<PAGE>   1
                       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 October 31, 1997
                                                ----------------

                                       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 1-11601

                           NATIONAL AUTO CREDIT, INC.
                           --------------------------
             (Exact name of registrant as specified in its charter)

                                    DELAWARE
         --------------------------------------------------------------
         (State or other jurisdiction of incorporation or organization)

                                   34-1816760
                      ------------------------------------
                      (I.R.S. Employer Identification No.)

                      30000 Aurora Road, Solon, Ohio 44139
                      ------------------------------------
              (Address of principal executive offices and zip code)

                                 (440) 349-1000
                                 --------------
              (Registrant's telephone number, including area code)

--------------------------------------------------------------------------------
         (FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR IF CHANGED
                              SINCE LAST REPORT).


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
   Yes  X     No  
       ---       ---

         APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
   Yes         No 
       ---        ----

         APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practicable date: 28,547,944 shares as of November 28, 1997.


<PAGE>   2



                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES



                                TABLE OF CONTENTS

                                                                     PAGE NUMBER
                                                                     -----------

 PART I.      FINANCIAL  INFORMATION:


 Item 1.      Financial Statements

              Consolidated Balance Sheets -
              October 31, 1997 and January 31, 1997                         1

              Consolidated Statements of Income -
              Three and Nine Months Ended October 31, 1997 and 1996         2

              Consolidated Statement of Stockholders'
              Equity - Nine Months Ended October 31, 1997                   3

              Consolidated Statements of Cash Flows -
              Nine Months Ended October 31, 1997 and 1996                   4

              Notes to Consolidated Financial Statements                  5 - 8

 Item 2.      Management's Discussion and Analysis of
              Financial Condition and Results of Operations               9 - 11

 PART II.     OTHER INFORMATION:

 Item 6.      Exhibits and Reports on Form 8-K                             12




<PAGE>   3


                   National Auto Credit, Inc. and Subsidiaries
                           Consolidated Balance Sheets
                (Thousands of Dollars, Except Per Share Amounts)

<TABLE>
<CAPTION>

                                                    October 31,      January 31,
                                                       1997              1997
                                                    ---------         ---------
ASSETS                                              (Unaudited)
<S>                                                 <C>               <C>      
Cash and cash equivalents                           $   1,791         $   1,756
Installment notes receivable, net                     292,145           316,048
Property and equipment, net of
  accumulated depreciation of
  $7,029 and  $ 6,264, respectively                     8,757             9,224
Other assets                                           12,209            11,741
Deferred income taxes                                  21,553            11,641
                                                    ---------         ---------

                                                    $ 336,455         $ 350,410
                                                    =========         =========


LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
  Self-insurance claims                             $   5,305         $  13,787
  Notes payable                                        13,835            13,354
  Operating debt                                       78,365            66,846
  Income taxes payable                                  4,406             6,777
  Other liabilities                                    15,325            20,098
                                                    ---------         ---------
                                                      117,236           120,862
                                                    ---------         ---------

Commitments and Contingencies                            --                --

Stockholders' Equity
  Preferred stock  - $.05 par value,
     authorized 2,000,000 shares,
     none issued                                         --                --
  Common stock - $.05 par value,
     authorized 40,000,000 shares, issued
     29,893,912 and 29,845,673 shares,
     respectively                                       1,495             1,492
  Additional paid-in capital                          166,011           165,605
  Retained earnings, including cumulative
     foreign currency translation loss
     of $1,398 and $1,070, respectively                63,816            74,073
  Treasury stock, at cost, 1,345,968 and              
     1,298,568 shares, respectively                   (12,103)          (11,622)
                                                    ---------         ---------
                                                      219,219           229,548
                                                    ---------         ---------


                                                    $ 336,455         $ 350,410
                                                    =========         =========
</TABLE>






              See notes to consolidated financial statements.



                                       -1-

<PAGE>   4


                   National Auto Credit, Inc. and Subsidiaries
                        Consolidated Statements of Income
                (Thousands of Dollars, Except Per Share Amounts)
                                   (Unaudited)

<TABLE>
<CAPTION>


                                                  Three Months Ended                Nine Months Ended
                                                      October 31,                       October 31,
                                              -------------------------         -------------------------
                                                 1997             1996             1997             1996
                                              --------         --------         --------         --------


<S>                                           <C>              <C>              <C>              <C>     
REVENUE
   Interest income                            $ 16,201         $ 14,156         $ 49,988         $ 41,373
   Fee and other income                          1,389            2,007            5,215            5,095
                                              --------         --------         --------         --------
      Total                                     17,590           16,163           55,203           46,468


COSTS AND EXPENSES
  Provision for credit losses                   41,741            2,642           57,555            7,031
  Operating                                      1,482            1,489            4,760            4,151
  General and administrative                     1,448            1,161            4,072            3,537
  Interest                                       1,672              788            4,610            1,616
                                              --------         --------         --------         --------
    Total                                       46,343            6,080           70,997           16,335
                                              --------         --------         --------         --------


INCOME (LOSS)  FROM CONTINUING
  OPERATIONS BEFORE INCOME TAXES               (28,753)          10,083          (15,794)          30,133

  Provision (benefit) for income taxes         (10,336)           3,419           (5,865)          10,637
                                              --------         --------         --------         --------

INCOME (LOSS) FROM CONTINUING
OPERATIONS                                     (18,417)           6,664           (9,929)          19,496

LOSS FROM DISCONTINUED OPERATIONS,
  NET OF TAX                                      --             (5,098)            --             (6,917)
                                              --------         --------         --------         --------

NET INCOME (LOSS)                             $(18,417)        $  1,566         $ (9,929)        $ 12,579
                                              ========         ========         ========         ========



EARNINGS (LOSS) PER SHARE
  Continuing operations                       $  (0.65)        $    .23         $  (0.35)        $   0.68
  Discontinued operations                         --               (.18)            --               (.24)
                                              --------         --------         --------         --------
  Total                                       $  (0.65)        $    .05         $  (0.35)        $   . 44
                                              --------         --------         --------         --------

WEIGHTED AVERAGE NUMBER OF
  SHARES OUTSTANDING (000's)                    28,548           28,504           28,537           28,490
                                              --------         --------         --------         --------
</TABLE>






                 See notes to consolidated financial statements.


                                       -2-

<PAGE>   5


                   National Auto Credit, Inc. and Subsidiaries
                 Consolidated Statement of Stockholders' Equity
                       Nine Months Ended October 31, 1997
                                 (In Thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>


                                              
                           Common Stock                              Foreign
                        -------------------   Additional             Currency
                                    Par        Paid-In    Retained  Translation   Treasury
                        Shares      Value      Capital    Earnings  Adjustment      Stock         Total
                        ------      -----      -------    --------  ----------      -----         -----

<S>                     <C>        <C>         <C>         <C>        <C>         <C>          <C>      
BALANCE
   JANUARY 31, 1997     29,846     $ 1,492     $165,605    $75,143    $(1,070)    $(11,622)    $ 229,548

Net  loss                                                   (9,929)                               (9,929)
Stock issued under
   benefit plans            48           3          406                                              409
Treasury stock
   purchases                                                                          (481)         (481)
Foreign currency
   translation                                                           (328)                      (328)
                        ------     -------     --------    -------    -------     --------     ---------

BALANCE
   OCTOBER 31, 1997     29,894     $ 1,495     $166,011    $65,214    $(1,398)    $(12,103)    $ 219,219
                        ======     =======     ========    =======    =======     ========     =========
</TABLE>







See notes to consolidated financial statements.


                                       -3-


<PAGE>   6


                   National Auto Credit, Inc. and Subsidiaries
                      Consolidated Statements of Cash Flows
                             (Thousands of Dollars)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                           Nine Months Ended
                                                                              October 31,
                                                                     ---------------------------
                                                                        1997              1996
                                                                     ---------         ---------
<S>                                                                  <C>               <C>      
CASH FLOWS FROM OPERATING ACTIVITIES
     Net income (loss)                                               $  (9,929)        $  12,579
     Adjustments to reconcile net income (loss) to net cash
       provided by operating activities:
         Depreciation and amortization                                   1,034             2,613
         Interest income on dealer advances                            (15,196)           (9,638)
         Provision for credit losses                                    57,555             7,031
         Deferred income taxes                                         (10,062)           (1,889)
         Changes in operating assets and liabilities:
           Income taxes payable                                         (2,221)           (4,396)
           Other liabilities                                            (4,413)            8,525
           Self-insurance claims                                        (8,482)           (6,394)
           Other operating assets and liabilities, net                  (2,182)             (998)
                                                                     ---------         ---------

         Net cash provided by operating activities                       6,104             7,433
                                                                     ---------         ---------

CASH FLOWS FROM INVESTING ACTIVITIES
     Principal collected on installment notes receivable               110,421            89,798
     Proceeds from sale of rental automobiles                             --              11,125
     Advances to dealers and payments of dealer holdbacks             (127,450)         (145,564)
     Purchase of property and equipment                                   (722)             (471)
     Other investing activities, net                                        82            (1,088)
                                                                     ---------         ---------

         Net cash used in investing activities                         (17,669)          (46,200)
                                                                     ---------         ---------

CASH FLOWS FROM FINANCING ACTIVITIES
     Net borrowings (payments) on lines of credit                      (76,500)           38,100
     Proceeds from revolving credit facility and
         issuance of senior notes                                      121,500              --
     Payments on revolving credit facility and senior notes            (33,000)             --
     Payments to acquire treasury stock                                   (481)             --
     Stock issued under benefit plans                                      409               383
     Other financing activities, net                                      (328)              319
                                                                     ---------         ---------

         Net cash provided by financing activities                      11,600            38,802
                                                                     ---------         ---------

Increase in cash and cash equivalents                                       35                35
Cash and cash equivalents at beginning of period                         1,756             1,665
                                                                     ---------         ---------
Cash and cash equivalents at end of period                           $   1,791         $   1,700
                                                                     =========         =========

Supplemental Disclosures of Cash Flow Information:

   Interest paid                                                     $   4,580         $   1,326
                                                                     =========         =========

   Income taxes paid                                                 $   6,381         $  12,803
                                                                     =========         =========
</TABLE>



See notes to consolidated financial statements.

                                       -4-

<PAGE>   7


                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)



NOTE A  -  Summary of Significant Accounting Policies
           ------------------------------------------

           GENERAL:

           The accompanying consolidated financial statements include the
           accounts of National Auto Credit, Inc. and its subsidiaries (the
           "Company").

           The unaudited consolidated financial statements have been prepared in
           accordance with generally accepted accounting principles for interim
           financial information and with the instructions to Form 10-Q and
           Article 10 of Regulation S-X. Accordingly, they do not include all of
           the information and footnotes required by generally accepted
           accounting principles for complete financial statements. In the
           opinion of management, all adjustments (consisting of normal
           recurring accruals) considered necessary for a fair presentation have
           been included. Operating results for the three and nine month periods
           ended October 31, 1997 are not necessarily indicative of the results
           that may be expected for the year ended January 31, 1998. For further
           information, refer to the financial statements and footnotes thereto
           included in the Company's January 31, 1997 Annual Report on Form
           10-K.

           EARNING PER SHARE:
           Earnings per share is computed on the basis of the weighted average
           common shares outstanding during the period. Common share equivalents
           have been excluded from this computation since they have less than a
           3% dilutive effect. These calculations are made in accordance with
           Accounting Principles Board Opinion (APB) No. 15 "Earnings Per
           Share". The Financial Accounting Standards Board recently issued
           Statement of Financial Accounting Standard (SFAS) 128, "Earnings Per
           Share" which supersedes APB No. 15 and is effective for all periods
           ending after December 15, 1997, earlier application not being
           permitted. Earnings per share determined in accordance with SFAS 128
           will not be materially different than earnings per share determined
           in accordance with APB No. 15.


           RECLASSIFICATIONS:
           Certain prior period amounts have been reclassified to conform with
           the current period presentation.






                                      -5-








<PAGE>   8


                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


NOTE B  -  Installment Notes Receivable, Net
           ---------------------------------

           The components of installment notes receivable, net, are as
           follows:

<TABLE>
<CAPTION>

                                                   October 31,         January 31,
                                                       1997               1997
                                                    ---------         ---------
                                                            (in thousands)

<S>                                                  <C>              <C>      
           Gross installment notes receivable        $ 511,224        $ 496,947
           Unearned income                            (70,552)          (72,475)
           Dealer holdbacks, net of advances          (73,674)          (74,967)
           Allowance for credit losses                (74,853)          (33,457)
                                                    ---------         ---------
           Installment notes receivable, net        $ 292,145         $ 316,048
                                                    =========         =========
</TABLE>

           A summary of changes in gross installment notes receivable is as
           follows:

<TABLE>
<CAPTION>

                                              Three Months Ended          Nine Months Ended
                                                 October 31,                 October 31,
                                           -----------------------     -----------------------
                                              1997          1996          1997          1996
                                           ---------     ---------     ---------     ---------
                                                               (in thousands)

           <S>                             <C>           <C>           <C>           <C>      
           Balance, beginning of period    $ 514,217     $ 426,030     $ 496,947     $ 354,012
           Contracts accepted                 74,983        97,779       242,331       274,013
           Cash collected                    (44,302)      (44,002)     (145,442)     (124,192)
           Charge-offs against:
              Dealer holdbacks               (26,558)      (15,895)      (64,377)      (33,727)
              Unearned income/allowance       (7,116)       (4,683)      (18,235)      (10,877)
                                           ---------     ---------     ---------     ---------
           Balance, end of period          $ 511,224     $ 459,229     $ 511,224     $ 459,229
                                           =========     =========     =========     =========
</TABLE>


           Installment notes receivable relate to the indirect consumer
           financing of used automobiles. These notes generally have initial
           terms ranging from 12 to 48 months with an average initial term of 37
           months and an initial gross amount of $9,500. At October 31, 1997 and
           January 31, 1997, the average remaining note term was 23 and 24
           months, respectively. The notes are collateralized by the related
           vehicles sold. Installment notes receivable are from customers
           residing in all 50 states with no individual state accounting for
           more than 10% of total installment notes receivable, except for Texas
           with 12.6%, North Carolina with 11.9% and Florida with 10.4%.

           The accrual of interest income is suspended once a note becomes 120
           days contractually past due. These non-performing notes are
           charged-off against the related dealer's holdback, unearned income
           and then allowance for credit losses, if necessary. At October 31,
           1997 and January 31, 1997, the percent of installment notes
           receivable which were greater than 120 days contractually past due
           was 33.2% and 24.9%, respectively.

           Dealer holdbacks are the amounts payable to member dealers from the
           acceptance of retail installment contracts, net of cash advanced. The
           dealer holdbacks protect the Company from potential losses associated
           with the installment contracts and are not paid unless substantially
           all advances, including those on non-performing loans related to a
           particular dealer, have been recovered. The components of dealer
           holdbacks, net of advances, are as follows:






                                       -6-

<PAGE>   9


                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)



NOTE B - Installment Notes Receivable, Net (cont.)
         -----------------------------------------
<TABLE>
<CAPTION>

                                                October 31,   January 31,
                                                   1997          1997
                                                ---------     ---------
                                                     (in thousands)

           <S>                                  <C>           <C>      
           Dealer holdbacks                     $ 406,167     $ 392,733
           Advances                              (332,493)     (317,766)
                                                ---------     ---------
           Dealer holdbacks, net of advances    $  73,674     $  74,967
                                                =========     =========
</TABLE>



          A summary of changes in dealer holdbacks, net of advances, is as
          follows:

<TABLE>
<CAPTION>

                                                       Three Months Ended        Nine Months Ended
                                                          October 31,              October 31,
                                                    ---------------------     -----------------------
                                                      1997         1996          1997          1996
                                                    --------     --------     ---------     ---------
                                                                     (in thousands)
<S>                                                 <C>          <C>          <C>           <C>      
           Balance, beginning of period             $ 76,560     $ 63,168     $  74,967     $  52,097
           Additions to holdbacks                     56,036       72,675       182,285       210,347
           Advances disbursed                        (44,445)     (51,689)     (138,458)     (159,178)
           Charge-offs of non-performing notes       (26,558)     (15,895)      (64,377)      (33,727)
           Charge-offs of uncollectable advances      13,204          292        22,908           708
           Other                                      (1,123)        (793)       (3,651)       (2,489)
                                                    --------     --------     ---------     ---------
           Balance, end of period                   $ 73,674     $ 67,758     $  73,674     $  67,758
                                                    ========     ========     =========     =========
</TABLE>

          The allowance for credit losses is maintained for earned but unpaid
          finance charges, and in the event the holdback of a particular dealer
          portfolio is not sufficient to ensure the recovery of any outstanding
          advances. The Company assesses fees to dealers for the purpose of
          supplementing this reserve. A summary of changes in the allowance for
          credit losses is as follows:

<TABLE>
<CAPTION>

                                             Three Months Ended        Nine Months Ended
                                                 October 31,              October 31,
                                           ---------------------     ---------------------
                                             1997         1996         1997         1996
                                           --------     --------     --------     --------
                                                           (in thousands)
           <S>                             <C>          <C>          <C>          <C>     
           Balance, beginning of period    $ 44,327     $ 28,078     $ 33,457     $ 23,284
           Advance reserve fees               5,524        1,356       12,178        2,691
           Provision for credit losses       41,741        2,642       57,555        7,031
           Net charge-offs                  (16,739)      (2,055)     (28,337)      (2,985)
                                           --------     --------     --------     --------
           Balance, end of period          $ 74,853     $ 30,021     $ 74,853     $ 30,021
                                           ========     ========     ========     ========
</TABLE>

          The Company recorded a provision for credit losses of $41.7 million 
          for the three months ended October 31, 1997 as compared to $2.6
          million for the comparable period in the prior year. For the nine
          months ended October 31, 1997, the provision for credit losses was
          $57.6 million as compared to $7.0 million for the same period a year
          ago. The increase in the provision for credit losses was primarily
          the result of the Company's evaluation of the collectability of its
          dealer portfolio utilizing enhanced static pool information applied 
          on a dealer-by-dealer basis.




                                       -7-

<PAGE>   10

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

NOTE C  -  Commitments and Contingencies
           -----------------------------

           In the normal course of its business, the Company is named as
           defendant in legal proceedings. It is the policy of the Company to
           vigorously defend litigation and/or enter into settlements of claims
           where management deems appropriate.

           In December 1995, the U.S. Department of Labor notified the Company
           of its investigation of the Company's pay practices concerning its
           former employees during the period from February 1993 through
           September 1995. The Department of Labor's investigation is ongoing
           and potential liability, if any, cannot be estimated by the Company
           at this time.



NOTE D  -  Notes Payable and Operating Debt
           --------------------------------

           The Company completed its private debt offering during the first
           quarter of fiscal 1998. The related $45.0 million of 7.66% unsecured
           Senior Notes have an average term of five years. During the first
           quarter of fiscal 1998, the Company also entered into an unsecured
           revolving credit agreement for $97.5 million with a group of
           financial institutions. This facility, which replaced the Company's
           previous committed facility of $50.0 million, consists of $39.0
           million with a term of one year and $58.5 million with a term of
           three years. The Company also has available $15.5 million of
           uncommitted short-term bank lines at October 31, 1997.

           Prompted by the Company's third quarter loss, the Company has 
           obtained waivers from its lenders, including Senior Note holders and
           financial institutions participating in its Credit Agreements, for
           non-compliance with the fixed charge coverage ratio covenant in
           agreements related to its borrowing. Such waivers will be in effect
           for third quarter reporting requirements. The Company intends to
           negotiate amendments to its terms related to its credit      
           agreements.

           Although the Company intends to negotiate longer term amendments to
           its credit agreements, there can be no assurance to that effect. If
           the Company is unsuccessful in its negotiations, it will, in the
           absence of further waivers, result in an event of default under such
           agreements and may require the Company to attempt to obtain
           replacement financing which could be at less favorable terms than
           those existing currently.

           Amounts outstanding at October 31, 1997 were $45.0 million from the
           private debt facility and $47.2 million from the revolving and
           uncommitted credit facilities. Borrowings under the revolving credit
           facility had an average interest rate of 6.4% at October 31, 1997 and
           mature at various dates through April 20, 1998. Outstanding
           borrowings at January 31, 1997 were $80.2 million and had an average
           interest rate of 6.1%.















                                       -8-

<PAGE>   11


                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

                                    Overview
                                    --------

National Auto Credit, Inc., (the "Company") had a net loss of $(18.4) million,
or $(.65) per share for the quarter ended October 31, 1997, as compared to net
income of $1.6 million , or $.05 per share, for the quarter ended October 31,
1996.

Revenue for the quarter ended October 31, 1997 was $17.6 million compared to
$16.2 million for the same quarter of the prior year. For nine months ended
October 31, 1997, revenue was $55.2 million compared to $46.5 million in the
prior year.

Revenue in the first nine months of fiscal 1998 benefited from gross installment
contract additions of $242.3 million bringing gross receivables to $511.2
million at October 31, 1997 compared to $496.9 million at January 31, 1997. Also
contributing to increased revenue was interest on advances, as advances grew
during the year to $332.5 million at October 31, 1997 from $317.8 million at
January 31, 1997. Future growth of the portfolio is dependent on the Company's
ability to generate additional installment contracts in excess of cash collected
and contracts charged-off. The Company has established minimum portfolio
collection standards for its dealers. To date 229 dealers have been deleted,
accounting for approximately 12% of the contract volume during the last six
months. The Company will continue to monitor its dealer relationships and make
adjustments as necessary.

On Septemer 4, 1997, in an effort to maximize shareholder value, the Company's
Board of Directors retained J.P. Morgan Securities, Inc., an investment banking 
firm, to assist management in examining strategic alternatives.

                              Results of Operations
                              ---------------------

Revenue
-------

Total revenue increased from $16.2 million and $46.5 million for the three and
nine months ended October 31, 1996 to $17.6 million and $55.2 million for the
comparable periods in 1997, representing increases of 8.8% and 18.8%,
respectively. These increases were the result of an increase in interest income
on advances related to the Company's installment notes receivable portfolio and
to an increase in interest income reflecting the growth in the Company's
installment notes receivable portfolio and its enrolled dealer base as follows:

<TABLE>
<CAPTION>

                                GROSS INSTALLMENT                     NUMBER OF
                                NOTES RECEIVABLE     NUMBER           ENROLLED
                                  (IN MILLIONS)   OF CONTRACTS        DEALERS
                                  -------------   ------------        -------
           <S>                        <C>             <C>               <C>
           January 31, 1994           $ 95.7          12,900              900
           October 31, 1994            171.9          24,900            1,300
           January 31, 1995            196.2          28,400            1,400
           October 31, 1995            320.2          48,300            2,100
           January 31, 1996            354.0          53,000            2,300
           October 31, 1996            459.2          65,300            2,900
           January 31, 1997            496.9          70,000            3,100
           October 31, 1997            511.2          75,200            3,400
</TABLE>

The Company continues to monitor the profitability of its dealer relationships
and based upon evaluations has discontinued its relationship with certain
dealers, netted from the amounts presented in the table above.

The average annualized yield of the portfolio decreased from 16.0% for the nine
months ended October 31, 1996 to 15.4% for the same period in 1997. The decrease
is attributable to the increase in non-performing installment contracts and to
the increase in the average initial term of the contract from 36 months at
October 31, 1996 to 37 months at October 31, 1997. 

                                      -9-


<PAGE>   12

                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Revenue (Cont.)
---------------

         Fee and other income includes principally late fees, other
miscellaneous dealer fees and warranty commissions. Revenue from these sources
decreased from $2.0 million for the three months ended October 31, 1996 to $1.4
million for the comparable period in 1997. This was the result of a decrease in
warranty commissions as the Company discontinued its warranty sales program. Fee
and other income for the nine months ended October 31, 1996 increased from $5.1
million to $5.2 million for the same period in 1997. This was due to the
decrease in warranty commissions largely offset by an increase in income from
late fees.


Provision for Credit Losses
---------------------------

         The Company recorded a provision for credit losses of $41.7 million for
the three months ended October 31, 1997 as compared to $2.6 million for the
comparable period in the prior year. For the nine months ended October 31, 1997,
the provision for credit losses was $57.6 million as compared to $7.0 million
for the same period a year ago. The increase resulted from an increase in the
non-cash provision for credit losses relating to dealer advances. The $33.2
million increase from the prior quarter is largely due to the recording of
amounts to reflect the result of the Company's evaluation of its recoverability
of dealer advances, utilizing enhanced static pool information applied on a
dealer-by-dealer basis.

         The provision for credit losses together with fees contractually
charged to member dealers are added to the allowance for credit losses. The
Company believes its credit loss reserves are adequate to absorb anticipated
credit losses, however, since there is no precise method for accurately
determining losses, actual losses could vary from current estimates. To reduce
the potential for future losses, the Company intends to modify its program and
re-evaluate the basis used to charge non-cash fees to dealers, which may reduce
its source for fee and other income.

         Non-performing loans as a percent of the gross installment notes
receivable portfolio (33.2% at October 31, 1997 and 24.9% at January 31, 1997),
are expected to increase as the portfolio matures. The risk of loss to the 
Company is mitigated by a security interest in the vehicle sold and dealer 
holdbacks.


Operating Expenses/ General and Administrative
----------------------------------------------

         Operating expenses and general and administrative expenses as a percent
of revenue remained relatively consistent at 16.4% and 16.5% for the three and
nine months ended October 31, 1996 and 16.7% and 16.0%, respectively, for the
same periods in 1997. The Company has begun staff reductions that will continue
into the fourth quarter in order to reduce operating expenses, as part of its
recently announced strategic initiatives.

Interest Expense
----------------

         Interest expense of $.8 million for the three months ended October 31,
1996 increased to $1.7 million for the three months ended October 31, 1997,
primarily as a result of an increase in average operating debt of $39.4 million
to $88.2 million. There was also an increase in the effective borrowing rate
from 6.1% for the three months ended October 31,1996 to 7.0% for the same period
in fiscal 1998.

         For the nine months ended October 31, 1997, interest expense increased
to $4.6 million from $1.6 million for the same period in the prior year as a
result of an increase in average operating debt of $52.2 million to $85.7
million. The effective borrowing rate increased to 6.7% for the nine months
ended October 31, 1997 from 6.0% for the same period in the prior year.

                                      -10-


<PAGE>   13




                   NATIONAL AUTO CREDIT, INC. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS



Income Taxes
------------

         The tax benefit for the three months ended October 31, 1997 was $10.3
million as compared to a tax provision of $3.4 million for the three months
ended October 31, 1996. The tax benefit for the nine months ended October 31,
1997 was $5.9 million as compared to a tax provision of $10.6 million for the
same period in the prior year. The change for both three and nine month periods
is attributable to the Company's increased provision for credit losses which
resulted in a net loss for the three and nine month periods ended October 31,
1997.


                         Liquidity and Capital Resources
                         -------------------------------


         The Company's primary sources of funds include net cash provided by
operating activities, collections on installment notes receivable, and proceeds
from the Company's revolving credit facility and senior notes. In fiscal 1997,
sources of funds also included proceeds from the sale of rental automobiles.

         Prompted by the Company's third quarter loss, the Company has obtained 
waivers from its lenders, including Senior Note holders and financial
institutions participating in its revolving credit facility, for non-compliance
of the fixed charge coverage ratio covenant. Such waivers will be in effect
until the Company's subsequent quarterly reporting period which will end
January 31, 1998. The Company intends to negotiate amendments to the terms of 
its credit agreements.

         Although the Company intends to negotiate longer term amendments to its
credit agreements, there can be no assurance to that effect. If the Company is
unsuccessful in its negotiation efforts, it will, in the absence of further
waivers, result in an event of default under such agreements and may require the
Company to attempt to obtain replacement financing which could be at less
favorable terms than those existing currently.

         Outstanding borrowings at October 31, 1997 totalled $92.2 million and
consisted of $47.2 million from the Company's revolving and uncommitted credit
facilities and $45.0 million from its private debt facility. Amounts available
to the Company from committed facilities totalled $56.5 million and uncommitted
facilities totalled $9.3 million at October 31, 1997.

         The ratio of operating debt to total capital was 25.9% at October 31,
1997 and 22.0% at January 31, 1997. It is anticipated that debt levels will
decrease through the end of the fiscal year primarily as the results of a
reduction in dealer advances as part of changes in the Company's dealer program.

         The statements contained in management's discussion and analysis of
financial condition and results of operations contain "forward-looking
statements" within the meaning of the Securities Exchange Act of 1934, with
respect to the Company's expectations for the future. Among the factors that
could cause actual results to differ materially from those forward looking
statements are the potential for greater than anticipated non-performing rates,
the potential for lower than anticipated recoverability of amounts advanced to
the Company's member dealers, the ability to obtain modifications to its current
financing agreements, and other factors as discussed in the Company's annual and
quarterly reports filed with the Securities and Exchange Commission.






                                      -11-

<PAGE>   14


PART II. OTHER INFORMATION

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


            a)        Exhibits
                      --------

         Exhibit
         Number       Exhibit Description
         ------       -------------------

           27         Financial Data Schedule

                      Electronically filed with the Securities and Exchange 
                      Commission pursuant to Item 601(c) of Regulations S-K.


            b)        Reports on Form 8-K
                      -------------------

                      No reports were filed on Form 8-K during the quarter ended
                      October 31, 1997.






                                      -12-


<PAGE>   15







                                   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.


                          NATIONAL AUTO CREDIT, INC.

Date:   December 15, 1997                By:   /s/ Robert J. Bronchetti
     -----------------------                   ------------------------
                                               Robert J. Bronchetti
                                               President and
                                               Chief Executive Officer
                                               and Director

                                         By:   /s/ Davida S. Howard
                                               ------------------------
                                               Davida S. Howard
                                               Vice President-Finance
                                               and Controller (Principal
                                               Financial and Accounting Officer)










                                      -13-