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 March 31, 2001

                                       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 of incorporation    (I.R.S. Employer Identification
or organization)                                 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 April 27, 2001

Class A Common Stock, without par value                      5,833,048
Class B Common Stock, without par value                      7,461,608
<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
         March 31, 2001 and June 30, 2000                                   3

         Consolidated Condensed Statements of Earnings
         for the Three and Nine Months Ended March 31, 2001 and 2000        4

         Consolidated Condensed Statements of Cash Flows for the
         Nine Months Ended March 31, 2001 and 2000                          5

         Consolidated Condensed Statement of Shareholders' Equity for the
         Nine Months Ended March 31, 2001                                   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        23

Part II. OTHER INFORMATION                                                 25

         Signatures                                                        26




<PAGE>

<TABLE>
<CAPTION>

Union Acceptance Corporation and Subsidiaries
Consolidated Condensed Balance Sheets
(Dollars in thousands, except share data)
(Unaudited)
                                                                         March 31,         June 30,
Assets                                                                     2001              2000
                                                                         ---------        ---------
<S>                                                                      <C>              <C>
Cash and cash equivalents                                                $   5,329        $  14,792
Restricted cash                                                              7,761           13,010
Receivables held for sale, net                                             127,312          206,701
Retained interest in securitized assets                                    266,115          208,431
Accrued interest receivable                                                  1,028            1,727
Property, equipment, and leasehold improvements, net                         9,511            9,494
Other assets                                                                27,082           23,983
                                                                         ---------        ---------

Total Assets                                                             $ 444,138        $ 478,138
                                                                         =========        =========

Liabilities and Shareholders' Equity

Liabilities
-----------
Notes payable                                                            $ 122,022        $ 152,235
Long-term debt                                                             155,000          177,000
Accrued interest payable                                                     2,028            5,408
Amounts due to trusts                                                       16,717           14,487
Dealer premiums payable                                                        711            3,663
Current and deferred income taxes payable                                   11,694            9,740
Other payables and accrued expenses                                         12,431            5,576
                                                                         ---------        ---------

Total Liabilities                                                          320,603          368,109
                                                                         ---------        ---------

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;
   5,833,048 and 5,816,024 shares issued and
   outstanding at March 31, 2001 and June 30, 2000, respectively            58,733           58,632

 Class B Common Stock, without par value, authorized 20,000,000 shares;
   7,461,608 shares issued and outstanding
   at March 31, 2001 and June 30, 2000                                           -                -

  Accumulated other comprehensive earnings, net of income taxes              3,611            3,564
  Retained earnings                                                         61,191           47,833
                                                                         ---------        ---------

 Total Shareholders' Equity                                                123,535          110,029
                                                                         ---------        ---------

  Total Liabilities and Shareholders' Equity                             $ 444,138        $ 478,138
                                                                         =========        =========
</TABLE>

See accompanying notes to consolidated condensed financial statements.

<PAGE>
<TABLE>
<CAPTION>

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


                                                             Three Months Ended           Nine Months Ended
                                                                  March 31,                   March 31,
                                                          --------------------------  --------------------------
                                                             2001          2000          2001          2000
                                                          ------------  ------------  ------------  ------------


<S>                                                        <C>           <C>           <C>           <C>
Interest on receivables held for sale                      $   10,727    $    8,221    $   35,951    $   23,050
Retained interest and other                                     8,379         6,704        23,684        18,874
                                                          ------------  ------------  ------------  ------------

   Total interest income                                       19,106        14,925        59,635        41,924
Interest expense                                                8,903         6,805        28,422        19,548
                                                          ------------  ------------  ------------  ------------

   Net interest margin                                         10,203         8,120        31,213        22,376
Provision for estimated credit losses                             300           840         2,525         2,255
                                                          ------------  ------------  ------------  ------------
   Net interest margin after provision
     for estimated credit losses                                9,903         7,280        28,688        20,121
                                                          ------------  ------------  ------------  ------------

Gain on sales of receivables, net                              12,880         2,754        28,552        10,545
Loss on interest rate swaps on securitized receivables        (10,475)            -       (19,361)            -
Gain (loss) on interest rate swaps on held for sale
  receivables                                                   3,122             -        (1,587)            -
Servicing fees                                                  7,805         6,217        22,150        18,473
Late charges and other fees                                     1,924         1,667         5,390         4,680
                                                          ------------  ------------  ------------  ------------

  Other revenues                                               15,256        10,638        35,144        33,698
                                                          ------------  ------------  ------------  ------------

Salaries and benefits                                           8,814         7,354        25,222        21,018
Other general and administrative expenses                       6,017         5,215        17,457        15,122
                                                          ------------  ------------  ------------  ------------

  Total operating expenses                                     14,831        12,569        42,679        36,140
                                                          ------------  ------------  ------------  ------------

Earnings before provision for income taxes                     10,328         5,349        21,153        17,679
Provision for income taxes                                      3,794         2,065         7,795         6,828
                                                          ------------  ------------  ------------  ------------

Net earnings                                                  $ 6,534       $ 3,284      $ 13,358      $ 10,851
                                                          ============  ============  ============  ============

 Net earnings per common share (basic & diluted)               $ 0.49        $ 0.25        $ 1.00        $ 0.82
                                                          ============  ============  ============  ============

Basic weighted average number of common
  shares outstanding                                       13,294,656    13,277,632    13,286,206    13,264,175

Dilutive effect of common stock options                         3,826        16,682        21,972        34,520
                                                          ------------  ------------  ------------  ------------

Diluted weighted average number of common
  shares outstanding                                       13,298,482    13,294,314    13,308,178    13,298,695
                                                          ============  ============  ============  ============
</TABLE>

See accompanying notes to consolidated condensed financial statements.

<PAGE>
<TABLE>
<CAPTION>
Union Acceptance Corporation and Subsidiaries
Consolidated Condensed Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
                                                                              Nine Months Ended
                                                                                 March 31,
                                                                        -----------------------------
                                                                            2001            2000
                                                                        -------------   -------------
Cash flows from operating activities:
<S>                                                                        <C>            <C>
   Net earnings                                                            $  13,358      $   10,851
    Adjustments to reconcile net earnings to net cash
     from operating activities:
      Increase in acquisitions of receivables held for sale,
        net of liquid                                                     (1,365,552)       (988,171)
      Dealer premiums paid, net on receivables held for sale                 (41,285)        (24,516)
      Proceeds from securitization of receivables held for sale            1,440,003         950,206
      Gain on sales of receivables                                           (44,458)        (19,907)
      Impairment of retained interest in securitized assets                    4,876           4,243
      Accretion of discount on retained interest in securitized assets       (22,881)        (17,784)
      Provision for estimated credit losses                                    2,525           2,255
      Amortization and depreciation                                            4,530           2,471
      Restricted cash                                                          5,249          (2,476)
      Other assets and accrued interest receivable                            (3,182)          1,422
      Amounts due to trusts                                                    2,230             745
      Other payables and accrued expenses                                      5,407         (12,082)
                                                                          -----------    ------------
        Net cash provided by (used in) operating activities                      820         (92,743)
                                                                          -----------    ------------

Cash flows from investing activities:
   Collections on retained interest in securitized assets
     and change in spread accounts and accelerated principal                  43,826          57,663
   Capital expenditures                                                       (1,275)         (2,465)
                                                                          -----------    ------------
        Net cash provided by investing activities                             42,551          55,198
                                                                          -----------    ------------

Cash flows from financing activities:
   Principal payment on long-term debt                                       (22,000)        (22,000)
   Stock options exercised                                                         -              93
   Net change in notes payable                                               (30,213)         61,191
   Payment of borrowing fees                                                    (621)           (446)
                                                                          -----------    ------------
        Net cash provided by (used in) financing activities                  (52,834)         38,838
                                                                          -----------    ------------

Change in cash and cash equivalents                                           (9,463)          1,293

Cash and cash equivalents, beginning of period                                14,792           8,088
                                                                          -----------    ------------

Cash and cash equivalents, end of period                                     $ 5,329         $ 9,381
                                                                          ===========    ============

Supplemental disclosures of cash flow information:
Income taxes paid                                                            $ 5,859        $ 19,297
Interest paid                                                               $ 27,295        $ 21,858
</TABLE>

See accompanying notes to consolidated condensed financial statements.
<PAGE>
<TABLE>
<CAPTION>
Union Acceptance Corporation and Subsidiaries
Consolidated Condensed Statement of Shareholders' Equity
For the Nine Months Ended March 31, 2001
(Dollars in thousands, except per share data)
(Unaudited)



                                         Number of Common Stock                    Accumulated
                                           Shares Outstanding                         Other                          Total
                                       ----------------------------   Common      Comprehensive      Retained    Shareholders'
                                         Class A        Class B       Stock          Earnings        Earnings       Equity
                                       ------------- -------------- ------------ ----------------- ------------ ---------------
<S>                                      <C>           <C>          <C>            <C>               <C>         <C>
Balance at June 30, 2000                 5,816,024     7,461,608    $ 58,632       $      3,564      $ 47,833    $    110,029

Comprehensive earnings:
  Net earnings                                   -             -           -                  -        13,358          13,358
  Net unrealized gain on retained
     interest in securitized assets              -             -           -                 73             -              73
  Income taxes related to net
    unrealized gain on retained
     interest in securitized assets              -             -           -                (26)            -             (26)
                                                                                                                 -------------
Total comprehensive earnings                                                                                           13,405

  Stock grants issued                       17,024             -         101                  -             -             101

                                         ---------     ---------    --------       ------------      --------    -------------
Balance at March 31, 2001                5,833,048     7,461,608    $ 58,733       $      3,611      $ 61,191    $    123,535
                                         =========     =========    ========       ============      ========    =============
</TABLE>


See accompanying notes to consolidated condensed financial statements.
<PAGE>



Union Acceptance Corporation and Subsidiaries
Notes to Consolidated Condensed Financial Statements
For the Nine Months Ended March 31, 2001 and 2000
(Unaudited)

Note 1 - Basis of Presentation

     The foregoing  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   (collectively,   the
"Company").

     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,  2000.  Certain  amounts for the
prior  period  have  been   reclassified   to  conform  to  the  current  period
presentation.

Note 2 - Retained Interest in Securitized Assets

     Retained Interest in Securitized  Assets ("Retained  Interest") is recorded
as an  "available  for  sale"  security  and is  recorded  at  fair  value.  The
associated unrealized gains and losses attributable to changes in fair value net
of income taxes are 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.

     The  average of the  interest  rates  received on  receivables  exceeds the
interest  rates paid on securities  issued in the  securitization.  Accordingly,
Retained Interest is a significant asset of the Company. In determining the fair
value  of  the  Retained   Interest,   the  Company  must  estimate  the  future
prepayments,  rates of  gross  credit  losses  and  credit  loss  severity,  and
delinquencies, 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 20.36% to 28.00%
at March 31, 2001.  The Company  estimates  gross 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 loss  assumptions  of 4.00% to 6.45% as a percentage  of
the  original  principal  balance  over  the  life of the  receivables  to value
Retained Interest at March 31, 2001.

     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.  The Company  utilized  discount rates ranging from 7.30% to 13.34% on the
estimated  cash  flows to be  released  from the  Spread  Account  to value  the
Retained  Interest at March 31, 2001. The weighted average discount rate used to
value Retained  Interest at March 31, 2001 was 11.93% compared to 13.78% at June
30, 2000.  This  decrease in the weighted  average  discount rate is primarily a
result of a decrease in U.S. Treasury Rates since June 30, 2000.




<PAGE>




Union Acceptance Corporation and Subsidiaries
Notes to Consolidated Condensed Financial Statements
For the Nine Months Ended March 31, 2001 and 2000
(Unaudited)

     In July 2000,  the  Emerging  Issues  Task  Force  ("EITF")  finalized  the
provisions  of EITF  Issue  No.  99-20,  "Recognition  of  Interest  Income  and
Impairment  of  Purchased  and  Retained  Beneficial  Interests  in  Securitized
Financial Assets",  ("EITF 99-20").  EITF 99-20 sets forth rules for recognizing
interest  income and  determining  when  securities must be written down to fair
value because of other than temporary  impairments.  EITF 99-20 will require the
prospective  method of adjusting  the  recognition  of interest  income when the
anticipated  cash flows have either  increased or  decreased.  Anticipated  cash
flows can change as the result of factors such as credit  losses and  prepayment
rates.  Under the provisions of EITF 99-20,  an other than temporary  impairment
must be recorded when the  anticipated  cash flows have decreased since the last
estimate and the fair value of the  Retained  Interest is less than the carrying
value.

     The Company  currently  applies certain  provisions of EITF Issue No. 93-18
"Recognition  of  Impairment  for an  Investment  in a  Collateralized  Mortgage
Obligation Instrument or in a Mortgage-Backed  Interest-Only Certificate" ("EITF
93-18") regarding impairment. EITF 99-20 will no longer allow for measurement of
other than temporary  impairments  based on fair values  discounted at risk free
rates.

     The effective date for EITF 99-20 is April 1, 2001,  with earlier  adoption
permitted. Any write-down associated with the implementation of EITF 99-20 would
be reported as a  "cumulative  effect of a change in accounting  principle"  and
would be reported on a  prospective  basis.  The Company  expects the  after-tax
cumulative  effect to be a charge to  earnings  of  approximately  $1.0  million
related to the  adoption  of EITF  99-20.  See--"Discussion  of  Forward-Looking
Statements".

Retained Interest in Securitized Assets is as follows (in thousands) at:

                                                         March 31,     June 30,
                                                           2001          2000
                                                         -----------------------
Estimated gross interest spread from receivables,
  net of estimated prepayments and fees                $   362,920  $   287,661
Estimated dealer premium rebates refundable                 16,345       18,133
Estimated credit losses on securitized receivables        (143,274)    (119,003)
Accelerated Principal (1)                                   28,823       24,082
Spread accounts                                             83,346       58,663
Discount to present value                                  (82,045)     (61,105)
                                                       ------------ ------------
  Total Retained Interest in Securitized Assets        $   266,115  $   208,431
                                                       ============ ============
Outstanding balance of securitized receivables         $ 3,228,640  $ 2,676,655
                                                       ============ ============
Estimated credit losses as a percentage of
  securitized receivables serviced                            4.44%        4.45%

(1)  Also referred to as "turbo".
<PAGE>


Union Acceptance Corporation and Subsidiaries
Notes to Consolidated Condensed Financial Statements
For the Nine Months Ended March 31, 2001 and 2000
(Unaudited)

Note 3 - Notes Payable

Notes Payable is comprised of warehouse credit  facilities of $119.5 million and
working  capital  line  borrowings  of $2.5 million at March 31, 2001 and $152.2
million of warehouse credit facilities at June 30, 2000.

Note 4 - Segment Information

     The  Company  has  a  single   reportable   segment   which  is  acquiring,
securitizing and servicing  retail  automobile  installment  sales contracts and
installment  loan  agreements  originated by dealerships  affiliated  with major
domestic and foreign  automobile  manufacturers.  The single segment is based on
management's   approach  to  operating  decisions,   assessing  performance  and
reporting financial information.

Note 5 - Earnings Per Share

     Options  to  purchase   shares  of  common  stock  are  excluded  from  the
calculation  of Earnings Per Share ("EPS")  assuming  dilution when the exercise
prices of these options are greater than the average  market price of the common
share during the period.  During March 2001,  the Board  adopted an amendment to
the Company's 1999 Incentive  Stock Plan,  subject to shareholder  approval,  to
increase the number of shares  reserved for issuance by 300,000.  In  connection
with Michael G. Stout's  appointment  as Chairman of the  Company's  board,  Mr.
Stout was awarded 300,000 options at an exercise price of $5.375,  half of which
vest in fiscal  2001 and half of which  vest in  fiscal  2002.  Additionally  in
March, the Company repurchased from optionees,  options to purchase an aggregate
of 217,250  shares with an option price of $16.00 per share.  No options with an
exercise price of $16.00 remain  outstanding.  The following chart indicates the
numbers of shares  which were  excluded  from the  calculation  of EPS  assuming
dilution for the periods indicated:

            Three Months Ended                    Nine Months Ended
                 March 31,                             March 31,
     -------------------------------        ----------------------------
          2001             2000                2001            2000
     ---------------    ------------        ------------    ------------
        1,006,443          439,911            988,297         422,073



Note 6 - Recent Accounting Pronouncements

     In  September  2000,  the  Financial   Accounting  Standards  Board  issued
Statement  of  Accounting  Standards  No. 140,  "Accounting  for  Transfers  and
Servicing of Financial  Assets and  Extinguishments  of Liabilities"  ("SFAS No.
140").  SFAS No. 140 replaces  Statement of Accounting  Standard No. 125,  which
bears the same title,  ("SFAS No. 125"). SFAS No. 140 is effective for transfers
and servicing of financial assets and  extinguishments of liabilities  occurring
after March 31, 2001. Other provisions of the statement are effective for fiscal
years  ended  after  December  15,  2000  and  include   additional   disclosure
requirements  and changes  related to the recognition  and  reclassification  of
collateral.  The Company has determined that the  implementation of SFAS No. 140
will  not have a  material  impact  on its  financial  position  or  results  of
operation. See--"Discussion of Forward-Looking Statements".




<PAGE>


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

Results of Operations

     Acquisition Volume and Pricing.  The Company currently acquires receivables
in 40 states  from over  5,500  manufacturer-franchised  auto  dealerships.  The
Company focuses its efforts on acquiring  receivables on late model used and, to
a lesser extent,  new automobiles from purchasers who exhibit a favorable credit
profile  ("Tier I"). The Company  acquired  $336.6 million  receivables  for the
quarter ended March 31, 2001, a 14.9% decrease over the $395.6 million  acquired
during the quarter ended March 31, 2000. Receivable acquisitions were down 31.2%
over the  previous  quarter  ended  December  31,  2000  acquisitions  of $489.2
million.  The nights and weekends acquisition volume for the quarter ended March
31, 2001 was 38.0% of the total quarterly volume for the quarter ended March 31,
2001. The nights and weekends acquisition volume for the quarters ended December
31,  2000  and  March  31,  2000  was  37.0%  and  39.6%,  respectively  of  the
corresponding total quarterly volume. The decrease in the receivable acquisition
volume  during the  quarter  was  deliberate  and was the  direct  result of the
Company's overall capital strategy.  During the first six months of fiscal 2001,
the average monthly volume was  approximately  $177.6 million compared to $112.2
million per month in the third quarter of fiscal 2001.  The  acquisition  volume
for March 2001 was $74.3 million and $59.1 million for April 2001.

     During June 2000,  the Company  moved to a risk based  pricing model and is
continually  assessing  and  refining  its  pricing  strategies.  The risk based
pricing model rewards those  customers with good credit quality with lower rates
and also prices higher risk accounts at higher rates.  The average  credit score
of newly acquired  receivables  was 685 and 664 for the quarters ended March 31,
2001 and 2000,  respectively.  The  Company  has been  utilizing  its risk based
pricing  strategy to enable it to curtail  acquisition  volume while at the same
time pricing  receivables  acquired with a view of achieving its targeted return
on managed assets. Because the Company limits the receivables it acquires if the
receivables  cannot be priced  at a level  required  to  achieve  the  Company's
targeted return on managed assets,  depending on market and competitive factors,
the Company's  acquisitions may fluctuate from period to period.  Moreover,  the
Company plans to attain receivable acquisition growth, gradually increasing from
current acquisition levels, based on the capital resources it has available over
time and its targeted return on managed assets. The Company is currently seeking
to price its receivable  acquisitions  such that they will ultimately  support a
return on managed assets of 1.5% after the next several years. In particular the
Company believes that the pricing of receivables acquired during the nine months
ended  March 31,  2001,  if viewed as a discrete  portfolio,  should  ultimately
support  a return on  managed  assets of at least  1.50%.  A number of  factors,
including  loss and  credit  performance  estimates  inherent  in the  Company's
pricing  strategies,  and other  factors  impacting  the  Company's  results  of
operations,  will affect whether it can achieve that targeted  performance level
and  the  number  of  years  it  may  take  it to  do  so.  See--"Discussion  of
Forward-Looking Statements".

     Gross  and Net  Spreads.  The gross and net  spreads  on the third  quarter
securitization  of fiscal 2001 were 7.43% and 5.12% compared to 5.88% and 4.94%,
respectively, over the same quarter of last fiscal year. Gross spread is defined
as the difference  between the weighted average receivable rate and the weighted
average  note rate.  Net spread is defined as the gross  spread,  net of upfront
costs,  servicing fees,  ongoing credit  enhancement fees, trustee fees, and the
economic  hedging gains or losses.  The risk based pricing model discussed above
could  result in a lower net spread if the  Company is less  competitive  on the
higher risk accounts. However, the net spreads have actually increased. The move
to a refined risk based pricing  strategy  combined  with the Company's  capital
strategy has resulted in an increase in credit scores while also  increasing the
net spreads  compared to the third quarter  securitization  for fiscal 2000. See
further  discussions  of  the  Company's  capital  strategy  in  the  "Financial
Condition" section.

     Net spreads are currently targeted around 6.00% on  securitizations  during
the fiscal year 2002.  Currently the Company does not expect to  securitize  any
additional  receivables in the quarter ending June 30, 2001. Although management
believes these targeted net 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".

     Portfolio Performance. The Company experienced a decrease in delinquency on
the Tier I automobile portfolio at March 31, 2001 compared to December 31, 2000.
Tier I delinquency  was 3.04% at March 31, 2001,  compared to 3.50% and 2.73% at
December 31, 2000 and March 31,  2000,  respectively.  During the quarter  ended
March 31, 2001,  the Company also  experienced  an increase in  recoveries  as a
percentage  of gross  charge-offs  on the Tier I portfolio  when compared to the
quarters  ended  December 31, 2000 and March 31, 2000.  The Tier I recovery rate
was 42.10% for the quarter  ended March 31, 2001,  compared to 39.10% and 40.91%
for the quarters ended December 31, 2000 and March 31, 2000,  respectively.  The
third  quarter  ended March 31, 2001 recovery rate was bolstered by the proceeds
of approximately  $1.4 million from the sale of Tier I and Tier II accounts that
have been  previously  charged off.  Without the impact of the proceeds from the
sale of these  accounts,  the Tier I recovery  rate would have been 38.77%.  Net
credit losses increased during the quarter ended March 31, 2001, compared to the
quarter  ended  December 31, 2000 and the quarter ended March 31, 2000. As shown
in the following tables,  Tier I net credit losses totaled 2.59% for the quarter
ended  March 31,  2001,  compared  to 2.35% and  2.30%  for the  quarters  ended
December 31, 2000 and March 31, 2000, respectively. Tier I net credit losses for
the nine months ended March 31, 2001 were 2.36%,  compared to 2.23% for the nine
months ended March 31, 2000.

     Provisions  are made for estimated net credit  losses in  conjunction  with
each  securitization.  The  current  assumption  utilized in the gain on sale of
receivables  calculation for estimated net credit losses on the third quarter of
fiscal 2001 securitization was 4.75% over the life of the pool compared to 4.50%
over the life of the  pool on the  fiscal  2000  third  quarter  securitization.
Estimated net credit losses as a percentage of securitized  receivables serviced
(inherent in Retained  Interest) was 4.44% at March 31, 2001,  compared to 4.47%
and 4.39% at December 31, 2000 and March 31, 2000, respectively.

     Certain information  concerning the Company's experience  pertaining to net
credit  losses  and  delinquencies  on the  Tier I  fixed  rate  retail  vehicle
receivables  serviced by the Company is shown in the following tables. There can
be no  assurance  that  future net credit  loss and  delinquency  experience  on
receivables  will be  comparable  to that set forth below.  See  "Discussion  of
Forward-Looking Statements".

<PAGE>
<TABLE>
<CAPTION>

                                                                       Tier I Credit Loss Experience
                                                                        For the Three Months Ended
                                         -----------------------------------------------------------------------------------------
                                                March 31, 2001              December 31, 2000                March 31, 2000
                                         ----------------------------- -----------------------------  ----------------------------

                                                                          (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                 266,011    $ 3,356,833        260,881    $ 3,274,480         222,413    $ 2,619,461

Gross charge-offs                             3,064    $    37,526          2,638    $    31,643           2,214    $    25,467
Recoveries                                                  15,800                        12,372                         10,417
                                                       -----------                   -----------                    -----------
  Net charge-offs                                      $    21,726                   $    19,271                    $    15,050
                                                       ===========                   ===========                    ===========

Gross charge-offs as a percentage
  of average servicing portfolio (1)           4.61%          4.47%          4.04%          3.87%           3.98%          3.89%
Recoveries as a percentage of
  gross charge-offs                                          42.10%                        39.10%                         40.91%
Net charge-offs as a percentage
  of average servicing portfolio (1)                          2.59%                         2.35%                          2.30%
</TABLE>

    (1) Annualized
<TABLE>
<CAPTION>


                                                          For the Nine Months Ended
                                         ----------------------------------------------------------

                                              March 31, 2001                 March 31, 2000
                                         ----------------------------- ----------------------------

                                                          (Dollars in thousands)

                                          Number of                      Number of
                                          Receivables     Amount        Receivables      Amount
                                          -----------     ------        -----------      ------
<S>                                         <C>        <C>                <C>        <C>
Average servicing portfolio                 257,766    $ 3,220,984        218,872    $ 2,557,339

Gross charge-offs                             8,008         96,268          6,449         71,504
Recoveries                                                  39,285                        28,787
                                                       -----------                   -----------
  Net charge-offs                                      $    56,983                   $    42,717
                                                       ===========                   ===========

Gross charge-offs as a percentage
  of average servicing portfolio (1)           4.14%          3.99%          3.93%          3.73%
Recoveries as a percentage
  of gross charge-offs                                       40.81%                        40.26%
Net charge-offs as a percentage
  of average servicing portfolio (1)                          2.36%                         2.23%

</TABLE>

   (1) Annualized

<PAGE>
<TABLE>
<CAPTION>

                                                                    Tier I Delinquency Experience
                                       --------------------------------------------------------------------------------------

                                           At March 31, 2001            At December 31, 2000            At March 31, 2000
                                       ---------------------------  ----------------------------  ---------------------------

                                                                        (Dollars in thousands)

                                       Number of                      Number of                     Number of
                                       Receivables      Amount        Receivables     Amount        Receivables     Amount
                                       -----------      ------        -----------     ------        -----------     ------
<S>                                      <C>         <C>                <C>        <C>                <C>        <C>
Servicing portfolio                      264,539     $ 3,329,473        263,984    $ 3,324,102        225,458    $ 2,672,470
Delinquencies:
  30-59 days                               4,625     $    54,280          5,792    $    64,651          3,577    $    39,441
  60-89 days                               2,548          32,609          2,924         35,130          1,978         23,070
  90 days or more                          1,211          14,424          1,444         16,462            957         10,524
                                       ---------     -----------        -------    -----------        -------    -----------
Total delinquencies                        8,384     $   101,313         10,160    $   116,243          6,512    $    73,035
                                       =========     ===========        =======    ===========        =======    ===========
Delinquency as a percentage
  of servicing portfolio                    3.17%           3.04%          3.85%          3.50%          2.89%          2.73%
</TABLE>

     Net earnings are  summarized  in the table  below.  Net earnings  increased
99.0% to $6.5 million,  or $0.49 per diluted share,  for the quarter ended March
31, 2001,  compared to $3.3 million, or $0.25 per diluted share, for the quarter
ended March 31, 2000.  The  increase  over the same quarter of the prior year is
primarily  due to increased  net interest  margin after  provision for estimated
credit  losses  and to the  gain  on  interest  rate  swaps  on  held  for  sale
receivables. Net earnings increased 23.1% to $13.4 million, or $1.00 per diluted
share, for the nine months ended March 31, 2001,  compared to $10.9 million,  or
$0.82 per diluted share,  for the nine months ended March 31, 2000. The increase
in net earnings for the nine months ended March 31, 2001 was partially offset by
the loss on interest rate swaps on held for sale receivables. The gain (loss) on
interest  rate  swaps  on  held  for  sale  receivables  is  the  result  of the
implementation of a new accounting  standard,  Statement of Financial Accounting
Standards  No.  133,   "Accounting   for  Derivative   Instruments  and  Hedging
Activities"  ("SFAS No. 133") during the first quarter of fiscal 2001.  SFAS No.
133 is  further  discussed  below  in the  "Gain  on sale of  receivables,  net"
section.
<TABLE>
<CAPTION>

                                       Three Months                               Nine Months
                                      Ended March 31,                           Ended March 31,
                          ---------------------------------------   ---------------------------------------
                               2001                   2000               2001                   2000
                          ----------------       ----------------   ----------------       ----------------
                                        (Dollars in thousands, except per share amounts)

<S>                               <C>                    <C>               <C>                    <C>
Net Income                        $ 6,534                $ 3,284           $ 13,358               $ 10,851
Net Earnings Per Share
  (basic and diluted)              $ 0.49                 $ 0.25             $ 1.00                 $ 0.82

</TABLE>

     Interest on receivables  held for sale increased 30.5% to $10.7 million and
56.0% to $36.0  million for the quarter  and nine months  ended March 31,  2001,
respectively,  compared to $8.2  million  and $23.1  million for the quarter and
nine months ended March 31, 2000, respectively. The increase over the prior year
related to a higher average held for sale portfolio of $327.5 million and $331.6
million  for the quarter and nine  months  ended March 31,  2001,  respectively,
compared to $249.1  million and $226.0  million for the same periods ended March
31, 2000.
<PAGE>

     Retained interest and other interest income increased 25.0% to $8.4 million
and 25.5% to $23.7 million for the quarter and nine months ended March 31, 2001,
respectively,  compared to $6.7 million and $18.9 million for the  corresponding
periods of fiscal 2000. The discount component of Retained Interest increased at
June 30, 1999 as a result of the Company  increasing  the discount  rate used to
record the gain on sale of receivables during the fourth quarter of fiscal 1999.
As a  result,  more  Securitizations  discounted  at the  higher  rate are being
accreted  into income  during the  quarter and nine months  ended March 31, 2001
than  in  the  corresponding  periods  ended  March  31,  2000.  The  individual
components  of  Retained  interest  and other  interest  income are shown in the
following table.


                              Three Months                    Nine Months
                             Ended March 31,                Ended March 31,
                          2001            2000           2001           2000
                       ------------    -----------   ------------   ------------
                             (In thousands)                   (In thousands)

Discount accretion         $ 8,270        $ 6,438         $23,261        $17,922
Other interest income          109            266             423            952
                       ------------   ------------   -------------   -----------
                           $ 8,379        $ 6,704         $23,684        $18,874
                       ============   ============   =============   ===========


     Interest expense increased 30.8% to $8.9 million and 45.4% to $28.4 million
for the quarter and nine months ended March 31, 2001, respectively,  compared to
$6.8 million and $19.5  million for the  corresponding  periods  ended March 31,
2000.  The increase was the result of the previously  mentioned  increase in the
average  held for sale  balance  but was  partially  offset by a decrease in the
warehouse  cost of funds and lower  long-term  debt interest  expense due to the
required  $22.0 million  principal  payment made on the senior debt on August 1,
2000.

     Provision  for  estimated  credit  losses  decreased  64.3% to $300,000 and
increased  12.0% to $2.5 million for the quarter and nine months ended March 31,
2001,  respectively,  compared to $840,000 and $2.3 million for the same periods
of fiscal 2000. The decrease from the prior third fiscal quarter is due to lower
receivable  acquisitions  in the  corresponding  quarter  as well  as a  smaller
concentration of Tier II and modified receivables, which typically have a higher
provision  for  estimated  credit loss  percentage.  The increase from the prior
year-to-date  is due to higher  receivable  acquisitions  for the relevant  nine
months offset by a smaller  concentration of Tier II and modified receivables as
discussed  above.  The  receivables  acquired during the quarter and nine months
ended March 31, 2001 decreased 14.9% and increased 41.7%, respectively, over the
same periods ended March 31, 2000.

     Gain on sale of receivables,  net and Gain (loss) on interest rate swaps on
securitized receivables. The gain on sale of receivables,  net, increased 367.7%
to $12.9 million and increased  170.8% to $28.6 million for the quarter and nine
months  ended March 31, 2001,  respectively,  compared to $2.8 million and $10.5
million for the corresponding  periods ended March 31, 2000. The Gain on sale of
receivables,  net for the quarter ended March 31, 2001 is primarily comprised of
$15.7  million of gain net of $2.8  million of other than  temporary  impairment
compared to $2.8 million of gain with no other than temporary impairment for the
quarter ended March 31, 2000. For the nine months ended March 31, 2001, the Gain
on sale of receivables,  net is primarily comprised of $33.5 million of gain net
of $4.9 million of other than temporary  impairment compared to $14.9 million of
gain net of $4.2 million of other than temporary  impairment for the nine months
ended March 31, 2000.  Gain on sale of  receivables,  net includes  charges,  if
applicable based on management's  review, for other than temporary  impairments.
On a  regular  basis,  management  reviews  the  fair  value  of  the  estimated
recoverable  cash flows  associated  with the  retained  interest for other than
temporary  impairments.  Some of the factors  considered in this  evaluation are
discussed further in the Notes to Consolidated Financial Statements. See - "Note
2 of the Consolidated Condensed Financial Statements".

     In connection  with the  Securitization  during the quarter ended March 31,
2001,  the Company sold $573 million of notes and delivered  $430 million of the
total  receivables.  The  Company  delivered  the  additional  $143  million  in
receivables at the end of April 2001.

     The  accounting  treatment for the Company's  derivative  activity  changed
during the first quarter of fiscal 2001 and is discussed in more detail below in
the "Gain (loss) on interest rate swaps on held for sale  receivables"  section.
As a result,  the Gain on sale of  receivables,  net for the quarter ended March
31, 2001 is not readily  comparable to the gain on sale of receivables,  net for
the quarter  ended March 31,  2000.  Historically,  the gain or loss on interest
rate swaps on securitized  receivables and other than temporary impairments have
been  included as  components  of the Gain on sales of  receivables,  net in the
statement of earnings. Beginning with the first quarter of fiscal 2001, the Gain
on sale of receivables, net no longer reflects the gain or loss on interest rate
swaps on securitized  receivables;  rather, the economic hedging gain or loss is
shown  separately  in the statement of earnings as "Gain (loss) on interest rate
swaps on securitized receivables."

     The net economic gain (the gain on the sales of  receivables  net of losses
on interest  rate swaps on  securitized  receivables  but  excluding  other than
temporary  impairments)  on the sales of receivables  (as shown in the following
table)  increased to $5.2 million for the quarter ended March 31, 2001 from $2.8
million for the quarter  ended March 31,  2000.  The net  economic  gain for the
receivables delivered during the quarter ended March 31, 2001 included a loss on
interest rate swaps on securitized  receivables  of $10.5 million  compared to a
$2.4  million gain on interest  rate swaps on  securitized  receivables  for the
quarter  ended March 31,  2000.  The  increase in the  economic  gain during the
quarter  ended  March 31,  2001  compared to the same period of last year is due
primarily to the decrease in the discount rate used in calculating  the gain for
the quarters ended March 31, 2001 and March 31, 2000, respectively. The discount
rate utilized is based on a spread to the  applicable  U.S.  Treasury  Rate. The
increase  in the net  economic  gain was also the  result of a  decrease  in the
estimated  prepayment  assumption  used in calculating  the gain for the quarter
ended March 31, 2001 compared to the quarter ended March 31, 2000.
<TABLE>
<CAPTION>

                                              Fiscal Quarter ended               Nine Months ended
                                                     March 31,                         March 31,
                                          ------------------------------  -----------------------------
                                             2001             2,000             2001            2,000
                                          -------------  ---------------  ---------------   -----------
                                               (In thousands)                     (In thousands)
<S>                                         <C>             <C>             <C>              <C>
Gain on sales of receivables                $ 15,674        $ 2,786         $ 33,402         $ 14,876
Loss on interest rate swaps on
     securitized receivables                 (10,475)             -          (19,361)               -
                                          -----------    -----------      -----------       ----------

     Net economic gain                      $  5,199        $ 2,786         $ 14,041         $ 14,876
                                          ===========    ===========     ============      ===========
</TABLE>




        The 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,  the level of  estimation  for net credit  losses,
discount rate and estimated prepayment rate.
<PAGE>

Third Quarter Securitizations                                   Fiscal
                                                        ------------------------
                                                          2001          2000
                                                        ---------     ----------

                                                        2001 - A      2000 - A

Amount securitized (in millions)                         $573.0         $282.7
Weighted average receivable rate                         13.30%         13.08%
Weighted average note rate                                5.87%          7.20%
Gross spread (1)                                          7.43%          5.88%
Net spread (2)                                            5.12%          4.94%
Cumulative credit loss assumption                         4.75%          4.50%
Annual prepayment speed assumption                       25.00%         28.00%
Discount rate assumption (3)                             13.49%         15.61%
Weighted average remaining maturity (in months)           71.5          68.9
Weighted average life (in years)                          2.17           1.99

(1) Gross spread - difference  between the weighted average  receivable rate and
weighted average note rate.
(2) Net spread - gross spread,  net of upfront costs,  servicing  fees,  ongoing
credit enhancement fees, trustee fees, and the hedging gains or losses.
(3) Discount  rate  assumption - applicable  U.S.  Treasury  Rate plus 900 basis
points.

        Gain  (loss)  on  interest  rate  swaps on held  for  sale  receivables.
Beginning in the first quarter of fiscal 2001, a new accounting  standard,  SFAS
No. 133,  became  effective for the Company.  This new standard  changes how the
Company accounts for its derivative  activity.  The only derivative  instruments
that the Company utilizes relate to interest rate swaps executed solely to hedge
receivable  acquisitions prior to securitization.  Management  believes that the
interest rate swaps are  effective in protecting  the Company from interest rate
fluctuations from origination through securitization and that these transactions
are typical in this industry.  However,  it has been  determined that under SFAS
No. 133, these transactions do not qualify for hedge accounting  treatment,  and
the Company's  derivatives  are therefore  required to be marked to market every
accounting  period.  The Company primarily hedges its interest rate risk between
the time of acquisition and sale into a securitization using amortizing interest
rate swaps.  Although  management  believes these amortizing interest rate swaps
are highly  effective in managing the Company's  interest rate risk, the Company
began to explore  alternative  methods  of  hedging  that may reduce the risk of
material cash outlays in a declining interest rate environment. In this quarter,
the Company  supplemented its current hedging strategy with a prefund  mechanism
in the 2001A  securitization.  The prefund mechanism  eliminates the need for an
interest rate swap on the prefunded receivables given that interest rate risk is
substantially  eliminated  since the funding  rate has been fixed.  Although the
Company  delivered the prefunded  receivables at the expected  weighted  average
coupon in April 2001, there is some risk that the Company may not always be able
to deliver prefunded  receivables at the expected  weighted average coupon.  The
Company  may choose to use this  strategy  in the  future.  See--"Discussion  of
Forward-Looking Statements".

     Previously,  the market value of derivatives  acquired for hedging purposes
was not accounted for until the  corresponding  receivables were securitized and
the  derivatives  closed out.  At that time,  the gain or loss on the closed out
derivatives was included in the gain on sales of receivables,  net amount.  This
amount is now a separate line item on the income  statement  titled "Gain (loss)
on interest  rate swaps on  securitized  receivables."  In addition,  UAC is now
required  to reflect  the market  value of any  outstanding  derivatives  on its
balance sheet,  and the changes in the  corresponding  value will be reported in
the income  statement  as "Gain  (loss) on interest  rate swaps on held for sale
receivables."  Based on a notional amount of $116.8  million,  this amount was a
loss of $1.6 million at March 31, 2001 and is related to interest  rate swaps on
receivables  held for sale,  most of which should be  securitized in the future.
Although the swaps are still in a loss position, for the quarter ended March 31,
2001, the Company recorded a gain of $3.1 million on interest rate swaps on held
for sale receivables. The Company recorded a gain during the quarter ended March
31, 2001 because the loss  position  improved from the loss position at December
31, 2000 of $4.7 million. Although this accounting change may have a significant
impact on the volatility of period to period earnings,  SFAS No. 133 has no cash
effect on the Company's  business.  The following table illustrates the movement
of the hedging  losses  from the held for sale  receivables  to the  securitized
receivables:
<PAGE>
<TABLE>
<CAPTION>


                                                             Fiscal Quarter Ended                   Nine Months ended
                                                September 30,    December 31,      March 31,            March 31,
                                              ---------------  --------------   ---------------    -------------------
                                                   2000             2001             2001                 2001
                                              ---------------  --------------   ---------------    -------------------
                                                                          (in millions)
Held for Sale Receivables
----------------------------------------------
<S>                                                  <C>              <C>               <C>                    <C>
Gain (loss) on interest rate swaps on
     held for sale receivables                       $ (2.4)          $ (4.7)           $ (1.6)                $ (8.7)
Reclassified to securitized receivables                                  2.4               4.7                    7.1
                                              --------------   --------------   ---------------    -------------------
Total net gain (loss) on interest rate swaps
     on held for sale receivables                    $ (2.4)          $ (2.3)            $ 3.1                 $ (1.6)
                                              ==============   ==============   ===============    ===================

Securitized Receivables
----------------------------------------------
Loss on interest rate swaps on
     securitized receivables                         $ (5.4)          $ (1.1)           $ (5.8)               $ (12.3)
Reclassified from held for sale receivables               -             (2.4)             (4.7)                  (7.1)
                                              --------------   --------------   ---------------    -------------------
Total net loss on interest rate swaps on
     securitized receivables                         $ (5.4)          $ (3.5)          $ (10.5)               $ (19.4)
                                              ==============   ==============   ===============    ===================
</TABLE>


     Servicing fees  increased  25.5% to $7.8 million and 19.9% to $22.2 million
for the quarter and nine months ended March 31, 2001, respectively,  compared to
$6.2 million and $18.5 million for the corresponding periods of fiscal 2000. The
increase  in  servicing  fees is a  result  of the  higher  average  securitized
servicing  portfolio  of $3.1  billion and $2.9 billion for the quarter and nine
months ended March 31, 2001 compared to $2.4 billion for the same periods of the
prior fiscal year.  Servicing fees consist  primarily of  contractual  servicing
fees of 1.0% on Tier I securitizations.

     Late  charges and other fees  increased  15.4% to $1.9 million and 15.2% to
$5.4 million for the quarter and nine months ended March 31, 2001, respectively,
compared to $1.7  million  and $4.7  million  for the  corresponding  periods of
fiscal 2000.  Other fees consist  primarily of late  charges,  gross profit from
dealership sales, and other fee income.

     Salaries and benefits expense  increased 19.9% to $8.8 million and 20.0% to
$25.2   million  for  the  quarter  and  nine  months   ended  March  31,  2001,
respectively,  from $7.4  million  and $21.0  million  for the  quarter and nine
months ended March 31, 2000, respectively. The increase was primarily related to
an increase in employees as the average servicing  portfolio increased 27.1% and
24.8% for the  quarter  and nine  months  ended  March  31,  2001.  The  average
full-time  equivalents  for the quarter and nine months ended March 31, 2001 was
731 and 694, respectively, compared to 597 and 569 for the corresponding periods
in fiscal 2000.

     Other general and  administrative  expense  increased 15.4% to $6.0 million
and 15.4% to $17.5 million for the quarter and nine months ended March 31, 2001,
respectively,  compared to $5.2  million  and $15.1  million for the quarter and
nine months ended March 31, 2000, respectively. Other general and administrative
operating   expense  includes   occupancy  and  equipment  costs,   outside  and
professional services, receivable expenses, promotional expenses, travel, office
supplies, and other. The increase in other general and administrative expense is
primarily  attributed to outside services expense,  comprising of service bureau
expense,  lock box expense  and bank  charges.  These  expenses  will  generally
increase as the Company's servicing portfolio increases.

     Total operating expenses  (including salaries and benefits) as a percentage
of the average servicing  portfolio was 1.76% and 1.75% for the quarter and nine
months ended March 31, 2001,  respectively,  compared to 1.89% and 1.85% for the
same periods of fiscal 2000. Total operating  expenses increased 18.0% and 18.1%
over the  quarter  and nine  months  ended  March 31,  2001 and March 31,  2000,
respectively,  however this  corresponds  with a 27.1% and 22.1% increase in the
average servicing portfolio over the same periods, respectively.

     Provision  for income  taxes  increased  83.7% to $3.8 million and 14.2% to
$7.8 million for the quarter and nine months ended March 31, 2001, respectively,
compared to $2.1 million and $6.8 million for the  corresponding  periods  ended
March 31, 2000. The increase for the quarter and nine months is the result of an
increase  in  earnings  before  income  taxes  which was  partially  offset by a
decrease  in the  effective  tax  rate.  Beginning  July 1,  2000,  the  Company
decreased the  effective tax rate by 1.7% to 36.5% from 38.2% (before  permanent
differences)  to more  accurately  reflect  the  combined  federal and state tax
liability resulting from the Company's  operations in the various  jurisdictions
in which the Company does business.


<PAGE>

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.  Selected  information  regarding the
Receivables held for sale, net and the servicing portfolio at March 31, 2001 and
June 30, 2000 is summarized in the following table:

                                           March 31,             June 30,
                                             2001                 2000
                                       -----------------    -----------------
                                                   (In thousands)

Receivables held for sale, net              $   127,312          $   206,701
Allowance for net credit losses             $    (2,467)         $    (2,978)
Securitized assets serviced                 $ 3,228,640          $ 2,676,655
Total servicing portfolio                   $ 3,350,897          $ 2,881,115


     Retained  interest in securitized  assets ("Retained  Interest").  Retained
Interest  increased  $57.7  million to $266.1  million at March 31,  2001,  from
$208.4  million at June 30, 2000.  The Retained  Interest  balance  increased or
decreased  by the  amounts  capitalized  upon  consummation  of the first  three
quarters'   securitizations   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 activity of Retained  Interest for the
nine months ended March 31, 2001 (in thousands):


Balance at June 30, 2000                                              $ 208,431

Amounts capitalized (including estimated dealer premium
  rebates refundable)                                                    83,432
Collections                                                             (73,250)
Accretion of discount                                                    22,881
Change in spread accounts                                                24,683
Change in accelerated principal                                           4,741
Other than temporary impairment                                          (4,876)
Net change in unrealized gain                                                73
                                                                  --------------

Balance at March 31, 2001                                             $ 266,115
                                                                  ==============



     The following table  illustrates the activity of the Spread account for the
nine months ended March 31, 2001 (in thousands):

Balance at June 30, 2000                                               $ 58,663

Excess cash flows deposited to spread accounts                           54,866
Initial spread account deposits                                           6,392
Interest earned on spread accounts                                        3,088
Less:  excess cash flows released to the Company                        (39,663)
                                                                  --------------

Balance at March 31, 2001                                              $ 83,346
                                                                  ==============



     Allowance for net credit losses on securitized receivables is included as a
component of Retained Interest. At March 31, 2001, the allowance related to both
Tier I and Tier II securitized  receivables  totaled $143.3 million, or 4.44% of
the total  securitized  receivable  portfolio,  compared to $119.0  million,  or
4.45%, at June 30, 2000.  Impairment of Retained Interest, an available-for-sale
security,  is measured on a disaggregate (pool by pool) basis in accordance with
SFAS 115. See "Note 2 - Notes to Consolidated  Condensed  Financial  Statements"
for additional  discussions and recent developments regarding Retained Interest.
Also, see - "Discussion of Forward-Looking Statements".

     Notes  payable were $122.0  million at March 31,  2001,  compared to $152.2
million at June 30,  2000.  The  portion of notes  payable  attributable  to the
warehouse credit  facilities were $119.5 million and $152.2 million at March 31,
2001 and June 30,  2000,  respectively.  The  decrease in the  warehouse  credit
facilities  is a result  of lower  acquisition  volume  after  the  close of the
securitization  transaction  in the quarter  ending  March 2001  compared to the
quarter ending June 2000.  Working capital line borrowings  totaled $2.5 million
at March 31, 2001 compared to none at June 30, 2000. The increase is a result of
temporary working capital needs.

     Long-term debt was $155 million at March 31, 2001, compared to $177 million
at June 30,  2000.  The  decrease in  long-term  debt was a result of a required
principal payment on the Company's Senior Notes in August 2000 of $22.0 million.

     Current and deferred  income taxes  payable  totaled $11.7 million at March
31, 2001, compared to $9.7 million at June 30, 2000. The difference is primarily
the result of the tax payments  made during the nine months ended March 31, 2001
and offset by the tax liability associated with current year earnings.


Liquidity and Capital Resources

     Sources and Uses of Cash in  Operations.  Net cash  provided  by  operating
activities  was $0.8 million for the nine months ended March 31, 2001,  compared
to cash used by operating  activities of $92.7 million for the nine months ended
March 31, 2000.  The change was  primarily  attributable  to higher  receivables
securitized than receivable  acquisitions during the nine months ended March 31,
2001.  Net cash  provided by investing  activities  was $42.6  million and $55.2
million for the nine months  ended  March 31, 2001 and 2000,  respectively.  The
decrease over the prior period  primarily  relates to the decrease in the change
in spread accounts and lower collection on retained interest,  but was partially
offset by a decrease in the  accelerated  principal.  Net cash used in financing
activities  for the nine months ended March 31, 2001 was $52.8 million  compared
to net cash  provided  by  financing  activities  of $38.8  million for the nine
months ended March 31, 2000. The primary factor for this change is the decreased
warehouse  borrowings resulting from the lower acquisition of receivables in the
quarter ended March 31, 2001 compared to the quarter ended March 31, 2000.

     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,  revolving warehouse credit facilities and a
$15  million  working  capital  line.  Historically,  the  Company  has used the
securitization  of receivable  pools as its primary  source of term funding.  In
August 1999, the Company established an additional source of liquidity through a
securitization  arrangement with a commercial  paper conduit.  This facility has
capacity of $450  million,  and $414.9  million was  utilized at March 31, 2001.
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
facilities  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
revolving  warehouse credit facilities 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 revolving warehouse credit facilities.  The Company consistently
assesses its long-term receivable funding arrangements with a view of 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
a  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.  Based on the delivery of the $143 million of receivables in April 2001
and the  previously  mentioned  decrease in the  acquisition of receivables as a
result of the Company's overall capital  strategy,  it does not currently expect
to securitize  any  additional  receivables in the quarter ending June 30, 2001.
See - "Discussion of Forward-Looking Statements".

     Derivative   financial   instruments.   Derivative   financial   instrument
transactions  (generally, a gain or loss on interest rate swaps) may represent a
source  or a use of cash  during  a given  period  depending  on the  change  in
interest rates. In the first three quarters of fiscal 2001, derivative financial
instrument  transactions used cash of $19.4 million compared to cash provided of
$5.0 million during the first three quarters of fiscal 2000.

     Warehouse  facilities.  The Company has Credit  Facilities with independent
financial   institutions  for  a  total  of  $750  million  to  fund  receivable
acquisitions.  A $350 million Credit Facility and a $200 million Credit Facility
are insured by surety bond providers while a $200 million Credit Facility is not
insured. At March 31, 2001, $119.5 million of the capacity was utilized,  and an
additional  $588,000 was available to borrow based on the outstanding  principal
balance of eligible  receivables.  At June 30, 2000, and March 31, 2000,  $152.2
million and $246.7 million of the capacity was utilized, and an additional $47.1
million  and $39.0  million was  available  to borrow  based on the  outstanding
principal balance of eligible receivables,  respectively.  The Credit Facilities
generally have a term of one year. Selected summary information about the Credit
Facilities is shown below:

  Credit Facility                  Outstanding                     Expiration
     Capacity                   at March 31, 2001                     Date
-------------------          ----------------------           ------------------
   (in millions)
       $ 350                           None                        August 2001
       $ 200                          $119.5                      February 2002
       $ 200                           None                        August 2001


     Working  capital  line.  In June 2000,  the Company  established  a working
capital line of credit for $15.0  million.  This line of credit is unsecured and
is available to fund short-term cash flow needs of the Company. The facility has
a one year term, and $12.5 million was available for use at March 31, 2001. This
facility expires in June 2001.

     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 of $22
million began on August 1, 1998 and are due annually on August 1 until maturity.
The Notes  currently  have a private  rating by Fitch of B+. 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.  The Notes have a current  private rating by Fitch of
B-. 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.  The Notes have a current private rating by
Fitch of B+.

     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.

     Capitalization and Effect on Results of Operations. The Company, as part of
its capital  strategy,  filed a  registration  statement with the Securities and
Exchange  Commission on April 6, 2001 relative to the proposed offer and sale of
up to 17.6 million shares of its Class A common stock  pursuant to  subscription
rights to be issued to its shareholders and to certain standby  purchasers.  The
Company  expects  net  proceeds  from the  offering  to be  approximately  $78.5
million. The registration statement has not yet become effective. The Company is
pursuing a capital strategy, of which the foregoing offering is a part, intended
to enhance its ratio of capital to managed  assets  (including  its  securitized
servicing  portfolio) over time. The anticipated  proceeds of the pending equity
offering  will increase the  Company's  equity to managed  assets ratio on a pro
forma basis to approximately 5.50% as of March 31, 2001 from 3.36%. Management's
objective is to raise this ratio to approximately 8.00% over the next few years.
It is not presently  management's  intention to seek to raise additional  equity
after  this  offering.  In  particular,  management  currently  expects  to seek
expanded  unsecured   revolving  credit  availability  or  issue  new  unsecured
subordinated debt in fiscal 2002 or 2003.  Management believes that the proceeds
of the pending  rights  offering,  together with funds  available from existing,
replacement  or such new credit  facilities  and funds  provided  by  operations
should be sufficient  to support  measured  growth in  receivable  acquisitions,
achieve an acceptable  level of  profitability  and to allow the Company to meet
long-term debt repayment obligations coming due in the next two years. It should
be noted,  however,  that the cash requirements of operations depend on a number
of factors that are  difficult to predict,  including the costs of interest rate
hedging  transactions,  the level of credit enhancements  required to securitize
receivables,  dealer reserve levels and similar  matters.  See  "Forward-Looking
Statements."

     If the Company can effectively  price receivable  acquisitions  relative to
risk,  management  expects  that it should  be able to  increase  its  return on
managed  assets and return on equity over the next several  years.  After taking
account of the additional equity to be raised in the pending equity offering and
based on  anticipated  market and  competitive  factors  and the loss and credit
performance  estimates inherent in management's  pricing strategies,  management
expects that the Company's return on equity will decline modestly in fiscal 2002
from fiscal 2001. However, based on such factors and assumptions, as receivables
acquired utilizing  management's  refined pricing strategies come to represent a
larger portion of the servicing portfolio, management presently anticipates that
the  Company  should be able to generate an  increasing  return on  shareholders
equity in fiscal 2003,  reaching the Company's targeted minimum return on equity
of 15% by the end of fiscal 2004. See "Forward-Looking Statements."

     The Company  plans to propose to  shareholders  at its 2001 annual  meeting
amendments  to its  charter,  which will  include an  elimination  of the voting
preference  of our Class B common  stock and  convert  the  outstanding  Class B
common  stock and Class A common  stock to a single  class of common  stock with
uniform rights. See - "Discussion of Forward-Looking Statements".


Discussion of Forward-Looking Statements

     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,  and other
aspects of its business.  Similar forward-looking  statements may be made by the
Company  from  time  to  time.  In  particular,  the  Company's  gain on sale of
receivables  and  retained  interest in  securitized  assets are reported on the
basis  of  significant   estimates  of  future   portfolio   performance.   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  2000  which is  incorporated
herein by this reference.



<PAGE>




Item 3.  Quantitative and Qualitative Disclosures About Market Risk

     The Company's sources for short-term 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 an economic  hedging strategy to mitigate this risk. The
Company uses an economic  hedging  strategy that  primarily  consists of forward
interest rate swaps having a maturity  approximating the average maturity of the
acquisition  volume during the relevant period. At such time as a Securitization
is committed,  the interest rate swaps are  terminated.  The Company's  economic
hedging   strategy  is  an  integral  part  of  its  practice  of   periodically
securitizing  receivables.  Prior to March 1999, as part of the economic hedging
strategy,  the Company  used an  economic  hedging  vehicle  that  included  the
execution of short sales of U.S. Treasury Notes having a maturity  approximating
the average  maturity of the receivable  acquisition  volume during the relevant
period. In addition,  the commercial paper conduit pursuant to which the Company
Securitized  $500.0 million in  receivables in September  2000, and which it may
utilize from time to time in the future, provides for issuance of a note bearing
interest at a floating rate with the  resulting  interest rate risk covered by a
related  interest  rate  swap  arrangement.  There is no  assurance  that  these
strategies will completely offset changes in interest rates. In particular, such
strategies depend on management's estimates of receivable acquisition volume and
timing of its  Securitizations.  The  Company  realizes  a gain on its  economic
hedging  transactions during periods of increasing interest rates and realizes a
loss on such transactions  during periods of decreasing interest rates. Prior to
July 1, 2000, the economic hedging gain or loss substantially  offset changes in
interest  rates  as seen by  reporting  a  lower  or  higher  gain on  sales  of
receivables,  respectively.  Also,  prior  to  July,  1,  2000,  recognition  of
unrealized gains or losses is deferred until the sale of receivables  during the
Securitization  and on the date of the sale,  deferred  hedging gains and losses
are  recognized  as a  component  of the Gain  (loss)  on sales of  receivables.
Beginning  July 1,  2000,  both  the  Gain  (loss)  on  interest  rate  swaps on
securitized  receivables  and the Gain (loss) on interest rate swaps on held for
sale receivables are reflected in the income  statement.  At March 31, 2001, the
Company had an  unrealized  hedging loss on forward  interest rate swaps of $1.6
million based on notional amounts outstanding of $116.8 million.  The fair value
of long-term debt increases or decreases as market interest rates are reduced or
increased, respectively.

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 March 31, 2001:
<TABLE>
<CAPTION>

                                       Three months         Fiscal year ended
                                      ended June 30,           June 30,
                                                     ---------------------------
                                          2001         2002         2003          Total       Fair Value
                                          ----         ----         ----          -----       ----------
                                                            (Dollars in thousands)

<S>                                    <C>           <C>        <C>             <C>            <C>
Notes Payable                          $ 122,022     $     -    $       -       $ 122,022      $ 122,022
   Weighted average variable rate           6.53%

Long-term debt                         $       -     $43,667    $ 111,333       $ 155,000      $ 150,890
   Weighted average fixed rate                 -        8.14%        8.86%           8.66%
</TABLE>


<PAGE>


Sensitivity analysis on Retained Interest

     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.  The
Company does not believe  fluctuations in interest rates  materially  affect the
rate of prepayments on receivables.

     At March 31, 2001,  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 March 31, 2001                                    Tier I                Tier II               Total
                                                                ------                -------               -----

<S>                                                         <C>                     <C>                   <C>
Fair value of retained interest (1)                         $      276,563          $      1,444          $      278,007

Prepayment speed assumption (annual rate)                  20.36% - 28.00%                20.69%

Impact on fair value of 10% adverse change                  $      269,932          $      1,435          $      271,367
Impact on fair value of 20% adverse change                  $      263,650          $      1,425          $      265,075


Net loss rate assumption (pool life rate)                    4.00% - 6.45%                12.00%

Impact on fair value of 10% adverse change                  $      251,404          $      1,117          $      252,521
Impact on fair value of 20% adverse change                  $      226,026          $        800          $      226,826


Discount rate assumption (annual rate)                      7.30% - 13.34%                12.30%

Impact on fair value of 10% adverse change                  $      270,704          $      1,416          $      272,120
Impact on fair value of 20% adverse change                  $      265,093          $      1,389          $      266,482

</TABLE>

(1)  Retained  Interest on the balance  sheet is lower than the total fair value
included in this  analysis.  The difference  primarily  relates to the inventory
value of repossessed  autos that have not been sold.  This amount is included in
Retained  Interest  as part of the  allowance  for  estimated  credit  losses on
securitized receivables but not included in the total fair value.

     These  sensitivities  are hypothetical and should be used with caution.  As
the figures indicate,  any change in fair value based on a particular percentage
variation in assumptions cannot be extrapolated  because the relationship of the
change  in fair  value is not  linear.  Also,  in this  table,  the  effect of a
variation in a particular  assumption on the fair value of the retained interest
is calculated  independent  from any change in another  assumption;  in reality,
changes in one factor may result in changes in another,  which might  magnify or
counteract the sensitivities. See "Discussion of Forward-Looking Statements."


<PAGE>



Part II. Other Information

Item 6.  Exhibits and Reports on Form 8-K

         (a)  The following exhibits are filed with this report:

                Exhibit  4.1    Amendment  No.  2  to  Note  Purchase  Agreement
                                between Union Acceptance Corporation and certain
                                lenders dated April 2, 1996.

                         4.2    Amendment No. 3 to Security  Agreement  dated as
                                of February 27, 2001  (incorporated by reference
                                to exhibit 4.9(c) to  Registration  Statement on
                                Form  S-2  filed   April  6,  2001,   Reg.   No.
                                333-58396).

                         4.3    Amendment No. 4 to Security  Agreement  dated as
                                of March 8, 2001  (incorporated  by reference to
                                Exhibit 4.9(d) to Registration Statement on Form
                                S-2 filed April 6, 2001, Reg. No. 333-58396).

                        10.1    Amendment No. 1 to Union Acceptance  Corporation
                                1994  Incentive  Stock Plan  effective  March 2,
                                2001   (incorporated  by  reference  to  Exhibit
                                10.18(a) to  Registration  Statement on Form S-2
                                filed April 6, 2001, Reg. No. 333-58396).

                        10.2    Amendment No. 2 to Union Acceptance  Corporation
                                1999 Stock Incentive Plan effective February 23,
                                2001.

                        10.3    Amendment  dated  November 19,  1998,  to Annual
                                Bonus and Deferral Plan for Senior Officers.

                        10.4    Consulting Agreement between us and Jerry D. Von
                                Deylen, dated as of March 2, 2001.

                        10.5    Employment  Letter  between  us  and  Michael G.
                                Stout, dated as of March 2, 2001.

         (b)  Reports on Form 8-K

                The  Company  filed no reports  on Form 8-K  during the  quarter
                ended March 31, 2001.





<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

May 9, 2001                             By:      /S/ John M. Stainbrook
                                                  ------------------------------
                                         John M. Stainbrook
                                         President and Chief Executive Officer



May 9, 2001                             By:      /S/ Rick A. Brown
                                                  ------------------------------
                                         Rick A. Brown
                                         Treasurer and Chief Financial Officer