United States Securities and Exchange Commission
                             Washington, D.C. 20549

                                    Form 10-Q

(Mark One)

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

                For the quarterly period ended September 30, 1999

                                       or

          ( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the Transition Period from _____ to _____

                         Commission File Number: 0-26412

                          UNION ACCEPTANCE CORPORATION
             (Exact name of registrant as specified in its charter)


          Indiana                                        35-1908796
 (State or other jurisdiction                         (I.R.S. Employer
of incorporation or organization)                   Identification Number)



     250 N. Shadeland Avenue, Indianapolis, IN           46219
      (Address of principal executive office)          (Zip Code)



                                 (317) 231-6400
              (Registrant's telephone number, including area code)

         Indicate  by check mark  whether  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
filing requirements for the past 90 days.

Yes (X)           No ( )

         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes of common stock, as of the latest practicable date:

                  Class                       Outstanding at November 12, 1999

Class A Common Stock, without par value                5,108,016 Shares
---------------------------------------                ----------------
Class B Common Stock, without par value                8,150,266 Shares
---------------------------------------                ----------------

<PAGE>

                  UNION ACCEPTANCE CORPORATION AND SUBSIDIARIES
                                    FORM 10-Q
                                      INDEX


                                                                            Page
Part I.  FINANCIAL INFORMATION

Item 1.  Consolidated Condensed Financial Statements (unaudited):

         Consolidated Condensed Balance Sheets as of
         September 30, 1999 and June 30, 1999                                  3

         Consolidated Condensed Statements of Earnings
         for the Three Months Ended September 30, 1999 and 1998                4

         Consolidated Condensed Statements of Cash Flows for the
         Three Months Ended September 30, 1999 and 1998                        5

         Consolidated Condensed Statement of  Shareholders' Equity for the
         Three Months Ended September 30, 1999                                 6

         Notes to Consolidated Condensed Financial Statements                  7

Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations                                  10

Item 3.  Quantitative and Qualitative Disclosures about Market Risk           19

Part II. OTHER INFORMATION                                                    21


         Signatures                                                           22




<PAGE>

Union Acceptance Corporation and Subsidiaries
Consolidated Condensed Balance Sheets
(Dollars in thousands, except share data)
(Unaudited)

<TABLE>
<CAPTION>

                                                                           September 30,    June 30,
Assets                                                                        1999            1999
                                                                            --------        --------
<S>                                                                         <C>             <C>
Cash and cash equivalents                                                   $  7,638        $  8,088
Restricted cash                                                               12,104          12,379
Receivables held for sale, net                                               230,189         267,316
Retained interest in securitized assets                                      194,463         190,865
Accrued interest receivable                                                    1,892           2,035
Property, equipment, and leasehold improvements, net                           8,593           8,375
Other assets                                                                  22,959          25,868
                                                                            --------        --------

Total Assets                                                                $477,838        $514,926
                                                                            ========        ========

Liabilities and Shareholders' Equity

Liabilities
 Amounts due under warehouse facilities                                     $169,815        $185,500
 Long-term debt                                                              177,000         199,000
 Accrued interest payable                                                      1,914           5,287
 Amounts due to trusts                                                        12,707          13,152
 Dealer premiums payable                                                         864           2,564
 Current and deferred income taxes payable                                    14,085          16,022
 Other payables and accrued expenses                                           3,648           3,922
                                                                            --------        --------

Total Liabilities                                                            380,033         425,447
                                                                            --------        --------

Commitment and Contingencies

Shareholders' Equity
 Preferred Stock, without par value, authorized
   10,000,000 shares; none issued and outstanding                                 --              --

 Class  A  Common  Stock,  without  par  value,
   authorized  30,000,000  shares;
   5,101,616 and 5,099,344 shares issued and
   outstanding at September 30, 1999 and
   June 30, 1999, respectively                                                58,464          58,452

 Class  B  Common  Stock,  without  par  value,
   authorized  20,000,000  shares;
   8,150,266 shares issued and outstanding
   at September 30, 1999 and June 30, 1999, respectively                          --              --

  Accumulated other comprehensive earnings, net of income taxes                3,094             199
  Retained earnings                                                           36,247          30,828
                                                                            --------        --------

 Total Shareholders' Equity                                                   97,805          89,479
                                                                            --------        --------

  Total Liabilities and Shareholders' Equity                                $477,838        $514,926
                                                                            ========        ========
</TABLE>


See accompanying notes to consolidated condensed financial statements.



<PAGE>


Union Acceptance Corporation and Subsidiaries
Consolidated Condensed Statements of Earnings
(Dollars in thousands, except share data)
(Unaudited)


<TABLE>
<CAPTION>
                                                               Three Months Ended
                                                                 September 30,
                                                        ------------------------------
                                                            1999               1998
                                                        -----------        -----------
<S>                                                     <C>                <C>
Interest on receivables held for sale                   $     8,145        $     8,251
Retained interest and other                                   5,728              5,632
                                                        -----------        -----------

   Total interest income                                     13,873             13,883
Interest expense                                              6,564              7,105
                                                        -----------        -----------

   Net interest margin                                        7,309              6,778
Provision for estimated credit losses                           750              2,325
                                                        -----------        -----------
   Net interest margin after provision
     for estimated credit losses                              6,559              4,453
                                                        -----------        -----------

Gain on sales of receivables, net                             6,530              2,706
Servicing fees                                                6,068              4,953
Late charges and other fees                                   1,505              1,206
                                                        -----------        -----------

  Other revenues                                             14,103              8,865
                                                        -----------        -----------

Salaries and benefits                                         6,927              5,670
Other general and administrative expenses                     4,914              4,321
                                                        -----------        -----------

  Total operating expenses                                   11,841              9,991
                                                        -----------        -----------

Earnings before provision for income taxes                    8,821              3,327
Provision for income taxes                                    3,402              1,270
                                                        -----------        -----------

Net earnings                                            $     5,419        $     2,057
                                                        ===========        ===========

 Net earnings per common share (basic & diluted)        $      0.41        $      0.16
                                                        ===========        ===========

Basic weighted average number of common
  shares outstanding                                     13,250,660         13,231,482
                                                        ===========        ===========
Diluted weighted average number of common
  shares outstanding                                     13,295,546         13,231,482
                                                        ===========        ===========
</TABLE>


See accompanying notes to consolidated condensed financial statements.



<PAGE>
Union Acceptance Corporation and Subsidiaries
Consolidated Condensed Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
                                                                                        Three Months Ended
                                                                                          September 30,
                                                                                  ---------------------------
                                                                                     1999              1998
                                                                                  ---------         ---------
<S>                                                                               <C>               <C>
Cash flows from operating activities:
   Net earnings                                                                   $   5,419         $   2,057
     Adjustments to reconcile net earnings to net cash
       from operating activities:
          Increase in receivables held for sale, net of liquidations               (330,869)         (398,641)
          Dealer premiums paid, net on receivables held for sale                     (9,812)          (13,342)
          Proceeds from securitization of receivables held for sale                 364,792           351,379
          Gain on sales of receivables                                               (4,601)          (12,713)
          Impairment of retained interest in securitized assets                         240             3,542
          Accretion of discount on retained interest in securitized assets           (5,371)           (5,026)
          Provision for estimated credit losses                                         750             2,325
          Amortization and depreciation                                                 904             1,279
          Restricted cash                                                               275             6,620
          Other assets and accrued interest receivable                                1,520            (3,007)
          Amounts due to trusts                                                        (445)           (3,543)
          Other payables and accrued expenses                                        (5,584)             (394)
                                                                                  ---------         ---------
             Net cash from operating activities                                      17,218           (69,464)
                                                                                  ---------         ---------

Cash flows from investing activities:
   Collections on retained interest in securitized assets
     and change in spread accounts                                                   21,011            10,934
   Capital expenditures                                                                (560)             (677)
                                                                                  ---------         ---------
        Net cash from investing activities                                           20,451            10,257

Cash flows from financing activities:
   Principal payment on long-term debt                                              (22,000)          (22,000)
   Stock options exercised                                                               12                --
   Net change in warehouse credit facilities                                        (15,685)           11,685
   Payment of borrowing fees                                                           (446)               --
                                                                                  ---------         ---------
             Net cash from financing activities                                     (38,119)          (10,315)
                                                                                  ---------         ---------

Change in cash and cash equivalents                                                    (450)          (69,522)

Cash and cash equivalents, beginning of period                                        8,088            75,612
                                                                                  ---------         ---------

Cash and cash equivalents, end of period                                          $   7,638         $   6,090
                                                                                  =========         =========

Supplemental disclosures of cash flow information:
Income taxes paid                                                                 $   7,439         $       1
Interest paid                                                                     $   9,782         $  11,718
</TABLE>


See accompanying notes to consolidated condensed financial statements.



<PAGE>

Union Acceptance Corporation and Subsidiaries
Consolidated Condensed Statement of Shareholders' Equity
For the Three Months Ended September 30, 1999
(Dollars in thousands, except per share data)
(Unaudited)


<TABLE>
<CAPTION>

                                            Number of Common Stock                    Accumulated
                                             Shares Outstanding                          Other                            Total
                                    -------------------------------------   Common   Comprehensive     Retained       Shareholders'
                                        Class A             Class B          Stock       Income        Earnings          Equity
                                    -----------------------------------------------------------------------------------------------

<S>                                  <C>                 <C>              <C>          <C>            <C>             <C>
Balance at June 30, 1999             5,099,344           8,150,266        $  58,452    $     199      $ 30,828        $     89,479

Comprehensive earnings:
  Net earnings                               -                   -                -            -         5,419               5,419
  Net unrealized gain on retained
     interest in securitized assets          -                   -                -        4,656             -               4,656
  Income taxes related to unrealized
    gain in securitized assets               -                   -                -      (1,761)             -              (1,761)
                                                                                                                 ------------------
Total comprehensive earnings                                                                                                 8,314

Stock options exercised                  2,272                   -               12            -             -                  12
                                    -----------------------------------------------------------------------------------------------

Balance at September 30, 1999        5,101,616           8,150,266        $  58,464     $  3,094      $ 36,247        $     97,805
                                    ===============================================================================================

</TABLE>


See accompanying notes to consolidated condensed financial statements.




<PAGE>




Union Acceptance Corporation and Subsidiaries
Notes to Consolidated Condensed Financial Statements
For the Three Months Ended September 30, 1999 and 1998
(Unaudited)

Note 1 - Basis of Presentation

         The forgoing consolidated condensed financial statements are unaudited.
However,  in the opinion of  management,  all  adjustments  necessary for a fair
presentation of the results of the interim period  presented have been included.
All  adjustments are of a normal and recurring  nature.  Results for any interim
period are not  necessarily  indicative  of results to be expected for the year.
The consolidated  condensed  financial  statements include the accounts of Union
Acceptance Corporation ("UAC") and its subsidiaries.

         During  fiscal  1995,  Union  Acceptance   Funding   Corporation,   UAC
Securitization  Corporation,  Performance  Funding  Corporation  and Performance
Securitization  Corporation  were formed as  wholly-owned  subsidiaries  of UAC.
During  fiscal  1996,  UAC Boat  Funding  Corp.  was  formed as a wholly-  owned
subsidiary  of UAC.  In fiscal  1997,  UAC Finance  Corporation  was formed as a
wholly-owned  subsidiary  of UAC.  Circle City Car Company and Union  Acceptance
Receivables  Corporation were formed as wholly-owned  subsidiaries of UAC during
the first and second quarters, respectively, of fiscal 1998.

         The  consolidated  condensed  interim  financial  statements  have been
prepared in accordance with Form 10-Q  specifications,  and,  therefore,  do not
include  all  information  and  footnotes  normally  shown in  annual  financial
statements.  A summary of the Company's  significant  accounting policies is set
forth in "Note 1" of the "Notes to  Consolidated  Financial  Statements"  in the
Company's Annual Report on Form 10-K for the year ended June 30, 1999.

         In determining  the fair value of the Retained  Interest in Securitized
Assets ("Retained Interest"),  the Company must estimate the future rates of net
credit losses and credit loss severity,  delinquencies and prepayments,  as they
impact the amount and timing of the estimated cash flows. The Company  estimates
prepayments  by  evaluating  historical  prepayment  performance  of  comparable
receivables and the impact of trends in the economy. The Company has used annual
prepayment  estimates ranging from 22.85% to 28.00% and 16.07% to 20.53% on Tier
I and Tier II  receivables,  respectively  at September  30,  1999.  The Company
estimates net credit losses and credit loss severity using available  historical
loss data for comparable  receivables  and the specific  characteristics  of the
receivables  purchased  by the Company.  The Company  used net credit  losses of
4.00%  to  6.47%  and  12.00%  to  15.29%  on Tier I and  Tier  II  receivables,
respectively, as a percentage of the original principal balance over the life of
the  receivables to value  Retained  Interest at September 30, 1999. The Company
determines the estimated fair value of its Retained  Interest by discounting the
expected  cash  flows  released  from the Trust  (the cash out  method)  using a
discount  rate  which  the  Company  believes  is  commensurate  with the  risks
involved. The Company used tiered discount rates based on a pool's specific risk
factors up to 900 basis points over the applicable  U.S.  Treasury Rate of 8.18%
to 14.60% and 11.68% to 15.46% on Tier I and Tier II  receivables,  respectively
at September 30, 1999. The weighted average discount rate used to value Retained
Interest at September 30, 1999 was 12.98%.

Note 2 - Reclassification

         Certain amounts for the prior period have been  reclassified to conform
to the current period presentation.

Note 3 - Retained Interest and Other Interest Income

         Retained  interest and other  interest  income  primarily  includes the
discount  accretion  recognized  on Retained  Interest,  the discount  accretion
related to the servicing asset,  interest earned on cash collection  accounts on
all securitization  transactions  before January 1, 1997, and interest earned on
cash and cash equivalents.


<PAGE>




Union Acceptance Corporation and Subsidiaries
Notes to Consolidated Condensed Financial Statements
For the Three Months Ended September 30, 1999 and 1998
(Unaudited)


Note 4 - Segment Information

         The Company has adopted Statement of Financial Accounting Standards No.
131 "Disclosures about Segments of an Enterprise and Related  Information ("SFAS
131")  effective  June 30,  1999.  SFAS 131  provides  new  guidance  on segment
reporting.  The Company  determined it has a single reportable  segment which is
acquiring,  securitizing  and  servicing  retail  automobile  installment  sales
contracts  originated by dealerships  affiliated with major domestic and foreign
automobile   manufacturers.   The  single  segment  was   determined   based  on
management's   approach  to  operating  decisions,   assessing  performance  and
reporting financial information.

Note 5 - Earnings Per Share

         Earnings  per Share  have been  computed  on the basis of the  weighted
average  number of common shares  outstanding  in accordance  with  Statement of
Financial  Standards  No. 128  "Earnings  per Share"  (EPS).  The following is a
reconciliation  of the weighted  average common shares for the basic and diluted
earnings per share computations:

                                                  Three Months Ended
                                                     September 30,
                                            ----------------------------
                                               1999              1998
                                            ----------        ----------
Basic EPS:
    Weighted average common shares          13,250,660        13,231,482
                                            ==========        ==========

Diluted EPS:
    Weighted average common shares          13,250,660        13,231,482
    Dilutive effect of stock options            44,886                --
                                            ----------        ----------
    Weighted average common and
         incremental shares                 13,295,546        13,231,482
                                            ==========        ==========



         The effect of stock options not exercised during the three months ended
September  30, 1999 are  dilutive  although  the effect on earnings per share is
less than  $.01.  The effect of stock  options  not  exercised  during the three
months ended September 30, 1998 are  anti-dilutive and therefore not included in
weighted average common shares.

Note 6 - Current Accounting Pronouncements

         In June 1998, the Financial Accounting Standards Board issued Statement
of  Financial   Accounting   Standards  No.  133,   "Accounting  for  Derivative
Instruments and Hedging Activities." The Statement, as amended, is effective for
fiscal years beginning after June 15, 2000,  with earlier  application  allowed.
Management is currently  assessing the impact,  if any, of this Statement on the
financial condition and operations of the Company upon adoption.



<PAGE>




Union Acceptance Corporation and Subsidiaries
Notes to Consolidated Condensed Financial Statements
For the Three Months Ended September 30, 1999 and 1998
(Unaudited)


Note 7 - Retained Interest in Securitized Assets

         Retained  Interest in  Securitized  Assets is recorded as an "available
for sale"  security  and is  recorded  at fair value with  unrealized  gains and
losses attributable to change in fair value, net of income taxes,  recorded as a
separate component of shareholders'  equity  ("accumulated  other  comprehensive
earnings").  Other  than  temporary  impairment  charges  are  recorded  through
earnings as a component of gain on sale of receivables, net.

Retained Interest in Securitized Assets is as follows (in thousands) at:
<TABLE>
<CAPTION>

                                                          September 30,          June 30,
                                                              1999                 1999
                                                          -----------          -----------
<S>                                                       <C>                  <C>
Estimated gross interest spread from receivables,
  net of estimated prepayments and fees                   $   268,900          $   248,687
Estimated dealer premium rebates refundable                    21,389               22,923
Estimated credit losses on securitized receivables           (107,422)            (104,448)
Spread accounts                                                62,238               69,757
Discount to present value                                     (50,642)             (46,054)
                                                          -----------          -----------
                                                          $   194,463          $   190,865
                                                          ===========          ===========

Outstanding balance of securitized receivables            $ 2,351,269          $ 2,256,415
                                                          ===========          ===========
Estimated credit losses as a percentage of
  securitized receivables serviced                               4.57%                4.63%
</TABLE>



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

General

         The  Company  derives  substantially  all  of  its  earnings  from  the
acquisition,  securitization and servicing of retail installment sales contracts
and installment  loan  agreements.  The retail  installment  sales contracts are
originated  by   dealerships   affiliated   with  major   domestic  and  foreign
manufacturers  and the loan agreements are originated by the Company as a result
of referrals by the  dealerships.  To fund the acquisition of these  receivables
prior to  securitization,  the  Company  utilizes a revolving  warehouse  credit
facility,    discussed   in   "Liquidity   and   Capital   Resources."   Through
securitizations, the Company periodically pools and sells receivables to a trust
which issues  Securities  to investors  representing  pro-rata  interests in the
receivables sold or notes  representing the indebtedness of the trust secured by
the receivables sold. When the Company sells receivables in a securitization, it
records  a gain  (or  loss)  on sale of  receivables  and  establishes  Retained
Interest in Securitized  Assets ("Retained  Interest") as an asset.  Excess cash
flows are recorded  against  Retained  Interest as received over the life of the
related securitization.

         Acquisition  Volume. The Company currently  acquires  receivables in 35
states from over 4,200  manufacturer-franchised  auto  dealerships.  The Company
focuses its efforts on acquiring receivables on late model used and, to a lesser
extent,  new  automobiles  made to  purchasers  who exhibit a  favorable  credit
profile ("Tier I"). Total  receivable  acquisitions  were $330.3 million for the
quarter  ended  September 30, 1999,  compared to $368.7  million for the quarter
ended June 30,  1999,  and $404.5  million  for the same  quarter of last fiscal
year. Receivable acquisitions for the quarter ended September 30, 1998, were the
highest  they have been in the history of the  Company.  The  Company's  primary
focus is on acquiring high quality, profitable receivables. The Company operated
in a relatively favorable interest rate environment during the prior fiscal year
which  contributed  to higher  acquisition  volume.  During the first quarter of
fiscal  2000,  the  Company  experienced  pricing  pressures  due to  increasing
treasury rates and as a result experienced lower receivable acquisitions.  See -
"Discussion of Forward-Looking Statements".

         Gross and Net Spreads.  The gross and net spreads on the first  quarter
securitization  of fiscal 2000 were 7.09% and 6.20% compared to 7.26% and 5.15%,
respectively, over the same quarter of last year. Gross spread is defined as the
difference between the weighted average receivable rate and the rate born by the
related  asset-backed  securities.  Net spread is defined as gross  spread  less
servicing fees, upfront costs,  ongoing credit enhancement and trustee fees, and
hedging gains or losses.

         Net spreads are currently targeted at 5.50% to 6.00% on securitizations
(assuming  a  pricing  spread  for  asset-backed  securities  over the  two-year
treasury note of 100 basis points) for the  remaining  three  quarters of fiscal
2000.  Management  believes that by targeting a spread of 7.00% to 7.50% between
receivable  rates and the two-year  treasury  rate that these net spreads can be
achieved.  Although management believes these spreads can be achieved,  material
factors  affecting  the net  spreads  are  difficult  to predict and could cause
management's  projections  to be materially  inaccurate.  These include  current
market  conditions  with respect to interest  rates and demand for  asset-backed
securities  generally and for securities issued in securitizations  sponsored by
the Company. See - "Discussion of Forward-Looking Statements".

         Gain on Sales of Receivables, Net and Interest Rate Risk. Gain on sales
of  receivables  continues  to be a  significant  element of the  Company's  net
earnings. The gain on sales of receivables is affected by several factors but is
primarily affected by the amount of receivables securitized, the net spread, and
the level of estimation for net credit losses.

         The  Company's  sources  for funds  generally  have  variable  rates of
interest,  and its  receivable  portfolio  bears  interest at fixed  rates.  The
Company  therefore  bears  interest  rate  risk on  receivables  until  they are
securitized  and employs a hedging  strategy to mitigate this risk.  The Company
uses a hedging  strategy  that  primarily  consists of the  execution of forward
interest rate swaps having a maturity  approximating the average maturity of the
receivable  production  during the relevant  period.  There is no assurance that
this strategy will  completely  offset changes in interest rates. In particular,
such strategy depends on management's estimates of receivable acquisition volume
and timing of its  securitizations.  The Company  realizes a gain on its hedging
transactions  during periods of increasing interest rates and realizes a loss on
such transactions  during periods of decreasing interest rates. The hedging gain
or loss will in part offset changes in interest rates as reflected by a lower or
higher  reported  gain on sales of  receivables,  respectively.  Recognition  of
unrealized gains or losses is deferred until the sale of receivables  during the
securitization.  On the date of the sale,  deferred hedging gains and losses are
recognized as a component of the gain on sales of receivables, net.

         Portfolio Performance. The Company has seen stabilization of net credit
losses during the last three  quarters.  Tier I net credit losses  totaled 1.97%
for the quarter ended  September  30, 1999,  compared to 1.96% and 2.78% for the
quarters ended June 30, 1999 and September 30, 1998,  respectively.  The Company
attributes the improvement to the  implementation of tighter credit standards in
March  1997  and  strategic  changes  made  in its  origination  and  collection
departments.  Delinquency  on the  Tier I  automobile  portfolio  was  3.18%  at
September  30, 1999,  compared to 2.63% and 3.05% at June 30, 1999 and September
30, 1998, respectively.  Management believes that the increase in delinquency is
a result of several factors,  including inefficiencies in the collection process
and general seasonality experienced in the portfolio. Recoveries as a percentage
of gross  charge-offs on the Tier I portfolio  decreased  slightly to 41.12% for
the quarter ended  September 30, 1999,  compared to 41.50% for the quarter ended
June 30, 1999, and increased from 38.67% for the same quarter of last year. This
increase  over the prior year is primarily due to an increase in the retail sale
of  repossessed  vehicles at the  Company's  new car  franchised  dealership  in
Indianapolis  for the quarter ended September 30, 1999,  compared to the quarter
ended September 30, 1998. This method of disposing of  repossessions  along with
stricter  monitoring of the  repossession and resale process should increase the
recovery rate over time. Recovery rates for repossessed  automobiles sold by the
Company's  retail  operation are  significantly  higher than  recovery  rates on
vehicles sold at auction. Approximately 15% of repossessed automobiles were sold
at the Company's  retail  operation  during the three months ended September 30,
1999,  compared to  approximately  9% for the three months ended  September  30,
1998. For those  automobiles  sold at retail during the quarter ended  September
30, 1999, the net proceeds received were  approximately 58% of the percentage of
the gross charge-off amount. See "Discussion of Forward-Looking Statements".

         Provisions are made for estimated net credit losses in conjunction with
each  receivable  sale. The current  assumption  utilized in the gain on sale of
receivables calculation for estimated net credit losses on the fiscal 2000 first
quarter  securitization  was 4.50% over the life of the pool based on a combined
sale of Tier I, Tier II and modified receivables. Estimated net credit losses as
a percentage of securitized receivables serviced (inherent in Retained Interest)
was 4.57% at September  30, 1999,  compared to 4.63% and 4.64% at June 30, 1999,
and September 30, 1998, respectively.


<PAGE>




         Tier I Portfolio. Set forth below is certain information concerning the
Company's  experience  pertaining to delinquencies  and net credit losses on the
Tier I fixed rate retail automobile, light truck and van receivables serviced by
the Company.  There can be no assurance that future  delinquency  and net credit
loss experience on receivables will be comparable to that set forth below.
See "Discussion of Forward-Looking Statements".

<TABLE>
<CAPTION>
                                                          Tier I Delinquency Experience
                                ------------------------------------------------------------------------------------

                                 At September 30, 1999         At June 30, 1999           At September 30, 1998
                                -----------------------  ---------------------------    ----------------------------
                                                               (Dollars in thousands)
                                Number of                   Number of                      Number of
                               Receivables     Amount      Receivables      Amount        Receivables      Amount
                               ----------   ------------   -----------    ----------      -----------    -----------
<S>                              <C>         <C>             <C>          <C>               <C>          <C>
Servicing portfolio              217,296     $2,530,654      213,746      $2,464,371        194,882      $2,151,695
Delinquencies:
  30-59 days                       4,714         50,734        3,962          41,475          3,741      $   38,040
  60-89 days                       1,955         20,439        1,614          16,654          1,873          19,652
  90 days or more                    875          9,291          670           6,754            793           7,966
                                ---------   ------------  -----------    ------------      ---------     -----------
Total delinquencies                7,544         80,464        6,246          64,883          6,407      $   65,658
                                =========   ============  ===========    ============      =========     ===========
Delinquency as a percentage
  of servicing portfolio           3.47%          3.18%        2.92%           2.63%          3.29%           3.05%
</TABLE>




         As  indicated  by  the  above  table,   delinquency  rates  based  upon
outstanding receivable balances of accounts 30 days past due and over were 3.18%
at  September  30,  1999,  compared  to  2.63% at June 30,  1999,  and  3.05% at
September 30, 1998, for the Company's Tier I servicing portfolio.
<TABLE>
<CAPTION>
                                                                    Tier I Credit Loss Experience
                                                                     For the Three Months Ended
                                        -----------------------------------------------------------------------------------------
                                            September 30, 1999             June 30, 1999                   September 30, 1998
                                        -------------------------   ----------------------------      ---------------------------
                                                                      (Dollars in thousands)

                                         Number of                   Number of                        Number of
                                        Receivables     Amount      Receivables        Amount         Receivables       Amount
                                        -----------     ------      -----------        ------         -----------       ------
<S>                                      <C>           <C>            <C>             <C>               <C>            <C>
Average servicing portfolio              216,508       $2,515,461     211,533         $2,424,663        190,877        $2,088,163

Gross charge-offs                          2,003       $   21,088       1,829         $   20,308          2,196        $   23,651
Recoveries                                                  8,671                          8,428                            9,146
                                                      ------------                   ------------                     -----------
  Net charge-offs                                      $   12,417                     $   11,880                       $   14,505
                                                      ============                   ============                     ===========

Gross charge-offs as a percentage
  of average servicing portfolio (1)       3.70%            3.35%       3.46%              3.35%          4.60%             4.53%
Recoveries as a percentage of
  gross charge-offs                                        41.12%                         41.50%                           38.67%
Net charge-offs as a percentage
  of average servicing portfolio (1)                        1.97%                          1.96%                            2.78%
</TABLE>
(1) Annualized


         As indicated in the above table,  net credit  losses on the Tier I auto
portfolio  totaled $12.4  million for the quarter  ended  September 30, 1999, or
1.97%  (annualized) as a percentage of the average servicing  portfolio compared
to 1.96% and 2.78% for the quarters ended June 30, 1999, and September 30, 1998,
respectively.

Results of Operations

         Net earnings  increased  163.4% to $5.4  million,  or $0.41 per diluted
share,  for the quarter ended September 30, 1999,  compared to $2.1 million,  or
$0.16 per diluted share,  for the quarter ended September 30, 1998. The increase
in net earnings for the quarter ended  September 30, 1999 was primarily  related
to a higher gain on sale of receivables, net and a lower amount of provision for
estimated credit losses.

         Net  interest  margin  after  provision  for  estimated  credit  losses
increased  47.3% to $6.6  million  for the quarter  ended  September  30,  1999,
compared to $4.5 million for the quarter ended  September 30, 1998. The increase
was primarily  related to a lower  provision for estimated  credit losses in the
first quarter of fiscal 2000 compared to the same quarter of the previous fiscal
year.

         Interest on  receivables  held for sale  decreased 1.3% to $8.1 million
for the quarter ended September 30, 1999,  compared to $8.3 million for the same
period of fiscal 1999. The decrease in interest on receivables held for sale was
primarily  a  result  of a  decrease  in  the  average  outstanding  balance  of
receivables held for sale for the quarter to $239.0 million,  compared to $256.1
million for the quarter ended September 30, 1998.

         Retained  interest and other  interest  income  increased  1.7% to $5.7
million for the quarter ended September 30, 1999, respectively, compared to $5.6
million for the quarter ended September 30, 1998.  Other interest income related
to discount accretion was $5.4 million for the quarter ended September 30, 1999,
compared to $5.1 million for the quarter ended  September 30, 1998. The discount
component of Retained  Interest  increased at June 30, 1998 by implementing  the
"cash out" method and again at June 30, 1999 by  increasing  the  discount  rate
used to  record  the gain on sale of  receivables.  (Discussed  in detail in the
Company's  Annual Report on Form 10-K for fiscal 1999).  The resulting effect of
this increase was an increase in the amount of the discount.  However,  due to a
Retained Interest  valuation policy change in the second quarter of fiscal 1999,
the accretion of the discount was reduced on some pools that were  determined to
be at risk for an other than temporary impairment. Other interest income related
to the  restricted  cash  accounts  (collection  and  spread  accounts)  for the
quarters  ended  September  30,  1999,  and 1998  were  $357,000  and  $522,000,
respectively.

         Interest  expense  decreased 7.6% to $6.6 million for the quarter ended
September 30, 1999, compared to $7.1 million for the quarter ended September 30,
1998. The decrease was a result of lower long-term debt interest expense related
to the required second principal  payment of $22.0 million on Senior Debt during
August  1999 as well as lower  average  warehouse  borrowing  needs due to lower
receivable acquisitions.

         Provision for estimated  credit losses  decreased 67.7% to $750,000 for
the quarter ended  September 30, 1999,  compared to $2.3 million for the quarter
ended  September 30, 1998. The decrease is primarily due to a smaller  portfolio
of Tier II and modified  receivables  as well as improved  credit quality on the
new receivables acquired.

         Gain on sales of receivables,  net increased 141.3% to $6.5 million for
the quarter ended  September 30, 1999,  compared to $2.7 million for the quarter
ended September 30, 1998. The gain for the quarters ended September 30, 1999 and
1998, consisted of gains on securitization transactions of $6.8 million and $6.2
million  offset by charges  for other than  temporary  impairments  of  Retained
Interest  of  $240,000  and  $3.5  million,  respectively.  Unrealized  gains on
Retained  Interest  are not  charged to income.  (See -  Financial  Condition  -
"Retained  interest  in  securitized   assets,"  below).  The  increase  in  the
securitization  transaction  gain  relates  to a higher  volume  of  receivables
securitized  offset by a higher discount rate assumption used in the fiscal 2000
first  quarter  securitization   compared  to  the  fiscal  1999  first  quarter
securitization.  The  receivables  sold in the  securitization  for the quarters
ended  September  30,  1999 and 1998,  of $364.8  million  and  $351.4  million,
respectively, primarily included receivable acquisitions for the months of June,
July and August of 1999 and 1998, respectively.


<PAGE>



         Information  relating  to  the  first  quarter  fiscal  2000  and  1999
securitizations is in the following table.


<TABLE>
<CAPTION>
First Quarter Securitizations                                       Fiscal
                                                    ------------------------------------------
                                                       2000                            1999
                                                       ----                            ----
                                                     1999 - C                        1998 - C
<S>                                                   <C>                             <C>
Volume (in millions)                                  $364.8                          $351.4
Weighted average receivable rate                      13.31%                          12.81%
Certificate rate                                       6.22%                           5.55%
Gross spread                                           7.09%                           7.26%
Net spread                                             6.20%                           5.15%
Weighted average life (in years)                       1.95                            2.06
Credit loss assumption                                 4.50%                           4.40%
Annual prepayment speed assumption                    28.00%                          25.00%
Discount rate assumption                              14.66%                           9.58%
Weighted average remaining maturity (in months)        71.1                            68.8
</TABLE>


         Servicing  fees  increased  22.5% to $6.1 million for the quarter ended
September 30, 1999, compared to $5.0 million for the quarter ended September 30,
1998.  The  increase in  servicing  fees is a result of the  increase in average
securitized receivables by 22.5% to $2.3 billion for the first quarter of fiscal
2000,  compared to $1.9 billion for the first quarter of fiscal 1999.  Servicing
fees  consist  primarily  of  contractual  servicing  fees  of  1.0%  on  Tier I
securitizations.

         Late  charges and other fees  increased  24.7% to $1.5  million for the
quarter ended September 30, 1999, compared to $1.2 million for the quarter ended
September 30, 1998.  Other fees consist  primarily of late charges and other fee
income and the gross  profit  from the  dealership  sales.  The  increase in the
current quarter resulted  primarily from the dealership gross profit on sales of
$324,000 but was offset by a decrease in other fee income  related to a decrease
in  receivable  acquisitions  and  the use of a  higher  percentage  of  generic
contracts.

         Salaries and benefits expense increased 22.2% to $6.9 million from $5.7
million for the quarters ended  September 30, 1999 and 1998,  respectively,  and
was primarily related to performance based incentives.

         Other  general  and  administrative  expense  increased  13.7%  to $4.9
million for the quarter ended  September 30, 1999,  compared to $4.3 million for
the quarter ended September 30, 1998. Other operating expense includes occupancy
and equipment costs,  outside and professional  services,  receivable  expenses,
promotional  expenses,  travel,  office  supplies  and  other.  Total  operating
expenses  (including  salaries  and  benefits)  as a  percentage  of the average
servicing  portfolio  was 1.85% for the quarters  ended  September  30, 1999 and
1998, and continues to be below the industry average.

Financial Condition

         Receivables  held for sale,  net and servicing  portfolio.  Receivables
held for sale, net includes the principal  balance of receivables held for sale,
net of  unearned  discount  and  allowance  for  estimated  net  credit  losses,
receivables in process, and prepaid dealer premiums.  The Company's portfolio of
receivables  held for sale,  net  decreased to $230.2  million at September  30,
1999,  from $267.3 million at June 30, 1999. The decrease was primarily due to a
higher volume of Tier I receivables  securitized  compared to Tier I receivables
acquired in the current quarter resulting from lower receivable  acquisitions in
the first quarter of fiscal 2000 compared to the fourth  quarter of fiscal 1999.
Allowance for net credit losses on receivables held for sale was $2.9 million at
September  30,  1999,  compared to $2.8  million at June 30,  1999.  The Company
serviced $2.4 billion and $2.3 billion in securitized receivables, and the total
servicing  portfolio was $2.6 billion and $2.5 billion as of September 30, 1999,
and June 30, 1999, respectively.

         Retained interest in securitized assets ("Retained Interest"). Retained
Interest  increased $3.6 million to $194.5  million at September 30, 1999,  from
$190.9  million at June 30, 1999.  The Retained  Interest  balance  increased or
decreased by the amounts  capitalized  upon  consummation  of the first  quarter
securitization   including   estimated  dealer  premium  rebates,   collections,
accretion of discount,  change in spread accounts,  impairment and net change in
unrealized  gain. The Company's  collections are the receipt of the net interest
spread.

The  following  table  illustrates  the  components  of the increase in Retained
Interest:

Amounts capitalized (including estimated dealer rebates)            $ 14,822
Collections                                                         (13,492)
Accretion of discount                                                  5,371
Change in spread accounts                                            (7,519)
Impairment                                                             (240)
Net change in unrealized gain                                         4,656
                                                                 ----------
  Increase in Retained Interest                                  $    3,598
                                                                 ==========


         Allowance for net credit losses on securitized  receivables is included
as a component of Retained  Interest.  At  September  30,  1999,  the  allowance
related  to both  Tier I and  Tier II  securitized  receivables  totaled  $107.4
million  or 4.57% of the total  securitized  receivable  portfolio  compared  to
$104.4 million or 4.63% at June 30, 1999. The Company's  assumptions for valuing
Retained  Interest  on a "cash out" basis at  September  30,  1999,  include the
Company's  latest  estimates  for net credit  losses of 4.00% to 6.47% on Tier I
receivables  and  12.00% to 15.29% on Tier II  receivables  as a  percentage  of
original  principal  balance  over the life of  receivables,  annual  prepayment
estimates  ranging  from  22.85% to 28.00% on Tier I  receivables  and 16.07% to
20.53% on Tier II receivables and discount rates ranging from 8.18% to 14.60% on
Tier I  receivables  and 11.68% to 15.46% on Tier II  receivables.  The weighted
average discount rate used to value Retained  Interest at September 30, 1999 was
12.98%.  Impairment of Retained Interest,  an  available-for-sale  security,  is
measured on a disaggregate (pool by pool) basis in accordance with SFAS 115. See
- "Discussion of Forward-Looking Statements".

         Amounts due under  revolving  warehouse  credit  facility and long-term
debt. The balance of the revolving  warehouse credit facility and the Senior and
Senior  Subordinated Notes was $346.8 million at September 30, 1999, compared to
$384.5  million at June 30, 1999.  The decrease in  borrowings  was related to a
required  principal payment on the Company's Senior Note in August 1999 of $22.0
million  and a decrease  in  acquisition  volume for the period  after the first
quarter  securitization  through September 30, 1999, compared to the same period
ended September 30, 1998.

         Current and deferred income taxes payable.  Current and deferred income
taxes payable was $14.1 million at September 30, 1999, compared to $16.0 million
at June 30, 1999.  The  decrease is  primarily a result of an extension  payment
made  during the  quarter  ended  September  30,  1999 for the  fiscal  1999 tax
liability offset by the payable associated with current period income.

Liquidity and Capital Resources

         Sources and Uses of Cash in Operations. The Company's business requires
significant  amounts of cash to support  operations.  Its  primary  uses of cash
include (i) acquisition of receivables,  (ii) payment of dealer premiums,  (iii)
securitization  costs  including  cash held in spread  accounts and similar cash
collateral accounts under the revolving warehouse credit facility, (iv) servicer
advances of  payments  on  securitized  receivables  pursuant to  securitization
trusts,  (v) losses on hedging  transactions  realized  in  connection  with the
closing of securitization transactions where interest rates have declined during
the period  covered by the hedge,  (vi)  operating  expenses,  (vii)  payment of
income taxes, and (viii) interest  expense.  The Company's  sources of cash from
operations include (i) standard servicing fees,  generally 1.0% per annum of the
Tier I securitized  portfolio,  (ii) future  servicing cash flows,  (iii) dealer
premium rebates,  (iv) gains on hedging transactions realized in connection with
the closing of securitization  transactions  where interest rates have increased
during the periods  covered by the hedge,  (v) interest income and (vi) sales of
receivables  in  securitization  transactions  and (vii)  proceeds  from sale of
interest-only strips in conjunction with securitization  transactions.  Net cash
from operating  activities increased to $17.2 million for the three months ended
September 30, 1999,  from net cash from operating  activities of ($69.5) million
for the three  months ended  September  30,  1998.  The  increase was  primarily
attributable to an increase in receivables  securitized  relative to receivables
acquired. Net cash from investing activities was $20.5 million and $10.3 million
for the three  months ended  September  30, 1999,  and 1998,  respectively.  The
increase over prior year relates to higher  collections on Retained Interest and
change in spread  accounts due to lower net credit losses and the release of the
1995B  spread  account of  approximately  $7.0 million due to  repurchasing  the
remaining receivables from this securitization.

         Derivative  financial  instruments.   Derivative  financial  instrument
transactions  may  represent  a source  or a use of cash  during a given  period
depending on the change in interest  rates. In the first quarter of fiscal 2000,
derivative financial instrument  transactions  provided a source of cash of $3.0
million,  compared to a use of cash of $5.2 million  during the first quarter of
fiscal 1999.

         Financing Activities.  Net cash from financing activities for the three
months ended September 30, 1999, was ($38.1)  million  compared to net cash from
financing activities of ($10.3) million for the three months ended September 30,
1998.  The decrease was a result of a decrease in warehouse  borrowings  for the
period  after the first  quarter  securitization  through  September  30,  1999,
compared to the same period ended September 30, 1998.

         The Company has substantial capital requirements to support its ongoing
operations  and  anticipated  growth.  The  Company's  sources of liquidity  are
currently  funds  from  operations,  securitization  transactions  and  external
financing  including long-term debt and the revolving warehouse credit facility.
Historically, the Company has used the securitization of receivable pools as its
primary source of long-term funding.  In August 1999, the Company established an
additional  source of  liquidity  through a  securitization  arrangement  with a
commercial  paper  conduit  which will be available for future use as management
deems appropriate.  Such facility has a capacity of $250.0 million, all of which
is  currently  available.  Securitization  transactions  enable  the  Company to
improve its liquidity, to recognize gains from the sales of the receivable pools
while  maintaining  the  servicing  rights to the  receivables,  and to  control
interest  rate risk by matching the repayment of amounts due to investors in the
securitizations with the actual cash flows from the securitized assets.  Between
securitization  transactions,  the Company  relies  primarily  on the  revolving
warehouse credit facility to fund ongoing receivable acquisitions (not including
dealer premiums).  In addition to receivable  acquisition  funding,  the Company
also  requires  substantial  capital on an ongoing basis to fund the advances of
dealer  premiums,  securitization  costs,  servicing  obligations and other cash
requirements  previously  described.  The Company's  ability to borrow under the
revolving  warehouse  credit  facility is dependent upon its compliance with the
terms  and  conditions  thereof.  The  Company's  ability  to  obtain  successor
facilities  or  similar  financing  will  depend on,  among  other  things,  the
willingness  of financial  institutions  to  participate  in funding  automobile
financing  business  and  the  Company's  financial  condition  and  results  of
operations.   Moreover,  the  Company's  growth  may  be  inhibited,   at  least
temporarily,  if the Company is not able to obtain  additional  funding  through
these or other  facilities,  or if it is unable to  satisfy  the  conditions  to
borrowing  under  the  revolving   warehouse   credit   facility.   The  Company
consistently  assesses its long-term receivable funding arrangements with a view
to optimizing cash flows and reducing costs. The Company has several options for
funding including,  but not limited to, a public asset backed securitization,  a
sale into the recently  closed  commercial  paper  facility,  a private sale, or
temporarily  holding the receivables.  The Company  continues to evaluate market
conditions  and available  liquidity and could decide to alter the timing of its
securitizations  in the future  depending  on the  Company's  cash  position and
available short-term funding.

         Warehouse  facility.  The Company has  borrowing  arrangements  with an
independent  financial  institution  for a $500.0  million  revolving  warehouse
credit  facility  that is  insured  by a surety  bond  provider  to fund  Tier I
receivable  acquisitions.  At September 30, 1999, $169.8 million of the capacity
was utilized,  and an additional  $54.1 million was available to borrow based on
the outstanding principal balance of eligible receivables. At June 30, 1999, and
September  30,  1998,  $185.5  million  and $84.8  million of the  capacity  was
utilized,  and an  additional  $67.2  million and $62.6 million was available to
borrow  based on the  outstanding  principal  balance of  eligible  receivables,
respectively.

         Long-term debt. The Company issued $110.0 million of 8.53% Senior Notes
due August 1, 2002, in connection  with the Company's  initial public  offering.
Interest on the Notes is payable  semiannually,  and  principal  payments  began
August 1, 1998, and are due on each subsequent  August 1, in the amount equal to
approximately 20% of the stated original principal balance. A required principal
payment  was made on the Senior  Notes in August  1998 and August  1999 of $22.0
million.  In April 1996,  the Company  completed  a private  placement  of $46.0
million of 9.99% Senior  Subordinated  Notes due March 30, 2003,  with  interest
payable  quarterly  and principal  due at maturity.  In March 1997,  the Company
issued $65.0  million of Senior  Notes due  December  27,  2002.  The Notes were
issued as "Series A" in the principal  amount of $50.0 million at 7.75% interest
and  "Series B" in the  principal  amount of $15.0  million  at 7.97%  interest.
Interest on the Notes is payable  semiannually  and a  principal  payment is due
March 15,  2002,  in the  amount  equal to  approximately  33 1/3% of the stated
original balance, with the remaining principal due at maturity.

         The Company's credit agreements, among other things, require compliance
with  monthly  and  quarterly  financial  maintenance  tests  and  restrict  the
Company's ability to create liens, incur additional indebtedness,  sell or merge
assets and make investments. The Company is in compliance with all covenants and
restrictions imposed by the terms of indebtedness.

         Based on current cash flow  projections,  management  believes that the
Company's  existing capital resources,  the revolving  warehouse credit facility
described above,  future earnings,  expected growth in receivable  acquisitions,
and periodic  securitization of receivables should provide the necessary capital
and liquidity for its operations  through at least the next twelve  months.  The
period  during  which  its  existing  capital  resources  will  continue  to  be
sufficient will,  however,  be affected by the factors described above affecting
the  Company's  cash  requirements.  A number of these  factors are difficult to
predict,  particularly  including the cash effect of hedging  transactions,  the
availability of outside credit enhancement in securitizations or other financing
transactions   and  other   factors   affecting   the  net  cash   provided   by
securitizations.   Depending  on  the  Company's   ongoing  cash  and  liquidity
requirements,  market conditions and investor interest,  the Company may seek to
issue  additional  debt or  equity  securities  in the  near  term.  The sale of
additional  equity,  including  Class A Common Stock or preferred  stock,  would
dilute the interests of current shareholders.

Discussion of Forward-Looking Information

         The above  discussions  and notes to consolidated  condensed  financial
statements contain forward-looking  statements made by the Company regarding its
results of  operations,  effects of changes in  accounting  policies,  cash flow
needs and liquidity,  receivable  acquisition volume, target spreads,  potential
credit losses,  recovery rates,  prepayment rates,  servicing income,  Year 2000
compliance,   and  other  aspects  of  its  business.   Similar  forward-looking
statements  may be made by the Company from time to time.  Such  forward-looking
statements are subject to a number of important factors that cannot be predicted
with  certainty  and which could  cause such  forward-looking  statements  to be
materially  inaccurate.  Such factors include,  for example,  demand for new and
used autos,  competition,  and consumer credit and delinquency  trends.  See the
"Discussion of Forward-Looking  Information" under "Management's  Discussion and
Analysis of Financial  Condition  and Results of  Operations"  in the  Company's
Annual Report on Form 10-K for fiscal 1999 which is incorporated  herein by this
reference.

Year 2000 Compliance

         During  the  year  ended  June  30,  1997,  the  Company  began  a risk
evaluation of potential Year 2000 issues. The outcome of this evaluation was the
formation of a Year 2000  Committee  that  consists of officers and employees of
the  Company.  The  purpose of this  committee  is to assess all risks,  analyze
current  systems  including  information  technology  ("IT") and non-IT systems,
coordinate  upgrades  and  replacements,  and report the current  and  projected
status of all known Year 2000 compliance issues.

         During the assessment  phase,  over thirty  service  bureaus and system
vendors   which   include  third  parties  which  the  Company  has  a  material
relationship  were  identified  that  performed or supplied  potential Year 2000
compliance  issues.  The list included  eight service  bureaus,  seven  software
vendors,  seven hardware  vendors,  one electric  company,  six  maintenance and
supplies companies and four telecommunications  companies. Once the systems were
identified,  an  immediate  correspondence  was  established  for the purpose of
educating  the  Company  on known  Year  2000  issues  or Year  2000  compliance
certification.

         The systems  identified were put through one of two possible phases. If
the  vendor  provided  proof that the system in  question  had proper  Year 2000
compliance  certification  and a testing  cycle  was  possible,  an  appropriate
testing cycle was performed. If the testing cycle failed or the system had known
Year 2000 issues, a mission critical evaluation and replacement  recommendations
were performed.

         At this time,  all known  mission  critical  systems  have been  either
replaced  or  upgraded  with Year 2000  compliant  solutions.  The last of these
upgrades  was  performed  in March  1999,  as  scheduled.  The  Company has been
re-testing all systems and plans on completing these tests by November 15, 1999.
Beginning  October 1, 1999,  the  Company  entered a "quiet  period" on in-house
development and  implementations  that will last through  December 31, 1999. The
purpose  of the  "quiet  period"  is to  eliminate  any new Year 2000  issues by
blocking any new software or hardware installations or upgrades except as may be
necessary to correct a Year 2000 problem.

         The replacement or remediation  costs for Year 2000  compliance  issues
with the  Company  is  estimated  to be less than  $100,000,  which the  Company
recognized as incurred.  This estimated cost is mostly due to software  upgrades
that include new features which are combined with Year 2000 corrections.

         The  Company  estimates  that the worst case Year 2000  issue  scenario
would be discontinuance  of electrical power.  Although the Company has numerous
power backup  devices,  a long-term  power outage would have a material  adverse
effect on the Company's  operations.  Although the  discontinuance of electrical
power is possible,  the Company  believes the likelihood of such an outage to be
remote. The Company continuously  monitors the status of its Year 2000 plan and,
based on such information,  will develop  contingency plans as necessary.  See -
"Discussion of Forward-Looking Statements".



<PAGE>



Item 3.  Quantitative and Qualitative Disclosures About Market Risk

         The Company  bears the primary risk of loss due to credit losses in its
servicing portfolio.  Credit loss rates are impacted by general economic factors
that affect  customers'  ability to  continue  to make timely  payments on their
indebtedness.  Prepayments on receivables in the servicing  portfolio reduce the
size of the  portfolio and reduce the Company's  servicing  income.  The gain on
sales of receivables in connection with each securitization  transaction and the
amount of Retained Interest  recognized in each transaction  reflect  deductions
for estimates of future defaults and prepayments. The carrying value of Retained
Interest may be adjusted  periodically to reflect  differences between estimated
and actual  net  credit  losses and  prepayments  on past  Securitizations.  For
example,  if net credit  losses  increased or decreased by 100 basis points on a
$300.0 million  Securitization,  the gain on sale would result in a reduction or
an increase of the Gain (Loss) on Sales of  Receivables  by  approximately  $3.0
million pre-tax, before consideration of discounting.  The same 100 basis points
increase or decrease  would result in a reduction or an increase of the Retained
Interest of approximately  $24.0 million,  before  consideration of discounting,
based on a  securitized  receivable  portfolio of $2.4 billion at September  30,
1999. The forgoing examples are developed utilizing the cash flow model employed
by management  to calculate the fair value of Retained  Interest by changing the
credit loss assumption as described.  The Company does not believe  fluctuations
in interest rates materially affect the rate of prepayments on receivables.

         The  Company's  sources  of  funds  generally  have  variable  rates of
interest,  and its  receivable  portfolio  bears  interest at fixed  rates.  The
Company  therefore  bears  interest  rate  risk on  receivables  until  they are
securitized and employs derivative financial  instruments to mitigate this risk.
The Company uses a hedging strategy that primarily  consists of the execution of
forward interest rate swaps having a maturity approximating the average maturity
of the receivable  production during the relevant period.  There is no assurance
that this  strategy  will  completely  offset  changes  in  interest  rates.  In
particular,  such  strategy  depends on  management's  estimates  of  receivable
acquisition  volume and timing of its  Securitizations.  The Company  realizes a
gain on its hedging transactions during periods of increasing interest rates and
realizes  a loss on such  transactions  during  periods of  decreasing  interest
rates. The hedging gain or loss should  substantially offset changes in interest
rates  as seen by a lower or  higher  reported  gain on  sales  of  receivables,
respectively.  Recognition  of unrealized  gains or losses is deferred until the
sale of receivables during the Securitization. On the date of the sale, deferred
hedging  gains and losses are  recognized as a component of Gain (Loss) on Sales
of Receivables.  Increases or decreases in interest rates reduce or increase the
fair value of long-term debt,  respectively.  At September 30, 1999, the Company
had an unrealized  hedging loss on forward interest rate swaps of $289,000 based
on notional amounts outstanding of $371.2 million.


<PAGE>

         The following  table presents the principal cash repayments and related
weighted  average  interest rates by maturity date for the current variable rate
and long-term debt at September 30, 1999.

<TABLE>
<CAPTION>
                                           Nine months
                                           ended June
                                            30, 2000      2001           2002          2003           Total        Fair Value
                                            --------      ----           ----          ----           -----        ----------
                                                                       (Dollars in thousands)
<S>                                        <C>         <C>            <C>          <C>               <C>            <C>
Amounts due under warehouse facility       $169,800    $    --        $    --      $        --       $169,800       $169,800
   Weighted average variable rate              5.12%

Long-term debt                             $     --    $22,000        $43,667      $   111,333       $177,000       $155,655
   Weighted average fixed rate                 0.00%      8.53%          8.14%            8.86%          8.64%
</TABLE>

Sensitivity analysis on Retained Interest

At September  30, 1999,  key economic  assumptions  and the  sensitivity  of the
current fair value of Retained Interest to immediate 10% and 20% adverse changes
in assumed economics is as follows:


<TABLE>
<CAPTION>
Amounts as of September 30, 1999                               Tier I               Tier II           Total
                                                               ------               -------           -----
<S>                                                          <C>                    <C>             <C>
Fair value of retained interest                              192,750,243            7,656,367       200,406,609

Prepayment speed assumption (annual rate)                   22.50%-28.00%        16.07% - 20.53%

Impact on fair value of 10% adverse change                   186,947,223            7,599,313       194,546,536
Impact on fair value of 20% adverse change                   181,451,225            7,543,699       188,994,924


Net loss rate assumption (pool life rate)                   4.00% - 6.47%        12.00%-15.29%

Impact on fair value of 10% adverse change                   174,407,614            6,473,988       180,881,602
Impact on fair value of 20% adverse change                   155,870,532            5,275,948       161,146,480


Discount rate assumption (annual rate)                     8.18% - 14.60%       11.68% - 15.46%

Impact on fair value of 10% adverse change                   188,467,785            7,506,680       195,974,465
Impact on fair value of 20% adverse change                   184,380,313            7,362,158       191,742,471
</TABLE>



Part II. Other Information

Item 6.  Exhibits and Reports on Form 8-K

                  Exhibit 27 -  Financial Data Schedule

         (b)  Reports on Form 8-K

                  The  Company  filed no reports on Form 8-K during the  quarter
                  ended September 30, 1999.





<PAGE>




Signatures

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  Registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                        Union Acceptance Corporation

November 12, 1999                       By: /S/ John M. Stainbrook
                                        ----------------------------------------
                                        John M. Stainbrook
                                        President and Chief Executive Officer



November 12, 1999                       By: /S/ Rick A. Brown
                                        ----------------------------------------
                                        Rick A. Brown
                                        Treasurer, Secretary and
                                        Chief Financial Officer