AMENDMENT NO. 4 TO

             POOLING AND SERVICING AGREEMENT AND INDENTURE OF TRUST


         FOURTH AMENDMENT,  dated as of April 14, 1998 (this "Amendment") to the
Pooling and  Servicing  Agreement  and  Indenture of Trust,  dated as of July 1,
1995,  as amended by  Amendment  No. 1 thereto  dated as of  September  1, 1995,
Amendment  No. 2 thereto  dated as of  December  5, 1995,  and  Amendment  No. 3
thereto  dated as of  October  14,  1997 (the  "Agreement"),  among  AFG  CREDIT
CORPORATION, a Delaware corporation, as Transferor (the "Transferor"),  AMERICAN
FINANCE GROUP, INC., a Delaware  corporation  ("AFG"), as Servicer,  and BANKERS
TRUST COMPANY,  a banking  corporation  organized and existing under the laws of
the State of New York,  as Trustee  (in such  capacity,  the  "Trustee")  and as
Collateral Trustee (in such capacity, the "Collateral Trustee").

         WHEREAS,  the Transferor,  AFG, the Trustee and the Collateral  Trustee
wish to amend the Agreement in the manner provided for in this Amendment.

         NOW, THEREFORE, the parties hereto hereby agree as follows:

         1. The definition of "Servicing  Fee  Percentage" in Section 1.1 of the
Agreement is amended by deleting the definition in its entirety and replacing it
with the following text:

                  "Servicing Fee Percentage" shall mean .40%.

         2. Paragraph 1(d) of Schedule 3 to the Agreement is amended by deleting
the text in its entirety and substituting in its place the following text:

                  The sum of the Discounted  Lease  Balances of Included  Leases
with respect to which the Lessees  thereunder are rated  internally by AFG, on a
cumulative basis, is not more than 40% of the Aggregate Pool Balance.

         3.  Paragraph  2(a) of Schedule 3 to the Agreement is hereby amended by
replacing the chart therein with the chart attached hereto as Exhibit I.

         4. Except as expressly amended,  modified and supplemented  hereby, the
provisions of the Agreement are and shall remain in full force and effect.

         5. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF  CALIFORNIA,  AND THE  OBLIGATIONS,  RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS,  PROVIDED,  HOWEVER,
THAT THE  OBLIGATIONS,  RIGHTS AND  REMEDIES OF THE  TRUSTEE AND THE  COLLATERAL
TRUSTEE  SHALL BE  DETERMINED  IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW
YORK.

           6. Capitalized terms used in this Amendment without  definition shall
have the meanings assigned to them in the Agreement.

         7. This Amendment may be executed in two or more  counterparts  (and by
different parties on separate counterparts), each of which shall be an original,
but all of which together shall constitute one and the same instrument.






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


                                   AFG CREDIT CORPORATION,
                                   as Transferor




                                   By:    /s/ J. Michael Allgood
                                          -----------------------------------
                                   Title: Vice President


                                   AMERICAN FINANCE GROUP, INC.
                                   as Servicer




                                   By:    /s/ J. Michael Allgood
                                          -------------------------------------
                                   Title: Vice President


                                   BANKERS TRUST COMPANY,
                                   as Trustee




                                   By:    /s/ Kevin Weeks
                                          ------------------------------------
                                   Title: Assistant Vice Prsident


                                   BANKERS TRUST COMPANY,
                                   as Collateral Trustee




                                   By:    /s/ Kevin Weeks
                                          -------------------------------------
                                   Title: Assistant Vice President

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<TABLE>
<CAPTION>

                                    EXHIBIT I


--------------------------------------------------------------------------------------------------------------
                                                                       Percentage of Aggregate
                       Category                                              Pool Balance
--------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>                     <C> 
1. Included Leases of any individual                               Based on External       Based on Internal
   Lessee that are rated AA- or higher                             Ratings                 Ratings
   by Standard & Poor's and Aa3 or
   higher by Moody's

                                                                       20%                          7%
-------------------------------------------------------------------------------------------------------------------
2. Included Leases of any individual                              Based on External       Based on Internal
   Lessee that are rated between                                  Ratings                 Ratings
   investment grade and (i) AA- by
   Standard & Poor's and (ii) Aa3 by
   Moody's

                                                                        9%                          7%
-------------------------------------------------------------------------------------------------------------------
3. Included Leases of any individual                              Based on External       Based on Internal             
   Lessee that are not rated investment                           Ratings                 Ratings
   grade by Moody's and Standard & Poors

                                                                        3%                          3%
-------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
4. Included Leases of all Lessees that 
   operate in the same industry*

                                                                                   40%
----------------------------------------------------------------------------------------------------------------
5. Included Leases that relate to the same 
   type of Equipment**

                                                                                   40%
----------------------------------------------------------------------------------------------------------------
6. Included Leases for which the Scheduled 
   Payments are payable semi-annually


                                                                                   10%
----------------------------------------------------------------------------------------------------------------

</TABLE>

 *Based upon Primary Standard Industrial Classification Code Number.

**As determined by AFG Credit Corporation in accordance with its 
  customary procedures.






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