INVESTMENT AGREEMENT

         THIS INVESTMENT AGREEMENT (this "Agreement") is by and between National
Auto Finance Company, Inc., a Delaware corporation, (the "Company"), and FSA
Portfolio Management Inc., a New York corporation (the "Investor").

                                     RECITAL

         WHEREAS, pursuant to that certain letter agreement, dated as of October
1, 1997, from Financial Security Assurance Inc. ("FSA") to the Company and
National Financial Auto Funding Trust ("Funding Trust"), FSA permanently waived
all Insurance Agreement Events of Default that occurred prior to October 1, 1997
under that certain Insurance and Indemnity Agreement among FSA, Funding Trust
and the Company, dated as of November 21, 1995, as amended (the "1995-1 Trust
Insurance Agreement"), with respect to the National Auto Finance 1995-1 Trust
(the "1995-1 Trust"), and the consequences thereof, including, without
limitation, (a) FSA's right to receive any Premium Supplement and (b) the
occurrence of an Event of Default under the Insurance and Indemnity Agreements
executed in respect of each of the National Auto Finance 1996-1 Trust (the
"1996-1 Trust") and the National Auto Finance 1997-1 Trust arising solely as a
result of any such Event of Default under the 1995-1 Trust Insurance Agreement,
and (ii) waived any right that it may have to receive any Premium Supplement in
respect of such Insurance Agreement Events of Default occurring on any date up
through and including March 31, 1998 (collectively, the "Waivers"); and

         WHEREAS, pursuant to Amendment No. 1 to the Master Spread Account
Agreements, and Amendment No. 1 to the Insurance and Indemnity Agreements, each
such agreement among Funding Trust, FSA, Harris Trust and Savings Bank, as
Collateral Agent ("Harris Trust") and the Company and dated as of October 1,
1997, the Company and FSA have modified the Average Delinquency Ratio, the
Average Default Rate and the Average Net Loss Rate, as such percentages are
currently set forth in (i) the definition of "Trigger Event") in the Master
Spread Account Agreements, as amended, and (ii) the section relating to Events
of Default in the Insurance and Indemnity Agreements, as amended, relating to
each of the 1995-1 Trust and the 1996-1 Trust, for the period September 1, 1997
through and including May 31, 1998 (collectively, the "Modifications");

         WHEREAS, pursuant to that certain Consent, dated as of October 1, 1997,
FSA consented to (i) the Company's execution and delivery of a Pledge Agreement,
dated as of October 1, 1997, between the Company and BankBoston, N.A. (the
"Pledge Agreement") and the Amendment to Trust Agreements, dated as of October
1, 1997, among the Company, The Chase Manhattan Bank of Delaware, as Trustee,
and certain co-trustees, pursuant to


<PAGE>

which the Company pledged to BankBoston certain assets as collateral for a
three-year revolving credit facility extended by BankBoston to the Company, and
(ii) the transfer or assignment of certain assets following any enforcement by
BankBoston of its rights and remedies under the Pledge Agreement;

         WHEREAS, in connection with and in furtherance of the various actions
described in the preceding recitals, the Company agreed to engage FSA for the
issuance of a Financial Guaranty Insurance Policy in connection with the next
issuance of automobile loan asset- backed certificates or automobile
receivables-backed notes, as the case may be, by or on behalf of the Company;
and

         WHEREAS, each of the (i) waivers, (ii) amendments, (iii) consents and
(iv) other agreements described in the preceding recitals, and described in that
certain Summary of Principal Terms for Waivers, Consents and Amendments, dated
as of October 1, 1997, between the Company and FSA, was required in order for
FSA to consider an engagement for the issuance of a Financial Guaranty Insurance
Policy in connection with such next securitization transaction.

         NOW, THEREFORE, in connection with and in consideration of the actions
and agreements described in the foregoing recitals, and the mutual covenants and
agreements hereinafter set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

                               ISSUANCE OF SHARES

         1.1 Issuance of Shares. In reliance upon the representations and
warranties of the Company and the Investor contained herein, the Company hereby
agrees to issue to the Investor 100,000 shares (the "Shares") of common stock of
the Company, par value $0.01 per share (the "Common Stock") contemporaneously
with the execution of this Agreement.

                 REPRESENTATIONS AND WARRANTIES OF THE INVESTOR

         2.1 The Investor hereby represents and warrants to the Company as
follows:

                  (a)      Authorization:  No Conflict.

                           (i)      The Investor has full corporate power and
authority to enter into this Agreement and to perform its obligations hereunder.
The execution and delivery of this Agreement and the performance by the Investor
of its obligations hereunder have been duly



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<PAGE>

authorized by the Board of Directors of the Investor and no further action or
approval, corporate or otherwise, by the Investor, its Board of Directors or its
stockholders is required in order to constitute this Agreement as a binding and
enforceable obligation of the Investor.

                           (ii)     The execution, delivery and performance by 
the Investor of this Agreement and the consummation by the Investor of the
transactions contemplated hereby do not and will not (x) contravene or conflict
with the charter or bylaws of the Investor, (y) contravene or conflict with or
constitute a violation of any provision of any law, regulation, judgment,
injunction, order or decree binding upon or applicable to the Investor, or (z)
constitute a default under or give rise to a right of termination, cancellation
or acceleration of any right or obligation of the Investor or to a loss of any
benefit to which the Investor is entitled under any provision of any agreement,
contract or any franchise, license, permit, order, approval, or other similar
authorization held by the Investor.

                  (b) Investigation. The Investor acknowledges that the Investor
has been afforded the opportunity to ask such questions as the Investor has
deemed necessary of, and to receive answers from, representatives of the Company
concerning the merits and risks of investing in the Shares. The Investor further
represents and warrants that the Investor has received all documents and
information relating to an investment in the Shares requested by or on behalf of
the Investor as the Investor has deemed appropriate in making a decision to
invest in the Shares.

                  (c) Purchase for Investment. Investor is acquiring the shares
for Investor's own account for investment, and not with a view to, or for resale
in connection with, any distribution thereof within the meaning of the
Securities Act of 1933, as amended (the "Securities Act").

                  (d) Accredited Investor. The Investor represents and warrants
that it is an "accredited investor" as defined in Rule 501(a) of regulation D
under the Securities Act.

                  (e) Private Placement. The Investor acknowledges that the
Shares have not been registered under the Securities Act and understands that
the Shares must be held indefinitely unless (i) they are subsequently registered
under the Securities Act or (ii) such sale is permitted pursuant to an available
exemption from such registration requirement, as evidenced by a legal opinion
reasonably satisfactory to the Company. The certificate(s) representing the
Shares and each certificate issued to any subsequent transferee of the Shares
shall bear a legend in substantially the following form (unless transferred in
the manner described in the following legend):




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<PAGE>

         THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
         UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR PURSUANT TO THE
         SECURITIES OR "BLUE SKY" LAWS OF ANY STATE. SUCH SECURITIES MAY NOT BE
         OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED, OR OTHERWISE
         ASSIGNED, EXCEPT (I) PURSUANT TO A REGISTRATION STATEMENT WITH RESPECT
         TO SUCH SECURITIES WHICH IS EFFECTIVE UNDER SUCH ACT, (II) PURSUANT TO
         RULE 144 UNDER SUCH ACT, OR (III) UPON THE FURNISHING TO THE COMPANY BY
         THE HOLDER OF THIS CERTIFICATE OF AN OPINION OF COUNSEL (OR OTHER
         EVIDENCE) REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH TRANSACTION
         IS NOT REQUIRED TO BE REGISTERED UNDER SUCH ACT OR ANY APPLICABLE STATE
         SECURITIES OR "BLUE SKY" LAWS.

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

                  3.1 The Company hereby represents and warrants to, and agrees
with, the Investor as follows:

                           (a)      Corporate Organization.  The Company is a 
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has full corporate power and authority to own or
lease its properties and to carry on its business and as in the places where
such properties are now owned or leased or such business is now being conducted.

                           (b)      Authorization; No Conflict.

                                    (i)     The Company has full corporate power
and authority to enter into this Agreement and to perform its obligations
hereunder. The execution and delivery of this Agreement and the performance by
the Company of its obligations hereunder have been duly authorized by the Board
of Directors of the Company and no further action or approval, corporate or
otherwise, by the Company, its Board of Directors or its stockholders is
required in order to constitute this Agreement as a binding and enforceable
obligation of the Company.

                                    (ii)    The execution, delivery and 
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby do not and will not (x) contravene or
conflict with the charter or bylaws of the Company, (y) contravene or conflict
with or constitute a violation of any provision of



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<PAGE>

any law, regulation, judgment, injunction, order or decree binding upon or
applicable to the Company, or (z) constitute a default under or give rise to a
right of termination, cancellation or acceleration of any right or obligation of
the Company or to a loss of any benefit to which the Company is entitled under
any provision of any agreement, contract or any franchise, license, permit,
order, approval, or other similar authorization held by the Company.

                           (c)      Capitalization of the Company.  As of the
date hereof, there are: (i) 20,000,000 shares of Common Stock authorized, of
which (A) 7,026,000 shares are issued and outstanding and (B) 500,000 shares are
reserved for issuance upon the exercise of options granted from time to time
under the Company's 1996 Share Incentive Plan, of which options for 371,000
shares have been granted, and (ii) 1,000,000 shares of preferred stock, par
value $0.01 per share, authorized, 2,400 of which are designated as Series A
Preferred Stock, of which 2,295 shares were issued and outstanding. The Shares
issued pursuant to this Agreement are duly authorized, validly issued, fully
paid and non-assessable and have not been issued in violation of any preemptive
rights.

                                  MISCELLANEOUS

                  4.1 Notices. Any notice or other communication given pursuant
to this Agreement must be in writing and (a) delivered personally, (b) sent by
facsimile or other similar facsimile transmission, (c) delivered by overnight
express, or (d) sent by registered or certified mail, postage prepaid, to the
Company at 621 N.W. 53rd Street, Suite 200, Boca Raton, Florida 33487, Attn:
Keith B. Stein, Vice Chairman, telecopier no.: (800) 436- 4178, and to the
Investor at 350 Park Avenue, New York, New York 10022, Attn: Roger K. Taylor,
Managing Director, telecopier no.: (212) 755-5165, and Bruce E. Stern, Managing
Director, General Counsel and Secretary, telecopier no.: (212) 339-3529.

                  4.2 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW.

                  4.3 No Assignment; Successors and Assigns. This Agreement
shall be binding upon the Company, the Investor and their respective successors
and assigns.

                  4.4 Duplicate Originals. The Company and the Investor may sign
any number of copies of this Agreement. Each signed copy shall be an original,
but all of them together shall represent the same agreement.




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<PAGE>

                  4.5 Severability. In any case provision in this Agreement
shall be held invalid, illegal or unenforceable in any respect for any reason,
the validity, legality and enforceability of any such provision in every other
respect and the remaining provisions shall not in any way be affected or
impaired thereby.

                  4.6 No Waivers; Amendments. No failure or delay on the part of
the Company or the Investor in exercising any right, power, or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power, or remedy preclude any other or further exercise thereof
or the exercise of any other right, power, or remedy at law or in equity or
otherwise. Any provision of this Agreement may be amended or waived if, but only
if, such amendment or waiver is in writing and is signed by the Company and the
Investor.

             [The remainder of this page intentionally left blank.]




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<PAGE>

                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of October ___, 1997.

                                        NATIONAL AUTO FINANCE
                                        COMPANY, INC.



                                        By:
                                        Name: Keith B. Stein
                                        Title: Vice Chairman and Treasurer


                                        FSA PORTFOLIO MANAGEMENT INC.


                                        By:
                                        Name:   Bruce E. Stern
                                        Title:     Managing Director




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