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


                                 SALE AGREEMENT




                                     BETWEEN




                    NATIONAL FINANCIAL AUTO FUNDING TRUST II




                                       AND




                      NATIONAL FINANCIAL AUTO FUNDING TRUST





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



                          DATED AS OF DECEMBER 15, 1997



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


<PAGE>
                                 SALE AGREEMENT


         SALE AGREEMENT, dated as of December 15, 1997, by and between NATIONAL
FINANCIAL AUTO FUNDING TRUST, a Delaware business trust ("Funding Trust I"), and
NATIONAL FINANCIAL AUTO FUNDING TRUST II, a Delaware business trust ("Funding
Trust II").


                              W I T N E S S E T H:

         In consideration of the mutual covenants herein contained, Funding
Trust I and Funding Trust II agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

         1.1 Incorporation of Definitions. Capitalized terms used but not
defined herein have the meanings ascribed to them in the Pooling and
Administration Agreement dated as of December 8, 1994 (the "Pooling and
Administration Agreement"), among Funding Trust II, as transferor, National Auto
Finance Company, Inc. ("NAFI") (as successor to National Auto Finance Company
L.P.), as Administrator, and Bankers Trust Company, as Trustee, or the
Assignment Agreement, dated as of December 15, 1997, between Funding Trust II
and the Trustee.

         1.2. Other Definitions. When used in this Agreement, the following
words and phrases shall have the following meanings:

         Cut-off Date:  As defined in Section 2.1.

         Closing Date:  means January 20, 1998.

         Originator Agreement: An agreement pursuant to which NAFI acquired
Receivables from an Originator.

         Outstanding Principal Balance: As of any date and with respect to any
Receivable, the outstanding principal balance of such Receivable as of such
date, which shall be computed by reducing the original principal balance of such
Receivable by the portion of each payment received and processed by the Servicer
on or before such date that would represent principal if such payments were
allocated to the principal of and interest on such Receivable based on the
amortization method provided in such Receivable.

         Purchase Price:  As defined in Section 2.1.

         Receivable Assets: The assets described in clauses (i) through (ix),
inclusive, of subsection 2.1 hereof.

<PAGE>
         Related Security: With respect to any Receivable, the interest of the
Seller in (i) the security interest in the Financed Vehicles granted by the
Obligors or the Receivables and any accessions thereto and (ii) physical damage,
credit life, credit disability or other insurance policies covering Financed
Vehicles or Obligors (including any blanket vendor's single interest insurance
policy).

         Receivables Schedule: The schedule of Receivables attached as Schedule
1 hereto, such schedule identifying each Receivable by name of the Obligor and
setting forth as to each Receivable its Outstanding Principal Balance as of the
Cut-off Date, loan number, interest rate, scheduled monthly payment of principal
and interest, final maturity date and original principal amount.

                                   ARTICLE II

                                PURCHASE AND SALE

         2.1 Purchase. Subject to and on the terms and conditions set forth
herein, Funding Trust II hereby sells, transfers, conveys and assigns, without
representation, warranty or recourse, except as specifically set forth herein,
all of its right, title and interest in and to (i) the Receivables identified on
the Receivables Schedule attached hereto as Schedule I, (ii) all monies paid or
payable thereunder on or after December 15, 1997 (the "Cut-off Date"), (iii) the
Related Security with respect to each such Receivable, (iv) all proceeds of the
foregoing, including all Collections or Related Security with respect to such
Receivables, or other recoveries applied to repay or discharge any such
Receivable received on or after the Cut-off Date (including net proceeds of sale
or other disposition of repossessed Financed Vehicles that were the subject of
any such Receivable) or other collateral or property of any Obligor or any other
party directly or indirectly liable for payment of such Receivables, (v) the
Seller Transaction Documents and the Assignment Agreement, dated as of December
15, 1997 between Funding Trust II and Bankers Trust Company, as Trustee of the
National Financial Auto Receivables Master Trust (the "Assignment Agreement"),
(vi) all records relating to any of the foregoing, (vii) all rights of Funding
Trust II assigned to Funding Trust II against Dealers under the Dealer
Agreements and against Originators under the Originator Agreements, (viii) any
other Trust Assets relating to the Receivables Assets, and (ix) the proceeds of
the foregoing. Funding Trust I agrees to pay to Funding II on the Closing Date
as the purchase price (the "Purchase Price") for the Receivable Assets sold
hereunder on such date an amount equal to $63,979,266.49 in immediately
available funds to an account at a bank designated by Funding Trust II to
Funding Trust I.

         2.2. Filings. (a) On or prior to the Closing Date, Funding Trust II
shall have filed in the office of the Secretary of State of Delaware and the
Office of the Secretary of State of Florida UCC financing statements,
appropriate under the Uniform Commercial Code in effect in Delaware and Florida
to reflect the transfer of the Receivables Assets from Funding Trust II to
Funding Trust I and to protect Funding Trust I's interest in the Receivables
Assets against all other Persons, naming Funding Trust II as debtor, Funding
Trust I as secured party and Harris Trust and Savings Bank ("Harris Trust") as

<PAGE>
assignee. During the term of this Agreement, Funding Trust II shall not change
its name, identity or structure or relocate its chief executive office or
principal place of business without first giving 60 days prior written notice to
Funding Trust I and Financial Security Assurance Inc. ("Financial Security")
(for so long as any policy issued Financial Security Assurance Inc. is in effect
with respect to any securities issued by Funding Trust I or any trust of which
Funding Trust I is depositor or transferor); provided, however, that Funding
Trust I has no right or power to prohibit a change in Funding Trust II's name,
identity or structure or, subject to the last sentence of this paragraph, a
relocation of, its chief executive office. If any change in Funding Trust II's
name, identity or structure or the relocation of its chief executive office or
principal place of business would make any financing or continuation statement
or notice of lien filed in connection with this Agreement seriously misleading
within the meaning of applicable provisions of the UCC or any title statute,
Funding Trust II, shall after the effective date of such change, promptly file
or cause to be filed such amendments as may be required to preserve and protect
Funding Trust I's interest in the Receivables Assets.

          (b) On or prior to the Closing Date, Funding Trust II shall deliver to
Funding Trust I or such other Person as Funding Trust I shall direct cash equal
to all payments received on such Receivables on or after the Cut-off Date and on
or before two Business days prior to the Closing Date. Within two Business Days
after the Closing Date, Funding Trust II shall deliver to Funding Trust I or
such other Person as Funding Trust I shall direct all other payments received on
such Receivables on or after the Cut-off Date and on or before the Closing Date.
Funding Trust hereby directs Funding Trust II to deliver cash equal to all such
payments described in this Section 2.2(b) to be delivered to Harris Trust and
Savings Bank ("Harris Trust") in its capacity as Trust Collateral Agent under
the Sale and Servicing Agreement (as defined herein).

         2.3. No Recourse. The sale and purchase of Receivables and the other
Receivables Assets under this Agreement shall be without recourse to Funding
Trust II.

         2.4. True Sales. Funding Trust II and Funding Trust I intend that the
transactions contemplated hereby be true sales of the Receivables and other
Receivables Assets by Funding Trust II to Funding Trust I providing Funding
Trust I with the full benefits of ownership of the Receivables and other
Receivables Assets free and clear of any liens, and neither Funding Trust II nor
Funding Trust I intends the transactions contemplated hereby to be, or for any
purpose to be characterized as, a loan from Funding Trust I to Funding Trust II.
Funding Trust II shall reflect sales of the Receivables Assets hereunder on the
books and records maintained by Funding Trust II as sales of assets, and shall
treat such sales as sales for all purposes.

         2.5. Receipt of Payments after Closing Date. Funding Trust I shall be
entitled to all payments received or receivable with respect to any Receivable
sold and conveyed by Funding Trust II to Funding Trust I hereunder that are
received on and after the Cut-off Date. If Funding Trust II receives any payment
on a Receivable belonging to Funding Trust I, Funding Trust II promptly shall
turn such payment over to Harris Trust, as trustee under the Sale and Servicing
Agreement, dated as of December 15, 1997 (the "Sale and Servicing Agreement"),
among National Auto Finance 1998-1 Trust, Funding Trust I, NAFI and Harris
Trust.

<PAGE>
                                   ARTICLE III

                                  MISCELLANEOUS

         3.1 Notices. All notices, demands and requests that may be given or
that are required to be given hereunder shall be sent by United States certified
mail, postage prepaid, return receipt requested, to the parties at their
respective addresses as follows:

         If to Funding Trust II:

                  National Financial Auto Funding Trust II
                  c/o Chase Manhattan Bank Delaware, as Trustee
                  1201 N. Market Street
                  Wilmington, Delaware  19801

                  Attention:  Corporate Administration Trust Department
                  Telecopier No.:       (302) 984-4903
                  Confirmation:         (302) 428-3375

         If to Funding Trust I:

                  National Financial Auto Funding Trust I
                  c/o Chase Manhattan Bank Delaware, as Trustee
                  1201 N. Market Street
                  Wilmington, Delaware 19801

                  Attention:  Corporate Administration Trust Department
                  Telecopier No.:       (302) 984-4903
                  Confirmation:         (302) 428-3375

         If to Financial Security Assurance Inc.:

                  Financial Security Assurance Inc.
                  350 Park Avenue
                  New York, New York  10022
                  Attention:   Surveillance Department
                  Re:          National Auto Finance 1998-1 Trust, 5.88%
                               Automobile Receivables-Backed Notes
                  Telecopier No:        (212) 339-3518,
                                        (212) 339-3529
                  Confirmation:(212) 826-0100

<PAGE>
         If to Harris Trust:

                  Harris Trust and Savings Bank
                  311 West Monroe Street, 12th Floor
                  Chicago, Illinois  60606

                  Attention:            Indenture Trust Division
                  Telecopier No.:       (312) 461-3525
                  Confirmation:         (312) 461-4662

         3.2. Choice of Law. This Agreement shall be construed in accordance
with the laws of the State of New York and the obligations, rights and remedies
of the parties hereunder shall be determined in accordance with such laws.

         3.3. Counterparts. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all of such counterparts shall together constitute but one and the same
instrument.

         3.4. Assignment. This Agreement may not be assigned by Funding Trust II
or Funding Trust I except as contemplated by this Section; provided, however,
that simultaneously with the execution and delivery of this Agreement, Funding
Trust I shall assign all of its right, title and interest hereunder to National
Auto Finance 1998-1 Trust pursuant to the Sale and Servicing Agreement, as
provided in Section 2.1 of the Sale and Servicing Agreement.

         3.5. Third-Party Beneficiaries. This Agreement will inure to the
benefit of and be binding upon the parties hereto and shall also be for the
benefit of Harris Trust (for the benefit of the Noteholders) and Financial
Security, each of which shall be considered to be third-party beneficiaries of
this Agreement and shall be entitled to rely upon and directly enforce the
provisions of this Agreement. Except as otherwise provided in this Agreement, no
other Person will have any right or obligation hereunder. Financial Security may
disclaim any of its rights and powers under this Agreement upon delivery of a
written notice to Funding Trust II and Funding Trust I.

         3.6. No Petition. Funding Trust II hereby agrees not to cause the
filing of a petition in bankruptcy against Funding Trust I until one year and
one day after the maturity of any securities securities evidencing a beneficial
interest in or secured by Receivable Assets sold, transferred or otherwise
conveyed by the Trustee to Funding Trust II, NAFI or any affiliate of either.

         3.7. Further Assurances. It is Funding Trust II's intention to convey
its entire rights, title and interest in the Receivables Assets or other assets
related thereto acquired from National Financial Auto Receivables Master Trust
pursuant to the Assignment Agreement.

         3.8. Limitation of Liability of Funding Trust I Trustee:
Notwithstanding anything contained herein to the contrary, this Agreement has
been executed and delivered by Chase Manhattan Bank Delaware not in its
individual capacity but solely as Trustee and in no event shall Chase Manhattan
Bank Delaware, have any liability for the representations, warranties,
covenants, agreements or other obligations of Funding Trust I hereunder or in
any of the certificates, notices or agreements delivered pursuant hereto, as to
all of which recourse shall be had solely to the assets of Funding Trust I.

<PAGE>
         3.9. Limitation of Liability of Funding Trust II Trustee:
Notwithstanding anything contained herein to the contrary, this Agreement has
been executed and delivered by Chase Manhattan Bank Delaware not in its
individual capacity but solely as Trustee and in no event shall Chase Manhattan
Bank Delaware, have any liability for the representations, warranties,
covenants, agreements or other obligations of Funding Trust II hereunder or in
any of the certificates, notices or agreements delivered pursuant hereto, as to
all of which recourse shall be had solely to the assets of Funding Trust II.


         3.10. Amendment. This Agreement may be amended in writing by the
parties hereto with the prior written consent of Financial Security, to cure any
ambiguity or to correct any provisions in this Agreement.






                     [Remainder of Page Intentionally Blank]

<PAGE>
         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.


              NATIONAL FINANCIAL AUTO FUNDING TRUST II

              By:    Chase Manhattan Bank Delaware, not in its individual
                     capacity, but solely as Trustee of National Financial
                     Auto Funding Trust II,



              By:
                     Name:
                     Title:



              NATIONAL FINANCIAL AUTO FUNDING TRUST

              By:    Chase Manhattan Bank Delaware, not in its individual
                     capacity, but solely as Trustee of National Financial
                     Auto Funding Trust,


              By:
                     Name:
                     Title: