       5,892 
                                            ==========  ==========  ==========  ==========
     Fully Diluted                              9,205       5,892       7,230       5,892 
                                            ==========  ==========  ==========  ==========
</TABLE>
See  accompanying  notes  to  Condensed  Consolidated  Financial  Statements.
<PAGE> 4
<TABLE>
<CAPTION>
                      UGLY DUCKLING CORPORATION AND SUBSIDIARIES
                   CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (In thousands - Unaudited)
                                                                  Nine Months Ended
                                                                    September 30,
                                                                ---------------------
<S>                                                             <C>         <C>
                                                                   1996       1995
                                                                ----------  ---------
Cash Flows from Operating Activities:
   Net Earnings (Loss)                                          $   4,115     (1,917)
   Adjustments to Reconcile Net Earnings (Loss) to Net
       Cash Provided by Operating Activities:
     Provision for Credit Losses                                    7,461      6,776 
     Gain on Sale of Finance Receivables                           (2,574)         - 
     Compensation Expense Related to Sale of Common Stock               -         45 
     Increase in Deferred Income Taxes                                  -       (242)
     Depreciation and Amortization                                  1,128        910 
     Changes in Assets and Liabilities:
       Decrease (Increase) in Inventory                               440     (1,750)
       Increase in Other Assets                                      (584)      (390)
       Increase in Accounts Payable and Accrued Expenses            1,430        626 
       Increase (Decrease) in Income Taxes Receivable/Payable         684       (293)
                                                                ----------  ---------

       Net Cash Provided by Operating Activities                   12,100      3,765 
                                                                ----------  ---------

 Cash Flows From Investing Activities:
   Increase in Finance Receivables                                (70,599)   (39,520)
   Proceeds from Sales of Finance Receivables                      31,107          - 
   Collections on Finance Receivables                              29,029     13,737 
   Increase in Investments Arising from Finance
     Receivables Sold                                              (8,963)         - 
   Collections on Notes Receivable                                    100          - 
   Purchases of Property and Equipment                             (4,013)    (2,238)
                                                                ----------  ---------
       Net Cash Used in Investing Activities                      (23,339)   (28,021)
                                                                ----------  ---------

 Cash Flows from Financing Activities:
   Repayments of Obligations Under Capital Leases                    (146)      (128)
   Net Additions (Repayments) of Notes Payable                     (2,824)    19,723 
   Net Issuance (Repayments) of Subordinated Notes Payable           (553)     5,391 
   Preferred Stock Dividends Paid                                    (817)         - 
   Net Proceeds from Issuance of Common Stock                      14,844          5 
                                                                ----------  ---------
       Net Cash Provided by Financing Activities                   10,504     24,991 
                                                                ----------  ---------
 Net Increase (Decrease) in Cash and Cash Equivalents                (735)       735 

 Cash and Cash Equivalents at Beginning of Period                   1,419        168 
                                                                ----------  ---------
 Cash and Cash Equivalents at End of Period                     $     684        903 
                                                                ==========  =========
</TABLE>
See  accompanying  notes  to  Condensed  Consolidated  Financial  Statements.
<PAGE> 5
                           UGLY DUCKLING CORPORATION
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 (Unaudited)

NOTE  1.        BASIS  OF  PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Ugly
Duckling Corporation (Company) have been prepared in accordance with generally
accepted  accounting principles for interim financial information, pursuant to
rules and regulations of the Securities and Exchange Commission.  Accordingly,
they do not include all of the information and footnotes required by generally
accepted   accounting   principles   for   a   complete   financial  statement
presentation.    In   the   opinion  of  management,  such  unaudited  interim
information  reflect  all  adjustments,  consisting  only  of normal recurring
adjustments, necessary to present the Company's financial position and results
of  operations  for  the  periods  presented.    The results of operations for
interim  periods  are not necessarily indicative of the results to be expected
for  a  full  fiscal  year.    The  Condensed Consolidated Balance Sheet as of
December  31,  1995 was derived from audited consolidated financial statements
as  of  that  date  but  does  not  include  all the information and footnotes
required  by  generally  accepted accounting principles.  It is suggested that
these  condensed consolidated financial statements be read in conjunction with
the  Company's  consolidated  financial statements for the year ended December
31,  1995, included in the Company's prospectus, dated October 29, 1996, filed
with  the  Securities  and  Exchange Commission pursuant to Rule 424(b) of the
Securities  Act  of  1933,  as  amended.

NOTE  2.        SUMMARY  OF  PRINCIPAL  BALANCES,  NET

Following  is  a  summary of Principal Balances, Net, as of September 30, 1996
and  December  31,  1995.

<TABLE>
<CAPTION>
                                   September 30,   December 31,
                                       1996            1995
                                  ---------------  -------------
<S>                               <C>              <C>
                                    (000 Omitted)  (000 Omitted)
Contractually Scheduled Payments  $       72,349         66,425 
Less: Unearned Finance Charges           (20,205)       (18,394)
                                  ---------------  -------------
   Principal Balances                     52,144         48,031 
Add:  Accrued Interest                       580            613 
      Loan Origination Costs                 206            582 
                                  ---------------  -------------
Principal Balances, Net           $       52,930         49,226 
                                  ===============  =============
</TABLE>

NOTE  3.        PRESENTATION  OF  DEALERSHIP  REVENUES  AND COST OF REVENUES

Revenues  from  Company  Dealership  operations consist of Sales of Used Cars,
Income  on  Finance  Receivables,  including  income  on  Residual  in Finance
Receivables Sold and Gain on Sale of Finance Receivables.  Cost of Revenues of
Dealership operations is comprised of Cost of Used Cars Sold and the Provision
for  Credit  Losses.


<PAGE> 6
The  prices  at which the Company sells its cars and the interest rate that it
charges  to  finance  these  sales  take into consideration that the Company's
primary  customers  are  high-risk borrowers, many of whom ultimately default.
The  Provision  for Credit Losses reflects these factors and is treated by the
Company  as  a  cost of both the future finance income derived on the contract
receivables originated at Company Dealerships as well as a cost of the sale of
the  cars  themselves.    Accordingly, unlike traditional car dealerships, the
Company  does  not  present gross profit/margin in its Statement of Operations
calculated  as  Sales  of  Used  Cars  less  Cost  of  Used  Cars  Sold.

NOTE  4.        PUBLIC  OFFERING

On  June  21,  1996,  the  Company  completed  its  initial public offering of
2,300,000  shares  of  its  Common  Stock.  Further,  on  June  28,  1996, the
underwriters of the offering exercised their over-allotment option to purchase
an  additional 345,000 shares of the Company's Common Stock.  The net proceeds
from the offering (approximately $14.9 million) were used to reduce borrowings
under  the  Company's  revolving  credit  facility.

Effective  upon  the  closing  of the initial public offering, SunAmerica Life
Insurance  Company  ("SunAmerica") converted $3.0 million of subordinated debt
into  Common  Stock at the initial public offering price.  SunAmerica received
444,444  shares  of  Common Stock in the Company.  The 12.5% subordinated note
was  originated  in  August  of  1995.

Effective  upon the closing of the initial public offering, Verde Investments,
Inc.(Verde),  an  affiliate  of the Company whose sole shareholder is also the
Chairman,  Chief  Executive  Officer, and majority stockholder of the Company,
lowered  the rental rates on eleven properties leased to the Company by Verde.
Verde  also granted the Company the right to purchase nine properties owned by
Verde  and  assigned  to  the  Company  its  leasehold  interests  in  the two
properties  it  subleases  to  the Company.  In addition, the interest rate on
$14.0  million  of  subordinated debt payable to Verde was lowered from 18% to
10%.

On  June  21,  1996,  prior to the closing of the initial public offering, the
Board  of Directors declared a dividend on the Company's Preferred Stock at an
annualized  rate  of  12%  in  the amount of $267,000 covering the period from
April  1,  1996  through  June  21,  1996.    Effective upon completion of the
offering,  the dividend rate on $10.0 million of Preferred Stock held by Verde
was  lowered  to  10%  through  the  end  of  1997.    See  Note  7,  below.

NOTE  5.        COMMON  STOCK  EQUIVALENTS

Net Earnings (Loss) per common share amounts are based on the weighted average
number  of common shares and common stock equivalents outstanding as reflected
on  Exhibit  11  to  this  Quarterly  Report  on  Form  10-Q.

NOTE  6.        RECLASSIFICATIONS

Certain reclassifications have been made to previously reported information to
conform  with  classifications made as of September 30, 1996 and for the three
and  nine  month  periods  then  ended.






<PAGE> 7
NOTE  7.        SUBSEQUENT  EVENT

Subsequent  to  September 30, 1996, the Company completed a public offering of
4,000,000  shares of its Common Stock (not including 600,000 additional shares
which  are  subject  to  the  underwriters'  over-allotment  option).  The net
proceeds from the offering (approximately $56 million) were used to redeem the
Company's  outstanding  10%  cumulative  Preferred Stock, to reduce borrowings
under the Company's revolving credit facility, and provide working capital for
general  corporate  purposes.


















































<PAGE> 8
                                   ITEM 2.
              MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                     CONDITION AND RESULTS OF OPERATIONS

This  Quarterly  Report  on  Form  10-Q  contains  forward looking statements.
Additional  written  or  oral  forward  looking  statements may be made by the
Company  from  time  to  time  in  filings  with  the  Securities and Exchange
Commission  or  otherwise.    Such  forward  looking statements are within the
meaning of that term in Section 27A of the Securities Act of 1933, as amended,
and  Section  21E  of  the  Securities Exchange Act of 1934, as amended.  Such
statements  may  include,  but  not  be  limited  to, projections of revenues,
income,  or loss, capital expenditures, plans for future operations, financing
needs  or plans, and plans relating to products or services of the Company, as
well  as  assumptions  relating  to  the  foregoing.

Forward  looking statements are inherently subject to risks and uncertainties,
some  of  which  cannot  be predicted or quantified.  Future events and actual
results  could  differ materially from those set forth in, contemplated by, or
underlying  the  forward  looking  statements.    Statements in this Quarterly
Report, including the Notes to the Condensed Consolidated Financial Statements
and  "Management's  Discussion and Analysis of Financial Condition and Results
of  Operations,"  describe  factors, among others, that could contribute to or
cause such differences.  Additional factors that could cause actual results to
differ  materially from those expressed in such forward looking statements are
set  forth  in  Exhibit  99  to  this  Quarterly  Report  on  Form  10-Q.

INTRODUCTION

Ugly  Duckling  Corporation (the "Company") operates one of the largest chains
of   Buy  Here-Pay  Here  used  car  dealerships  in  the  United  States  and
underwrites,  finances,  and  services  retail installment contracts generated
from  the  sale  of  used  cars by its dealerships ("Company Dealerships") and
third  party  used  car  dealers  ("Third  Party Dealers") located in selected
markets throughout the country.  The Company targets its products and services
to  the  sub-prime segment of the automobile financing industry, which focuses
on  selling  and  financing  the sale of used cars to persons who have limited
credit  histories,  low  incomes,  or  past  credit  problems  ("Sub-Prime
Borrowers").

BUSINESS  OPERATIONS    The  Company  commenced its used car sales and finance
operations  with  the  acquisition of two Company Dealerships in 1992.  During
1993, the Company acquired three additional Company Dealerships.  In 1994, the
Company  constructed  and  opened four new Company Dealerships that were built
specifically to meet the Company's new standards of appearance, reconditioning
capabilities, size, and location.  During 1994, the Company closed one Company
Dealership  because the facility failed to satisfy these new standards and, at
the  end  of  1995,  closed  its  Gilbert,  Arizona  dealership  (the "Gilbert
Dealership").    In  July  1996,  the  Company's  Prescott, Arizona dealership
commenced  operations.

The  Gilbert  Dealership was used by the Company to evaluate the sale of later
model  used cars.  These cars had an average age of approximately three years,
which  is  two  to  five  years  newer than the cars typically sold at Company
Dealerships, and cost more than twice that of typical Company Dealership cars.
 The  Company  determined  that  its  standard  financing program could not be
implemented  on  these  higher  cost  cars.    Furthermore,  operation of this
dealership  required additional corporate infrastructure to support its market
niche,  such as distinct advertising and marketing programs, which the Company

<PAGE> 9
was  unable to leverage across its other operations.  Accordingly, the Company
terminated  this  program  in  December,  1995,  and sold the land, dealership
building,  and  other  assets to a third party.  During the three months ended
September  30,  1995,  the  Gilbert  Dealership produced sales of $3.5 million
(average  of  $9,732  per car sold) and gross profits (Sales of Used Cars less
Cost  of Used Cars Sold) of $631,000 (average of $1,764 per car sold), and the
Company  incurred  selling and marketing expenses of $233,000 (average of $650
per  car  sold).  During the nine months ended September 30, 1995, the Gilbert
Dealership produced sales of $7.1 million (average of $8,882 per car sold) and
gross  profits  of  $1.8  million  (average  of  $2,221 per car sold), and the
Company  incurred  selling and marketing expenses of $450,000 (average of $563
per  car sold).  The pro forma results of operations discussed below have been
adjusted  as  if the Gilbert Dealership had been terminated as of December 31,
1994,  as  management  believes these pro forma results are more indicative of
ongoing  operations.

In  1994,   the   Company  acquired  Champion  Financial  Services,  Inc.,  an
independent automobile finance company, primarily for its management expertise
and  contract  servicing  software  and  systems.  Champion had a portfolio of
approximately   $1.9  million  in  sub-prime  contracts  averaging  $2,000  in
principal  amount.    For  the  balance  of  1994,  the  Company  purchased an
additional  $1.7  million  in  contracts.

In  April  1995,  the  Company  initiated  an  aggressive  plan for purchasing
contracts  from  Third  Party  Dealers  and  by  September 30, 1996 had opened
twenty-two  Third  Party  Dealer contract buying offices ("Branch Offices") in
seven  states  serving  approximately  800  Third Party Dealers.  Further, the
Company  intends  to open at least eight additional branches during the fourth
quarter  of  1996  and  at  least  15  additional  branches  during  1997.

INITIAL  PUBLIC  OFFERING AND RECAPITALIZATION TRANSACTIONS  On June 21, 1996,
the  Company  completed  its  initial  public  offering of 2,300,000 shares of
Common  Stock.    On June 28, 1996, the underwriters of the offering exercised
their  overallotment  option  to  purchase an additional 345,000 shares of the
Company's  Common  Stock.    The net proceeds from the offering (approximately
$14.9  million)  were  used to reduce borrowings under the Company's revolving
credit   facility   ("Revolving   Facility")  with  General  Electric  Capital
Corporation  ("GE  Capital").

Effective  upon the closing of the initial public offering, Verde Investments,
Inc.  ("Verde"),  an  affiliate  of  the Company whose sole stockholder is the
Chairman,  Chief  Executive  Officer, and majority stockholder of the Company,
agreed  to sell to the Company, subject to financing, nine properties owned by
Verde and leased to the Company at the lower of $7.45 million or the appraised
value  (as  determined by an independent third party), and, pending such sale,
to  lower  the rental rates on such properties to an aggregate of $745,000 per
year,  subject  to cost of living adjustments if the sale does not take place.
The  Company believes the reduced rental rates approximate the financing costs
to  be  incurred  in  connection  with  the  purchase  of such properties.  In
addition,  Verde  assigned  to  the  Company  its  leasehold  interests in two
properties  it  previously subleased to the Company, lowered the interest rate
on  $14  million  of  subordinated  debt  payable to Verde from 18% to 10% per
annum, and lowered the dividend rate on $10 million of Preferred Stock held by
Verde  (which  previously  accrued  a dividend of 12% annually, increasing one
percent  annually  to  a  maximum of 18%) to 10% through 1997.  Also effective
upon   the   closing  of  the  offering,  SunAmerica  Life  Insurance  Company
("SunAmerica"),  a  significant  funding source of the Company, converted $3.0
million  of  subordinated debt into Common Stock at the public offering price.

<PAGE> 10
RECENT  DEVELOPMENTS    Since  its  initial  public offering in June 1996, the
Company  has opened one new Company Dealership in Arizona and has acquired the
leasehold rights to an existing dealership in Las Vegas, Nevada.  In addition,
the  Company  has  three other dealerships (one in Phoenix, Arizona and two in
Albuquerque,   New   Mexico)  and  a  used  car  reconditioning  facility  (in
Albuquerque,  New  Mexico) currently under development.  Also since June 1996,
the  Company  has  opened  nine Third Party Dealer contract purchasing offices
("Branch  Offices")  in  various  states and intends to open eight more Branch
Offices  during  the  fourth quarter of 1996.  The Company intends to continue
its  aggressive  growth  strategy,  developing or acquiring additional Company
Dealerships  and  opening  fifteen  or  more  Branch  Offices  in  1997.

The  Company  is in the process of expanding its Third Party Dealer operations
by  implementing a collateralized dealer financing program (the "Cygnet Dealer
Program"),  pursuant  to  which  it  will  provide  operating  credit lines to
qualified  Third  Party  Dealers.   The Company anticipates that it will begin
testing  this  program  with  selected  Third  Party Dealers during the fourth
quarter  of 1996 and will begin full-scale marketing of the program during the
first  quarter  of  1997.

The  Company  has  also  established  insurance  operations  directed  to  the
sub-prime  market.   Its initial activities in this area have focused on force
placing  casualty insurance on its Third Party Dealer contracts.  In an effort
to expand its services, the Company entered into a letter of intent In October
1996  to  acquire  the  capital  stock  of  an  insurance agency that provides
insurance services to the sub-prime market.  The Company does not believe that
this  transaction  will  be  consummated.

GROWTH  IN  FINANCE RECEIVABLES  Total  assets  of the Company grew from $60.8
million  at December 31, 1995 to $77.4 million at September 30, 1996 primarily
as  a  result  of  growth  in  finance receivable related assets.  This growth
excludes  $32.6  million in principal balances outstanding and serviced by the
Company  under  securitization  sales agreements at September 30, 1996, all of
which  were  sold  during  1996.

The  following  table reflects finance receivables principal balances for both
managed  and  owned  contracts as of September 30, 1996 and December 31, 1995.
<TABLE>
<CAPTION>
FINANCE  RECEIVABLES  PRINCIPAL  BALANCES
                                               September 30, 1996             December 31, 1995
                                        -------------------------------  -----------------------------
<S>                                     <C>              <C>             <C>             <C>
                                        Principal        Number          Principal       Number
                                        ---------------  --------------  --------------  -------------
                                          (000 Omitted)        (Actual)   (000 Omitted)       (Actual)
SOURCE OF CONTRACTS:
Originated at Company Dealerships       $       48,066           9,632   $       34,226          8,049
Less Balances on Portfolio Securitized
    and Sold                                   (32,633)         (7,226)               -              -
                                        ---------------  --------------  --------------  -------------
Originated at Company Dealerships, Net          15,433           2,406           34,226          8,049
Purchased From Third Party Dealers              36,711           8,041           13,805          2,733
                                        ---------------  --------------  --------------  -------------
    Company Total                       $       52,144          10,447   $       48,031         10,782
                                        ===============  ==============  ==============  =============
    Total Managed Portfolio             $       84,777          17,673   $       48,031         10,782
                                        ===============  ==============  ==============  =============
</TABLE>
<PAGE> 11
The  following  tables  detail  finance  receivables  activity  for  contracts
originated  at  Company Dealerships and purchased from Third Party Dealers for
the  three  and  nine  months  ended  September  30,  1996  and  1995.

<TABLE>
<CAPTION>
FINANCE  RECEIVABLE  PRINCIPAL  BALANCES  ORIGINATED/PURCHASED
                                            Three Months Ended            Three Months Ended
                                            September 30, 1996            September 30, 1995
                                    -------------------------------  -------------------------------
<S>                                 <C>              <C>             <C>              <C>
                                       Principal         Number         Principal         Number
                                    ---------------  --------------  ---------------  --------------
                                      (000 Omitted)     (Actual)      (000 Omitted)      (Actual)
SOURCE OF CONTRACTS:
Originated at Company Dealerships   $        11,082           1,575  $        10,083           1,624
Purchased From Third Party Dealers           15,716           2,678            5,416             850
                                    ---------------  --------------  ---------------  --------------
                                    $        26,798           4,253  $        15,499           2,474
                                    ===============  ==============  ===============  ==============
</TABLE>


<TABLE>
<CAPTION>
FINANCE  RECEIVABLE  PRINCIPAL  BALANCES  ORIGINATED/PURCHASED
                                            Nine Months Ended             Nine Months Ended
                                            September 30, 1996            September 30, 1995
                                    -------------------------------  -------------------------------
<S>                                 <C>              <C>             <C>              <C>
                                       Principal         Number         Principal         Number
                                    ---------------  --------------  ---------------  --------------
                                      (000 Omitted)     (Actual)      (000 Omitted)      (Actual)
SOURCE OF CONTRACTS:
Originated at Company Dealerships   $        38,179           5,413  $        28,085           4,780
Purchased From Third Party Dealers           32,919           5,781           10,921           2,094
                                    ---------------  --------------  ---------------  --------------
                                    $        71,098          11,194  $        39,006           6,874
                                    ===============  ==============  ===============  ==============
</TABLE>


RESULTS  OF  OPERATIONS
FOR  THREE  MONTHS  ENDED  SEPTEMBER  30,  1996
COMPARED  TO  THREE  MONTHS  ENDED  SEPTEMBER  30,  1995

DEALERSHIP  REVENUES

SALES  OF  USED  CARS  -  Sales  of  Used  Cars  during the three months ended
September  30,  1996,  were  $12.3  million versus sales of $10.5 million (pro
forma)  for  the comparable three month period in 1995, reflecting an increase
of  17.1%.   During the three months ended September 30, 1996, 1,766 used cars
were  sold  with an average sales price of $6,976.  For the three months ended
September  30,  1995,  1,705  (pro  forma) used cars were sold with an average
sales  price  of  $6,162 (pro forma).  The increase in revenue is attributable
both  to management's decision to sell higher quality vehicles, resulting in a
higher  average sales price, and the increase in the number of cars sold which
is  attributed to the success of the Company's business strategy.  The revenue

<PAGE> 12
figures,  however, also reflect the decrease in the level of sales the Company
typically  experiences  in  the third quarter as compared to the first half of
the  year,  which  is  attributable  to  the  seasonal  buying patterns of the
Company's  Company  Dealership  customers  as well as management's decision to
slow  its  advertising  expenditures  in  preparation  for  a  new advertising
campaign.

The  Company's  sales  strategy is to provide financing to customers with poor
credit  histories  or  who  are unable to obtain financing through traditional
sources.    The  Company  Dealerships  financed  approximately  90.0% of sales
revenue and 88.7% of the units sold for the three month period ended September
30,  1996 compared to 92.7% (pro forma) of sales revenue and 91.7% (pro forma)
of  the  units  sold  for  the  comparable  period  in  1995.

INCOME  ON  FINANCE  RECEIVABLES  - Income on Finance Receivables from Company
Dealership  sales  was  $2.2  million for the three months ended September 30,
1996  versus  $2.3  million  for  the comparable three month period in 1995, a
decrease of 4.3%.  The decrease in income was primarily due to the decrease in
average  contract  principal  balances  outstanding  during  the  period ended
September  30,  1996,  reflecting  the  Company's  sales  of  $17.1 million in
receivables in September, 1996.  The Company Dealership portfolio of contracts
for  the  three month periods ending September 30, 1996 and September 30, 1995
had  an  effective  yield  of  29.5%  and  28.9%,  respectively.

GAIN  ON  SALES  OF FINANCE RECEIVABLES - For the three months ended September
30,  1996,  the Company recorded a Gain on Sale of Finance Receivables of $1.4
million.    The  Company completed its third securitization in September 1996.
The  Company  reduced  its  Allowance  for  Credit  Losses (Allowance) by $3.3
million  and  retained  a  residual  interest  in  the  contracts sold of $3.1
million.    The  Company  plans  to  undertake  a  securitization  transaction
approximately  every three to four months.  Future securitizations may include
the  sale of receivables acquired from Third Party Dealers.  The Company's net
income  may fluctuate from quarter to quarter in the future as a result of the
timing  and  size  of  its  securitizations.

COST  OF  DEALERSHIP  REVENUES

COST  OF  USED  CARS  SOLD  - Cost of Used Cars Sold were $7.0 million for the
three  month  period  ended September 30, 1996 versus $5.9 million (pro forma)
for  the  comparable  three  month  period  in 1995, an increase of 18.6% (pro
forma).    This increase is attributable to both the increase in the number of
used  cars sold and an increase in, on a percentage basis, the average cost of
the  used cars purchased for resale.  On a percentage basis, Cost of Used Cars
Sold  increased  from  55.8%  (pro  forma) of sales for the three month period
ended  September 30, 1995 to 56.6% of sales for the comparable period in 1996.
In  1996,  management  continued  its  strategy  to  increase the quality, and
therefore  the  cost,  of  cars sold while targeting a consistent dollar gross
margin.    For  the  three  months ended September 30, 1996, on a per car sold
basis,  the  average gross margin was $3,025 versus $2,725 (pro forma) for the
same  period  in  1995.

PROVISION  FOR  CREDIT  LOSSES  -  A  high  percentage  of  Company Dealership
customers  ultimately  do  not  make  all  of  their  contractually  scheduled
payments,  requiring the Company to charge off the remaining principal balance
due.    The Company maintains an Allowance to absorb such losses.  To fund the
Allowance as it relates to cars financed through Company Dealerships, a direct
charge  to  revenues  is  recorded through the Provision for Credit Losses for
each  contract  originated.    The Provision for Credit Losses (Provision) was

<PAGE> 13
$2.5 million for the three months ended September 30, 1996 versus $2.3 million
(pro forma) in the comparable three month period in 1995, an decrease of 8.7%.
 This  increase  is  attributable  to  the  increases  in  both  the number of
contracts originated as well as the average amount financed in the three month
period  ending  September  30,  1996.   As a percentage of sales financed, the
Provision  averaged 22.9% for the three months ended September 30, 1996 versus
23.6%  (pro forma) for the comparable three month period in 1995. The decrease
reflects  the  Company's  strengthened  underwriting  requirements, the higher
quality of used cars sold, and the Company's improved collection efforts.  The
amount  of  the Provision in a given period is based on the amount the Company
estimates  is  required  to  maintain  an  adequate  Allowance.   Also see the
discussion  of  the  "Allowance  for  Credit  Losses"  below.

OTHER  INCOME

Other Income, which consists primarily of income on Third Party Dealer finance
receivables,  increased  by  246%  to  $2.3 million for the three months ended
September  30,  1996  from  $664,000  for the three months ended September 30,
1995.    The  increase  reflects the substantial growth in the Company's Third
Party Dealer contract portfolio.  Subsequent to April 1995, as a result of its
migration to higher quality contracts and expansion into markets with interest
rate  limits, the Company's yield on its Third Party Dealer contract portfolio
has trended downward.  The Third Party Dealer portfolio had an average balance
of $32.8 million for the three month period ending September 30, 1996, with an
effective yield for the three month period of  24.2%.  This portfolio averaged
$8.8  million for the three months ended September 30, 1995, with an effective
yield  of    27.3%.

INCOME  BEFORE  OPERATING  EXPENSES

As  a  result  of  the  Company's continued expansion, Income before Operating
Expenses  grew  to  $8.7 million for the three months ended September 30, 1996
versus $5.3 million (pro forma) for the three months ended September 30, 1995.
Finance  Income  on  third party contracts  was the primary contributor to the
increase.    Net  Revenue  from  Dealership  Activity  also contributed to the
increase.

OPERATING  EXPENSES

Operating  Expenses  consist  of  selling  and marketing expenses, general and
administrative expenses and depreciation and amortization.  Operating Expenses
were  $5.6  million  for the three months ended September 30, 1996 versus $4.8
million (pro forma) for the three months ended September 30, 1995, an increase
of 16.7%.  The increase reflects additional expenses attributable to increased
Company    Dealership    activity,    continued   development   of   corporate
infrastructure,  and  the expansion of the Third Party Dealer network from one
branch  office  at  March  31,  1995  to  twenty-two as of September 30, 1996.

Operating  Expenses  represented  30.6% of total revenues for the three months
ended September 30, 1996 and 31.7% of total revenue for the three months ended
September  30,  1995.

INTEREST  EXPENSE

SUBORDINATED  NOTES  PAYABLE  - Interest expense on Subordinated Notes Payable
totaled $352,000 for the three months ended September 30, 1996 versus $929,000
for  the  comparable  three  month  period in 1995.  The decrease was due to a
decrease  in  the average Subordinated Note balance from $20.7 million for the

<PAGE> 14
three  months  ended  September  30,  1995 to $14 million for the three months
ended  September 30, 1996.  In addition, the interest rate on the Subordinated
Notes,  which was  originally 18%, was reduced to 10% effective June 21, 1996.
Had  the  rate  decrease  been  effective  for  the  three  month period ended
September  30,  1995,  interest  expense  would have been reduced by $412,000.

INTEREST, OTHER - Interest, Other consisted primarily of the cost of borrowing
under  the  Company's revolving credit facility ("Revolving Facility") with GE
Capital.    Interest,  Other  totaled  $838,000  for  the  three  months ended
September  30,  1996  versus $732,000 for the comparable three month period in
1995.    For  the  three  month  period  ended  September 30, 1996, the amount
outstanding  under  the  Revolving  Facility  averaged  $29.6  million with an
average  borrowing  cost  of 9.7%.  For the three month period ended September
30,  1995,  the amount outstanding under the Revolving Facility averaged $25.2
million  with  an  average  borrowing  rate  of  10.7%.


RESULTS  OF  OPERATIONS
FOR  NINE  MONTHS  ENDED  SEPTEMBER  30,  1996
COMPARED  TO  NINE  MONTHS  ENDED  SEPTEMBER  30,  1995

DEALERSHIP  REVENUES

SALES OF USED CARS - Sales of Used Cars during the nine months ended September
30, 1996, were $42.5 million versus sales of $29.3 million (pro forma) for the
comparable  nine  month  period  in 1995, reflecting an increase in same store
sales  of  over 45.1%.  During the nine months ended September 30, 1996, 6,141
used  cars  were  sold  with  an  average sales price of $6,920.  For the nine
months ended September 30, 1995, 4,875 (pro forma) used cars were sold with an
average  sales  price  of  $6,019  (pro  forma).    The increase in revenue is
attributable  both  to  Management's decision to sell higher quality vehicles,
resulting  in  a higher average sales price, and the increase in the number of
cars  sold during the first six months of the year, which is attributed to the
success  of  the Company's business strategy, most notably its advertising and
marketing  programs.

The  Company  Dealerships  financed  approximately  89.8% of sales revenue and
88.1%  of  the  units  sold for the nine month period ended September 30, 1996
compared  to  89.2%  (pro forma) of sales revenue and 91.5% (pro forma) of the
units  sold  for  the  comparable  period  in  1995.

INCOME  ON  FINANCE  RECEIVABLES  - Income on Finance Receivables from Company
Dealership sales was $7.4 million for the nine months ended September 30, 1996
versus  $5.8  million  for  the nine month period ended September 30, 1995, an
increase  of  27.6%.  The increase in income was primarily due to the increase
in  average  contract  principal  balances  outstanding during the nine months
ended September 30, 1996 as impacted by the Company's sale of $41.3 million in
finance  receivables in 1996.  Additionally, Income on Finance Receivables for
the  nine  month  period  in  1996  includes $725,000 in income on Residual in
Finance  Receivables  Sold.    There was no corresponding income in 1995.  The
Company  Dealership  portfolio  of contracts for the nine month periods ending
September  30, 1996 and September 30, 1995 had an effective yield of 29.2% and
29.3%,  respectively.






<PAGE> 15
GAIN   ON   SALES   OF   FINANCE  RECEIVABLES  -  The  Company  completed  the
securitization and sale of approximately $41.3 million in contracts originated
at  its  Company Dealerships during the nine month period ended September 1996
from  which  the  Company  recognized  gains  on  sales  of $2.6 million.  The
Company's  net income may fluctuate from quarter to quarter in the future as a
result  of  the  timing  and  size  of  its  securitizations.

COST  OF  DEALERSHIP  REVENUES

COST OF USED CARS SOLD - Cost of Used Cars Sold was $23.8 million for the nine
month period ended September 30, 1996 versus $15.3 million (pro forma) for the
comparable  nine month period in 1995, an increase of 55.6%.  This increase is
attributable  to  both  the  increase  in  the number of used cars sold and an
increase  in,  on  a  percentage basis, the average purchase price of the used
cars sold.  On a percentage basis, Cost of Used Cars Sold increased from 52.1%
(pro  forma)  of  sales  for the nine month period ended September 30, 1995 to
56.1%  of  sales  for  the  comparable  period  in  1996.  In 1996, Management
continued  its  strategy  to  increase the quality, and therefore the cost, of
cars  sold  while  targeting  a  consistent dollar gross margin.  For the nine
months  ended  September  30, 1996, on a per car sold basis, the average gross
margin  was  $3,039  versus  $2,885  (pro  forma) for the same period in 1995.

PROVISION  FOR  CREDIT  LOSSES  -  The Provision was $7.7 million for the nine
months  ended  September  30,  1996  versus  $6.3  million  (pro forma) in the
comparable  nine  months  in  1995,  an  increase  of 22.2%.  This increase is
attributable  to  the  increases in both the number of contracts originated as
well  as the average amount financed in the nine month period ending September
30, 1996.  As a percentage of sales financed, the Provision averaged 20.2% for
the  nine  months  ended  September  30, 1996 versus 24.1% (pro forma) for the
comparable  nine  month  period  in 1995.  The decrease reflects the Company's
strengthened  underwriting requirements, the higher quality of used cars sold,
and the Company's improved collection efforts.  The amount of the Provision in
a  given  period  is  based on the amount the Company estimates is required to
maintain an adequate Allowance.  Also see the discussion of the "Allowance for
Credit  Losses"  below.

OTHER  INCOME  -  Other  Income, which consists primarily of income on Third
Party  Dealer  finance  receivables,  increased  to  $5.3 million for the nine
months  ended  September  30, 1996 from $1.3 million for the nine months ended
September  30,  1995,  an  increase  of 307%.  Subsequent to April, 1995, as a
result of its migration to higher quality contracts and expansion into markets
with  interest  rate  limits,  the  Company's  yield on its Third Party Dealer
contract  portfolio has trended downward.  The Third Party Dealer portfolio of
contracts  had  an  average balance of $24.1 million for the nine month period
ended September 30, 1996, with an effective yield for the nine month period of
24.7%.    This  portfolio  averaged  $5.0  million  for  the nine months ended
September  30,  1995,  with  an  effective  yield  for  the  period of  26.5%.

INCOME  BEFORE  OPERATING  EXPENSES

As  a  result  of  the  Company's continued expansion, Income before Operating
Expenses  grew  to $26.2 million for the nine months ended September 30, 1996,
versus $14.8 million (pro forma) for the nine months ended September 30, 1995.
 Net Revenue from Dealership Activity, and growth of the Company's Third Party
Dealer  operations  were  the  primary  contributors  to  the  increase.




<PAGE> 16
OPERATING  EXPENSES

Operating  Expenses  consist  of  selling  and marketing expenses, general and
administrative expenses and depreciation and amortization.  Operating Expenses
were  $17.6 million for the nine months ended September 30, 1996, versus $14.0
million  for  the nine months  ended September 30, 1995, an increase of 25.7%.
The increase reflects additional expenses attributable to the expansion of the
Third  Party  Dealer  network  from  one  branch  office at March 31, 1995, to
twenty-two  as of September 30, 1996. The increase also reflects the continued
development  of  corporate  infrastructure,  including  the  implementation of
contract  servicing  facilities and systems, to accommodate anticipated future
growth.  Expenses  attributable  to the Company Dealership sales and financing
activities,   including   real   property   rent   expense,   also   increased
proportionately  to  the  Company  Dealership  revenue growth.  Until June 21,
1996,  the  Company  Dealerships  paid rents to Verde based on a percentage of
Company  Dealership total revenues.  Effective June 21, 1996, these rents have
been reduced to a fixed amount.  Had the new fixed rents been in place for the
nine months ended September 30, 1996 and 1995, rent expense for the nine month
periods  would  have  been  reduced  by  $961,000  and $1 million (pro forma),
respectively.    The  Company  also  continues  to  expand its advertising and
marketing  efforts.

Operating  Expenses  represented  30.5%  of total revenues for the nine months
ended  September 30, 1996 and 32.2% of total revenue for the nine months ended
September  30,  1995.

INTEREST  EXPENSE

SUBORDINATED  NOTES  PAYABLE - Interest  expense on Subordinated Notes Payable
totaled  $1.6 million for the nine months ended September 30, 1996 versus $2.5
million for the comparable nine month period in 1995.  The decrease was due to
a decrease in the average Subordinated Note balance from $18.9 million for the
nine  months  ended  September  30,  1995 to $14.0 million for the nine months
ended  September  30, 1996.  In addition, effective June 21, 1996 the interest
rate  on the Subordinated Note was decreased from 18% to 10%. Had the interest
rate  decrease  been  effective for the nine month periods ended September 30,
1996  and  1995,  interest  expense  would have been reduced $500,000 and $1.1
million,  respectively.

INTEREST,  OTHERS  -  Interest,  Others  consisted  primarily  of  the cost of
borrowing  under  the  Revolving  Facility  with GE Capital.  Interest, Others
totaled  $2.9 million for the nine months ended September 30, 1996 versus $1.5
million  for  the  comparable  nine  month period in 1995.  For the nine month
period  ended  September  30,  1996 the amount outstanding under the Revolving
Facility  averaged  $31.9 million with an average borrowing rate of 9.8%.  For
the  nine  month period ended September 30, 1995, the amount outstanding under
the  Revolving  Facility averaged $18.4 million with an average borrowing rate
of  10.7%.

ALLOWANCE  FOR  CREDIT  LOSSES

The  Company  has  established  an  Allowance for Credit Losses (Allowance) to
cover  anticipated  credit losses on the contracts currently in its portfolio.
The  Allowance has been established through the Provision for Credit Losses on
contracts   originated  at  Company  Dealerships,  and  through  nonrefundable
acquisition  discounts  on  contracts purchased from Third Party Dealers.  The
Allowance as a percentage of Company Dealership contracts increased from 21.9%
at  December  31,  1995 to 23.1% at September 30, 1996, and the Allowance as a

<PAGE> 17
percentage  of  Third  Party Dealer contracts increased from 7.2% to 8.3% over
the  same  period.    However,  the Allowance as a percentage of the Company's
combined  contract portfolio decreased from 17.7% at December 1995 to 12.7% at
September 30, 1996 due to  the  relative  increase  in  the  combined contract
portfolio  represented  by  contracts  purchased from Third Party Dealers, for
which  a  lower  level  of  Allowance  is  required.

STATIC  POOL ANALYSIS, GENERAL - To monitor contract performance, beginning in
June  1995,  the  Company implemented "static pool" analysis for all contracts
originated  since  January  1,  1993.    Static  pool analysis is a monitoring
methodology  by which each month's originations and subsequent charge offs are
assigned  a  unique  pool  and  the  pool performance is monitored separately.
Improving  or  deteriorating performance is measured based on cumulative gross
and  net  charge offs as a percentage of original principal balances, based on
the  number  of  complete  payments  made  by the customer  before charge off.
Management  has factored the trends indicated by its static pool analysis into
its  determination  of  the  adequacy  of  the  Allowance for both its Company
Dealership  and  Third  Party  Dealer  portfolio.

The  Company  monitors  all  its  static pools on a monthly basis; however for
presentation  purposes the information in static pool tables for the Allowance
attributable  to  Company  Dealerships and the Allowance attributable to Third
Party  Dealers  is  presented on a quarterly basis.  For periods denoted by an
"x",  the  pools  have  not  seasoned sufficiently to allow for computation of
cumulative  losses.   With respect to periods denoted by a "-", the pools have
not  yet  attained  the  indicated  cumulative  age.

ALLOWANCE  ATTRIBUTABLE  TO  COMPANY  DEALERSHIP  CONTRACTS - The Allowance on
contracts  originated at Company Dealerships increased to 23.1% of outstanding
principal  balance  as of September 30, 1996 compared to 21.9% as of  December
31,  1995.  The following table reflects activity in the Allowance, as well as
information  regarding charge off activity, on contracts originated at Company
Dealerships  for the three and nine month periods ended September 30, 1996 and
1995.

























<PAGE> 18
<TABLE>
<CAPTION>
                                    Three Months Ended              Nine Months Ended
                                       September 30,                   September 30,
                              -------------------------------  ------------------------------
<S>                           <C>              <C>             <C>             <C>
                                   1996             1995            1996            1995
                              ---------------  --------------  --------------  --------------
                                (000 Omitted)   (000 Omitted)   (000 Omitted)   (000 Omitted)
ALLOWANCE ACTIVITY:
Balance, beginning of period  $        5,974           7,875           7,500           6,050 
Provision for credit losses            2,541           2,372           7,713           6,776 
Reduction attributable to
  loans sold                          (3,263)              -          (6,187)              - 
Net Charge offs                       (1,681)         (1,983)         (5,455)         (4,562)
                              ---------------  --------------  --------------  --------------
Balance, end of period        $        3,571           8,264           3,571           8,264 
                              ===============  ==============  ==============  ==============
CHARGE OFF ACTIVITY:
Principal Balances:
  Collateral Repossessed      $       (1,664)         (1,729)         (5,260)         (4,227)
  Other                                 (342)           (785)         (1,619)         (1,693)
                              ---------------  --------------  --------------  --------------
  Total Principal Balances            (2,006)         (2,514)         (6,879)         (5,920)
  Accrued interest                      (114)           (191)           (486)           (434)
  Recoveries, net                        439             722           1,910           1,792 
                              ---------------  --------------  --------------  --------------
Net Charge Offs               $       (1,681)         (1,983)         (5,455)         (4,562)
                              ===============  ==============  ==============  ==============
</TABLE>

The  Provision for Credit Losses is charged to Company Dealership revenues for
contracts  originated at Company Dealerships.  The Provision has declined as a
percentage  of  principal  balances  due  to the factors discussed above.  See
"--Results  of  Operations--  Provision  for  Credit  Losses."

Since  many  of  the Company's customers use income tax refunds as a source of
down  payments,  Company  Dealerships generally experience increased car sales
and  contract  originations during the first six months of a fiscal year.  See
"--Seasonality."   Accordingly, the increase in the Allowance at September 30,
1996  over  December 31, 1995 is primarily a timing difference, reflecting the
fact  that  such increased sales and contract originations (and the associated
Provision  for  Credit  Losses  taken  on  each  contract at the time of sale)
immediately increase the Allowance while charge offs related to such contracts
may  occur  later.

<PAGE>
STATIC  POOL ANALYSIS, COMPANY DEALERSHIP CONTRACTS - The following table sets
forth  the  cumulative  net  charge  offs as a percentage of original contract
cumulative  balances, based on the quarter of origination and segmented by the
number  of  monthly  payments  made  prior  to  charge  off.
<TABLE>
<CAPTION>






<PAGE> 19

POOL'S CUMULATIVE NET LOSSES AS PERCENTAGE OF 
POOL'S ORIGINAL AGGREGATE PRINCIPAL BALANCE
     Monthly Payments Completed by Customer Before Charge  Off
              0      3      6     12     18     24
             ----  -----  -----  -----  -----  -----
<S>          <C>   <C>    <C>    <C>    <C>    <C>
1993:
1st Quarter  6.6%  18.3%  26.6%  33.2%  35.1%  35.3%
2nd Quarter  7.7%  18.4%  26.2%  30.6%  32.1%  32.3%
3rd Quarter  8.5%  19.9%  25.2%  30.4%  31.5%  31.7%
4th Quarter  7.1%  16.9%  23.4%  27.7%  28.9%  29.5%

1994:
1st Quarter  3.5%  10.8%  14.3%  17.7%  19.3%  21.4%
2nd Quarter  3.7%  11.3%  15.3%  19.7%  21.7%     x
3rd Quarter  3.5%   8.5%  12.9%  17.0%  19.4%     - 
4th Quarter  2.9%   9.1%  13.3%  18.0%     x      - 

1995:
1st Quarter  1.6%   8.3%  13.8%  18.2%     -      - 
2nd Quarter  2.5%   7.9%  12.7%     x      -      - 
3rd Quarter  1.9%   6.5%  11.3%     -      -      - 
4th Quarter  1.1%   5.8%     x      -      -      - 

1996:
1st Quarter  1.4%     x      -      -      -      - 
</TABLE>

The  following  table  reflects  the  principal balances of delinquent Company
Dealership  contracts  as a percentage of total outstanding contract principal
balances  of  the  Company  Dealership  portfolio as of September 30, 1996 and
December  31,  1995.
<TABLE>
<CAPTION>
                                  September 30,   December 31,
                                       1996           1995
                                  --------------  -------------
<S>                               <C>             <C>
DELINQUENCY PERCENTAGES:
Principal balances current                 95.4%          94.7%
Principal balances 31 to 60 days            3.1%           4.2%
Principal balances over 60 days             1.5%           1.1%
</TABLE>

At December 31, 1995 the average number of days a customer was delinquent when
repossession  took  place  was  under 30 days for both contracts originated at
Company  Dealerships  and those purchased from Third Party Dealers.  In  1996,
the  Company  has  elected  to  extend  the time period before repossession is
ordered with respect to those customers who exhibit a willingness and capacity
to  bring  their  contracts current.  As this modification to its repossession
policy is implemented,  delinquencies  are expected to  adjust  accordingly.

ALLOWANCE  ATTRIBUTABLE  TO  THIRD  PARTY  DEALER CONTRACTS - The Allowance on
contracts  purchased  from  Third  Party  Dealers  increased  to  8.3%  of the
outstanding  principal  balance  as  of  September  30,  1996  from 7.2% as of
December  31,  1995.  For these contracts, the Company continues to credit all
Discount  acquired  with the purchase of contracts from Third Party Dealers to
the  Allowance.
<PAGE> 20
Following  are  tables  reflecting  activity  in  the  Allowance,  as  well as
information  regarding  charge off activity, on contracts purchased from Third
Party  Dealers  for  the three and nine month periods ended September 30, 1996
and  1995.

<TABLE>
<CAPTION>
                                        Three Months Ended             Nine Months Ended
                                           September 30,                   September 30,
                                 -------------------------------  ------------------------------
<S>                              <C>              <C>             <C>             <C>
                                      1996             1995            1996            1995
                                 ---------------  --------------  --------------  --------------
                                   (000 Omitted)   (000 Omitted)   (000 Omitted)   (000 Omitted)
ALLOWANCE ACTIVITY:
Balances at beginning of period  $        2,074             650           1,000             160 
Provision for credit losses                   -               -               -               - 
Discount acquired                         1,816             428           3,646           1,109 
Net Charge offs                            (835)           (194)         (1,591)           (385)
Balances at end of period        $        3,055             884           3,055             884 
                                 ===============  ==============  ==============  ==============
CHARGE OFF ACTIVITY:
Principal Balances:
  Collateral Repossessed         $       (1,003)           (213)         (2,070)           (335)
    Other                                  (191)            (81)           (416)           (134)
                                 ---------------  --------------  --------------  --------------
  Total Principal Balances               (1,194)           (294)         (2,486)           (469)
  Accrued interest                          (64)            (13)           (123)            (29)
  Recoveries, net                           423             113           1,018             113 
                                 ---------------  --------------  --------------  --------------
Net Charge Offs                  $         (835)           (194)         (1,591)           (385)
                                 ===============  ==============  ==============  ==============
</TABLE>

Discount  acquired  totaled $1.8 million and $3.6 million for the three months
and  nine  months  ended  September 30, 1996, respectively.  Discount acquired
totaled  $428,000  and $1.1 million for the three months and nine months ended
September  30,  1995,  respectively.    In  1996, as a percentage of principal
balances  purchased,  the  Discount  averaged 11.6% for the three months ended
September  30,  1996  and  11.1% for the nine months then ended.  Beginning in
1996  the  Company  expanded  into  markets  with interest rate limits.  While
contractual  interest  rates  on  these contracts are limited, the Company has
been  able  to  purchase  these contracts at a reasonably consistent effective
yield  and  therefore Discounts have trended upward.  In 1995, as a percentage
of contracts purchased, Discount averaged 11.1% and 10.2% for the three months
and  nine  months  ended September 30, 1995, respectively.  In the nine months
ended  September  30,  1995,  the  Company had just begun its expansion of the
Third  Party Dealer branch network and significantly curtailed the purchase of
lesser  quality  contracts,  which  were  purchased  at  a  higher  discounts.
Accordingly, the lower percentage level of Discount for the three month verses
the  nine  month  period  is attributable to this transition to higher quality
contracts,  purchased  at lower discounts.   The Company continues to allocate
all  Discount  acquired  to  the  Allowance  for  Credit  Losses.

STATIC POOL ANALYSIS, THIRD PARTY DEALERS - The following table sets forth the
cumulative  net  charge  offs  as a percentage of original contract cumulative
balances,  based  on the quarter of origination and segmented by the number of
monthly  payments  made  prior  to  charge  off.

<PAGE> 21
<TABLE>
<CAPTION>
POOL'S  CUMULATIVE  NET LOSSES AS PERCENTAGE OF 
POOL'S ORIGINAL AGGREGATE PRINCIPAL  BALANCE
      Monthly Payments Completed by Customer Before Charge Off


               0      3       6      12     18     24
             -----  ------  ------  -----  -----  -----
<S>          <C>    <C>     <C>     <C>    <C>    <C>
1995:
2nd Quarter    .9%    4.1%    5.8%      x      -      -
3rd Quarter   1.4%    4.0%      x       -      -      -
4th Quarter   1.0%      x       -       -      -      -

1996:
1st Quarter    .8%      -       -       -      -      -
</TABLE>

While  the  static  pool  information  is  developing, management augments its
evaluation  of  the  adequacy of the Allowance for Third Party Dealers through
comparisons in the characteristics of collateral ratios and borrowers on Third
Party  Dealer  contracts  versus those of the Company Dealership contracts, as
well   as  through  comparisons  of  portfolio  delinquency,  actual  contract
performance  and, to the extent information is available, industry statistics.

Beginning  April  1,  1995, the Company initiated a new purchasing program for
Third  Party  Dealer  contracts  which  included  a  rapid migration to higher
quality  contracts.    As  of March 31, 1995, the Third Party Dealer portfolio
originated under the prior program had a principal balance of $2.0 million and
has  a  remaining  balance  of $246,000 as of September 30, 1996.  Static pool
results  under  the  prior  program  are  not  a  material  consideration  for
management evaluation of the current Third Party Dealer portfolio and contract
performance  under this prior program have been excluded from the table above.

Analysis  of  portfolio  delinquencies  is  also  considered in evaluating the
adequacy of the Allowance.  The following table reflects the principal balance
of   delinquent  Third  Party  Dealer  contracts  as  a  percentage  of  total
outstanding contract principal balances of the Third Party Dealer portfolio as
of  September  30,  1996  and  December  31,  1995.

<TABLE>
<CAPTION>
                                  September 30,   December 31,
                                       1996           1995
                                  --------------  -------------
<S>                               <C>             <C>
DELINQUENCY PERCENTAGES:
Principal balances current                 96.9%          98.4%
Principal balances 31 to 60 days            2.5%           1.2%
Principal balances over 60 days             0.6%           0.4%
</TABLE>

See  the  discussion above regarding the Company's repossession policy and its
impact  on  delinquencies.




<PAGE> 22
LIQUIDITY  AND  CAPITAL  RESOURCES

The  Company  requires capital to support increases in its contract portfolio,
expansion   of  Company  Dealerships  and  Branch  Offices,  the  purchase  of
inventories,  the  purchase of property and equipment, and for working capital
and  general corporate purposes.  The funding sources available to the Company
include  operating  cash  flow, proceeds from the sale of finance receivables,
and  supplemental  borrowings.    The Company's Net Cash Provided by Operating
Activities  increased  by  218%  from  $3.8  million for the nine months ended
September  30,  1995  to $12.1 million for the nine months ended September 30,
1996.   The increase was primarily due to increases in Net Earnings, Provision
for   Credit   Losses,  Accounts  Payable  and  Accrued  Expenses,  and  Other
Liabilities  and  a  decrease in Refundable Income Taxes offset by the Gain on
Sale  of  Finance  Receivables.

The  Net  Cash  Used  in  Investing  Activities  decreased by 16.8% from $28.0
million  in  the  nine months ended September 30, 1995 to $23.3 million in the
nine  months ended September 30, 1996.  The $31.1 million provided by the sale
of  finance  receivables  and  the  $29.0  million  provided by collections on
finance  receivables  were offset by the $70.6 million used in the increase in
finance receivables, $9.0 million used for the increase in Investments Arising
from  Finance  Receivables  Sold,  and  $4.0 million used for the purchases of
property  and  equipment.

The  Company's  Net  Cash  Provided by Financing Activities decreased by 58.0%
from  $25.0  million  in  the  nine  months  ended September 30, 1995 to $10.5
million  in  the  nine months ended September 30, 1996.  The primary financing
activities in the first nine months of 1996 were the $14.8 million in proceeds
from  the issuance of common stock and corresponding $2.8 million reduction of
the  Revolving  Facility  with  GE  Capital.

REVOLVING  FACILITY  -  The  Revolving  Facility with GE Capital has a maximum
commitment  of up to $50.0 million.  Under the Revolving Facility, the Company
may borrow up to 65.0% of the principal balance of eligible Company Dealership
contracts  and  up  to  90.0% of the principal balance of eligible Third Party
Dealer  contracts.  The Revolving Facility expires in September 1997, at which
time  the  Company  has  the  option  to  renew the Revolving Facility for one
additional  year.    The  facility  is  secured  by  substantially  all of the
Company's  assets.  As of September 30, 1996, the Company's borrowing capacity
under  the  Revolving  Facility was approximately $41.3 million, the aggregate
principal  amount  outstanding under the Revolving Facility was $28.0 million,
and  the amount available to be borrowed under the facility was $13.3 million.
The  Revolving Facility bears interest at the 30-day LIBOR plus 4.25%, payable
daily  (total  rate  of  9.7%  as  of  September  30,  1996).    The  rate was
subsequently  reduced  to  30-day  LIBOR  plus  3.60%  in  October  1996.

SUBORDINATED   NOTES   PAYABLE   -   The  Company  has  historically  borrowed
substantial amounts from Verde, an affiliate of the Company.  The subordinated
notes  payable  balances  outstanding  to  Verde  totaled  $14.6 million as of
December  31,  1995 ($24.6 million prior to the conversion of $10.0 million to
Preferred  Stock  as  discussed  below), and $14.0 million as of September 30,
1996.   Prior to June 21, 1996, these borrowings accrued interest at an annual
rate  of  18.0%.    Effective  June 21, 1996 the annual interest rate on these
borrowings  was  reduced  to  10.0%.   The Company is required to make monthly
payments  of  interest  and annual payments of principal in the amount of $2.0
million.  This debt is junior to all of the Company's other indebtedness.  The
Company  may  suspend  interest  and  principal payments in the event it is in
default  on  obligations  to  any  other  creditors.

<PAGE> 23
PREFERRED  STOCK  -  On December  31,  1995, Verde Investments converted $10.0
million of subordinated debt to Preferred Stock of the Company.  Prior to June
21, 1996, the Preferred Stock accrued a dividend of 12.0% annually, increasing
one  percent  per  year  up to a maximum of 18.0%. Effective June 21, 1996 the
dividend  on  the  Preferred Stock was decreased to 10.0% through December 31,
1997,  at  which  time  the rate was scheduled to be raised to, and remain at,
12.0%.    The  Preferred  Stock  was  retired  in  November  1996.

CONVERTIBLE  NOTE  -  In August 1995, the Company entered into a note purchase
agreement  with  SunAmerica  pursuant  to  which  SunAmerica  purchased a $3.0
million  convertible  subordinated  note.  Effective June 21, 1996, SunAmerica
exercised  its  conversion  rights.    In return for the early exercise of its
conversion  rights,  the  Company  granted  SunAmerica  a  ten-year warrant to
purchase 116,000 shares of Common Stock at $6.75 per share, the initial public
offering  price,  and  paid  fees  to  SunAmerica  totaling  $150,000.

SECURITIZATIONS   -   SunAmerica   and  the  Company  have  entered  into  the
Securitization  Program  under  which  SunAmerica  may  purchase  up to $175.0
million  of  certificates secured by contracts.  The Securitization Program is
intended  to  provide  the Company with an additional source of funding to the
Revolving  Facility.    At  the  closing  of  each securitization, the Company
receives payment from SunAmerica for the certificates sold, net of investments
held  in  trust.  The Company also generates cash flow under this program from
ongoing  servicing  fees and excess cash flow distributions resulting from the
difference  between  the payments received from customers on the contracts and
the  payments  paid  to  SunAmerica.

CAPITAL   EXPENDITURES   AND  COMMITMENTS  -  The  Company  has  acquired  the
leasehold  rights  to  an  existing dealership in Las Vegas, Nevada, has three
other dealerships (one in Phoenix, Arizona and two in Albuquerque, New Mexico)
and  a  reconditioning  facility  (in Albuquerque, New Mexico) currently under
development,  and  has  begun  an  expansion  of  its  contract  servicing and
collection  facility.    In  addition,  the  Company intends to open eight new
Branch  Offices  during  the  fourth  quarter of 1996.  The Company intends to
continue  its  aggressive  growth strategy, developing or acquiring additional
Company  Dealerships and opening 15 or more new Branch Offices through the end
of 1997.  The Company believes that it will expend an average of approximately
$1.5 million to $1.7 million (excluding inventory) to develop each new Company
Dealership  and  $50,000  to  establish  each  new Branch Office.  The Company
intends   to   finance   these  expenditures  through  operating  cash  flows,
supplemental  borrowings,  (including  under  the  Revolving Facility), and as
discussed  below,  the  proceeds  of  the  October  29,  1996  offering.

SEASONALITY

Historically,  the  Company  has  experienced higher revenues in the first two
quarters  of  the  year  than  in  the  latter  half of the year.  The Company
believes  that  these results are due to seasonal buying patterns resulting in
part  from  the  fact  that  many  of its customers receive income tax refunds
during the first half of the year, which are a primary source of down payments
on  used  car  purchases.

INFLATION

Increases  in  inflation  generally  result  in higher interest rates.  Higher
interest rates on the Company's borrowings would decrease the profitability of
the  Company's  existing  portfolio.  The Company will seek to limit this risk
through  its  Securitization  Program  and,  to  the  extent market conditions

<PAGE> 24
permit,  for contracts originated at Company Dealerships, either by increasing
the  interest  rate  charged,  or  the  profit margin on the cars sold, or for
contracts  acquired from Third Party Dealers, either by acquiring contracts at
a  higher discount or with a higher interest rate.  To date, inflation has not
had  a  significant  impact  on  the  Company's  operations.

SECONDARY  PUBLIC  OFFERING

On  October  29,  1996  the  Company  completed a secondary public offering of
4,000,000  shares  of  Common  Stock.   Approximately $49.0 million of the net
proceeds  of  the offering (approximately $56.0 million) were used to pay down
the  Revolving  Facility  and  to retire the $10.0 million in Preferred Stock.
Remaining  net  proceeds  of  approximately $7.0 million were added to working
capital  for  general  corporate  purposes.

The  underwriters  of  the  offering  have  a  30-day  option  to  purchase an
additional  600,000  shares  of  the Common Stock at a price of $15 per share.
Should  the  underwriters  elect  to  exercise  their option, the net proceeds
(approximately  $8.5  million)  will  be  added to working capital for general
corporate  purposes.







































<PAGE> 25
                              PART  II. OTHER  INFORMATION


Item  1.  Legal  Proceedings.

          The  registrant  and  its  subsidiaries are not the subject of legal
          proceedings  which,  in  the  opinion  of  management,  will  have a
          material  effect  on the financial position of the registrant or its
          results  of operations.

Item  2.  Changes  in  Securities.

          None.

Item  3.  Defaults  Upon  Senior  Securities.

          None.

Item  4.  Submission of Matters to a Vote of Security Holders.

          None.

Item  5.  Other  Information.

          None.

Item  6.  Exhibits  and  Reports  on  Form  8-K.

     (a)  Exhibits

          Exhibit  11  - Statement regarding Computation of Earnings per Share
          Exhibit  27  -  Financial  Data  Schedule - Regulation S-X Article 5
          Exhibit  99  -  Statement  regarding  Forward-looking  Information

     (b)  Reports  on  Form  8-K.

          No  reports on Form 8-K have been filed during the quarter for which
          this  report  is  filed.





















<PAGE> 26
Pursuant  to  the requirements of the Securities and Exchange Act of 1934, the
registrant  has  duly  caused  this  report  to be signed on its behalf by the
undersigned  thereunto  duly  authorized.


Ugly  Duckling  Corporation


Date:  November 14, 1996
       -----------------




/s/  Steven  T.  Darak
     -----------------

Steven  T.  Darak
Senior  Vice  President  and
Chief  Financial  Officer
(Principal  Financial  and  Accounting  Officer)



































                                     S-1