SENIOR SUBORDINATED PROMISSORY NOTE


THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED,
QUALIFIED, APPROVED OR DISAPPROVED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS. NEITHER THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER FEDERAL OR STATE REGULATORY
AUTHORITY HAS PASSED ON OR ENDORSED THE MERITS OF THESE SECURITIES.

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED WITH "ORIGINAL
ISSUE DISCOUNT" FOR PURPOSES OF SECTION 1272 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED. FOR INFORMATION REGARDING THE "ISSUE PRICE," "ISSUE DATE,"
AMOUNT OF "ORIGINAL ISSUE DISCOUNT," AND "YIELD TO MATURITY" OF THE NOTE,
CONTACT THE CHIEF FINANCIAL OFFICER OF NATIONAL AUTO FINANCE COMPANY, INC. AT
621 N.W. 53RD STREET, SUITE 200, BOCA RATON, FLORIDA 33487, TELEPHONE: (800)
999- 7535.


                      NATIONAL AUTO FINANCE COMPANY, INC.



                      SENIOR SUBORDINATED PROMISSORY NOTE
                             DUE DECEMBER 22, 2004




$20,000,000                                                 New York, New York
                                                                March 27, 1998




DAFS03...:\97\64897\0015\1306\NTS3138U.10A
<PAGE>
            FOR VALUE RECEIVED, the undersigned, NATIONAL AUTO FINANCE COMPANY,
INC., a Delaware corporation (the "COMPANY"), promises to pay to the order of
THE STRUCTURED FINANCE HIGH YIELD FUND, LLC or permitted assigns the principal
sum of Twenty Million dollars ($20,000,000) on December 22, 2004, with interest
thereon from time to time as provided herein.

            1. PURCHASE AGREEMENT. This Senior Subordinated Promissory Note
(this "NOTE") is issued pursuant to the Securities Purchase Agreement, dated as
of March 27, 1998, by and among the Company and The Structured Finance High
Yield Fund, LLC (the "PURCHASE AGREEMENT"), and the holder of this Note is
entitled to the benefits of this Note and the Purchase Agreement and may enforce
the agreements contained herein and therein and exercise the remedies provided
for hereby and thereby or otherwise available in respect hereto and thereto.

            The Purchase Agreement provides for the acceleration of the maturity
of this Note upon the occurrence of certain events.

            2. INTEREST. The Company promises to pay interest on the outstanding
principal amount of this Note (i) at the rate of 11.875% per annum through
December 22, 2000, (ii) at the rate of 12.875% per annum from and after December
22, 2000 through December 22, 2001, (iii) at the rate of 13.875% per annum from
and after December 22, 2001 through December 22, 2002, and (iv) at the rate of
14.875% per annum from and after December 22, 2002 and thereafter (as applicable
for each period, the "BASE INTEREST RATE"). The Company shall pay interest on
the Note quarterly in arrears on each March 31, June 30, September 30 and
December 31 of each year or, if any such date shall not be a Business Day, on
the next succeeding Business Day to occur after such date (each date upon which
interest shall be so payable, an "INTEREST PAYMENT DATE"), beginning on March
31, 1998. Interest on this Note shall be paid by wire transfer of immediately
available funds to an account designated by the holder of this Note. Interest on
this Note shall accrue from the date of issuance until repayment of the
principal and payment of all accrued interest in full. Interest shall be
computed on the basis of a 360-day year of twelve 30-day months. Notwithstanding
the foregoing provisions of this Section 2, but subject to applicable law, any
overdue principal of and overdue interest on this Note shall bear interest,
payable on demand in immediately available funds, for each day from the date
payment of principal or interest was due to the date of actual payment, at the
rate of interest which is equal to the applicable Base Interest Rate plus 2% per
annum, and, upon and during the continuance of an Event of Default, this Note
shall bear interest, from the date of the occurrence of such Event of Default
until such Event of Default is cured or waived, payable on demand in immediately



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<PAGE>
available funds, at the rate of interest which is equal to the applicable Base
Interest Rate plus 2% per annum.

            3. MANDATORY REDEMPTION AT THE OPTION OF THE HOLDER.

                  3.1 CHANGE OF CONTROL. If one or more events constituting a
Prepayment Event shall occur, the holder of this Note shall have the right, on
the date specified in Section 3.2 (the "MANDATORY REDEMPTION DATE"), to require
the Company to redeem (a "MANDATORY REDEMPTION") all (but not less than all) of
the Notes then held by such holder at a price (the "MANDATORY REDEMPTION PRICE")
equal to (i) the following percentage of the outstanding principal amount of the
Note to be prepaid plus (ii) an amount equal to all accrued and unpaid interest
thereon to the Mandatory Redemption Date, in immediately available funds:

If to be Prepaid During                                          Percentage of
        the Period:                                           Principal Amount

March 27, 1998 to                                                 110.0%
December 22, 1998

December 23, 1998 to                                              107.5%
December 22, 1999

December 23, 1999 to                                              105.0%
December 22, 2000

December 23, 2000                                                 100.0%
 and thereafter

            Notwithstanding anything to the contrary contained herein, in the
event the holder of this Note requires a Mandatory Redemption following a Change
of Control that is a Sale Transaction, the percentage of the Mandatory
Redemption Price that exceeds the aggregate principal amount of and accrued but
unpaid interest on the Notes to be repaid shall be waived or reduced to the
extent that The Structured Finance High Yield Fund, LLC's "internal rate of
return" on the Notes and the Warrants issued pursuant to the Purchase Agreement
(taking into account the portion of the Mandatory Redemption Price that exceeds
the aggregate principal amount of and accrued but unpaid interest on the Notes
held by The Structured Finance High Yield Fund, LLC that have been or are to be
prepaid pursuant to this Section 3 which is not waived) exceeds 25.0%. For
purposes of this Note, "internal rate



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<PAGE>
of return" means, as of the Mandatory Redemption Date, an internal rate of
return calculated by determining the discount rate that equates the present
value of all cash flows of the investment in the Notes and the Warrants to zero
and which is derived by taking into account (i) the amount invested in the Notes
and the Warrants of the Company by The Structured Finance High Yield Fund, LLC
(as of the date invested), (ii) the amount of any interest payments on the Notes
received by The Structured Finance High Yield Fund, LLC (as of the date
received), (iii) the amount of any proceeds received by The Structured Finance
High Yield Fund, LLC upon the sale or other disposition prior to the Mandatory
Redemption Date of all or any portion of the Notes and the Warrants or the
Common Stock issuable upon exercise of the Warrants (as of the date received),
(iv) the Market Price (as defined in the Warrants) of the Common Stock (assuming
exercise of any unexercised Warrants of the Company held by The Structured
Finance High Yield Fund, LLC (as of the Mandatory Redemption Date) and (v) the
facility fee received by The Structured Finance High Yield Fund, LLC pursuant to
Section 2.2 of the Purchase Agreement.

                  3.2 NOTICE. Notice of a Prepayment Event (the "PREPAYMENT
EVENT NOTICE") shall be mailed no more than 10 Business Days after the
occurrence of a Prepayment Event to each holder of Notes, at such holder's
address as it appears on the transfer books of the Company. The date fixed for
each Mandatory Redemption shall be fixed by the Company and shall be no less
than 20 days or more than 40 days after the date of the Prepayment Event Notice.
Notwithstanding the foregoing and Section 3.1 hereof, in the event of the
occurrence of a Prepayment Event of the types set forth in any of clauses (iii)
or (iv) of the definition of "Change of Control," the Prepayment Event Notice
shall be mailed to each holder of Notes no later than 10 Business Days prior to
the consummation of the transaction contemplated by such clause (iii) or (iv),
as the case may be, and the Company shall not be required to purchase any Notes
unless such transaction shall be consummated, in which case the Company shall be
required to purchase such Notes immediately prior to the consummation of such
transaction.

                  3.3 PROVISIONS OF NOTICE. The right of the holders of Notes to
require the Company to effect a Mandatory Redemption shall remain in effect from
the time of the mailing of, until the redemption date set forth in, the
Prepayment Event Notice. The Prepayment Event Notice shall be accompanied by a
copy of the information most recently required to be supplied under Sections
9.1(a) and 9.1(b) of the Purchase Agreement. The Prepayment Event Notice shall
contain all instruments and materials necessary to enable the holder of this
Note to tender this Note pursuant to this Section 3. The Prepayment Event
Notice, which shall govern the terms of the Mandatory Redemption, shall state:




                                     4
<PAGE>
                       (a) that a Prepayment Event has occurred, that each
            holder of Notes has the right to require the Company to effect a
            Mandatory Redemption pursuant to this Section 3 and that tendered
            Notes will be redeemed;

                       (b)    the Mandatory Redemption Price and the date for
            redemption;

                       (c) that each holder of Notes may require the Company to
            redeem all (but not less than all) Notes held thereby;

                       (d) that the Notes redeemed pursuant to the Mandatory
            Redemption shall cease to accrue interest after the designated date
            for purchase (unless the Company shall default in the payment of the
            Mandatory Redemption Price, in which case the Notes shall not cease
            to accrue interest after such date);

                       (e) such other information respecting the procedures for
            effecting the Mandatory Redemption as the Company shall include and
            such other information as may be required by law; and

                       (f) that (unless otherwise required by law) any holder of
            Notes will be entitled to withdraw his or her election if the
            Company receives, not later than the close of business on the third
            Business Day next preceding the date scheduled for redemption,
            facsimile transmission or letter setting forth the name of such
            holder, the principal amount of Notes such holder delivered for
            redemption and a statement that such holder is withdrawing his or
            her election to have such Notes redeemed.

                  3.4 REDEMPTION PROCEDURE. The holder of this Note may elect to
require the Company to redeem all (but not less than all) of the Notes held by
such holder pursuant to a Mandatory Redemption by delivery of written notice
thereof to the Company prior to the date fixed for such Mandatory Redemption. If
the holder of this Note so elects, on the date fixed for any Mandatory
Redemption, such holder shall surrender all of the Notes held thereby to the
Company at the place designated in the Prepayment Event Notice. From and after
the Mandatory Redemption Date (i) such Notes shall no longer be deemed
outstanding, (ii) the right to receive interest thereon shall cease to accrue
and (iii) all rights of the holders of such Notes shall cease and terminate,
excepting only the right to receive the Mandatory Redemption Price therefor;
provided, however, that if the Company shall default



                                     5
<PAGE>
in the payment of the Mandatory Redemption Price, the Notes shall thereafter be
deemed to be outstanding and the holders thereof shall have all of the rights of
a holder of Notes until such time as such default shall no longer be continuing
or shall have been waived by holders of at least 66% of the then outstanding
principal amount of the Notes.

            4.    OPTIONAL REDEMPTION.

                  4.1 REDEMPTION BY COMPANY. Except as otherwise provided
herein, the Company shall not have any right to prepay or redeem this Note. The
Company shall have the right, at any time and from time to time at its sole
option and election, to redeem (the "OPTIONAL REDEMPTION") the Notes, in whole
but not in part, on not less than 30 days notice of the date of redemption,
which must be a Business Day (any such date an "OPTIONAL REDEMPTION DATE") at a
price (the "OPTIONAL REDEMPTION PRICE") equal to (i) the following percentage of
the outstanding principal amount of the Notes to be redeemed plus (ii) an amount
equal to all accrued and unpaid interest thereon to the date fixed for
prepayment, whether or not currently payable, to the Optional Redemption Date,
in cash or other immediately available funds:

   If redeemed                            Percentage of Principal
during the period:                                   Amount

March 27, 1998 to                                     110.0%
December 22, 1998

December 23, 1998 to                                  107.5%
December 22, 1999

December 23, 1999 to                                  105.0%
December 22, 2000

December 23, 2000 and                                 100.0%
thereafter


            Notwithstanding anything to the contrary contained herein, in the
event of the occurrence of any Public Offering prior to December 23, 2000, the
Company shall have the right, at its sole option and election, to use the
proceeds from such Public Offering(s) to redeem, by delivery of a notice
pursuant to Section 4.2, concurrently with the consummation of such Public
Offering(s), up to an aggregate total amount (whether with the proceeds from



                                     6
<PAGE>
one or more than one Public Offering) of 33-1/3% of the principal amount of the
Notes outstanding on the Closing Date at a price equal to 100.0% of the
outstanding principal amount of the Notes to be prepaid plus an amount equal to
all accrued and unpaid interest thereon to the date fixed for prepayment,
whether or not currently payable, in cash or other immediately available funds.

            Upon the occurrence of an Event of Default under Section 11.1(viii)
of the Purchase Agreement, the Company shall be deemed to have elected to redeem
the Notes as provided in this Section 4.1 and shall so redeem the Notes as
provided in this Section 4 (without giving effect to the immediately preceding
paragraph).

                  4.2 NOTICE. Notice of the Optional Redemption (the "OPTIONAL
REDEMPTION NOTICE") shall be mailed at least 30 days, but not more than 60 days,
prior to the date fixed for redemption to each holder of the Notes, at such
holder's address as it appears on the transfer books of the Company. In order to
facilitate the redemption of the Notes, the Board of Directors of the Company
may fix a record date for the determination of the Notes to be redeemed, or may
cause the transfer books of the Company for the Notes to be closed, not more
than 60 days or less than 30 days prior to the date fixed for such redemption.

                  4.3 DEPOSIT OF FUNDS. On the Optional Redemption Date, the
Company shall, and at any time after the Optional Redemption Notice shall have
been mailed and before the date of Optional Redemption the Company may, deposit
for the benefit of the holders of the Notes the funds necessary for the Optional
Redemption with a bank or trust company in the Borough of Manhattan, The City of
New York, having a capital and surplus of at least $150,000,000. Any moneys so
deposited by the Company and unclaimed at the end of two years from the date
designated for the Optional Redemption shall revert to the general funds of the
Company or as otherwise required by law. After such reversion, any such bank or
trust company shall, upon demand, pay over to the Company such unclaimed amounts
and thereupon such bank or trust company shall be relieved of all responsibility
in respect thereof and any holder of Notes shall look only to the Company for
the payment of the Optional Redemption Price. Any interest accrued on funds
deposited pursuant to this Section 4.3 shall be paid from time to time to the
Company for its own account.

                  4.4 TERMINATION OF RIGHTS. The Optional Redemption Notice
having been given as aforesaid, upon the deposit of funds pursuant to Section
4.3 in respect of the Notes to be redeemed pursuant to Section 4.1,
notwithstanding that any such Notes themselves shall not have been surrendered
for cancellation, from and after the Optional Redemption Date (i) the Notes
shall no longer be deemed outstanding, (ii) the rights to



                                     7
<PAGE>
receive interest thereon shall cease to accrue and (iii) all rights of the
holders of the Notes shall cease and terminate, excepting only the right to
receive the Optional Redemption Price therefor; provided, however, that if the
Company shall default in the payment of the Optional Redemption Price, the Notes
shall thereafter be deemed to be outstanding and the holders thereof shall have
all of the rights of a holder of Notes until such time as such default shall no
longer be continuing or shall have been waived by holders of at least 66% of the
then outstanding principal amount of the Notes.

            5. DEFINITIONS. Capitalized terms not otherwise defined in this Note
shall have the meanings ascribed to them in the Purchase Agreement. As used in
this Note, and unless the context requires a different meaning, the following
terms have the meanings indicated:

            "BANKRUPTCY LAW" means Title 11, U.S. Code or any other federal,
state or foreign law for the relief of debtors, as any such laws may be amended
from time to time.

            "CHANGE OF CONTROL" of the Company shall mean such time as:

                  (i) Any Person or "group" (within the meaning of Section
      13(d)(3) of the Exchange Act) other than National Auto Finance Company,
      L.P., Morgan Guaranty Trust Company, Gary L. Shapiro, Keith B. Stein,
      First Union National Bank of North Carolina (or any of its Affiliates),
      The 1818 Mezzanine Fund, L.P., P.C. Investment Company, the Progressive
      Investment Company, Inc. and Manufacturers Life Insurance Company (U.S.A.)
      or the Purchaser (collectively, the "Principal Stockholders") is or
      becomes the beneficial owner, directly or indirectly, of outstanding
      shares of Capital Stock of the Company, entitling such Person or Persons
      to exercise 50% or more of the total votes entitled to be cast for the
      election of directors under ordinary circumstances at a regular or special
      meeting, or by action by written consent, of (i) common stockholders of
      the Company if at least a majority of the Company's Board of Directors are
      elected by common stockholders, and (ii) voting stockholders of the
      Company in all other circumstances (the term "beneficial owner" shall be
      determined in accordance with Rule 13d-3, promulgated by the Commission
      under the Exchange Act);

                  (ii) A majority of the Board of Directors of the Company shall
      consist of Persons other than Continuing Directors. The term "Continuing
      Director" shall mean any member of the Board of Directors of the Company
      on the Closing Date and any other member of the Board of Directors who
      shall be recommended or elected to



                                     8
<PAGE>
      succeed or become a Continuing Director by a majority of Continuing 
      Directors who are then members of the Board of Directors of the Company;

                  (iii) The stockholders of the Company shall have approved a
      recapitalization, reorganization, merger, consolidation, sale or other
      disposition of all or substantially all the assets of the Company (in one
      transaction or in a series of related transactions) or similar
      transaction, in each case, with respect to which all or substantially all
      the Persons who were the respective beneficial owners of the outstanding
      shares of Capital Stock of the Company immediately prior to such
      recapitalization, reorganization, merger or consolidation, beneficially
      own, directly or indirectly, less than 50% of the combined voting power of
      the then outstanding shares of Capital Stock of the Company resulting from
      such recapitalization, reorganization, merger, consolidation or similar
      transaction or obtaining the assets of the Company; or

                  (iv) Upon the consummation of any transaction the result of
      which is that the Common Stock is not required to be registered under
      Section 12 of the Exchange Act and that the holders of Common Stock do not
      receive common stock of the Person surviving such transaction which is
      required to be registered under Section 12 of the Exchange Act.

            "PREPAYMENT EVENT" means the occurrence of (i) a Change of Control
or (ii) a conveyance, transfer, lease or other disposition (whether in one
transaction or a series of transactions) of all or substantially all of the
assets (wherever acquired) of any division or Subsidiary of the Company (except
for sales in connection with Permitted Securitization Transactions) if such
assets accounted for at least 33% of the Company's Net Income determined by
reference to the most recent audited financial statements of the Company.

            "PUBLIC OFFERING" shall mean the sale in any offering by the Company
of its Capital Stock for its own account pursuant to a registration statement on
Form S-1 or otherwise under the Securities Act of 1933, as amended, and the
rules and regulations of the Securities and Exchange Commission thereunder.

            "SALE TRANSACTION" shall mean a Change of Control pursuant to
subsection (iii) of the definition thereof, provided that the reference
contained therein to 50% shall instead be deemed to be 10%.

            6. SUBORDINATION. This Note is subordinated to certain Senior
Indebtedness. To the extent provided in Article 12 of the Purchase Agreement,
Senior



                                     9
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Indebtedness must be paid before this Note may be paid. The Company, and the
holder of this Note by accepting this Note, agree to the subordination
provisions contained in Article 12 of the Purchase Agreement.

            7. EXCHANGE OF NOTES. At the option of the holder of this Note, this
Note may be exchanged for other Notes of like tenor and of a like aggregate
principal amount, upon surrender of this Note at the principal office of the
Company; provided, however, that the minimum denomination of any Note to be
issued in exchange for this Note shall be at least $3,000,000 and in at least
$1,000 increments, unless the transferee of this Note (i) shall have purchased
this Note in a public offering or subsequent to a public offering thereof, (ii)
is a partner or member of the holder of this Note and shall have received this
Note upon the dissolution or liquidation of the holder of this Note or in
connection with a distribution of assets by the holder of this Note, or (iii) is
a parent or subsidiary of the holder of this Note, which in each case the
minimum denomination of any note to be issued in exchange for this Note shall be
at least $1,000.

            8. AMENDMENT. Amendments and modifications of this Note may be made
only in the manner provided in Section 14.5 of the Purchase Agreement.

            9. GOVERNING LAW. This Note shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of law.


            IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed, as of the date written below.

                       NATIONAL AUTO FINANCE COMPANY, INC.



                              By_____________________________
                                  Name:
                                  Title:

Date: March 27, 1998



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