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            UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                        Washington, D. C.  20549

                             **FORM 10-Q

      (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                     SECURITIES EXCHANGE ACT OF 1934**

              For the quarterly period ended July 31, 2004

                                   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 001-04146

                               ----------

                   **NAVISTAR FINANCIAL CORPORATION**
         (Exact name of Registrant as specified in its charter)

                Delaware36-2472404
      (State or other jurisdiction of     (I.R.S. Employer Identification No.)
      incorporation or organization)

 2850 West Golf Road Rolling Meadows, Illinois60008
     (Address of principal executive offices)         (Zip Code)

   Registrant's telephone number including area code 847-734-4000

  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 and (2) has been subject to
  such filing requirements for the past 90 days Yes    X   No____

  Indicate by check mark whether the  registrant is an  accelerated  filer
  (as defined in Rule 12b-2 of the Act).  Yes X   No ___

                   APPLICABLE ONLY TO ISSUERS INVOLVED
                    IN BANKRUPTCY PROCEEDINGS DURING
                        THE PRECEDING FIVE YEARS:

  Indicate by check mark whether the  registrant  has filed all  documents
  and reports  required  to be filed by  Sections  12, 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:

  As of  August  31,  2004,  the  number  of  shares  outstanding  of  the
  registrant's common stock was 1,600,000.

THE  REGISTRANT IS A  WHOLLY-OWNED  SUBSIDIARY OF  INTERNATIONAL  TRUCK AND
ENGINE  CORPORATION,   WHICH  IS  A  WHOLLY-OWNED  SUBSIDIARY  OF  NAVISTAR
INTERNATIONAL  CORPORATION,  AND MEETS THE  CONDITIONS SET FORTH IN GENERAL
INSTRUCTION  H (1) (a) AND (b) OF FORM 10-Q AND IS  THEREFORE  FILING  THIS
FORM WITH THE REDUCED DISCLOSURE FORMAT.

--------------------------------------------------------------------------------

               **NAVISTAR FINANCIAL CORPORATION
                               AND SUBSIDIARIES

                                     INDEX****PART I.  FINANCIAL INFORMATION**

  Item 1. Financial Statements:                                         Page

          Statements of Consolidated Income and Retained Earnings --
          Three Months and Nine Months Ended July 31, 2004 and 2003.......2

          Statements of Consolidated Financial Condition --
          July 31, 2004; October 31, 2003; and July 31, 2003..............3

          Statements of Consolidated Cash Flow --
          Nine Months Ended July 31, 2004 and 2003........................4

          Notes to Consolidated Financial Statements......................5

  Item 2. Management's Discussion and Analysis of Results
          of Operations and Financial Condition..........................13

  Item 4. Controls and Procedures........................................20

**PART II. OTHER INFORMATION**

  Item 1. Legal Proceedings..............................................21

  Item 5. Other Information..............................................21

  Item 6. Exhibits and Reports on Form 8-K...............................21

**Signature**................................................................22

--------------------------------------------------------------------------------

                         **Part I - Financial Information

Item 1. Financial Statements

                Navistar Financial Corporation and Subsidiaries

       Statements of Consolidated Income and Retained Earnings (Unaudited)**

                                      Three Months Ended   Nine Months Ended
                                          July     July     July      July
  **Millions of Dollars**                     2004     2003     2004      2003
  **Revenues**
   Retail Notes and Finance Leases.......$ 7.8    $12.5   $ 25.2    $ 34.9
   Income Related to Sales of Finance
    Receivables.......................... 13.1     28.2     44.0      63.6
   Operating Leases...................... 12.4     14.7     39.9      51.2
   Wholesale Notes.......................  9.0      8.6     24.1      23.5
   Accounts..............................  5.3      4.0     16.5      13.1
   Servicing Fees........................  8.0      6.5     20.8      19.1
   Other Revenue.........................  1.2      1.2      3.3       4.4
                                         -----    -----    -----     -----
    Total................................ 56.8     75.7    173.8     209.8

  **Expenses**
   Cost of Borrowing
    Interest Expense.....................  8.8     12.0     31.9      38.1
    Other................................  1.6      2.3      6.2       6.2
   Credit, Collection and Administrative. 10.1     10.7     28.2      31.9
   Provision for Credit Losses...........  2.1      4.0      6.5      11.9
   Depreciation on Operating Leases......  9.6     10.9     29.7      35.5
   Other Expense.........................  0.4      1.2      1.4       3.3
                                         -----    -----    -----     -----
    Total................................ 32.6     41.1    103.9     126.9

  **Income Before Taxes**.................... 24.2     34.6     69.9      82.9
  Income Tax Expense.....................  9.2     12.3     26.9      31.6
                                          -----    -----   -----     -----
    Net Income...........................$15.0    $22.3   $ 43.0    $ 51.3
                                         ======  ======   ======    ======
  Retained Earnings
   Beginning of Period..................$232.6   $216.1   $204.6    $197.1
   Dividends Paid.......................     -     (5.0)       -    (15.0)
                                         -----   -----     -----     -----
   End of Period........................$247.6   $233.4   $247.6    $233.4
                                        ======   ======   ======    ======

               See Notes to Consolidated Financial Statements.

--------------------------------------------------------------------------------

            **Navistar Financial Corporation and Subsidiaries

        Statements of Consolidated Financial Condition (Unaudited)**

                                              July 31,  October 31,  July 31,
**Millions of Dollars**                             2004       2003        2003

**ASSETS**

Cash and Cash Equivalents.................... $   77.7   $     -  $    5.2
Finance Receivables
   Finance Receivables Held for Sale.........    419.7     519.9     533.6
   Other Finance Receivables.................    299.0     347.3     242.5
   Allowance for Losses......................     (7.0)    (12.9)    (15.1)
                                                ------     ------    ------
         Finance Receivables, net............    711.7     854.3     761.0

Amounts Due from Sales of Receivables........    445.9     368.9     460.3
Net Investment in Operating Leases...........    158.2     191.1     192.5
Restricted Marketable Securities.............    419.1     505.6     430.1
Other Assets.................................     27.6      39.9      50.6
                                               -------   -------   -------
   Total Assets.............................. $1,840.2  $1,959.8  $1,899.7
                                              ========  ========   =======

**LIABILITIES AND SHAREOWNER'S EQUITY**

Net Accounts Payables to Affiliates.......... $    9.6  $    4.2  $   26.2
Senior and Subordinated Debt.................  1,292.6   1,461.9   1,348.5
Other Liabilities............................    116.6     129.5     123.6
                                               -------   -------   -------
   Total Liabilities.........................  1,418.8   1,595.6   1,498.3

Shareowner's Equity
Capital Stock (par value $1.00, 1,600,000
   shares issued and outstanding) and
   Paid-In Capital...........................    182.9     171.0     171.0
Retained Earnings............................    247.6     204.6     233.4
Accumulated Other Comprehensive Loss.........     (9.1)    (11.4)     (3.0)
                                                -------   -------   -------
  Total Shareowner's Equity..................    421.4     364.2     401.4

Total Liabilities and Shareowner's Equity.... $1,840.2  $1,959.8  $1,899.7
                                              ========  ========  ========

              See Notes to Consolidated Financial Statements.

--------------------------------------------------------------------------------
               **Navistar Financial Corporation and Subsidiaries

                Statements of Consolidated Cash Flow (Unaudited)**

                                                            Nine Months Ended
                                                               July    July
Millions of Dollars                                            2004    2003

**Cash Flow From Operations**
   Net income...........................................   $  43.0   $  51.3
   Adjustments to reconcile net income
         to cash provided from operations:
      Gains on sales of receivables.....................     (39.8)    (59.3)
      Depreciation, amortization and accretion..........      37.3      43.8
      Provision for credit losses.......................       6.5      11.9
      Net change in accounts payable to affiliates......       5.4     (26.0)
      Net change in accrued income taxes................      (4.9)     21.9
      Other.............................................       2.1       7.9
                                                             ------    ------
         Total..........................................      49.6      51.5
                                                             ------    ------
**Cash Flow From Investing Activities**
   Originations of finance receivables held for sale....    (963.3)   (764.6)
   Net proceeds from sales of finance receivables
       held for sale....................................   1,118.6   1,347.2
   Net proceeds from sales of retail accounts...........     100.0         -
   Net change in restricted marketable securities.......      86.5    (325.5)
   Collections of retail notes and finance lease receivables,
      net of change in unearned finance income..........      97.7      53.7
   Repurchase of sold retail receivables................    (152.8)   (163.5)
   Net change in wholesale notes and accounts
     receivables........................................     (51.7)     51.8
   Net change in amounts due from sales of receivables..     (49.6)    (52.7)
   Purchase of equipment leased to others...............     (22.0)    (25.1)
   Sale of equipment leased to others...................      25.4      45.5
   Receipts from derivative contracts...................       0.8       3.1
   Payments on derivative contracts.....................      (0.5)    (15.0)
                                                            -------   -------
         Total..........................................     189.1     154.9
                                                            =======   =======

**Cash Flow From Financing Activities**
   Net change in bank revolving credit facility usage...      60.0    (147.0)
   Proceeds from long-term debt.........................      31.3      28.4
   Principal payments on long-term debt.................     (82.3)    (99.6)
   Dividends paid to International......................         -     (15.0)
   Assumption of debt by Navistar International
     Corporation........................................    (170.0)        -
                                                            -------   -------
         Total..........................................    (161.0)   (233.2)
                                                            =======   =======

**Change in Cash and Cash Equivalents**.....................      77.7     (26.8)
**Cash and Cash Equivalents, Beginning of Period**..........         -      32.0
                                                            -------   -------
**Cash and Cash Equivalents, End of Period**................    $ 77.7      $5.2
                                                            =======   =======

**Supplementary disclosure of cash flow information:**
   Interest paid........................................    $ 33.2    $ 37.3
   Income taxes paid, net of refunds....................    $ 32.9    $  9.4

**Supplementary disclosure of non-cash financing activity:**
   Additional paid in capital resulting from assumption
   of debt by Navistar International Corporation........    $ 11.9    $    -

              See Notes to Consolidated Financial Statements.

--------------------------------------------------------------------------------

                      **NAVISTAR FINANCIAL CORPORATION
                            AND SUBSIDIARIES

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                (Unaudited)

1.  BASIS OF PRESENTATION**

    The consolidated  financial statements include the accounts of Navistar
    Financial    Corporation    and    its    wholly-owned     subsidiaries
    ("Corporation").    International    Truck   and   Engine   Corporation
    ("International"),  which is  wholly  owned by  Navistar  International
    Corporation ("Navistar"), is the parent company of the Corporation.

    The accompanying  unaudited financial  statements have been prepared in
    accordance  with  accounting  policies  described in the  Corporation's
    2003 Annual Report on Form 10-K and should be read in conjunction  with
    the disclosures therein.

    In January 2003,  the Financial  Accounting  Standards  Board  ("FASB")
    issued  Interpretation  No. 46,  "Consolidation  of  Variable  Interest
    Entities".  This interpretation  addresses  consolidation  requirements
    of variable  interest  entities  ("VIE's").  In December 2003, the FASB
    revised this  Interpretation  to clarify the  application of Accounting
    Research  Bulletin  No. 51,  "Consolidated  Financial  Statements",  to
    certain   entities  in  which   equity   investors   do  not  have  the
    characteristics  of a controlling  financial interest for the entity to
    finance its  activities  without  additional  financial  support.  This
    Interpretation,  as revised,  is  effective  for periods  ending  after
    December 15, 2003.  The  Corporation  determined  that it does not have
    an  interest  in  a  VIE,  as  defined   within  this   Interpretation.
    Transferors to qualifying  special purpose entities  ("QSPE's") subject
    to the reporting  requirements  of  Statements of Financial  Accounting
    Standards  ("SFAS")  140,  "Accounting  for  Transfers and Servicing of
    Financial  Assets and  Extinguishments  of  Liabilities",  are excluded
    from  the  scope  of this  interpretation.  The  Corporation  currently
    sells  receivables  to  entities  meeting the  requirements  of QSPE's.
    Therefore,  this  Interpretation  has no  impact  on the  Corporation's
    results of operations, financial condition, and cash flows.

    In December 2003,  the FASB issued a revision to SFAS 132,  "Employers'
    Disclosure  about  Pensions and Other  Postretirement  Benefits".  This
    Statement retains the disclosures  previously  required by SFAS 132 but
    adds additional disclosure requirements about the assets,  obligations,
    cash flows,  and net periodic  benefit cost of defined  benefit pension
    plans and other defined  benefit  postretirement  plans.  It also calls
    for the  required  information  to be provided  separately  for pension
    plans and for  other  postretirement  benefit  plans.  The  Corporation
    assessed the assets, obligations,  cash flows, and net periodic benefit
    cost for pension plans and for other  postretirement  benefit plans and
    determined the amounts to be inmmaterial; therefore, related disclosures
    have been omitted.

    On December 8, 2003,  the  President  signed the Medicare  Prescription
    Drug,  Improvement and  Modernization Act of 2003 ("the Act") into law.
    The  Act  introduces  a  voluntary   prescription  drug  benefit  under
    Medicare as well as a federal  subsidy to  sponsors  of retiree  health
    care plans that provide  prescription  drug  benefits that are at least
    actuarially equivalent to Medicare Part D. In May 2004, the FASB issued
    FSP 106-2, "Accounting  and  Disclosure  Requirements  Related  to  the
    Medicare Prescription Drug, Improvement and Modernization Act of 2003",
    which  requires  the  commencement  of accounting  recognition for  the
    effects  of the  Act no  later  than  the  Corporation's quarter ending
    October 31, 2004.  The Corporation implemented the  accounting guidance
    related to the effects of the  Act  during  the  quarter ended July 31,
    2004.  The cumulative effect  of accounting   for the subsidy as of the
    date of  the Act through  the  date  of implementation resulted  in  an
    immaterial  reduction   to  the  Corporation's  postretirement  benefit
    expenses and liabilities.

    In the  opinion  of  management,  these  interim  financial  statements
    reflect  all   adjustments,   consisting  of  normal  recurring  items,
    necessary  to present  fairly  the  results  of  operations,  financial
    condition  and cash flow for the  interim  periods  presented.  Interim
    results are not  necessarily  indicative  of results to be expected for
    any other interim period or for the full year.  Certain  amounts in the
    prior period  financial  statements  have been  reclassified to conform
    with current period presentations.

**2. COMPREHENSIVE INCOME**

    The Corporation's total comprehensive income was:

                                              Three Months      Nine Months
                                             Ended July 31     Ended July 31
    Millions of Dollars                      2004      2003     2004     2003
    Net income...........................  $ 15.0    $ 22.3    $ 43.0   $ 51.3
    Change in net unrealized gains (losses)
      on investments (net of tax of $1.0,
      ($0.1), ($1.4), and ($0.2))........    (1.6)      0.2       2.3      0.3
                                           ------    ------    ------   ------
       Total comprehensive income........  $ 13.4    $ 22.5    $ 45.3   $ 51.6
                                           ======    ======    ======   ======

**3.  FINANCE RECEIVABLES**

    Finance receivables are summarized as follows:

                                             July 31,  October 31,  July 31,
    Millions of Dollars                        2004       2003       2003
    Retail notes, net of unearned income.... $ 320.9    $ 404.5    $ 410.5
    Finance leases, net of unearned income..    98.8      115.4      123.1
    Wholesale notes.........................    87.3       46.0       34.3
    Accounts:
       Retail...............................   133.5      217.9      140.1
       Wholesale............................    78.2       83.4       68.1
                                              ------     ------      ------
         Total accounts.....................   211.7      301.3      208.2
                                              ------     ------      ------
            Total finance receivables.......   718.7      867.2      776.1
            Less: Allowance for losses......     7.0       12.9       15.1
                                              ------     ------      ------

            Total finance receivables, net.. $ 711.7    $ 854.3    $ 761.0
                                              ======     ======      ======

    Finance  receivables held for sale consisted of $419.7 million,  $519.9
    million,  and $533.6 million in retail notes and finance leases, net of
    unearned  income,  as of July 31, 2004,  October 31, 2003, and July 31,
    2003, respectively.

**4.  ALLOWANCE FOR LOSSES**

    The change in allowance for losses is summarized as follows:

                                              July 31, October 31,  July 31,
    Millions of Dollars                         2004       2003       2003
    Allowance for losses, beginning of period $ 12.9     $ 16.0     $ 16.0
    Provision for credit losses..............    6.5       15.8       11.9
    Net losses charged to allowance..........   (4.1)      (4.2)      (5.0)
    Allocated to finance receivables sold....   (8.3)     (14.7)      (7.8)
                                               ------     ------      -----
       Allowance for losses, end of period...  $ 7.0     $ 12.9     $ 15.1
                                               ======     ======     ======

    The average  outstanding  balance of impaired  finance  receivables was
    not material for the fiscal  periods  ended July 31, 2004,  October 31,
    2003,  and  July  31,  2003.  Interest  income  that  would  have  been
    recognized  on  impaired  finance  receivables  during the nine  months
    ended July 31,  2004 and 2003 or for the year ended  October  31,  2003
    was not material.

    Balances  with  payments  past  due  over  90  days  on  owned  finance
    receivables,  including held for sale, totaled $11.3 million as of July
    31, 2004.

**5.  SENIOR AND SUBORDINATED DEBT**

    Senior and subordinated debt outstanding is summarized as follows:

                                             July 31,  October 31,  July 31,
    Millions of Dollars                       2004        2003       2003
    Bank revolving credit facility, at
     variable rates, due December 2005......  $ 631.0    $ 571.0    $ 435.0

    Revolving retail warehouse facility,
     at variable rates, due October 2005....    500.0      500.0      500.0

    Borrowings secured by operating leases,
     3.45% to 6.65%, due serially through
     April 2010.............................    161.6      212.5      236.6

    Convertible debt, 4.75%, due April 2009.        -      178.4      176.9
                                              -------    -------    -------
     Total senior and subordinated debt..... $1,292.6   $1,461.9   $1,348.5
                                              =======    =======    =======

    Navistar   assumed  the  $220.0   million  4.75   percent   convertible
    subordinated  debt due in 2009 from the  Corporation  in June 2004.  As
    compensation  for the  assumption of this debt,  the  Corporation  paid
    Navistar  approximately $170.0 million in cash.  Navistar's  assumption
    of the  Corporation's  debt  resulted in an $11.9  million  increase in
    additional paid in capital for the Corporation.

**6.  DERIVATIVE FINANCIAL INSTRUMENTS**

    The Corporation  uses derivative  financial  instruments as part of its
    overall  interest rate risk  management  strategy as further  described
    under Note 13 of the 2003 Annual Report on Form 10-K.

    The Corporation  manages its exposure to fluctuations in interest rates
    by limiting the amount of fixed rate assets  funded with  variable rate
    debt.  This is  accomplished  by selling  fixed rate  receivables  on a
    fixed rate basis and by  utilizing  derivative  financial  instruments.
    These derivative  financial  instruments may include forward contracts,
    interest rate swaps,  and interest  rate caps.  The fair value of these
    instruments  is estimated  based on quoted market prices and is subject
    to market  risk as the  instruments  may become  less  valuable  due to
    changes  in  market  conditions  or  interest  rates.  The  Corporation
    manages   exposure  to  counterparty   credit  risk  by  entering  into
    derivative  financial  instruments  with major  financial  institutions
    that  can be  expected  to  fully  perform  under  the  terms  of  such
    agreements.  The  Corporation  does  not  require  collateral  or other
    security  to  support  derivative  financial  instruments  with  credit
    risk.  The  Corporation's  counterparty  credit  exposure is limited to
    the positive fair value of  contracts at  the  reporting  date.  As  of
    July  31,  2004,  the  Corporation's derivative  financial  instruments
    had  a  negative  net  fair  value.  Notional  amounts  of  derivative
    financial  instruments do not represent exposure to credit loss.

    As  of  July  31,  the   notional   amounts  and  fair  values  of  the
    Corporation's   derivative  financial  instruments  are  summarized  as
    follows:

    Inception      Maturity        Instrument           Notional  Fair Value
                                                        (Millions of Dollars)
    October 2000   November 2012   Interest rate cap    $500.0    $  (1.3)
                   November 2012   Interest rate cap     500.0        1.3
    July 2001      April 2006      Interest rate swap     25.0       (0.7)
    November 2002  March 2007      Interest rate swap*    28.4          -
    October 2003   April 2008      Interest rate swap*       -       (0.1)
    July 2004      September 2008  Interest rate swap*       -          -

      * Accounted for as non-hedging instruments.

    The fair values of all  derivatives  are recorded in Other  Liabilities
    on the Statements of Consolidated Financial Condition.

    On July 30, 2004,  the  Corporation  entered into a Receivable  Purchase
    Agreement.  The  Corporation is the Servicer of the Receivable  Purchase
    Agreement.  The other parties to the Agreement  entered into an interest
    rate swap  agreement.  Although  the  Corporation  is not a party to the
    swap agreement, the Corporation's role as Servicer creates an obligation
    for net amounts owed to the Agent under the swap agreement.

    In  fiscal  2004,  forward  starting  swap  losses  were  $3.3  million,
    compared with $7.7 million in prior year.

**7.  SALES OF RECEIVABLES**

    During  the first  nine  months of fiscal  2004,  the  Corporation  sold
    $1,120.0  million of retail notes and leases for a pre-tax gain of $39.8
    million  compared  to the first  nine  months of fiscal  2003,  when the
    Corporation  sold $1,350.0  million of retail  receivables for a pre-tax
    gain of $59.3 million.

    The  Corporation's  retained  interests,   which  include  interest-only
    receivables,  cash reserve accounts, and subordinated certificates,  are
    recorded  at fair  value in the  periods in which the sales  occur.  The
    fair value of the  interest-only  receivable  is based on  estimates  of
    prepayment  speeds and discount  rates.  The  Corporation  evaluates the
    fair value of its retained interests  quarterly and makes adjustments to
    these  values when it deems  permanent changes in  its  assumptions have
    changed.

    The  following  table  summarizes  income  related  to sales of  finance
    receivables:

                                            Three Months       Nine Months
                                           Ended July 31     Ended July 31
    Millions of Dollars                    2004     2003      2004     2003
    Gains on sales of receivables.....  $ 7.8      $26.1     $39.8    $59.3
    Excess spread.....................    4.9        2.6       8.9     10.8
    Fair value adjustment.............      -          -      (2.4)       -
    Derivative losses.................    0.2       (1.0)     (3.3)    (7.8)
    Interest income from retained
       securities and other...........    0.2        0.5       1.0      1.3
                                        -----      -----     -----     -----
    Total income related to
       sales of finance receivables...  $13.1      $28.2     $44.0    $63.6
                                        =====      =====     =====    =====

**8.  COMMITMENTS AND CONTINGENCIES**

    Leases

    The Corporation is obligated under  non-cancelable  operating leases for
    the  majority  of its office  facilities.  These  leases  are  generally
    renewable and provide that property taxes and  maintenance  costs are to
    be paid by the  lessee.  As of  July  31,  2004,  future  minimum  lease
    commitments under  non-cancelable  operating leases with remaining terms
    in excess of one year are as follows:

           Twelve months period ended July 31(Millions of Dollars)

           2005................................. $   1.9
           2006.................................     1.9
           2007.................................     0.4
           2008.................................     0.4
           2009.................................     0.2
           Thereafter...........................     0.1
                                                  ------
                Total........................... $   4.9
                                                  ======

    The total  operating  lease  expense for the nine months ended July 31,
    2004  and  2003  and for the  year  ended  October  31,  2003  was $1.3
    million, $1.8 million and $2.3 million, respectively.

    Guarantees of Debt

    The  Corporation   periodically   guarantees  the  outstanding  debt  of
    affiliates.   The  guarantees  allow  for   diversification  of  funding
    sources for the  affiliates.  As of July 31, 2004, the  Corporation  has
    multiple   guarantees   related  to  Navistar's  three  Mexican  finance
    subsidiaries,  Servicios Financieros  Navistar,  S.A. de C.V. ("SOFOL"),
    Arrendadora  Financiera  Navistar,  S.A.  de  C.V.  ("Arrendadora")  and
    Navistar  Comercial  S.A.  de C.V.  The  Corporation  has no recourse as
    guarantor in case of default.

    The following table summarizes the borrowings as of July 31, 2004:

    Type of Funding                  Maturity        Amount of     Outstanding
                                                     Guaranty        Balance
                                                       (Millions of Dollars)

    Revolving credit facility(2)     December 2005       $100.0      $21.0
    Medium term note(1)              November 2004         43.8       43.8
    Revolving credit facility(1)     July 2007             17.5       17.5
    Revolving credit facility(1),(3) Indefinite            21.0       21.0
    Revolving credit facility(1),(3) Indefinite            17.5        3.7
    Revolving credit facility(1)     August 2004            6.6        6.6
    Revolving credit facility(1),(4) June 2005              4.4          -
                                                                    ------
                                                          Total     $113.6
                                                                    ======

    (1)Peso-denominated
    (2)Revolving  credit  facility   guaranteed jointly with Navistar
    (3)The  bank  reviews  the  terms  of  this facility  monthly.  This
       facility  may be  used  for as long as all the conditions and terms
       are met.
    (4)Contract review date June 2005

    Guarantees of Derivatives

    As  of  July  31,  2004,  the  Corporation  had  guaranteed   derivative
    contracts  for interest rate swaps and cross  currency  swaps related to
    SOFOL and  Arrendadora.  The Corporation is liable up to the fair market
    value of these  derivative  contracts  only in cases of default by SOFOL
    and Arrendadora.

    The following table  summarizes the guaranteed  derivative  contracts as
    of July 31, 2004:

                                                  Outstanding     Fair
    Instrument                  Maturity           Notional       Value
                                                  (Millions of Dollars)
    Interest rate swaps and
       cross currency swaps*    May 2007         $  65.2         $  0.2

    * Peso-denominated

    Other

    The  Corporation  has entered into an agreement  for the  repurchase  of
    equipment.  Under this  agreement,  which  matures in August  2004,  the
    Corporation  would  be  required  to  make a  maximum  potential  future
    payment of $11.9 million.  Under the provisions of this  agreement,  the
    Corporation  can  liquidate the  repurchased  assets to recover all or a
    portion of the payment.  The Corporation  has potential  exposure to the
    extent  that  there  is a  difference  between  the  fair  value  of the
    repurchased   asset   and  the   guaranteed   repurchase   amount.   The
    Corporation's  current  exposure under this agreement is estimated to be
    immaterial.

    On November 30, 2001, the  Corporation  completed the sale of all of the
    stock of Harco  National  Insurance  Company  ("Harco"),  a wholly-owned
    insurance  subsidiary,  to IAT  Reinsurance  Syndicate Ltd.  ("IAT"),  a
    Bermuda  reinsurance  company.  As part of its sales agreement with IAT,
    the  Corporation  has agreed to  guarantee  the adequacy of Harco's loss
    reserves.  There is no limit to the potential  amount of future payments
    required  by  the  Corporation  related  to  this  reserve.   The  sales
    agreement is scheduled to expire  November 2008. The carrying  amount of
    the  Corporation's  liability  under this guarantee is estimated at $4.5
    million as of July 31, 2004 and is included in Other  Liabilities in the
    Consolidated  Statements  of Financial  Condition.  Management  believes
    this reserve is adequate to cover any future potential payments to IAT.

--------------------------------------------------------------------------------

                      **NAVISTAR FINANCIAL CORPORATION
                             AND SUBSIDIARIES

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

Certain  statements under this caption purely  constitute  "forward-looking
statements"  within  the  meaning of  Section 27A  of the  Securities  Act,
Section 21E  of the  Exchange  Act, and the Private  Securities  Litigation
Reform Act of 1995 that are  subject to risks and  uncertainties.  Navistar
Financial   Corporation's   ("Corporation")   actual   results  may  differ
significantly   from  the  results   discussed   in  such   forward-looking
statements.  You  should  not  place  undue  reliance  on those  statements
because  they are subject to numerous  uncertainties  and factors  relating
to our operations and business  environment,  all of which are difficult to
predict   and  many  of   which   are   beyond   our   control,   and  such
forward-looking  statements  only  speak as of the date of this  Form 10-Q.
Forward-looking  statements include information  concerning our possible or
assumed  future  results  of  operations,  including  descriptions  of  our
business   strategy.   These   statements   often  include  words  such  as
"believe," "expect,"  "anticipate," "intend," "plan," "estimate" or similar
expressions.  These  statements are based on assumptions  that we have made
in light of our  experience in the industry as well as our  perceptions  of
historical trends,  current  conditions,  expected future  developments and
other factors we believe are appropriate  under the  circumstances.  As you
read  and  consider  this  Form 10-Q,  you  should  understand  that  these
statements  are not  guarantees  of  performance  or results.  They involve
risks,  uncertainties  and  assumptions.  Although  we  believe  that these
forward-looking  statements  are  based  on  reasonable  assumptions,   you
should  be aware  that many  factors  could  affect  our  actual  financial
results or results of operations  and could cause actual  results to differ
materially  from  those in the  forward-looking  statements.  Factors  that
might  cause such a  difference  include,  but are not  limited  to,  those
discussed under the heading "Business Outlook".

Overview

The   Corporation   was   incorporated   in  Delaware  in  1949  and  is  a
wholly-owned  subsidiary  of  International  Truck and  Engine  Corporation
("International"),   which  is  a   wholly-owned   subsidiary  of  Navistar
International    Corporation    ("Navistar").    As   used   herein,    the
"Corporation"   refers   to   Navistar   Financial   Corporation   and  its
wholly-owned subsidiaries unless the context otherwise requires.

The  Corporation  is a  commercial  financing  organization  that  provides
wholesale,  retail and lease  financing  in the United  States for sales of
new and used  trucks sold by  International  and  International's  dealers.
The  Corporation  also  finances  wholesale  accounts and  selected  retail
accounts  receivable  of  International.  Sales of new products  (including
trailers) of other  manufacturers  are also financed  regardless of whether
they are designed or customarily  sold for use with  International's  truck
products.

The  Corporation  also  services  finance  receivables  it  originates  and
purchases.  The  Corporation's  sources of  revenues  are from sales of its
receivables,  servicing of its sold receivables,  earnings from investments
and interest  earned from its financing  programs under wholesale and other
dealer loan financing programs.

The  Corporation  is exposed to market risk  primarily due to  fluctuations
in  interest  rates  during  the  accumulation  period  prior  to a sale of
finance  receivables.  Interest  rate risk arises when  funding  fixed rate
receivables   with  floating  rate  debt.  The   Corporation   has  managed
exposure to interest  rate  changes by funding  floating  rate  receivables
with  floating  rate debt and fixed rate  receivables  with fixed rate debt
and  equity  capital.  Management  has  reduced  the  net  exposure,  which
results  from the  funding of fixed rate  receivables  with  floating  rate
debt by  generally  selling  fixed rate  receivables  on a fixed rate basis
and by utilizing derivative financial instruments when appropriate.

Business Outlook

Navistar  currently  projects  fiscal 2004 U.S. and Canadian  Class 8 heavy
truck  demand  to be  211,000  units,  up 32.5%  from  2003.  Class 6 and 7
medium truck demand,  excluding  school buses, is forecast at 93,000 units,
up 24.3%  from  2003.  Demand for  school  buses is  expected  to be 26,000
units,  down  10.9%  from  2003.   Mid-range  diesel  engine  shipments  by
Navistar to OEMs in fiscal  2004 are  expected  to be 349,200  units,  5.1%
higher than 2003.

Critical Accounting Policies

The  consolidated  financial  statements  are prepared in  conformity  with
accounting   principles   generally   accepted  in  the  United  States  of
America.  The  preparation of these financial  statements  requires the use
of estimates,  judgments,  and assumptions that affect the reported amounts
of assets and  liabilities at the date of the financial  statements and the
reported  amounts of revenues  and expenses  during the periods  presented.
In  preparing  these  financial  statements,  management  has made its best
estimates  and  judgments  of certain  amounts  included  in the  financial
statements,  giving  due  consideration  to  materiality.  The  significant
accounting  principles which management  believes are the most important to
aid in fully understanding the Corporation's financial results are:

|X|   Sales of Receivables
|X|   Allowance for Losses

Details  regarding the  Corporation's use of these policies and the related
estimates  are  described in the  Corporation's  2003 Annual Report on Form
10-K.

Results of Operations

Fiscal Nine- Month Period 2004 Compared with 2003

Year-to-date  net income was $43.0  million for 2004,  compared  with $51.3
million  for the same  period  of 2003.  During  the first  nine  months of
fiscal 2004,  the  Corporation  sold  $1,120.0  million of retail notes and
leases  for a pre-tax  gain of $39.8  million  compared  to the first  nine
months of fiscal  2003,  when the  Corporation  sold  $1,350.0  million  of
retail  receivables  for a pre-tax gain of $59.3  million.  The decrease in
gains  on sales of  receivables  is  primarily  due to lower  volume  and a
decline in average  portfolio  yield due to  increased  competition.  Lease
portfolio yield dropped during fiscal 2004 as liquidations of  older higher
yielding leases were  replaced with  acquisitions of lower yielding leases.
The decrease in revenue was partly offset by reductions in expenses.

During the fiscal  nine-month  period in 2004, the Corporation  experienced
improved  portfolio  performance and pricing in the used truck market.  The
credit loss  provision  is funded  based on the  Corporation's  belief that
its portfolio  performance  and pricing will continue,  barring any adverse
impact  on  the  economy  and  the  trucking  industry.  The  allowance  is
maintained at an amount  management  considers  appropriate  in relation to
the  outstanding  portfolio  based on  factors  such as  overall  portfolio
credit risk  quality,  historical  loss  experience,  and current  economic
conditions.

Financial Condition

Finance Volume and Finance Market Share

The  Corporation's  finance market share of new  International  trucks sold
in the U.S.  increased  to 15.5% at July 31,  2004  from  15.1% at July 31,
2003  primarily  due to  increased  originations.  During  the  first  nine
months of fiscal  2004,  the  Corporation's  net retail  notes and  finance
leases  originations  were $963.3  million,  compared  with $764.6  million
during  the  same  period  of  fiscal  2003.  This  increase  reflects  the
continued   improvement   in  the   Class   6-8   truck   market  in  which
International  participates.  Net serviced  retail notes and finance leases
balances  were  $2,606.6  million and $2,445.8  million as of July 31, 2004
and 2003, respectively.

Wholesale note originations increased 28.1% to $2,868.1 million  during the
first nine  months  of fiscal 2004, compared  with $2,239.2 million for the
same period of fiscal 2003. Serviced wholesale note balances increased 19.6%
to $1,084.6 million  as of July 31, 2004 from $907.0 million as of July 31,
2003.  The increase in wholesale note balances and originations reflects an
increase in International orders and retail deliveries.

Finance Volume and Finance Market Share

The  Corporation  has  seen  an  improvement  in  its  truck   repossession
activities.   Total  year  to  date  repossessions  for  fiscal  2004  were
1,180  units,  compared  with 1,919  units in 2003.  Serviced  repossession
balance also decreased  significantly  from $31.7  million,  as of July 31,
2003,  to $20.2  million,  as of July 31,  2004,  as a result  of the lower
acquisition of repossessed vehicles.

Funds Management

The Corporation has  traditionally  obtained the funds to provide financing
to  International's  dealers  and  retail  customers  from sales of finance
receivables,  commercial  paper,  short and long-term bank borrowings,  and
medium and  long-term  debt.  The  Corporation's  current debt ratings have
made sales of finance receivables the most economical source of funding.

Credit Ratings

The Corporation's debt ratings as of July 31, 2004 are as follows:

                                                      Standard
                                 Fitch      Moody's   and Poor's
Senior unsecured debt             BB          Ba3        BB-
Subordinated debt                 B+          B2          B
Outlook                         Stable      Stable     Stable

Funding Facilities

Receivable  sales  are  a  significant  source  of  funding.   Through  the
asset-backed  public market and private  placement  sales,  the Corporation
has been  able to fund  fixed  rate  retail  notes  and  finance  leases at
rates,  which are more  economical  than those available to the Corporation
in the public  unsecured bond market.  The  Corporation  sells retail notes
and  finance  leases  through   Navistar   Financial   Retail   Receivables
Corporation  ("NFRRC"), a special purpose,  wholly-owned  subsidiary of the
Corporation.

During  the  first  nine  months  of 2004 and 2003,  the  Corporation  sold
$1,120  million and  $1,350.0  million,  respectively,  of retail notes and
finance  leases  to  owner  trusts  which,  in  turn,  issued  asset-backed
securities  that were sold to  investors.  As of July 31,  2004,  there was
no remaining  shelf  registration  available to NFRRC.  On August 13, 2004,
a $4.0 billion shelf registration filed by NFRRC became effective.

In June  2004,  International  Truck  Leasing  Corp.  ("ITLC"),  a  special
purpose,  wholly-owned  subsidiary of the  Corporation,  was established to
provide  for the funding of certain  leases.  ITLC's  assets are  available
to satisfy its creditors'  claims prior to such assets  becoming  available
for ITLC's uses or to the Corporation or affiliated companies.

Truck  Engine  Receivables  Financing   Corporation,   a  special  purpose,
wholly-owned  subsidiary  of the  Corporation,  has in  place a trust  that
provides for the funding of $100.0 million of unsecured  trade  receivables
generated  by the sale of diesel  engines  and  engine  service  parts from
International  to Ford Motor  Company.  The  facility  matures in 2006.  As
of July 31,  2004,  the  Corporation  had  utilized  $81.2  million of this
facility.

During  the  second   quarter  of  fiscal  2004,   Truck  Retail   Accounts
Corporation  ("TRAC"),  a special purpose,  wholly-owned  subsidiary of the
Corporation,  obtained  financing  for  its  retail  accounts  with  a bank
conduit that  provides for the funding of up to $100.0  million of eligible
retail  accounts.  The revolving  retail account  facility expires in April
2005.  The sales of retail  accounts  under  TRAC  constitute  sales  under
generally accepted  accounting  principles in the United States of America,
with the result that the sold  accounts are removed from the  Corporation's
balance   sheet  and  the   investor's   interests  are  not  reflected  as
liabilities.  TRAC is a separate  corporate entity,  and its assets will be
available  first and  foremost  to satisfy the claims of the  creditors  of
TRAC. As of July 31, 2004,  the  Corporation  had utilized $93.5 million of
this facility.

Navistar  Financial  Securities  Corporation  ("NFSC"),  a special purpose,
wholly-owned  subsidiary  of the  Corporation,  has in  place  a  revolving
wholesale  note  trust that  provides  for the  funding  of up to  $1,236.0
million of eligible  wholesale  notes.  As of July 31,  2004,  it comprised
two $200.0 million tranches of investor  certificates  maturing in 2004 and
2008,  three $212.0 million tranches of investor  certificates  maturing in
2005 and 2006, and variable  funding  certificates  with a maximum capacity
of $200.0  million  maturing  in  February  2005.  NFSC  also has  retained
interest  in  marketable  securities  that  could  be used  to fund  $169.6
million in additional  eligible  wholesale  notes. As of July 31, 2004, the
Corporation  had utilized  $997.3  million of the revolving  wholesale note
trust.

Truck Retail  Instalment  Paper  Corporation  ("TRIP"),  a special  purpose
wholly-owned  subsidiary  of the  Corporation,  issued  $500.0  million  of
senior and  subordinated  floating rate  asset-backed  notes on October 16,
2000.  The  proceeds  were used to establish a revolving  retail  warehouse
facility to fund the  Corporation's  retail notes and retail leases,  other
than fair market value leases,  during the  accumulation  period prior to a
receivable  sale.  There were $130.2  million in retail notes and leases at
the end of the third  quarter  2004,  compared  with $500.0  million at the
end of the third quarter 2003.  This  difference  was a result of a conduit
sale in the third quarter of 2004.

The  Corporation  also has  $820.0  million  contractually  committed  bank
revolving  credit  facility  that will mature in December  2005. As of July
31, 2004, $652.0 million of this facility was utilized.

As of July  31,  2004,  the  aggregate  available,  including  unrestricted
cash,  to fund finance  receivables  under all the various  facilities  was
$1,049.1 million.

Navistar assumed the $220.0 million 4.75 percent  convertible  subordinated
debt due in 2009 from the  Corporation  in June 2004. As  compensation  for
the assumption of this debt, the  Corporation  paid Navistar  approximately
$170.0 million in cash.  Navistar's  assumption of the  Corporation's  debt
resulted in an $11.9  million  increase in  additional  paid in capital for
the Corporation.

The weighted  average  borrowing rate on all debt outstanding for the first
nine  months of fiscal  2004  decreased  to 3.11%  from  3.67% for the same
period  in  2003.  The  decrease  in  the  Corporation's  weighted  average
borrowing rate is primarily a result of lower LIBOR rates.

Management   believes  that   collections   on  the   outstanding   finance
receivables  portfolio plus cash available from the  Corporation's  various
funding   sources  will  permit  the  Corporation  to  meet  the  financing
requirements of  International's  dealers and retail customers through 2004
and beyond.

New Accounting Pronouncements

The  consolidated  financial  statements  include the  accounts of Navistar
Financial  Corporation and its wholly-owned  subsidiaries  ("Corporation").
International  Truck and  Engine  Corporation  ("International"),  which is
wholly owned by Navistar  International  Corporation  ("Navistar"),  is the
parent company of the Corporation.

The  accompanying  unaudited  financial  statements  have been  prepared in
accordance with accounting  policies  described in the  Corporation's  2003
Annual  Report on Form  10-K and  should  be read in  conjunction  with the
disclosures therein.

In  December  2003,  the FASB  issued a revision  to SFAS 132,  "Employers'
Disclosure  about  Pensions  and  Other  Postretirement   Benefits".   This
Statement  retains  the  disclosures  previously  required  by SFAS 132 but
adds  additional  disclosure  requirements  about the assets,  obligations,
cash  flows,  and net  periodic  benefit  cost of defined  benefit  pension
plans and other defined  benefit  postretirement  plans.  It also calls for
the required  information  to be provided  separately for pension plans and
for  other  postretirement  benefit  plans.  The Corporation  assessed  the
assets, obligations, cash flows, and net periodic benefit cost for  pension
plans and for other postretirement benefit plans and determined the amounts
to be immaterial;  therefore, related dislosures have been omitted.

In January 2003, the FASB issued  Interpretation No. 46,  "Consolidation of
Variable Interest Entities".  This interpretation  addresses  consolidation
requirements  of variable  interest  entities  ("VIEs").  In December 2003,
the  FASB  revised  this  Interpretation  to  clarify  the  application  of
Accounting Research Bulletin No. 51, "Consolidated  Financial  Statements",
to  certain   entities  in  which   equity   investors   do  not  have  the
characteristics  of a  controlling  financial  interest  for the  entity to
finance  its  activities   without  additional   financial  support.   This
Interpretation,   as  revised,   is  effective  for  periods  ending  after
December  15, 2003.  The  Corporation  determined  that it does not have an
interest in a VIE, as defined  within this  Interpretation.  Transferors to
qualifying  special purpose  entities  ("QSPE's")  subject to the reporting
requirements  of FASB  Statement  No. 140,  "Accounting  for  Transfers and
Servicing of Financial  Assets and  Extinguishments  of  Liabilities",  are
excluded   from  the  scope  of  this   interpretation.   The   Corporation
currently  sells  receivables  to  entities  meeting  the  requirements  of
QSPE's.  Therefore,  this Interpretation has no impact on the Corporation's
results of operations, financial condition, and cash flows.

On December 8, 2003, the President signed the Medicare  Prescription  Drug,
Improvement  and  Modernization  Act of 2003 ("the Act") into law.  The Act
introduces a voluntary  prescription  drug benefit  under  Medicare as well
as a federal  subsidy  to  sponsors  of  retiree  health  care  plans  that
provide   prescription   drug  benefits  that  are  at  least   actuarially
equivalent  to  Medicare  Part D.  In  May 2004, the FASB issued FSP 106-2,
"Accounting   and   Disclosure   Requirements   Related   to  the  Medicare
Prescription  Drug,  Improvement  and  Modernization  Act  of  2003", which
requires the commencement of accounting recognition for the  effects of the
Act  no later  than  the Corporation's quarter ending October 31, 2004. The
Corporation implemented  the  accounting guidance related to the effects of
the Act during  the  quarter  ended July 31, 2004. The cumulative effect of
accounting for  the subsidy  as of the date of the Act  through the date of
implementation  resulted in an  immaterial  reduction  to the Corporation's
postretirement benefit expenses and liabilities.

--------------------------------------------------------------------------------
                       **NAVISTAR FINANCIAL CORPORATION
                               AND SUBSIDIARIES

ITEM 4.   CONTROLS AND PROCEDURES**

Evaluation of Disclosure Controls and Procedures

The  Corporation's  principal  executive  officer  and  principal  financial
officer,  along with other  management  of the  Corporation,  evaluated  the
Corporation's  disclosure  controls  and  procedures  (as  defined  in  rule
13a-15(e)  and  15d-15(e)  under the  Securities  Exchange  Act of 1934,  as
amended)  as of July 31,  2004.  Based  on that  evaluation,  the  principal
executive  officer  and  principal  financial  officer  of  the  Corporation
concluded   that,  as  of  July  31,  2004,  the  disclosure   controls  and
procedures  in place at the  Corporation  were (1)  designed  to ensure that
material  information  relating to the  Corporation is made known to them to
allow timely decisions regarding required  disclosure and (2) effective,  in
that such disclosure  controls and procedures provide  reasonable  assurance
that  information  required to be  disclosed by the  Corporation  in reports
that the  Corporation  files or submits under the Exchange Act, is recorded,
processed,  summarized  and  reported on a timely basis in  accordance  with
applicable  rules and  regulations.  Although  the  Corporation's  principal
executive   officer   and   principal    financial   officer   believe   the
Corporation's  existing  disclosure  controls and procedures are adequate to
enable  the  Corporation  to comply  with its  disclosure  obligations,  the
Corporation  is  in  the  process  of  formalizing   and   documenting   the
procedures already in place.

Changes in Internal Control over Financial Reporting

The  Corporation  has not made any  change  to its  internal  control  over
financial  reporting (as defined in rule 13a-15(f) and 15d-15(f)  under the
Exchange  Act)  during the  fiscal  quarter  ended July 31,  2004 that have
materially  affected,  or are reasonably likely to materially  affect,  the
Corporation's internal control over financial reporting.

================================================================================
                       **NAVISTAR FINANCIAL CORPORATION
                              AND SUBSIDIARIES

PART II - OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS**

There were no  material  pending  legal  proceedings  other than  ordinary,
routine litigation incidental to the business of the Corporation.

**ITEM 5.   OTHER INFORMATION**

None.

**ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K**

(a)  Exhibits:

        3    Articles of Incorporation and By-Laws................E-1

        4    Instruments Defining Rights of Security Holders,
             including Indentures.................................E-2

       10    Material Contracts...................................E-4

       31.1  CEO Certification Pursuant to
             Section 302 of the Sarbanes-Oxley Act of 2002........E-12

       31.2  CFO Certification Pursuant to
             Section 302 of the Sarbanes-Oxley Act of 2002........E-14

       32    CEO and CFO Certifications Pursuant to
             Section 906 of the Sarbanes-Oxley Act of 2002........E-16

(b)  Reports on Form 8-K filed during the quarter ended July 31, 2004:

         The  Corporation  filed a  current  report  on Form  8-K  with the
         Commission  on May  12,  2004 to  announce  Navistar's  intent  to
         assume the Corporation's  $220.0 million 4.75 percent  convertible
         subordinated debt.

--------------------------------------------------------------------------------
                      **NAVISTAR FINANCIAL CORPORATION
                             AND SUBSIDIARIES**

                                 SIGNATURE

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.

                                  **Navistar Financial Corporation**
                                              (Registrant)

Date:  September 10, 2004          /s/ PAUL MARTIN
                                       Paul Martin
                                       Vice President and Controller
                                       (Principal Accounting Officer)
```