EXHIBIT 4.3
                                                                     -----------

                       THIRD AMENDMENT AND LIMITED WAIVER
                             TO SECURITY AGREEMENT

THIS THIRD AMENDMENT AND LIMITED WAIVER TO SECURITY AGREEMENT, dated as of March
29,  2002 (this  "Amendment"),  is entered  into by and among  UNION  ACCEPTANCE
FUNDING  CORPORATION,  as Seller,  VARIABLE  FUNDING CAPITAL  CORPORATION,  as a
Company,   UAFC-2  CORPORATION,   as  Debtor,   UNION  ACCEPTANCE   CORPORATION,
individually  and  as  Collection  Agent,  FIRST  UNION  SECURITIES,   INC.,  as
Collateral Agent and Deal Agent,  FIRST UNION NATIONAL BANK, as Paying Agent and
fir BANK  INVESTORS  named  herein.  Capitalized  terms  used and not  otherwise
defined herein are used as defined in the Agreement (as defined below).

     WHEREAS,  the parties hereto entered into that certain Security  Agreement,
dated as of August 31, 2001, (as amended to date, the "Agreement")

     WHEREAS,  the  parties  hereto  desire to amend the  Agreement  in  certain
respects as provided herein;

     WHEREAS,  the Collection  Agent has notified the Company and the Deal Agent
that it will breach a financial  covenant and has requested  that the Deal Agent
and the Company provide a limited waiver regarding such breach;

     WHEREAS, the Company and the Deal Agent desire to waive the breach;

     NOW  THEREFORE,  in  consideration  of the  premises  and the other  mutual
covenants contained herein, the parties hereto agree as follows:

     Section 1.1 Limited Waiver.

          (a) Pursuant to Exhibit C of the Agreement, the Collection Agent shall
     not permit  its Fixed  Charge  Coverage  Ratio to be less than 1:15 to 1.00
     (the "Fixed Charge Coverage Ratio Requirement"). Pursuant to Section 6.3(d)
     of the  Agreement,  a  Collection  Agent  Default  shall occur if the Fixed
     Charge Coverage Ratio  Requirement is breached.  Pursuant to Section 7.1(d)
     of the  Agreement,  a Termination  Event shall occur if a Collection  Agent
     Default  shall have  occurred or if UAC is not the  Collection  Agent.  The
     Collection Agent has informed the Company and the Deal Agent that the Fixed
     Charge  Coverage Ratio  Requirement  will be breached and that a Collection
     Agent  Default  and a  Termination  Event will  occur  with  respect to the
     calendar quarter ending on March 31, 2002 (the "Waiver Period").

          (b) The  Collection  Agent  hereby  requests a waiver of, and the Deal
     Agent and the Company hereby agree to waive the Fixed Charge Coverage Ratio
     Requirement  and the  occurrence  of the  Collection  Agent Default and the
     Termination Event with respect to the Waiver Period.

          (c) The waiver agreed to herein shall be effective only for the Waiver
     Period.  For  each  calendar  quarter  (other  than  the  calendar  quarter
     constituting   the  Waiver   Period),   the  Fixed  Charge  Coverage  Ratio
     Requirement,  the Collection Agent Default and the Termination  Event shall
     have the same  force  and  effect  as if this  waiver  letter  had not been
     entered  into by the  parties  hereto,  and the Deal Agent and the  Company
     shall  have all of the  rights  and  remedies  afforded  to them  under the
     Agreement and each other Transaction  Document as though no waiver had been
     granted by them hereunder.

          (d) The  execution,  delivery and  effectiveness  of this waiver shall
     not,  except as  expressly  provided  herein,  operate  as a waiver of' any
     right, power or remedy of the Deal Agent or the Company under the Agreement
     or any of the other Transaction Documents.

     Section 1.2 Amendments.

          (a) The following new definition is added in appropriate  alphabetical
     order to Section 1.1 of the Agreement:

               Exhibit C means that  certain  Exhibit C to the  Agreement as the
          same has been amended to the date hereof

          (b) Subclause  (a) of Exhibit C to the Agreement is hereby  amended to
     read in its entirety as follows:

          (a) as of the end of each  calendar  quarter,  permit its Tangible Net
     Worth  to be less  than  sum of (i)  $160,000,000  and  (ii) 80% of its Net
     Income since December 31, 2001.

          (c) Subclauses (b), (c) and (d) of Exhibit C are hereby amended by (i)
     adding the phase "as of the end of each calendar quarter," at the beginning
     of each of subclause (b), (c) and (d) and (ii) by deleting the phases",  at
     any time," and "as of the end of any calendar  month" each time they appear
     in each of subclause (b), (c) and (d).

          (d) The  definition of "Current  Maturities" is hereby amended to read
     in its entirety as follow:

          Current Maturities means, on any date of determination,  the aggregate
     of the payments of principal  due on the  Collection  Agent's or any of its
     Subsidiaries' senior and subordinated debt (including,  without limitation,
     scheduled  payments under the Residual Funding Facility,  but excluding all
     payments  under  non-recourse  warehouse  debt  secured by an  interest  in
     installment  sales  contracts or installment  loan and security  agreements
     secured by an  interest  in an  automobile,  light-truck  or van) in the 12
     months following such date of determination.

          (e) The  definition of "Fixed Charge  Coverage  Ratio" in Exhibit C to
     the Agreement is hereby amended in its entirety to read as follows:

          Fixed Charge Coverage  Ratio:  As of the end of any calendar  quarter,
     for the twelve (12) calendar month period then ended,  the ratio of (i) the
     Collection  Agent's Adjusted EBITDA, to (ii) the aggregate Interest Expense
     for the same 12 month period plus the excess, if any, of (A) the sum of (1)
     Current Maturities and (2) $10,000,000 over (B) the Liquidity.

          (f)  The  definition  of  "Subordinated  Debt"  in  Exhibit  C to  the
     Agreement is hereby amended to read in its entirety as follows:

          Subordinated  Debt means,  the Debt of the  Collection  Agent which is
     expressly  subordinate  to the unsecured  Debt as  interpreted  by the Deal
     Agent in its sole discretion.

          (g)  The  following   new   definitions   are  added  in   appropriate
     alphabetical order to Exhibit C to the Agreement:

          Liquidity means, the sum of (i) all unrestricted cash available to the
     Collection Agent and (ii) Total Borrowing Capacity.

          Residual Funding Facility means, the certain residual funding facility
     provided pursuant to the Securities Funding Agreement, dated as of April 5,
     2002 among UAC Funding Facility  Corporation,  as borrower,  the Collection
     Agent  as  servicer,  the  Lenders  signatory  thereto  from  time to time,
     Wachovia  Bank,  National  Association,  as a lender and as  administrative
     agent and First Union  Securities,  Inc., as structuring  agent and as deal
     agent, as the same may be amended from time to time.

          Total Borrowing  Capacity  means,  on any day, the aggregate,  for all
     committed borrowing  facilities to which the Collection Agent or any of its
     Subsidiaries  is a  party  (including,  without  limitation,  the  Residual
     Funding  Facility),  of the  positive  excess,  if any,  of (i) the maximum
     amount  that  could  be   borrowed   on  such  date  under  such   facility
     (hereinafter, the "Potential Maximum Outstandings"),  based upon the amount
     of  receivables  or  other  assets  available  to  such  facility  and  all
     reductions thereto pursuant to the documentation  relating to such facility
     and the  applicable  advance rate (or other similar term) over (ii) the sum
     of (A) the  principal  amount (or similar  amount)  outstanding  under such
     facility  on  such  day and (B) any  incremental  increase  in the  reserve
     account  (or  similar  term or concept)  for such  facility  required to be
     deposited in the reserve account, assuming the principal amount (or similar
     amount)  outstanding under such facility was equal to the Potential Maximum
     Outstandings for such facility.

          (h) The definitions of "Credit Facility", "Specified Debt", "Warehouse
     Facility" and "Warehouse Outstandings" are hereby deleted from Exhibit C to
     the Agreement.

     Section 1.3 Agreement in Full Force and Effect as Amended

     Except as specifically  amended hereby,  the Agreement shall remain in full
force and effect.  All  references to the Agreement  shall be deemed to mean the
Agreement, as modified hereby. This Amendment shall not constitute a novation of
the Agreement,  but shall  constitute an amendment  thereof.  The parties hereto
agree to be bound by the terms and  conditions of the  Agreement,  as amended by
this Amendment, as though such terms and conditions were set forth herein.

     Section 1.4 Miscellaneous.

          (a) This Amendment may be executed in any number of counterparts,  and
     by the different parties hereto on the same or separate counterparts,  each
     of which  shall be deemed  to be an  original  instrument  but all of which
     together  shall  constitute  one and the  same  agreement.  Delivery  of an
     executed  counterpart  of a signature  page to this  Amendment by facsimile
     shall be effective as delivery of a manually executed counterpart.

          (b) The descriptive headings of the various sections of this Amendment
     are inserted for  convenience  of reference only and shall not be deemed to
     affect the meaning or construction of any of the provisions hereof.

          (c) This Amendment may not be amended or otherwise  modified except as
     provided in the Agreement.

          (d) THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER
     THIS  AMENDMENT  SHALL BE  GOVERNED BY AND  CONSTRUED  AND  INTERPRETED  IN
     ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

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     IN WITNESS  WHEREOF,  the parties have caused this Amendment to be executed
by their respective  officers  thereunto duly  authorized,  as of the date first
above written.

                                        UAFC-2 CORPORATION,
                                        as Debtor

                                        By:  /s/ Leeanne W. Graziani
                                           -------------------------------------
                                        Name:  Leeanne W. Graziani
                                           -------------------------------------
                                        Title: President
                                           -------------------------------------


                                        UNION ACCEPTANCE FUNDING CORPORATION,
                                        as Seller

                                        By:  /s/ Rick A. Brown
                                           -------------------------------------

                                        Name:  Rick A. Brown
                                             -----------------------------------

                                        Title:  Vice President
                                              ----------------------------------

                                        UNION ACCEPTANCE CORPORATION,
                                        individually and as Collection Agent

                                        By:  /s/ Melanie S. Otto
                                           -------------------------------------
                                        Name:  Melanie S. Otto
                                             -----------------------------------
                                        Title:  Senior Vice President
                                              ----------------------------------

                                        VARIABLE FUNDING CAPITAL CORPORATION,
                                        By First Union Securities, Inc.,
                                        as attorney- in-fact

                                        By: /s/ Doug Wilson
                                           -------------------------------------
                                        Name:   Doug Wilson
                                             -----------------------------------
                                        Title:
                                              ----------------------------------


                                        FIRST UNION SECURITIES, INC.,
                                        as Collateral Agent and Deal Agent

                                        By:   /s/ Curt Sidden
                                           -------------------------------------
                                        Name:  Curt Sidden
                                             -----------------------------------
                                        Title:  Managing Director
                                              ----------------------------------


                                        FIRST UNION NATIONAL BANK
                                        as Paying Agent and Bank Investor

                                        By: /s/ Prakash Wadhwani
                                           -------------------------------------
                                        Name:   Prakash Wadhwani
                                             -----------------------------------
                                        Title:
                                              ----------------------------------