<PAGE>

                                                                  EXECUTION COPY


                               PURCHASE AGREEMENT

         This PURCHASE AGREEMENT is made as of this 1st day of July 1997, by and
between ASTA FUNDING, INC., a Delaware corporation (the "Seller"), having its
principal executive office at 210 Sylvan Avenue, Englewood Cliffs, New Jersey
07632 and ASTA AUTO RECEIVABLES COMPANY, a Delaware corporation (the
"Purchaser"), having its principal executive office at 210 Sylvan Avenue,
Englewood Cliffs, New Jersey 07632.

                                    RECITALS

         1. In the regular course of its business, the Seller purchases from
motor vehicle dealers and services certain motor vehicle retail installment loan
contracts and promissory notes secured by new and used automobiles and light
duty trucks.

         2. The Seller desires to sell, and the Purchaser desires to purchase,
Receivables (as hereinafter defined) pursuant to the terms and conditions of
this Agreement.

         3. The Receivables to be sold subsequently hereunder will be sold by
the Purchaser pursuant to the Pooling and Servicing Agreement (as hereinafter
defined) to the Asta Auto Trust 1997-1 to be created thereunder, in
consideration of certificates issued by the Trust which represent beneficial
ownership interests in the Trust (the "Certificates").

         4. The Purchaser will sell to Greenwich Capital Markets, Inc. for cash
100% of the principal amount of the Class A Certificates and Class B
Certificates.

         NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, and the mutual terms and covenants contained herein, the
parties hereto agree as follows:


                                    ARTICLE I
                               CERTAIN DEFINITIONS

         Terms not defined in this Agreement shall have the meaning set forth in
the Pooling and Servicing Agreement. As used in this Agreement, the following
terms shall, unless the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms of the
terms defined):

         "Agreement" shall mean this Purchase Agreement and all amendments
hereof and supplements hereto.




<PAGE>

         "Certificate Purchase Agreement" shall mean the Certificate Purchase
Agreement by and between Greenwich Capital Markets, Inc., the Purchaser and the
Seller, dated as of July 30, 1997.

         "Initial Receivables" means all Receivables acquired by the Purchaser
from the Seller on the Closing Date pursuant to this Agreement.

         "Memorandum" shall have the meaning assigned to such term in the
Certificate Purchase Agreement.

         "Other Conveyed Property" means (i) all monies at any time paid on the
Receivables or in respect thereof on or after the applicable Cutoff Date,
including all Liquidation Proceeds to be received with respect to such
Receivables; (ii) all right, title and interest of the Seller in and the
security interests to the Financed Vehicles and any other interest of the Seller
in the Financed Vehicles, including, without limitation, the certificates of
title with respect to Financed Vehicles; (iii) all right, title and interest of
the Seller with respect to the Receivables in and to any proceeds from any
claims on any Insurance Policies covering the Obligors, the Financed Vehicles or
the Receivables; (iv) all right, title and interest of the Seller in and to
refunds of unearned premiums with respect to any Insurance Policies covering the
Receivables, the Obligors or the Financed Vehicles or their obligations with
respect to the Financed Vehicles and any recourse to Dealers for any of the
foregoing and (v) all items contained in the Receivable Files, any and all other
documents or electronic records that the Seller keeps on file in accordance with
its customary procedures relating to the Receivables, the Obligors or the
Financed Vehicles, property (including the right to receive future Liquidation
Proceeds) that secures a Receivable and that has been acquired by or on behalf
of the Seller pursuant to liquidation of such Receivable, all present and future
claims, demands, causes and choses in action in respect of the Receivables and
any or all of the foregoing and all payments on or under and all proceeds of
every kind and nature whatsoever in respect of the Receivables and any and all
of the foregoing, including all proceeds of the conversion, voluntary or
involuntary, into cash or other liquid property, all cash proceeds, accounts,
accounts receivables, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, rights to payment of any and
every kind and other forms of obligations and receivables, instruments and other
property that at any time constitute all or part of or are included in the
proceeds of the Receivables and any of the foregoing.

         "Pooling and Servicing Agreement" shall mean the Pooling and Servicing
Agreement by and among Asta Auto Receivables Company, as Seller, Asta Funding,
Inc., as Servicer, CSC Logic/MSA, L.L.P., as Backup Servicer, and The Chase
Manhattan Bank, as Trustee and Custodian, dated as of July 1, 1997.

         "Purchase Price" shall have the meaning specified in Section 2.1(a)
hereof.

         "Purchaser" shall mean Asta Auto Receivables Company, a Delaware
corporation, its successors and assigns.




                                        2

<PAGE>

         "Rating Agency" shall have the meaning specified in the Pooling and
Servicing Agreement.

         "Repurchase Event" shall mean the occurrence of a breach of any of the
Seller's representations and warranties contained in Section 3.2 hereof (without
regard to any limitations regarding Seller's knowledge) that materially and
adversely affects the interests of the Purchaser in any Receivable (including
any Liquidated Receivable) or the failure of an Obligor to make its first
Scheduled Payment causing a repurchase obligation under Section 4.7 of the
Pooling and Servicing Agreement.

         "Seller" shall mean Asta Funding, Inc., a Delaware corporation, in its
capacity as seller of the Receivables and the Other Conveyed Property relating
thereto, its successors and assigns.

         "Subsequent Receivables" means all Receivables acquired by the
Purchaser from the Seller after the Closing Date and during the Pre-Funding
Period pursuant to this Agreement.

         "Subsequent Transfer Date" means each Business Day occurring no more
than once per calendar week during the Pre-Funding Period on which Subsequent
Receivables shall be acquired by the Purchaser pursuant to this Agreement and
transferred to the Trust pursuant to the Pooling and Servicing Agreement.

         "Trust" shall mean the Asta Auto Trust 1997-1.

         "Trustee" means The Chase Manhattan Bank, its successors and assigns.

         "UCC" shall mean the Uniform Commercial Code, as in effect from time to
time in the relevant jurisdictions.


                                   ARTICLE II
                        PURCHASE AND SALE OF RECEIVABLES
                         AND THE OTHER CONVEYED PROPERTY

         2.1 Purchase Price.

                  (a) In consideration of the conveyance of the Initial
Receivables and the related Other Conveyed Property by the Seller to the
Purchaser, the Purchaser shall pay or cause to be paid to the Seller on the
Closing Date an amount equal to 100% of the aggregate Receivables Cash Purchase
Price for the Initial Receivables. Such Receivables Cash Purchase Price shall be
payable in cash by federal wire transfer funds.

                  (b) In consideration of the conveyance of Subsequent
Receivables and related Other Conveyed Property by the Seller to the Purchaser,
upon prior notice of one Business Day given by the Purchaser to the Trustee, the
Purchaser shall cause the Trustee, on each Subsequent Transfer Date, to pay to
the Seller an amount equal to the Receivables Cash Purchase Price for such
Subsequent Receivables in cash by federal wire transfer funds. The Seller
acknowledges



                                        3

<PAGE>

that funds to purchase the Subsequent Receivables and Other Conveyed Property
relating thereto and to fund the corresponding deposit in the Reserve Fund on
each Subsequent Transfer Date shall be disbursed by the Trustee solely from the
Pre-Funding Account pursuant to Section 5.6A of the Pooling and Servicing
Agreement.

         2.2 Conveyance of Receivables

                  (a) Subject to the conditions set forth in paragraph (b)
below, the Seller, pursuant to the mutually agreed upon terms contained herein,
shall on the Closing Date (with respect to the Initial Receivables) and each
Subsequent Transfer Date (with respect to any Subsequent Receivables) sell,
transfer, assign and otherwise convey to the Purchaser without recourse (but
without limitation of their obligations in this Agreement or the Pooling and
Servicing Agreement), all of the right, title and interest of the Seller,
whether then existing or thereafter acquired, in and to all accounts, contract
rights, general intangibles, chattel paper, instruments, documents, money,
deposit accounts, certificates of deposit, goods, letters of credit, advices of
credit and uncertificated securities consisting of, arising from or relating to
the Receivables listed on the Schedule of Receivables and the Other Conveyed
Property related thereto. With respect to Subsequent Receivables, the Seller
shall only be obligated to sell, transfer, assign or otherwise convey Subsequent
Receivables to the Purchaser with an aggregate Principal Balance up to the
amount on deposit in the Pre-Funding Account on the applicable Subsequent
Transfer Date. It is the intention of the Seller and the Purchaser that the
transfers and assignments contemplated by this Agreement shall constitute a sale
of the Receivables and the Other Conveyed Property from the Seller to the
Purchaser conveying good title thereto free and clear of any Liens, and the
Receivables and Other Conveyed Property shall not be a part of the Seller's
estate in the event of the filing of a bankruptcy petition by or against the
Seller under any bankruptcy or similar law.

                  (b) The Seller shall transfer to the Purchaser the Receivables
and Other Conveyed Property as described in paragraph (a) above only upon the
satisfaction of each of the following conditions on or prior to the Closing Date
(with respect to the Initial Receivables) or each applicable Subsequent Transfer
Date (with respect to the transfer of Subsequent Receivables):

                  (i) The Seller shall not have been insolvent nor shall the
         Seller have been rendered insolvent by the sale and assignment
         contemplated hereby, nor shall the Seller be aware of any pending
         insolvency;

                  (ii) The Seller shall have taken any action necessary or
         advisable to maintain the perfected ownership interest of the Purchaser
         in the Receivables and Other Conveyed Property;

                  (iii) No selection procedures adverse to the interests of the
         Purchaser or the Trust shall have been utilized by the Seller or the
         Purchaser in selecting the related Receivables; and




                                        4

<PAGE>



                  (iv) no more than 20.25% of the Initial Receivables are
         Actuarial Receivables, not less than 79.75% of the Initial Receivables
         are Simple Interest Receivables and each Subsequent Receivable will be
         a Simple Interest Receivable.

                  (c) With respect to the Subsequent Receivables, the Purchaser
shall be obligated to purchase from the Seller, and the Seller shall be
obligated to sell to the Purchaser Subsequent Receivables only if all of the
following conditions have been met:

         (A) the aggregate Principal Balance of any Subsequent Receivables sold
         to the Purchaser on a Subsequent Transfer Date must not be less than
         $2,000;

         (B) the Seller and the Purchaser must comply with the requirements
         specified in Section 2.3 hereof;

         (C) the Pre-Funding Account shall contain available funds in an amount
         at least equal to the related aggregate amount set forth in Section
         2.1(b) hereof on such Subsequent Transfer Date;

         (D) each Subsequent Receivable must meet the terms and conditions set
         forth in Section 3.4 of the Pooling and Servicing Agreement and
         described in the Private Placement Memorandum under the heading "The
         Receivables Pool;"

         (E) the representations and warranties set forth in Sections 3.1 and
         3.2 hereof are true and complete as of the related Subsequent Transfer
         Date and the Seller has complied with Article IV hereof;

         (F) the purchase by the Purchaser of any Subsequent Receivables and the
         subsequent transfer of such Subsequent Receivables by the Purchaser to
         the Trust during the Pre-Funding Period pursuant to the Pooling and
         Servicing Agreement must not result in any reduction of the rating of
         any Certificate by any of the Rating Agencies below the rating that was
         obtained on the Closing Date;

         (G) solely as a result of the purchase by the Purchaser of any
         Subsequent Receivables and the subsequent transfer of such Subsequent
         Receivables by the Purchaser to the Trust pursuant to the Pooling and
         Servicing Agreement, the weighted average annual percentage interest
         rate (the "Average Interest Rate") for all the Receivables in the Trust
         at the end of the Pre-Funding Period must not be more than 100 basis
         points lower than the Average Interest Rate of the Initial Receivables;

         (H) on or prior to each Subsequent Transfer Date, the Seller shall have
         caused to be provided to the Purchaser, the Trustee, the Rating Agency
         and the Placement Agent a letter prepared by an independent accountant
         retained by the Seller certifying that the characteristics of the
         related Subsequent Receivables conform to the characteristics set forth
         in Section 3.4 of the Pooling and Servicing Agreement and described in
         the Private Placement Memorandum under the heading "The Receivables
         Pool;"




                                        5

<PAGE>

         (I) as of the termination of the Pre-Funding Period, the percentage of
         Receivables having Obligor billing addresses in New Jersey, New York
         and Pennsylvania shall not exceed 27.24%, 50.00% and 20.00%,
         respectively, of the aggregate principal balance of all Receivables as
         of such date; and

         (J) on each Subsequent Transfer Date, the aggregate principal amount of
         Subsequent Receivables on which at least one Scheduled Payment has not
         been made by the related Obligor and received by the Servicer with
         respect to such Receivables shall not exceed the Repurchase Threshold.

         2.3 Delivery of Receivable Files. The Seller shall deliver to the
Purchaser the following documents (a) on the Closing Date (with respect to each
Initial Receivable) and (b) two Business Days prior to each Subsequent Transfer
Date (with respect to each related Subsequent Receivable to be purchased on such
Subsequent Transfer Date):

                  (i) The fully executed original of each Receivable and any
         amendments thereto;

                  (ii) a copy of the VSI Insurance Policy meeting the
         requirements of Section 3.6(a)(iii) of the Pooling and Servicing
         Agreement; and

                  (iii) The original certificate of title or other evidence of
         title as specified in Section 3.6(a)(ii) of the Pooling and Servicing
         Agreement.

         2.4 The Closing. The sale by the Seller and purchase by the Purchaser
of the Initial Receivables being purchased directly from the Seller shall take
place at a closing (the "Closing") held at the offices of Orrick, Herrington &
Sutcliffe LLP, 666 Fifth Avenue, 18th Floor, New York, New York 10103 on the
Closing Date, simultaneously with the closings under: (a) the Pooling and
Servicing Agreement pursuant to which (i) the Purchaser will assign all of its
right, title and interests in and to the Initial Receivables and the related
Other Conveyed Property to the Trustee for the benefit of the
Certificateholders, (ii) the Purchaser shall have deposited $1,932,478.63 in the
Reserve Account; $48,168.04 in the Simple Interest Differential Account, and
$199,539.85 in the Capitalized Interest Account and (iii) the Trust will issue
and deliver the Certificates to the Purchaser in exchange for the Initial
Receivables, the Other Conveyed Property, and the Pre-Funding Account; and (b)
the Certificate Purchase Agreement pursuant to which the Purchaser will sell a
portion of the Certificates to Greenwich Capital Markets, Inc.

         2.5 The Pre-Funding Events. The sale and purchase of the Subsequent
Receivables on each Subsequent Date shall take place at the offices of the
Trustee or such other location as the Seller and Purchaser may reasonably agree;
provided, however, that any such sale and purchase of Subsequent Receivables is
conditioned upon the requirements of Section 3.11 of the Pooling and Servicing
Agreement having been fulfilled as of such Subsequent Transfer Date.







                                        6

<PAGE>
                                   ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

         3.1 Representations and Warranties of the Purchaser. The Purchaser
hereby represents and warrants to the Seller as of the date hereof, as of the
Closing Date and as of each Subsequent Transfer Date:

                  (a) Organization and Good Standing. The Purchaser has been
duly organized and is validly existing as a corporation in good standing under
the laws of the State of Delaware, with power and authority to own its
properties and to conduct its business as such properties shall be currently
owned and such business is presently conducted, and had at all relevant times,
and shall have, power, authority and legal right to acquire and own the
Receivables and the Other Conveyed Property, and to transfer the Receivables and
the Other Conveyed Property to the Trust pursuant to the Pooling and Servicing
Agreement.

                  (b) Due Qualification. The Purchaser is duly qualified to do
business as a foreign corporation in good standing and has obtained all
necessary licenses and approvals in all jurisdictions where the failure to do so
would materially and adversely affect the Purchaser's ability to acquire the
Receivables and the Other Conveyed Property or the validity or enforceability of
the Receivables and the Other Conveyed Property or to perform the Purchaser's
obligations hereunder.

                  (c) Power and Authority. The Purchaser has the corporate power
and authority to execute and deliver this Agreement, the Pooling and Servicing
Agreement and any other agreement related thereto (collectively, the "Purchaser
Transaction Documents") and to carry out the terms thereof and to acquire the
Receivables and the Other Conveyed Property hereunder and the execution,
delivery and performance of the Purchaser Transaction Documents have been duly
authorized by the Purchaser by all necessary action.

                  (d) No Consent Required. The Purchaser is not required to
obtain the consent of any other Person, or any consent, license, approval or
authorization or registration or declaration with, any governmental authority,
bureau or agency in connection with the execution, delivery or performance of
the Purchaser Transaction Documents, except for such as have been obtained,
effected or made.

                  (e) Binding Obligation. The Purchaser Transaction Documents
constitute the legal, valid and binding obligations of the Purchaser,
enforceable against the Purchaser in accordance with their terms, subject, as to
enforceability, to applicable bankruptcy, insolvency, reorganization,
conservatorship, receivership, liquidation and other similar laws and to general
equitable principles.

                  (f) No Violation. The execution, delivery and performance by
the Purchaser of the Purchaser Transaction Documents, the consummation of the
transactions contemplated thereby and the fulfillment of the terms of the
Purchaser Transaction Documents do not and will not conflict with, result in any
breach of any of the terms and provisions of, or constitute (with or without
notice or lapse of time) a default under, the certificate of incorporation or
bylaws of



                                        7

<PAGE>



the Purchaser, or, after giving effect to the transactions contemplated thereby
and any consents that have been obtained and are in full force and effect,
conflict with or breach any of the terms or provisions of, or constitute (with
or without notice or lapse of time) a default under, any indenture, agreement,
mortgage, deed of trust or other instrument to which the Purchaser is a party or
by which the Purchaser is bound or to which any of its properties are subject,
or result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement, mortgage, deed of trust
or other instrument (other than the Pooling and Servicing Agreement), or violate
any law, order, rule or regulation, applicable to the Purchaser or its
properties, of any federal or state regulatory body, any court, administrative
agency, or other governmental instrumentality having jurisdiction over the
Purchaser or any of its properties.

                  (g) No Proceeding. There are no proceedings, investigations,
injunctions, writs, restraining orders or any order of any nature pending, or,
to the best knowledge of the Purchaser, threatened against the Purchaser, before
any court, regulatory body, administrative agency, or other tribunal or
governmental instrumentality having jurisdiction over the Purchaser or its
properties: (i) asserting or declaring the invalidity of the Purchaser
Transaction Documents, (ii) seeking to prevent or preventing the consummating of
any of the transactions contemplated by the Purchaser Transaction Documents, or
(iii) seeking any determination or ruling that might materially and adversely
affect the performance by the Purchaser of its obligations under, or the
validity or enforceability of, the Purchaser Transaction Documents or the
Certificates.

In the event of any breach of a representation and warranty made by the
Purchaser hereunder, the Seller covenants and agrees that it will not take any
action to pursue any remedy that it may have hereunder, in law, in equity or
otherwise, until a year and a day have passed since the date on which all the
Certificates or other similar securities issued by the Trust have been paid in
full. The Seller agrees that damages will not be an adequate remedy for such
breach and that this covenant may be specifically enforced by the Purchaser or
by the Trust.

         3.2 Representations and Warranties of the Seller. (a) The Seller hereby
represents and warrants to the Purchaser as of the date hereof, as of the
Closing Date, and as of each Subsequent Transfer Date:

                  (i) Organization and Good Standing. The Seller has been duly
         organized and is validly existing as a corporation in good standing
         under the laws of the State of Delaware, with power and authority to
         own its properties and to conduct its business as such properties shall
         be currently owned and such business is presently conducted and had at
         all relevant times, and shall have, power, authority and legal right to
         acquire, own and service the Receivables and the Other Conveyed
         Property transferred by it to the Purchaser.

                  (ii) Due Qualification. The Seller is duly qualified to do
         business as a foreign corporation in good standing, and has obtained
         all necessary licenses and approvals, in



                                        8

<PAGE>

         all jurisdictions in which the ownership or lease of its property or
         the conduct of its business requires such qualification, except where
         the failure to qualify or maintain such licenses or approvals would not
         have a material adverse effect on the Seller.

                  (iii) Power and Authority. The Seller has the corporate power
         and authority to execute and deliver this Agreement, the Pooling and
         Servicing Agreement (in its capacity as Servicer thereunder) and any
         other agreement related thereto (collectively, the "Seller Transaction
         Documents") and to carry out the terms thereof; the Seller has full
         corporate power and authority to sell and assign the Receivables and
         the Other Conveyed Property to be sold and assigned to the Purchaser
         hereunder and has duly authorized such sale and assignment to the
         Purchaser by all necessary corporate action; and the execution,
         delivery and performance of the Seller Transaction Documents have been
         duly authorized by it by all necessary corporate action.

                  (iv) Valid Sale; Binding Obligations. The Seller Transaction
         Documents have been duly executed and delivered and this Agreement
         shall effect a valid sale, transfer and assignment of the Receivables
         and the Other Conveyed Property transferred by it, and each of the
         Seller Transaction Documents shall be enforceable against the Seller
         and any creditors of and purchasers from the Seller; and the Seller
         Transaction Documents constitute the legal, valid and binding
         obligations of the Seller enforceable in accordance with their terms
         against the Seller, except as enforceability may be limited by
         bankruptcy, insolvency, reorganization or other similar laws affecting
         the enforcement of creditors' rights generally and by equitable
         limitations on the availability of specific remedies, regardless of
         whether such enforceability is considered in a proceeding in equity or
         at law.

                  (v) No Violation. The consummation of the transactions
         contemplated by the Seller Transaction Documents by the Seller and the
         fulfillment of the terms of thereof by the Seller do not and shall not
         conflict with, result in any breach of any of the terms and provisions
         of or constitute (with or without notice, lapse of time or both) a
         default under, the certificate of incorporation or bylaws of the
         Seller, or, after giving effect to the transactions contemplated
         thereby and any consents that have been obtained and are in full force
         and effect, any indenture, agreement, mortgage, deed of trust or other
         instrument to which the Seller is a party or by which it or any of its
         properties are bound, or result in the creation or imposition of any
         Lien upon any of its properties pursuant to the terms of any such
         indenture, agreement, mortgage, deed of trust or other instrument,
         other than this Agreement, or violate any law, order, rule or
         regulation applicable to it of any court or of any federal or state
         regulatory body, administrative agency or other governmental
         instrumentality having jurisdiction over it or any of its properties.

                  (vi) No Proceedings. There are no proceedings, investigations,
         injunctions, writs, restraining orders or any order of any nature
         pending or, to the best of the Seller's knowledge, threatened against
         the Seller, before any court, regulatory body, administrative agency or
         other tribunal or governmental instrumentality having jurisdiction over
         the Seller or their respective properties (i) asserting or declaring
         the



                                        9

<PAGE>

         invalidity of the Seller Transaction Documents, (ii) seeking to prevent
         or preventing the issuance of the Certificates or the consummation of
         any of the transactions contemplated by the Seller Transaction
         Documents, or (iii) that might materially and adversely affect the
         performance by it of obligations under, or the validity or
         enforceability of, the Seller Transaction Documents or the
         Certificates.

                  (vii) Chief Executive Office. The chief executive offices of
         the Seller are located at 210 Sylvan Avenue, Englewood Cliffs, New
         Jersey 07632 and there have been no other such locations during the
         past four months.

                  (viii) Taxes. The Seller has filed all federal, State, county,
         local and foreign income, franchise and other tax returns required to
         be filed by it through the date hereof, and has paid all taxes
         reflected as due thereon. There is no pending dispute with any taxing
         authority that, if determined adversely to the Seller, would result in
         the assertion by any taxing authority of any material tax deficiency,
         and the Seller has no knowledge of a proposed liability for any tax to
         be imposed upon the Seller's properties or assets for which there is
         not an adequate reserve reflected in the Seller's current financial
         statements.

                  (ix) Pension/Profit Sharing Plans. No contribution failure has
         occurred with respect to any pension or profit sharing plan, and all
         such plans have been fully funded as of the date of this Agreement.

                  (x) Trade Names. "Asta Funding, Inc." and "Asta Holding, Inc."
         are the only trade names under which the Seller is currently operating
         its business and under which the Seller operated its business for the
         period of time during which the Seller was in existence preceding the
         Closing Date.

                  (xi) Lock-Box Account. Each Obligor of a Receivable has been
         directed and is required to remit payments to the Lock-Boxes.

                  (xii) Consolidation. The Seller has operated and will operate
         its business such that its assets and liabilities will not be
         substantively consolidated with the assets and liabilities of the
         Purchaser and its separate existence will not be disregarded in any
         State or federal court proceeding.

                  (xiii) Business Purpose. The Seller will acquire and sell,
         transfer, assign and otherwise convey (for State law, tax and financial
         accounting purposes) the Receivables for a bona fide business purpose.

                  (xiv) Federal Income Tax Purposes. The Seller intends to treat
         the transactions contemplated under this Agreement as a sale of the
         Receivables to the Purchaser for federal income tax purposes. The
         Purchaser and the Trustee intend to cause to be filed all returns or
         reports in a manner consistent with such treatment.




                                       10

<PAGE>

                  (b) The Seller hereby makes all representations and warranties
in Section 3.4 of the Pooling and Servicing Agreement as if it were the Seller
under the Pooling and Servicing Agreement. Such representations and warranties
are true and correct as of the Closing Date with respect to the Initial
Receivables and shall be true and correct as of each Subsequent Transfer Date
with respect to the Subsequent Receivables, and shall survive the sale,
transfer, and assignment of the Receivables and the Other Conveyed Property
relating thereto to the Purchaser and the subsequent assignment and transfer
pursuant to the Pooling and Servicing Agreement.


                                   ARTICLE IV
                             COVENANTS OF THE SELLER

         The Seller agrees with the Purchaser as follows; provided, however,
that to the extent that any provision of this ARTICLE IV conflicts with any
provision of the Pooling and Servicing Agreement, the Pooling and Servicing
Agreement shall govern:

         4.1 Protection of Title of Purchaser and the Trust.

                  (a) At the Closing Date and on each Subsequent Transfer Date,
the Seller shall have filed or caused to be filed a protective UCC-1 financing
statement (in case the conveyance of the Receivables is deemed to be a security
for a loan), executed by it as seller or debtor, naming the Purchaser as
purchaser or secured party and describing the Receivables and the Other Conveyed
Property to be sold by it to the Purchaser on such date as collateral, with the
office of the Secretary of State of the State of New Jersey and in such other
locations as the Purchaser shall have required. In addition, on the Closing Date
and on each Subsequent Transfer Date, the Seller shall have filed or caused to
be filed a UCC-3 financing statement releasing any existing liens on any of the
Receivables with the Secretary of State of the State of New Jersey and in such
other locations as the Purchaser shall have required. From time to time
thereafter the Seller shall execute and file such financing statements, all in
such manner and in such places as may be required by law fully to preserve,
maintain and protect the interest of the Purchaser under this Agreement and of
the Trust under the Pooling and Servicing Agreement in the Receivables and the
Other Conveyed Property and in the proceeds thereof. The Seller shall deliver
(or cause to be delivered) to the Purchaser and the Trustee file-stamped copies
of, or filing receipts for, any document filed as provided above, as soon as
practicably available following such filing. In the event that the Seller fails
to perform its obligations under this subsection, the Purchaser or the Trustee
may do so, at the expense of the Seller.

                  (b) The Seller shall not change its name, identity, or
corporate structure in any manner that would, could or might make any financing
statement or continuation statement filed by the Seller (or by the Purchaser or
the Trustee on behalf of the Seller) in accordance with paragraph (a) above
seriously misleading within the meaning of ss. 9-402(7) of the UCC, unless it
shall have given the Purchaser and the Trustee at least 30 days' prior written
notice thereof, and shall promptly file appropriate amendments to all previously
filed financing statements and continuation statements,




                                       11

<PAGE>



                  (c) The Seller shall give the Purchaser and the Trustee at
least 30 days' prior written notice of any relocation of its principal executive
office if, as a result of such relocation, the applicable provisions of the UCC
would require the filing of any amendment of any previously filed financing or
continuation statement or of any new financing statement. The Seller shall at
all times maintain each office from which it services its respective Receivables
and its principal executive office within the United States of America.

                  (d) The Seller shall maintain its computer systems so that,
from and after the time of the sale hereunder of the Receivables to the
Purchaser and the conveyance under the Pooling and Servicing Agreement of such
Receivables by the Purchaser to the Trust, each of the Seller's master computer
records (including archives) that refers to a Receivable shall indicate clearly
that such Receivable has been sold to the Purchaser and has been conveyed by the
Purchaser to the Trust. Indication of the Trust's ownership of a Receivable
shall be deleted from or modified on each of the Seller's computer systems when,
and only when, such Receivable shall have been paid in full or shall have been
repurchased by any of the Seller or the Purchaser.

                  (e) If at any time the Seller shall propose to sell, grant a
security interest in, or otherwise transfer any interest in motor vehicle
receivables to any prospective purchaser, lender or other transferee, the Seller
shall give to such prospective purchaser, lender, or other transferee computer
tapes, records, or print-outs (including any restored from archives) that, if
they shall refer in any manner whatsoever to any of the Receivables, shall
indicate clearly that such Receivables have been sold to the Purchaser and are
owned by the Trust pursuant to the Pooling and Servicing Agreement.


         4.2 Other Lien or Interests. The Seller will not sell, pledge, assign
or transfer to any other Person, or grant, create, incur, assume or suffer to
exist any Lien on the Receivables or the Other Conveyed Property transferred
hereunder by it or any interest therein, and the Seller shall defend the right,
title, and interest of the Purchaser in and to the Receivables and the Other
Conveyed Property against all claims of third parties claiming through or under
the Seller; provided that the Seller's obligation under this Section 4.2 shall
terminate upon termination of the Trust pursuant to the Pooling and Servicing
Agreement.

         4.3 Indemnification.

                  (a) The Seller shall defend, indemnify and hold harmless the
Purchaser from and against any and all costs, expenses, losses, damages, claims,
and liabilities arising out of or resulting from any breach of any of Seller's
representations and warranties contained herein (except for any representation
or warranty contained in this Agreement, the Pooling and Servicing Agreement or
other related documents or instruments with respect to a Receivable, the remedy
for the breach of which is the repurchase of such Receivable), to the extent all
losses, liabilities, damages, costs or expenses, including without limitation,
all fees and expenses of attorneys, consultants and auditors and the reasonable
cost of investigations, with respect thereof are not satisfied in full by
payment of the purchase price of such Receivable in accordance with the terms of
the Pooling and Servicing Agreement.



                                       12

<PAGE>


                  (b) The Seller agrees to pay, and shall defend, indemnify and
hold harmless the Purchaser, from and against any taxes that may at any time be
asserted against the Purchaser with respect to this Agreement, including,
without limitation, any sales, tangible or intangible personal property,
privilege, or license taxes (but not including any taxes asserted with respect
to, and as of any date of, the sale, transfer and assignment of any Receivables
and Other Conveyed Property to the Seller and of the sale, transfer and
assignment of such Receivables and Other Conveyed Property to the Trust or the
issuance and sale of any Certificates, or asserted with respect to ownership of
the Receivables and Other Conveyed Property or federal, state or other income
taxes, franchise taxes or taxes on gross receipts or capital) and costs and
expenses in defending against the same, arising by reason of the acts to be
performed by the Seller under this Agreement or imposed against the Purchaser.

                  (c) The Seller shall defend, indemnify, and hold harmless the
Purchaser from and against any and all costs, expenses, losses, claims, damages,
and liabilities to the extent that such costs, expenses, losses, claims,
damages, or liabilities arose out of, or were imposed upon the Purchaser,
through the negligence, willful misfeasance, or bad faith of the Seller, in the
performance of its duties under this Agreement or by reason of the Seller's
reckless disregard of its obligations and duties under this Agreement.

                  (d) The Seller shall defend, indemnify, and hold harmless the
Purchaser, from and against all costs, expenses, losses, claims, damages, and
liabilities arising out of or incurred in connection with the acceptance or
performance of the Seller's duties as Servicer under the Pooling and Servicing
Agreement.

         Indemnification under this Section 4.3 shall include reasonable fees
and expenses of counsel and expenses of litigation and shall survive the
maturity of the Certificates. The indemnity obligations hereunder shall be in
addition to any obligation that the Seller may otherwise have. The Backup
Servicer, the Custodian and the Trustee on behalf of the Certificateholders
shall be third party beneficiaries of the indemnities provided in this Section.

         4.4 Seller Note. Neither the Seller nor the Purchaser shall extinguish
nor cause to be extinguised nor in any way impair the value of the Seller Note
prior to the November 1997 Distribution Date, except to the extent that
reductions in the principal value of the Seller Note are necessary to fund the
repurchase by the Seller of Receivables pursuant to Section 4.7 of the Pooling
and Servicing Agreement.

                                    ARTICLE V
                            MISCELLANEOUS PROVISIONS

         5.1 Obligations of Seller. The obligations of the Seller under this
Agreement shall not be affected by reason of any invalidity, illegality or
irregularity of any Receivable.

         5.2 Repurchase Events. The Seller hereby covenants and agrees with the
Purchaser for the benefit of the Purchaser, the Trustee and the
Certificateholders, that upon occurrence of a Repurchase Event, the Seller
shall, unless the related breach shall have been cured in all material respects,
repurchase the affected Receivables hereunder, at the Purchase Amount from



                                       13

<PAGE>

the Trust. The provisions of this Section 5.2 are intended to grant the Trustee
a direct right against the Seller to demand performance hereunder and in
connection therewith the Seller waives any requirement of prior demand against
the Purchaser and waives any defaults it would have against the Purchaser with
respect to such repurchase obligation. Any such purchase shall take place in the
manner specified in Section 3.5 of the Pooling and Servicing Agreement. The sole
remedy of the Certificateholders, the Trust, the Trustee, or the Purchaser
against the Seller with respect to any Repurchase Event shall be to enforce the
Seller's obligation to purchase such Receivables pursuant to this Agreement;
provided, however, that the Seller shall indemnify the Trustee, including its
officers, directors, employees and agents, and the Trust and the
Certificateholders against all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel, which may be
asserted against or incurred by any of them, as a result of third party claims
arising out of the events or facts giving rise to such breach. Upon receipt of
the Purchase Amount, the Purchaser shall cause the Trustee to release the
related Receivable File to the Seller and to execute and deliver all instruments
of transfer or assignment, without recourse, as are necessary to vest in the
Seller title to the Receivable.

         5.3 Seller's Assignment of Purchased Receivables. With respect to all
Receivables repurchased by the Seller pursuant to this Agreement, the Purchaser
shall assign, without recourse (except as provided herein), representation or
warranty, to the Seller all of the Purchaser's right, title and interest in and
to such Receivables, and all security and documents and all Other Conveyed
Property conveyed to the Purchaser directly relating thereto, without recourse,
representation or warranty, except as to the absence of liens, charges or
encumbrances created by or arising as a result of actions of the Purchaser or
the Trust. Such assignment shall be a sale and assignment outright, and not for
security. If, following the reassignment of a Purchased Receivable in any
enforcement suit or legal proceeding, it is held that the Seller may not enforce
any such Receivable on the ground that it shall not be a real party in interest
or a holder entitled to enforce the Receivable, the Purchaser shall, at the
expense of the Seller, take such steps as the Seller deems reasonably necessary
to enforce the Receivable, including bringing suit in the Purchaser's or in the
name of the Trustee on behalf of the Certificateholders.

         5.4 Waivers. No failure or delay on the part of Purchaser or the
Trustee as assignee of the Purchaser in exercising any power, right or remedy
under this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or remedy preclude any other or future
exercise thereof or the exercise of any other power, right or remedy.

         5.5 Limitation on Liability of the Seller and Others. Each of the
Seller and any director, officer, employee or agent of the Seller may rely in
good faith on the advice of counsel or on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
under this Agreement. The Seller shall be under no obligation to appear in,
prosecute or defend any legal action that is not incidental to its obligations
under this Agreement, the Pooling and Servicing Agreement or other related
documents or instruments and that in its opinion may involve it in any expense
or liability.

         5.6 Amendment. This Agreement may be amended from time to time by a
written amendment duly executed and delivered by the Seller and the Purchaser;
provided, however, that



                                       14

<PAGE>

any such amendment that would materially adversely affect the rights of the
Certificateholders of any Class under the Pooling and Servicing Agreement must
be consented to by Certificateholders representing at least 51% of the
then-outstanding Certificate Balance of each Class or such other Person
adversely affected. Certificates held by the Purchaser or the Seller, or any
Affiliate thereof, shall be deemed not outstanding for purposes of the preceding
sentence.

         5.7 Notices. All communications and notices pursuant hereto to either
party shall be in writing or by telegraph or facsimile and addressed or
delivered to it at its address (or in case of facsimile, at its facsimile number
at such address) shown in the opening portion of this Agreement or at such other
address as may be designated by it by notice to the other party and, if mailed
or sent by telegraph or facsimile, shall be deemed given when mailed,
communicated to the telegraph office or transmitted by facsimile.

         5.8 Severability of Provisions. If any one or more of the covenants,
provisions or terms of this Agreement is invalid, for any reason whatsoever,
then such covenants, provisions of terms shall be deemed severable from the
remaining covenants, provisions or terms of this Agreement and shall in no way
affect the validity or enforceability of the other provisions of this Agreement.

         5.9 Intention of the Parties. The execution and delivery of this
Agreement shall constitute an acknowledgement by the Seller and the Purchaser
that they intend that the assignments and transfers contemplated herein
constitute a sale and assignment outright, and not for security, of the
Receivables and the Other Conveyed Property, conveying good title thereto free
and clear of any Liens, from the Seller to the Purchaser, and that the
Receivables and the Other Conveyed Property shall not be a part of the Seller's
estate in the event of the bankruptcy, reorganization, arrangement, insolvency
or liquidation proceeding, or other proceeding under any federal or state
bankruptcy or similar law, or the occurrence of another similar event, of or
with respect to, the Seller. In the event that such conveyance is determined to
be made as security for a loan made by the Purchaser or the Trust or the Trustee
on behalf of the Certificateholders to the Seller, the parties intend that the
Seller shall have granted to the Purchaser a security interest in all of its
right, title and interest in and to the Receivables and the Other Conveyed
Property conveyed by it pursuant to this Agreement, and that this Agreement
shall constitute a security agreement under applicable law.

         5.10 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAWS THEREOF AND THE OBLIGATIONS RIGHTS AND REMEDIES
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE IN ACCORDANCE WITH SUCH LAWS.

         5.11 Counterparts. For the purpose of facilitating the execution of
this Agreement and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and all of which counterparts shall constitute but
one and the same instrument.




                                       15

<PAGE>

         5.12 Conveyance of the Receivables and the Other Conveyed Property to
the Trustee on Behalf of the Trust. The Seller acknowledges that the Purchaser
intends, pursuant to the Pooling and Servicing Agreement, to convey the
Receivables and Other Conveyed Property, together with its rights under this
Agreement, to the Trustee on the date hereof. The Seller acknowledges and
consents to such conveyance and waives any further notice thereof and covenants
and agrees that the representations and warranties of the Seller contained in
this Agreement and the rights of the Purchaser hereunder are intended to benefit
the Trustee on behalf of the Certificateholders. In furtherance of the
foregoing, the Seller covenants and agrees to perform its duties and obligations
hereunder, in accordance with the terms hereof for the benefit of the Trustee on
behalf of the Certificateholders and that, notwithstanding anything to the
contrary in this Agreement, the Seller shall be directly liable to the Trust
(notwithstanding any failure by the Servicer, the Backup Servicer or the
Purchaser to perform its duties and obligations hereunder or under the Pooling
and Servicing Agreement) and that the Trustee may enforce the duties and
obligations of the Seller, under this Agreement against the Seller,
respectively, for the benefit of the Trustee on behalf of the
Certificateholders.

         5.13 Nonpetition Covenant. The Seller shall not petition or otherwise
invoke the process of any court or government authority for the purpose of
commencing or sustaining a case against the Purchaser under any federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Purchaser or any substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Purchaser.

         5.14 No Recourse. Without limiting the obligations of the Seller
hereunder, no recourse may be taken, directly or indirectly, under this
Agreement or any certificate or other writing delivered in connection herewith
or therewith, against any affiliate, employee, incorporator, stockholder,
officer or director, as such, of the Seller, or any affiliate, employee,
incorporator, stockholder, officer or director, as such, of any predecessor or
successor of the Seller.

         5.15 Third Party Beneficiaries. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Each of the Backup Servicer, the Custodian and
the Trustee on its own behalf and on behalf of the Certificateholders shall be a
third-party beneficiary to the provisions of this Agreement, and shall be
entitled to rely upon and to enforce directly such provisions.





                                       16

<PAGE>

                  IN WITNESS WHEREOF, the parties hereby have caused this
Agreement to be executed by their respective officers there unto duly authorized
as of the date and year first above written.

                                       ASTA AUTO RECEIVABLES COMPANY

                                       By: /s/ Gary Stern
                                           -----------------------------
                                           Name:  Gary Stern
                                           Title: President



                                       ASTA FUNDING, INC.

                                       By: /s/ Mitchell Harmon
                                           ------------------------------
                                           Name:  Mitchell Herman
                                           Title: CFO