EXECUTION COPY






                        MASTER SPREAD ACCOUNT AGREEMENT,

                            dated as of July 23, 1997

                                      among

                     NATIONAL FINANCIAL AUTO FUNDING TRUST,

                        FINANCIAL SECURITY ASSURANCE INC.

                                       and

                         HARRIS TRUST AND SAVINGS BANK,

                       as Trustee and as Collateral Agent
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                                TABLE OF CONTENTS
                                                                           Page

                                    ARTICLE I

                                   DEFINITIONS

   Section 1.01.  Definitions................................................3
   Section 1.02.  Rules of Interpretation...................................16

                                   ARTICLE II

            REVERSIONARY HOLDERS; SERIES SUPPLEMENTS; THE COLLATERAL

   Section 2.01.  Reversionary Holders......................................17
   Section 2.02.  Series Supplements........................................17
   Section 2.03.  Creation and Grant of Security
                        Interest by the Transferor..........................18
   Section 2.04.  Priority..................................................19
   Section 2.05.  Transferor Remains Liable.................................19
   Section 2.06.  Maintenance of Collateral.................................20
   Section 2.07.  Termination and Release of Rights.........................20
   Section 2.08.  Non-Recourse Obligations of
                         Transferor and the Reversionary
                        Holders.............................................22

                                   ARTICLE III

                                 SPREAD ACCOUNTS

   Section 3.01.  Establishment of Spread Accounts;
                        Initial Deposits into Spread Accounts...............22
   Section 3.02.  Investments...............................................23
   Section 3.03.  Distributions; Priority of Payments.......................24
   Section 3.04.  General Provisions Regarding Spread
                      Accounts..............................................27
   Section 3.05.  Reports by the Collateral Agent...........................28

                                   ARTICLE IV

                              THE COLLATERAL AGENT

   Section 4.01.  Appointment and Powers....................................29
   Section 4.02.  Performance of Duties.....................................29
   Section 4.03.  Limitation on Liability...................................30
   Section 4.04.  Reliance upon Documents...................................30
   Section 4.05.  Successor Collateral Agent................................31
   Section 4.06.  Indemnification...........................................33
   Section 4.07.  Compensation and Reimbursement............................33
   Section 4.08.  Representations and Warranties of
                      the Collateral Agent..................................34
   Section 4.09.  Waiver of Setoffs.........................................34
   Section 4.10.  Control by the Controlling Party..........................35

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                                    ARTICLE V

                           COVENANTS OF THE TRANSFEROR

   Section 5.01.  Preservation of Collateral................................35
   Section 5.02.  Opinions as to Collateral.................................35
   Section 5.03.  Notices...................................................36
   Section 5.04.  Waiver of Stay or Extension Laws; Marshalling
                        of Assets...........................................36
   Section 5.05.  Noninterference, etc......................................37
   Section 5.06.  Transferor Changes........................................37

                                   ARTICLE VI

                   CONTROLLING PARTY; INTERCREDITOR PROVISIONS

   Section 6.01.  Appointment of Controlling Party..........................38
   Section 6.02.  Controlling Party's Authority.............................38
   Section 6.03.  Rights of Secured Parties.................................39
   Section 6.04.  Degree of Care............................................39

                                   ARTICLE VII

                              REMEDIES UPON DEFAULT

   Section 7.01.  Remedies upon a Default...................................40
   Section 7.02.  Waiver of Default.........................................40
   Section 7.03.  Restoration of Rights and Remedies........................40
   Section 7.04.  No Remedy Exclusive.......................................41

                                  ARTICLE VIII

                                  MISCELLANEOUS

   Section 8.01.  Further Assurances........................................41
   Section 8.02.  Waiver....................................................41
   Section 8.03.  Amendments, Waivers.......................................42
   Section 8.04.  Severability..............................................42
   Section 8.05.  Nonpetition Covenant......................................42
   Section 8.06.  Notices...................................................43
   Section 8.07.  Term of this Agreement....................................45
   Section 8.08.  Assignments, Third-Party Rights;
                        Reinsurance.........................................45
   Section 8.09.  Consent of Controlling Party..............................46
   Section 8.10.  Trial by Jury Waived......................................46
   Section 8.11.  Governing Law.............................................46
   Section 8.12.  Consents to Jurisdiction..................................47
   Section 8.13.  Limitation of Liability...................................47
   Section 8.14.  Determination of Adverse Effect...........................48
   Section 8.15.  Counterparts..............................................48
   Section 8.16.  Headings..................................................48


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                         MASTER SPREAD ACCOUNT AGREEMENT


      MASTER SPREAD ACCOUNT AGREEMENT, dated as of July 23, 1997 (the
"Agreement"), by and among NATIONAL FINANCIAL AUTO FUNDING TRUST, a Delaware
business trust (the "Transferor"), FINANCIAL SECURITY ASSURANCE INC., a New York
stock insurance company ("Financial Security"), and HARRIS TRUST AND SAVINGS
BANK, an Illinois banking corporation, in its capacities as Trustee under each
Securitization Agreement referred to below, in such capacity as agent for the
Securityholders and Financial Security with respect to the related Series (the
"Trustee") and as Collateral Agent (as defined below).

                                    RECITALS

        National Auto Finance 1997-1 Trust (the "Series 1997-1 Trust"), a
Delaware business trust, was formed pursuant to a Trust Agreement dated as of
June 29, 1997 (as such agreement may be amended, amended and restated,
supplemented or otherwise modified from time to time in accordance with the
terms thereof, the "Series 1997-1 Trust Agreement"), between the Transferor and
Wilmington Trust Company, a Delaware banking corporation, as Owner Trustee (the
"Owner Trustee").

        Pursuant to a Sale and Servicing Agreement dated as of June 29, 1997 (as
such agreement may be amended, amended and restated, supplemented or otherwise
modified from time to time in accordance with the terms thereof, the "Series
1997-1 Sale and Servicing Agreement") by and among the Series 1997-1 Trust, the
Transferor, National Auto Finance Company, Inc., a Delaware corporation
("NAFI"), in its capacity as Servicer (the "Servicer") and Harris Trust and
Savings Bank, an Illinois banking corporation, as Trust Collateral Agent (the
"Trust Collateral Agent") and Backup Servicer (the "Backup Servicer"), the
Transferor will, on the Closing Date and from time to time thereafter, sell all
of its right, title and interest in and to the Receivables and certain other
property of the Series 1997-1 Trust Estate to the Series 1997-1 Trust, and
pursuant to the Indenture dated as of June 29, 1997 (as such agreement may be
amended, amended and restated, supplemented or otherwise modified from time to
time in accordance with the terms thereof, the "Series 1997-1 Indenture", and
together with the Series 1997-1 Trust Agreement and the Series 1997-1 Sale and
Servicing Agreement, the "Series 1997-1 Securitization Agreements"), between the
Series 1997-1 Trust and Harris Trust and Savings Bank, as Indenture Trustee and
as Trust Collateral Agent, the Series 1997-1 Trust has assigned the Receivables
and certain other property of the Series 1997-1 Trust Estate to the Trust
Collateral Agent for the benefit of the Noteholders and Financial Security. Also
pursuant to the Series 1997-1 Indenture, the

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Series 1997-1 Trust will issue $66,891,200 aggregate principal amount of 6.35%
Automobile Receivables-Backed Notes (the "Series 1997-1 Notes" or "Series
1997-1").

        Financial Security has been asked to issue the Series 1997-1 Note Policy
to the Trust Collateral Agent to guarantee payment of the Scheduled Payments (as
defined in the Series 1997-1 Note Policy) on each Distribution Date in respect
of the Series 1997-1 Notes.

        In partial consideration of the issuance of the Series 1997-1 Note
Policy, the Transferor has agreed that Financial Security shall have certain
rights as Controlling Party, to the extent set forth herein.

        In order to secure the performance of the Secured Obligations, the
Transferor, in its capacity as the agent of the Reversionary Holders, has agreed
to pledge the Collateral to the Collateral Agent for the benefit of Financial
Security and for the benefit of the Trustees on behalf of the Securityholders,
upon the terms and conditions set forth herein.

        It is contemplated that NAFI and/or the Transferor and/or any other
Affiliate of NAFI may in the future enter into one or more additional
Securitization Agreements pursuant to which the Transferor and/or NAFI and/or
such other Affiliate of NAFI will sell or pledge all or a portion of its right,
title and interest in and to pools of contracts and/or other financial assets or
property to a Trust or other Person and in connection therewith Financial
Security in its discretion may in the future issue additional Policies with
respect to certain guaranteed distributions or scheduled payments with respect
to the corresponding additional Series. In connection with any such issuance of
additional Policies, it is contemplated that Financial Security will obtain
certain Controlling Party rights with respect to the related Series, and that,
in connection with each such additional Series, the parties hereto will enter
into a Series Supplement hereto pursuant to which NAFI and/or the Transferor
and/or any other Affiliate of NAFI will assign, or cause to be assigned,
additional Collateral pursuant to the terms hereof.


                                   AGREEMENTS

      In consideration of the premises, and for other good and valuable
consideration, the adequacy, receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:



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                                     ARTICLE

                                   DEFINITIONS

      Section Definitions. Unless defined in this Agreement, capitalized terms
used in this Agreement shall have the meaning given such terms in the applicable
Securitization Agreement or Series Supplement, as identifiable from the context
in which such term is used. The following terms shall have the following
respective meanings:

      "Affiliate" means, as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person within the meaning of control under Section 15 of the Securities Act
of 1933, as amended.

      "Agreement" means this Master Spread Account Agreement, as the same may be
amended, amended and restated, supplemented or otherwise modified from time to
time in accordance with the terms hereof.

      "Authorized Officer" means, (i) with respect to Financial Security, the
Chairman of the Board, the President, the Executive Vice President or any
Managing Director of Financial Security, (ii) with respect to the Trustees or
the Collateral Agent, any Vice President or Trust Officer thereof, and (iii)
with respect to the Transferor, any Co-Trustee thereof.

      "Collateral" means the Series 1997-1 Collateral, and with respect to any
other Series, all collateral delivered hereunder with respect to each of such
Series, as specified in the related Series Supplement.

      "Collateral Agent" means, initially, Harris Trust and Savings Bank, in its
capacity as collateral agent on behalf of the Secured Parties, including its
successors in interest, until a successor Person shall have become the
Collateral Agent pursuant to Section 4.05 hereof, and thereafter "Collateral
Agent" shall mean such successor Person.

      "Collateral Agent Fee" means, with respect to the Series 1997-1 Notes, the
annual fee payable to the Collateral Agent for services rendered as the
Collateral Agent, which Collateral Agent Fee is included in the fees paid to
Harris Trust and Savings Bank pursuant to the applicable Series 1997-1
Securitization Agreement.

      "Collection Account" means the Collection Account applicable to any
Series, as specified in the related Securitization Agreement.

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      "Controlling Party" means, with respect to a Series, at any time, the
Person designated as the Controlling Party at such time pursuant to Section 6.01
hereof.

      "Cumulative Loss Rate" means, as of any Reporting Date, a fraction,
expressed as a percentage, the numerator of which is an amount equal to the
excess of (i) the sum of (a) the aggregate of the Principal Balances of all
Receivables that have become Liquidated Receivables (each such Principal Balance
calculated as of the last day of the Due Period during which such Receivable
became a Liquidated Receivable), (b) accrued and unpaid interest on such
Principal Balances through the last day of the Due Period during which such
Receivable became a Liquidated Receivable and (c) the amount of all Bankruptcy
Losses with respect to the Receivables over (ii) the Net Liquidation Proceeds
received by the Trust with respect to all Liquidated Receivables, and the
denominator of which is an amount equal to the sum of the Series 1997-1 Initial
Balance and the aggregate Principal Balances of Subsequent Receivables sold to
the Trust through the last day of the related Due Period (which Aggregate
Principal balances shall be as of the respective dates on which such Subsequent
Receivables were sold to the Trust).

      "Deemed Cured" means, as of a Reporting Date, with respect to a Trigger
Event that has occurred with respect to a Series, that no Trigger Event with
respect to such Series shall have occurred as of such Reporting Date or as of
any of the two consecutively preceding Reporting Dates.

      "Default" means with respect to any Series, at any time, (i) if Financial
Security is then the Controlling Party with respect to such Series, any
Insurance Agreement Event of Default with respect to such Series, and (ii) if
the Trustee is then the Controlling Party with respect to such Series, any
Servicer Termination Event with respect to such Series.

      "Deficiency Claim Date" means, with respect to any Distribution Date, the
fourth Business Day preceding such Distribution Date.

      "Delivery" means with respect to the Collateral:

      (1)   the perfection and priority of a security interest in which is
            governed by the law of a jurisdiction which has adopted the 1978
            Revision to Article 8 of the UCC:

            (a) with respect to bankers' acceptances, commercial paper,
      negotiable certificates of deposit and other obligations that constitute
      "instruments" within the meaning of Section 9-105(l)(i) of the UCC (other
      than certificated securities) and are susceptible of physical delivery,

                                    -4-
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      transfer thereof to the Collateral Agent by physical delivery to the
      Collateral Agent, indorsed to, or registered in the name of, the
      Collateral Agent or its nominee or indorsed in blank and such additional
      or alternative procedures as may hereafter become appropriate to effect
      the complete transfer of ownership of any such Collateral to the
      Collateral Agent free and clear of any adverse claims, consistent with
      changes in applicable law or regulations or the interpretation thereof;

            (b) with respect to a "certificated security" (as defined in Section
      8-102(1)(a) of the UCC), transfer thereof:

                  (i) by physical delivery of such certificated security to the
            Collateral Agent, provided that if the certificated security is in
            registered form, it shall be indorsed to, or registered in the name
            of, the Collateral Agent or indorsed in blank;

                  (ii) by physical delivery of such certificated security to a
            "financial intermediary" (as defined in Section 8-313(4) of the UCC)
            of the Collateral Agent specially indorsed to or issued in the name
            of the Collateral Agent;

                  (iii) by the sending by a financial intermediary, not a
            "clearing corporation" (as defined in Section 8-102(3) of the UCC),
            of a confirmation of the purchase and the making by such financial
            intermediary of entries on its books and records identifying as
            belonging to the Collateral Agent of (A) a specific certificated
            security in the financial intermediary's possession, (B) a quantity
            of securities that constitute or are part of a fungible bulk of
            certificated securities in the financial intermediary's possession,
            or (C) a quantity of securities that constitute or are part of a
            fungible bulk of securities shown on the account of the financial
            intermediary on the books of another financial intermediary; or

                  (iv) by the making by a clearing corporation of appropriate
            entries on its books reducing the appropriate securities account of
            the transferor and increasing the appropriate securities account of
            the Collateral Agent or a Person designated by the Collateral Agent
            by the amount of such certificated security, provided that in each
            case: (A) the clearing corporation identifies such certificated
            security for the sole and exclusive account of the Collateral Agent
            or the Person designated by the Collateral Agent, (B)

                                    -5-
<PAGE>
            such certificated security shall be subject to the clearing
            corporation's exclusive control, (C) such certificated security is
            in bearer form or indorsed in blank or registered in the name of the
            clearing corporation or custodian bank or a nominee or either of
            them, (D) custody of such certificated security shall be maintained
            by such clearing corporation or a "custodian bank" (as defined in
            Section 8-102(4) of the UCC) or the nominee of either subject to the
            control of the clearing corporation and (E) such certificated
            security is shown on the account of the transferor thereof on the
            books of the clearing corporation prior to the making of such
            entries; and such additional or alternative procedures as may
            hereafter become appropriate to effect the complete transfer of
            ownership of any such Collateral to the Collateral Agent free and
            clear of any adverse claims, consistent with changes in applicable
            law or regulations or the interpretation thereof;

            (c) with respect to any security issued by the U.S. Treasury, the
      Federal Home Loan Mortgage Corporation or by the Federal National Mortgage
      Association that is a book-entry security held through the Federal Reserve
      System pursuant to Federal book entry regulations, the following
      procedures, all in accordance with applicable law, including applicable
      Federal regulations and Articles 8 and 9 of the UCC: book-entry
      registration of such property to an appropriate book-entry account
      maintained with a Federal Reserve Bank by a financial intermediary which
      is also a "depositary" pursuant to applicable Federal regulations and
      issuance by such financial intermediary of a deposit advice or other
      written confirmation of such book-entry registration to the Collateral
      Agent of the purchase by the financial intermediary on behalf of the
      Collateral Agent of such book-entry security; the making by such financial
      intermediary of entries in its books and records identifying such
      book-entry security held through the Federal Reserve System pursuant to
      Federal book-entry regulations as belonging to the Collateral Agent and
      indicating that such financial intermediary holds such book-entry security
      solely an agent for the Collateral Agent; and such additional or
      alternative procedures as may hereafter become appropriate to effect
      complete transfer of ownership of any such Collateral to the Collateral
      Agent free of any adverse claims, consistent with changes in applicable
      law or regulations or the interpretation thereof;

            (d) with respect to any item of Collateral that is an
      "uncertificated security" (as defined in Section 8-102(1)(b)

                                    -6-
<PAGE>
      of the UCC) and that is not governed by clause (c) above,
      transfer thereof:

                  (i)   by registration of the transfer thereof to
                  the Collateral Agent, on the books and records of
                  the issuer thereof;

                  (ii) by the sending of a confirmation by a financial
                  intermediary of the purchase, and the making by such financial
                  intermediary of entries on its books and records identifying
                  as belonging to the Collateral Agent (A) a quantity of
                  securities which constitute or are part of a fungible bulk of
                  uncertificated securities registered in the name of the
                  financial intermediary or (B) a quantity of securities which
                  constitute or are part of a fungible bulk of securities shown
                  on the account of the financial intermediary on the books of
                  another financial intermediary; or

                  (iii) by the making by a clearing corporation of appropriate
                  entries on its books reducing the appropriate account of the
                  transferor and increasing the account of the Collateral Agent
                  or a person designated by the Collateral Agent by the amount
                  of such uncertificated security, provided that in each case:
                  (A) the clearing corporation identifies such uncertificated
                  security for the sole and exclusive use of the Collateral
                  Agent or the Person designated by the Collateral Agent, (B)
                  such uncertificated security is registered in the name of the
                  clearing corporation or a custodian bank or a nominee of
                  either, and (C) such uncertificated security is shown on the
                  account of the transferor on the books of the clearing
                  corporation prior to the making of such entries; and

            (e) in each case of delivery contemplated herein, the Collateral
      Agent shall make appropriate notations on its records, and shall cause
      same to be made of the records of its nominees, indicating that such
      securities are held in trust pursuant to and as provided in this
      Agreement.

      (2) the perfection and priority of a security interest in which is
governed by the law of a jurisdiction which has adopted the 1994 Revision to
Article 8 of the UCC:

                  (a)  with respect to bankers' acceptances,
            commercial paper, negotiable certificates of deposit

                                    -7-
<PAGE>
            and other obligations that constitute "instruments" within the
            meaning of Section 9-105(1)(i) of the UCC (other than certificated
            securities) and are susceptible of physical delivery, transfer
            thereof to the Collateral Agent by physical delivery to the
            Collateral Agent, indorsed to, or registered in the name of, the
            Collateral Agent or its nominee or indorsed in blank and such
            additional or alternative procedures as may hereafter become
            appropriate to effect the complete transfer of ownership of any such
            Collateral to the Collateral Agent free and clear of any adverse
            claims, consistent with changes in applicable law or regulations or
            the interpretation thereof;

                  (b) with respect to a "certificated security" (as defined in
            Section 8-102(a)(4) of the UCC), transfer thereof:

                        (i) by physical delivery of such certificated security
                  to the Collateral Agent, provided that if the certificated
                  security is in registered form, it shall be indorsed to, or
                  registered in the name of, the Collateral Agent or indorsed in
                  blank;

                        (ii) by physical delivery of such certificated security
                  in registered form to a "securities intermediary" (as defined
                  in Section 8-102(a)(14) of the UCC) acting on behalf of the
                  Collateral Agent if the certificated security has been
                  specially endorsed to the Collateral Agent by an effective
                  endorsement.

                  (c) with respect to any security issued by the U.S. Treasury,
            the Federal Home Loan Mortgage Corporation or by the Federal
            National Mortgage Association that is a book-entry security held
            through the Federal Reserve System pursuant to Federal book entry
            regulations, the following procedures, all in accordance with
            applicable law, including applicable federal regulations and
            Articles 8 and 9 of the UCC: book-entry registration of such
            property to an appropriate book-entry account maintained with a
            Federal Reserve Bank by a securities intermediary which is also a
            "depositary" pursuant to applicable federal regulations and issuance
            by such securities intermediary of a deposit advice or other written
            confirmation of such book-entry registration to the Collateral Agent
            of the purchase by the securities intermediary on behalf of the
            Collateral Agent of such

                                    -8-
<PAGE>
            book-entry security; the making by such securities intermediary of
            entries in its books and records identifying such book-entry
            security held through the Federal Reserve System pursuant to Federal
            book-entry regulations as belonging to the Collateral Agent and
            indicating that such securities intermediary holds such book-entry
            security solely as agent for the Collateral Agent; and such
            additional or alternative procedures as may hereafter become
            appropriate to effect complete transfer of ownership of any such
            Collateral to the Collateral Agent free of any adverse claims,
            consistent with changes in applicable law or regulations or the
            interpretation thereof;

                  (d) with respect to any item of Collateral that is an
            "uncertificated security" (as defined in Section 8-102(a)(18) of the
            UCC) and that is not governed by clause (c) above, transfer thereof:

                  (i) (A) by registration to the Collateral Agent as the
                  registered owner thereof, on the books and records of the
                  issuer thereof.

                        (B) by another Person (not a securities intermediary)
                  either becomes the registered owner of the uncertificated
                  security on behalf of the Collateral Agent, or having become
                  the registered owner acknowledges that it holds for the
                  Collateral Agent.

                  (ii) the issuer thereof has agreed that it will comply with
            instructions originated by the Collateral Agent without further
            consent of the registered owner thereof.

                  (e) in each case of delivery contemplated herein, the
            Collateral Agent shall make appropriate notations on its records,
            and shall cause same to be made of the records of its nominees,
            indicating that securities are held in trust pursuant to and as
            provided in this Agreement.

                  (f) with respect to a "security entitlement" (as defined in
            Section 8-102(a)(17) of the UCC)

                        (i) if a securities intermediary (A) indicates by book
                  entry that a "financial asset" (as defined in Section
                  8-102(a)(9) of the UCC) has been credited to be the Collateral
                  Agent's "securities account" (as defined in Section 8- 501(a)
                  of the UCC), (B) receives a financial asset

                                    -9-
<PAGE>
                  (as so defined) from the Collateral Agent or acquires a
                  financial asset for the Collateral Agent, and in either case,
                  accepts it for credit to the Collateral Agent's securities
                  account (as so defined), (C) becomes obligated under other
                  law, regulation or rule to credit a financial asset to the
                  Collateral Agent's securities account, or (D) has agreed that
                  it will comply with "entitlement orders" (as defined in
                  Section 8-102(a)(8) of the UCC) originated by the Collateral
                  Agent without further consent by the "entitlement holder" (as
                  defined in Section 8- 102(a)(7) of the UCC), of a confirmation
                  of the purchase and the making by such securities intermediary
                  of entries on its books and records identifying as belonging
                  to the Collateral Agent of (I) a specific certificated
                  security in the securities intermediary's possession, (II) a
                  quantity of securities that constitute or are part of a
                  fungible bulk of certificated securities in the securities
                  intermediary's possession, or (III) a quantity of securities
                  that constitute or are part of a fungible bulk of securities
                  shown on the account of the securities intermediary on the
                  books of another securities intermediary.



      "Final Termination Date" means, with respect to a Series, the date that is
the later of (i) the Insurer Termination Date with respect to such Series and
(ii) the Trustee Termination Date with respect to such Series.

      "Financial Security Default" means, with respect to any Series, any one of
the following events shall have occurred and be continuing:

            (a) Financial Security shall have failed to make a payment required
      under the related Policy;

            (b) Financial Security shall have (i) filed a petition or commenced
      any case or proceeding under any provision or chapter of the United States
      Bankruptcy Code or any other similar Federal or state law relating to
      insolvency, bankruptcy, rehabilitation, liquidation or reorganization,
      (ii) made a general assignment for the benefit of its creditors, or (iii)
      had an order for relief entered against it under the United States
      Bankruptcy Code or any other similar Federal or state law relating to
      insolvency, bankruptcy, rehabilitation, liquidation or reorganization
      which is final and nonappealable; or

                                    -10-
<PAGE>
            (c) a court of competent jurisdiction, the New York Department of
      Insurance or other competent regulatory authority shall have entered a
      final and nonappealable order, judgment or decree (i) appointing a
      custodian, trustee, agent or receiver for Financial Security or for all or
      any material portion of its property or (ii) authorizing the taking of
      possession by a custodian, trustee, agent or receiver of Financial
      Security (or the taking of possession of all or any material portion of
      the property of Financial Security).

      "GAC Receivable" means any Receivable (i) originated by
General Acceptance Corp. or any Affiliate thereof and/or (ii)
transferred, assigned, set-over, sold or otherwise conveyed by
General Acceptance Corp. or any Affiliate thereof to NAFI or any
Affiliate thereof.

      "Guaranteed Distributions" shall have the meaning set forth
in the related Policy.

      "Harris Trust and Savings Bank" means Harris Trust and Savings Bank, an
Illinois banking corporation.

      "Initial Spread Account Deposit" means, with respect to the Series 1997-1
Notes, an amount equal to $1,764,163.51.

      "Insurance Agreement" means, with respect to any Series, the Insurance and
Indemnity Agreement among Financial Security and/or NAFI and/or the Transferor
and such other parties as may be named therein, pursuant to which Financial
Security issued a Policy to
the Trustee.

      "Insurer Secured Obligations" means, with respect to a Series, all amounts
and obligations which may at any time be owed to or on behalf of Financial
Security (or any agents, accountants or attorneys for Financial Security) under
the Insurance Agreement related to such Series or under any Transaction Document
in respect of such Series, regardless of whether such amounts are owed now or in
the future, whether liquidated or unliquidated, contingent or noncontingent.

      "Insurer Termination Date" means, with respect to any Series, the date
which is the latest of (i) the date of the expiration of all Policies issued in
respect of such Series, (ii) the date on which Financial Security shall have
received payment and performance in full of all Insurer Secured Obligations with
respect to such Series and (iii) the latest date any payment referred to above
could be avoided as a preference or otherwise under the United States Bankruptcy
Code or any other similar Federal or state law relating to insolvency,
bankruptcy, rehabilitation, liquidation or reorganization, as specified in an

                                    -11-
<PAGE>
Opinion of Counsel delivered to the Collateral Agent and the Trustee.

      "Lien" means any security interest, lien, charge, pledge, preference,
equity or encumbrance of any kind, including tax liens, mechanics' liens and any
liens that attach by operation of the law.

      "Monthly Period" means, with respect to a Reporting Date or a Distribution
Date, the calendar month immediately preceding the month in which such Reporting
Date or Distribution Date occurs (such calendar month being referred to as the
"related" Monthly Period with respect to such Reporting Date or Distribution
Date).

      "NAFI" means National Auto Finance Company, Inc., a Delaware
corporation.

      "Non-Controlling Party" means with respect to a Series at any time, the
Secured Party that is not the Controlling Party at such time.

      "Opinion of Counsel" means a written opinion of counsel acceptable, as to
form, substance and issuing counsel, to the Controlling Party.

      "Policy" means the Series 1997-1 Note Policy and any insurance policy
subsequently issued by Financial Security with respect to a Series.

      "Requisite Amount" means, with respect to Series 1997-1, as of any
Reporting Date after giving effect to any distributions of principal on the
Series 1997-1 Notes to be made on the related Distribution Date, the greater of
(a) the lesser of (i) (A) if such Reporting Date occurs before the July 1998
Distribution Date, $2,205,204.40, or (B) if such Reporting Date occurs after the
July 1998 Distribution Date and (1) the Cumulative Loss Rate as of the Reporting
Date relating to the July 1998 Distribution Date is less than 4.0%,
$1,470,136.26 or (2) the Cumulative Loss Rate as of the Reporting Date relating
to the July 1998 Distribution Date is equal to or greater than 4.0%,
$2,205,204.40 and (ii) the greater of (A) the outstanding principal amount of
the Series 1997-1 Notes as of such Reporting Date after giving effect to any
distributions of principal to be made thereon on the related Distribution Date
and (B) $100,000, and (b) (i) if a Trigger Event shall have occurred as of such
Reporting Date (and until such Trigger Event is Deemed Cured) and no Insurance
Agreement Event of Default shall have occurred as of such Reporting Date, 7% of
the Series 1997-1 Balance as of such Reporting Date, or (ii) if an Insurance
Agreement Event of Default shall have occurred as of such Reporting Date, an
unlimited amount; provided, however, if the aggregate Principal

                                    -12-
<PAGE>
Balance of GAC Receivables that are a part of the Trust Property as of such
Reporting Date is an amount equal to or greater than 20% of the aggregate
Principal Balance of GAC Receivables as of the Initial Cut-off Date that were a
part of the Trust Property as of the Closing Date, the Requisite Amount with
respect to such Reporting Date as determined pursuant to clause (a) above shall
be increased by an amount equal to $294,027.25; provided further, however, if
the aggregate Principal Balance of GAC Receivables that are a part of the Trust
Property as of such Reporting Date is an amount greater than zero, the Requisite
Amount with respect to such Reporting Date as determined pursuant to clause
(b)(i) above shall be increased by an amount equal to $294,027.25

      "Reversionary Holders" has the meaning specified in Section
2.01 hereof.

      "Scheduled Payments" shall have the meaning set forth in the
related Policy.

      "Secured Obligations" means, with respect to each Series the Insurer
Secured Obligations with respect to such Series and the Trustee Secured
Obligations with respect to such Series.

      "Secured Parties" means Financial Security and the Trustee.

      "Securities" means the "notes", "certificates" or other obligations issued
or arising under a Securitization Agreement.

      "Securitization Agreement" means, with respect to the Series 1997-1 Notes,
the Series 1997-1 Securitization Agreements and, for each other Series created
pursuant to a Securitization Agreement, the "Trust Agreement", the "Sale and
Servicing Agreement", the "Indenture", the "Pooling and Servicing Agreement",
"Sale and Servicing Agreement", "Indenture", "Purchase and Contribution
Agreement" or any other financing document related to such Series.

      "Securityholders" means the holders of the Securities of a Series as more
particularly described in the Securitization Agreement with respect to such
Series.

      "Security Interests" means, with respect to the Series 1997-1 Notes, the
security interests and Liens in the Series 1997-1 Collateral granted pursuant to
Section 2.03 hereof, and, with respect to any other Series, the security
interests and Liens in the related Collateral granted pursuant to the related
Series Supplement.

      "Series 1997-1 Balance" means with respect to any Reporting
Date, the sum of the Pool Balance as of the last day of the

                                    -13-
<PAGE>
related Due Period and the amount on deposit in the Pre-Funding Account, if any,
on such date.

      "Series 1997-1 Collateral" has the meaning specified in
Section 2.03(a) hereof.

      "Series 1997-1 Indenture" has the meaning provided in the
second recital to this Agreement.

      "Series 1997-1 Initial Balance" means $66,156,163.54.

      "Series 1997-1 Insurance Agreement" means the Insurance Agreement related
to the Series 1997-1 Notes.

      "Series 1997-1 Insurer Secured Obligations" means the Insurer Secured
Obligations with respect to the Series 1997-1 Notes.

      "Series 1997-1 Note Policy" means the Policy issued with respect to the
Series 1997-1 Notes.

      "Series 1997-1 Notes" has the meaning set forth in the
second recital to this Agreement.

      "Series 1997-1 Reversionary Holders" has the meaning
specified in Section 2.01 hereof.

      "Series 1997-1 Secured Obligations" means the Secured Obligations related
to the Series 1997-1 Notes.

      "Series 1997-1 Securitization Agreements" has the meaning set forth in the
second recital to this Agreement.

      "Series 1997-1 Spread Account" has the meaning specified in
Section 3.01(a) hereof.

      "Series 1997-1 Trust" has the meaning provided in the first
recital to this Agreement.

      "Series 1997-1 Trust Agreement" has the meaning provided in the first
recital to this Agreement.

      "Series 1997-1 Trust Estate" means the Trust Estate with respect to the
Series 1997-1 Notes, as described in the Series 1997-1 Sale and Servicing
Agreement and the Series 1997-1 Indenture.

      "Series of Securities" or "Series" means the Series 1997-1 Notes or, as
the context may require, any other series of Securities issued or arising as
described in Section 2.02 hereof, or collectively, all such series.

                                    -14-
<PAGE>
      "Series Supplement" means a supplement hereto executed by the parties
hereto in accordance with Section 2.02 hereof.

      "Servicer Termination Side Letter" shall have the meaning set forth in the
Insurance Agreement.

      "Spread Account" has the meaning specified in Section
3.01(a) hereof.

      "Spread Account Eligible Investments" means Eligible Investments held by
the Collateral Agent in a Spread Account and with respect to which the
Collateral Agent has taken Delivery.

      "Spread Account Shortfall" means, with respect to any Series and any
Reporting Date with respect to which (x) a Trigger Event has occurred and has
not been Deemed Cured or (y) an Insurance Agreement Event of Default has
occurred, the excess, if any, of the Requisite Amount with respect to such
Reporting Date over the amount on deposit in the related Spread Account after
making any withdrawals therefrom required by priorities FIRST, SECOND, and THIRD
of Section 3.03(b) hereof.

      "Transaction Documents" means, with respect to a Series, this Agreement,
each of the applicable Securitization Agreements, the Servicer Termination Side
Letter, the Insurance Agreement, the Indemnification Agreement, the Purchase
Agreement, the Inducement Letter, the Premium Letter, the Assignment Agreement,
if any, the Custodian Agreement, the Lockbox Agreement, any Conveyance related
to such Series, any Subsequent Transfer Agreement related to such Series and any
other financing document related to such Series.

      "Trigger Event" means, with respect to Series 1997-1, that as of any
Reporting Date with respect to Series 1997-1 that any one of the following
events shall have occurred and shall not have been Deemed Cured: (a) the Average
Delinquency Ratio as of such Reporting Date is equal to or greater than 8.25%;
or (b) the Average Default Rate as of such Reporting Date (i) occurring before
the July 1999 Distribution Date is equal to or greater than 18% and (ii)
occurring subsequent to the July 1999 Distribution Date is equal to or greater
than 14%; or (c) the Average Net Loss Rate as of such Reporting Date (i)
occurring before the July 1999 Distribution Date is equal to or greater than 8%
and (ii) occurring subsequent to the July 1999 Distribution Date is equal to or
greater than 6%.

      "Trust" means a trust formed pursuant to a Securitization
Agreement.

      "Trust Estate" with respect to any Series means the property
assigned to the Trustee or other Person or held in the estate of

                                    -15-
<PAGE>
the Trust, in each case pursuant to the related Securitization Agreement.

      "Trustee" means with respect to any Series, the Trustee or Trust
Collateral Agent, as applicable, named in the related Securitization Agreement.

      "Trustee Secured Obligations" means, with respect to a Series, all amounts
and obligations which NAFI, the Transferor or the Trust may at any time owe to
or on behalf of the Trustee for the benefit of the Securityholders under the
Securitization Agreement with respect to such Series.

      "Trustee Termination Date" means, with respect to any Series, the date
which is the latest of (i) the date on which the Trustee shall have received, as
Trustee for the holders of the Securities of such Series, payment and
performance in full of all Trustee Secured Obligations arising out of or
relating to such Series, (ii) the date on which all payments in respect of the
Securities of such Series shall have been made and the related Trust shall have
been terminated pursuant to the terms of the related Securitization Agreement
and (iii) the latest date any payment referred to above could be avoided as a
preference or otherwise under the United States Bankruptcy Code or any other
similar Federal or state law relating to insolvency, bankruptcy, rehabilitation,
liquidation or reorganization, as specified in an Opinion of Counsel delivered
to the Collateral Agent and the Trustee.

      "Uniform Commercial Code" or "UCC" means the Uniform Commercial Code in
effect in the relevant jurisdiction, as the same may be amended from time to
time.

      "Unreimbursed Amounts" has the meaning specified in Section
3.03(b) hereof.

      Section Rules of Interpretation. The terms "hereof," "herein" or
"hereunder," unless otherwise modified by more specific reference, shall refer
to this Agreement in its entirety. Unless otherwise indicated in context, the
terms "Article," "Section," "Appendix," "Exhibit" or "Annex" shall refer to an
Article or Section of, or Appendix, Exhibit or Annex to, this Agreement. The
definition of a term shall include the singular, the plural, the past, the
present, the future, the active and the passive forms of such term. A term
defined herein and used herein preceded by a Series designation, shall mean such
term as it relates to the Series designated.



                                    -16-
<PAGE>
                                     ARTICLE

           REVERSIONARY HOLDERS; SERIES SUPPLEMENTS; THE COLLATERAL

      Section Reversionary Holders. It is anticipated that each Securitization
Agreement will require that certain amounts be deposited into a Spread Account.
With respect to any Series, the Person or Persons who will ultimately be
entitled to receive distributions of amounts released from the related Spread
Account are the "Reversionary Holders" with respect to such Spread Account and
Series and may be classified into different classes of Reversionary Holders
pursuant to the applicable Securitization Agreement and Section 3.03 hereof.
With respect to Series 1997-1, the Reversionary Holders (the "Series 1997-1
Reversionary Holders") shall be the holders of the Trust Certificates.

      It is intended by the parties hereto that the Collateral shall constitute
property held in trust by the Collateral Agent, to provide for the payment of
the Secured Obligations, and that such Collateral and any property rights
appurtenant thereto shall vest in the related Reversionary Holders only when
such Collateral is released to such Reversionary Holders in accordance with
Section 3.03(b) hereof.

      Notwithstanding the foregoing, each Reversionary Holder may treat the
deposit of the related Collateral into the related Spread Account as the receipt
by such Reversionary Holder of such Collateral for Federal and state income
taxes, as may be required by law.

      Each Securitization Agreement in which the Transferor is not itself the
sole Reversionary Holder shall provide that the Transferor shall be deemed to be
the agent of the related Reversionary Holders for the purpose of perfecting the
Collateral Agent's Security Interest in the related Collateral. Each
Securitization Agreement shall additionally provide that the Reversionary
Holders agree to execute and deliver such instruments of conveyance, assignment,
grant, confirmation, etc., as well as any financing statements, in each case, as
the Controlling Party shall consider reasonably necessary in order to perfect
the Collateral Agent's Security Interest in the related Collateral.

      Section Series Supplements. The parties hereto agree that the Transferor
will have the option to enter into a Series Supplement hereto with respect to
each Series, the Secured Obligations with respect to which are to be secured by
Collateral held pursuant to the provisions of this Agreement. The parties will
enter into a Series Supplement only if the following conditions shall have been
satisfied:


                                    -17-
<PAGE>
            (i) The Transferor shall have sold or pledged all or a portion of
      its right, title and interest in and to a pool of Receivables and/or other
      financial assets or property to a Trust or other Person pursuant to a
      Securitization Agreement;

            (ii) Financial Security shall have issued a Policy in respect of the
      Guaranteed Distributions or Scheduled Payments, as the case may be, with
      respect to the Series issued or arising pursuant to such Securitization
      Agreement; and

            (iii) Pursuant to the related Series Supplement the related
      Collateral specified herein shall be administered by the Collateral Agent
      substantially on the terms set forth in Section 2.03 hereof.

      Section   Creation and Grant of Security Interest by
the Transferor.

        To secure the performance of the Series 1997-1 Secured Obligations and
the Secured Obligations with respect to each other Series to the extent provided
herein, the Transferor, including in its capacity as agent on behalf of the
Reversionary Holders, hereby pledges, assigns, grants, transfers and conveys to
the Collateral Agent, on behalf of and for the benefit of the Secured Parties, a
lien on and security interest in (which lien and security interest is intended
to be prior to all other Liens), all of its right, title and interest in and to
the following (all being collectively referred to herein as the "Series 1997-1
Collateral" and constituting Collateral hereunder):

              the amounts distributed to the Series 1997-1 Spread Account
      pursuant to Section 5.7(b)(v) of the Series 1997-1 Sale and Servicing
      Agreement and Section 5.6(a) of the Series 1997-1 Indenture and all rights
      and remedies that the Series 1997-1 Reversionary Holders may have to
      enforce such distributions, whether under the Series 1997-1 Securitization
      Agreements or otherwise;

              the Series 1997-1 Spread Account established pursuant to Section
      3.01 hereof, and each other account established by the Transferor and
      maintained by the Collateral Agent (including, without limitation, the
      Initial Spread Account Deposit related thereto and all additional monies,
      checks, securities, investments and other documents from time to time held
      in or evidencing any such accounts);

              all of the Transferor's right, title and
      interest in its capacity as agent for the Series 1997-1

                                    -18-
<PAGE>
      Reversionary Holders, in and to investments made with proceeds of the
      property described in clauses (i) and (ii) above, or made with amounts on
      deposit in the Series 1997-1 Spread Account; and

              all distributions, revenues, products,
      substitutions, benefits, profits and proceeds, in whatever
      form, of any of the foregoing.

        To effectuate the provisions and purposes of this Agreement, including
for the purpose of perfecting the security interests granted hereunder, the
Transferor represents and warrants that it has executed and filed on or prior to
the Closing Date an appropriate Uniform Commercial Code financing statement in
the State of Illinois sufficient to assure that the Collateral Agent, as agent
for the Secured Parties, has a first priority perfected security interest in all
Series 1997-1 Collateral which can be perfected by the filing of a financing
statement.

      Section Priority. The Transferor intends the security interests in favor
of the Collateral Agent, for the benefit of the Secured Parties, to be prior to
all other Liens in respect of the Collateral, and the Transferor shall take all
actions necessary to obtain and maintain, in favor of the Collateral Agent, for
the benefit of the Secured Parties, a first lien on and a first priority
perfected security interest in the Collateral. Subject to the provisions hereof
specifying the rights and powers of the Controlling Party from time to time to
control certain specified matters relating to the Collateral, each Secured Party
shall have all of the rights, remedies and recourse with respect to the
Collateral afforded a secured party under the Uniform Commercial Code, and all
other applicable law in addition to, and not in limitation of, the other rights,
remedies and recourse granted to such Secured Parties by this Agreement or any
other law relating to the creation and perfection of liens on, and security
interests in, the Collateral.

      Section Transferor Remains Liable. The Security Interests are granted as
security only and shall not (i) transfer or in any way affect or modify, or
relieve the Transferor from, any obligation to perform or satisfy, any term,
covenant, condition or agreement to be performed or satisfied by the Transferor
under or in connection with this Agreement, the Insurance Agreement or any other
Transaction Document to which it is a party or (ii) impose any obligation on any
of the Secured Parties or the Collateral Agent to perform or observe any such
term, covenant, condition or agreement or impose any liability on any of the
Secured Parties or the Collateral Agent for any act or omission on its part
relative thereto or for any breach of any

                                    -19-
<PAGE>
representation or warranty on its part contained therein or made in connection
therewith, except, in each case, to the extent provided herein and in the other
Transaction Documents.

      Section   Maintenance of Collateral.

        Safekeeping. The Collateral Agent agrees to (i) maintain the Collateral
(other than Spread Account Eligible Investments) received by it and all records
and documents relating thereto at the office of the Collateral Agent specified
in Section 8.06 hereof or such other address within the State of Illinois
(unless all filings have been made to continue the perfection of the security
interest in the Collateral to the extent such security interest can be perfected
by filing a financing statement, as evidenced by an Opinion of Counsel delivered
by the Transferor to the Controlling Party), as may be approved by the
Controlling Party and (ii) take Delivery of and maintain the Spread Account
Eligible Investments and all records and documents relating thereto at its
offices within the State of New York. The Collateral Agent shall keep all
Collateral and related documentation in its possession separate and apart from
all other property that it is holding in its possession and from its own general
assets and shall maintain accurate records pertaining to the Spread Account
Eligible Investments and Spread Accounts included in the Collateral in such a
manner as shall enable the Collateral Agent and the Secured Parties to verify
the accuracy of such record-keeping. The Collateral Agent's books and records
shall at all times show that the Collateral is held by the Collateral Agent as
agent of the Secured Parties and is not the property of the Collateral Agent.
The Collateral Agent will promptly report to each Secured Party and the
Transferor any failure on its part to hold the Collateral as provided in this
Section 2.06(a) and will promptly take appropriate action to remedy any such
failure.

        Access. The Collateral Agent shall permit each of the Secured Parties,
the Reversionary Holders or their respective duly authorized representatives,
attorneys, auditors or designees, to inspect the Collateral in the possession of
or otherwise under the control of the Collateral Agent pursuant hereto at such
reasonable times during normal business hours as any such Secured Party or
Reversionary Holders may reasonably request upon not less than two Business
Days' prior written notice. The costs and expenses associated with any such
inspection will be paid by the party making such inspection.

      Section   Termination and Release of Rights.

        On the Insurer Termination Date relating to a Series, the rights,
remedies, powers, duties, authority and obligations conferred upon Financial
Security pursuant to this Agreement in

                                    -20-
<PAGE>
respect of the Collateral related to such Series (and, to the extent provided
herein, in respect of Collateral related to other Series) shall terminate and be
of no further force and effect and all rights, remedies, powers, duties,
authority and obligations of Financial Security with respect to such Collateral
shall be automatically released; provided that any indemnity provided to or by
Financial Security herein shall survive such Insurer Termination Date. If
Financial Security is acting as Controlling Party with respect to a Series on
the related Insurer Termination Date, Financial Security agrees, at the expense
of the Transferor, to execute and deliver such instruments as the successor
Controlling Party may reasonably request to effect such release, and any such
instruments so executed and delivered shall be fully binding on Financial
Security and any Person claiming by, through or under Financial Security.

        On the Trustee Termination Date related to a Series, the rights,
remedies, powers, duties, authority and obligations, if any, conferred upon the
Trustee pursuant to this Agreement in respect of the Collateral related to such
Series (and, to the extent provided herein, in respect of the Collateral related
to other Series) shall terminate and be of no further force and effect and all
such rights, remedies, powers, duties, authority and obligations of the Trustee
with respect to such Collateral shall be automatically released; provided that
any indemnity provided to or by the Trustee herein shall survive such Trustee
Termination Date. If the Trustee is acting as Controlling Party with respect to
a Series on the related Trustee Termination Date, the Trustee agrees, at the
expense of the Transferor, to execute and deliver such instruments as the
Transferor may reasonably request to effectuate such release, and any such
instruments so executed and delivered shall be fully binding on the Trustee.

        On the Final Termination Date with respect to a Series, the rights,
remedies, powers, duties, authority and obligations conferred upon the
Collateral Agent and each Secured Party pursuant to this Agreement shall
terminate and be of no further force and effect and all rights, remedies,
powers, duties, authority and obligations of the Collateral Agent and each
Secured Party with respect to the Collateral related to such Series (and, to the
extent provided herein, in respect of Collateral related to other Series) shall
be automatically released, subject to the application of such amounts for
indemnity payments and all other amounts due and payable hereunder. On the Final
Termination Date with respect to a Series, the Collateral Agent agrees, and each
Secured Party agrees, at the expense of the Transferor, to execute such
instruments of release, in recordable form if necessary, in favor of the
Transferor as the Transferor may reasonably request, to deliver any Collateral
related to such Series in its possession to the Transferor or as otherwise
provided in the related

                                    -21-
<PAGE>
Securitization Agreement, and to otherwise release the lien of this Agreement
and release and deliver to the Transferor or as otherwise provided in the
related Securitization Agreement the Collateral related to such Series.

      Section Non-Recourse Obligations of Transferor and the Reversionary
Holders. Notwithstanding anything herein or in the other Transaction Documents
to the contrary, the parties hereto agree that the obligations of the Transferor
and the Reversionary Holders hereunder shall be recourse only to the extent of
amounts deposited in the Spread Accounts. The Transferor agrees that it shall
not declare or make payment of (i) any dividend or other distribution on or in
respect of any beneficial interests in the Transferor or (ii) any payment on
account of the purchase, redemption, retirement or acquisition of (x) any
beneficial interest in the Transferor or (y) any option, warrant or other right
to acquire any beneficial interest in the Transferor or (z) any payment of any
loan made by NAFI or any Affiliate of NAFI to the Transferor, unless (in each
case) at the time of such declaration or payment (and after giving effect
thereto) no amount payable by the Transferor or any Reversionary Holders under
any Transaction Document is then due and owing but unpaid.


                                     ARTICLE

                                 SPREAD ACCOUNTS

      Section   Establishment of Spread Accounts; Initial
Deposits into Spread Accounts.

        On or prior to the Closing Date relating to Series 1997-1, the
Collateral Agent shall establish with respect to such Series, at its office or
at another depository institution or trust company an Eligible Deposit Account,
designated, "Spread Account - National Auto Finance Series 1997-1 Trust - Harris
Trust and Savings Bank, as Collateral Agent for Financial Security Assurance
Inc. and another Secured Party" (the "Spread Account", and, with respect to the
Series 1997-1 Notes, the "Series 1997-1 Spread Account"). All Spread Accounts
established under this Agreement from time to time shall be maintained at the
same depository institution (which depository institution may be changed from
time to time in accordance with this Agreement). If any Spread Account
maintained or established with respect to a Series ceases to be an Eligible
Deposit Account, the Collateral Agent shall, within five Business Days,
establish a new Eligible Deposit Account for such Series.

        No withdrawals may be made of funds in any Spread Account except as
provided in Section 3.03 of this Agreement.

                                    -22-
<PAGE>
Except as specifically provided in this Agreement, funds in a Spread Account
established with respect to a Series shall not be commingled with funds in a
Spread Account established with respect to another Series or with any other
moneys. All moneys deposited from time to time in such Spread Account and all
investments made with such moneys shall be held by the Collateral Agent as part
of the Collateral with respect to such Series.

        On the Closing Date with respect to a Series, the Collateral Agent shall
deposit the Initial Spread Account Deposit with respect to such Series, if any,
received from the Transferor
into the related Spread Account.

        Each Spread Account shall be separate from each Trust, and amounts on
deposit therein will not constitute a part of the Trust Estate of any Trust.
Each Spread Account shall be maintained by the Collateral Agent at all times
separate and apart from any other account of the Transferor, the Servicer or the
Trust. All income or loss on investments of funds in any Spread Account shall be
reported by the applicable Reversionary Holders as taxable income or loss of
such Reversionary Holders.

      Section   Investments.

        Funds which may at any time be held in the Spread Account established
with respect to a Series shall be invested and reinvested by the Collateral
Agent, at the written direction (including, subject to the provisions hereof,
general standing instructions) of the Transferor (unless a Default actually
known to an Authorized Officer of the Collateral Agent shall have occurred and
be continuing, in which case at the written direction of the Controlling Party)
or its designee received by the Collateral Agent by 1:00 P.M. New York City time
on the Business Day prior to the date on which such investment shall be made, in
one or more Spread Account Eligible Investments in the manner specified in
Section 3.02(c) hereof. If no written direction with respect to any portion of
such Spread Account is received by the Collateral Agent, the Collateral Agent
shall invest such funds overnight in such Eligible Investments as the Collateral
Agent may select, provided that the Collateral Agent shall not be liable for any
loss or absence of income resulting from such investments or for investments
made pursuant to written instructions received in accordance with this Section
3.02(a).

        Each investment made pursuant to this Section 3.02 on any date shall
mature not later than the Business Day immediately preceding the Distribution
Date next succeeding the day such investment is made, except that any investment
made on the day preceding a Distribution Date shall mature on such Distribution
Date; provided that any investment of funds in any Spread Account maintained
with the Collateral Agent (which shall be qualified as

                                    -23-
<PAGE>
a Spread Account Eligible Investment) in any investment as to which the
Collateral Agent is the obligor, if otherwise qualified as an Eligible
Investment (including any repurchase agreement on which the Collateral Agent in
its commercial capacity is liable as principal) may mature on the Distribution
Date next succeeding the date of such investment.

        Subject to the other provisions hereof, the Collateral Agent shall have
sole control over each such investment and the income thereon, and any
certificate or other instrument evidencing any such investment, if any, shall be
delivered directly to the Collateral Agent or its agent, together with each
document of transfer, if any, necessary to transfer title to such investment to
the Collateral Agent in a manner complying with Section 2.06 hereof and the
requirements of the definition of "Spread Account Eligible Investments."

        If amounts on deposit in any Spread Account are at any time invested in
a Spread Account Eligible Investment payable on demand, the Collateral Agent
shall (i) consistent with any notice required to be given thereunder, demand
that payment thereon be made on the last day such Spread Account Eligible
Investment is permitted to mature under the provisions hereof and (ii) demand
payment of all amounts due thereunder promptly upon receipt of written notice
from the Controlling Party to the effect that such investment does not
constitute a Spread Account Eligible Investment.

        All moneys on deposit in a Spread Account together with any deposits or
securities in which such moneys may be invested or reinvested, and any gains
from such investments, shall constitute Collateral hereunder with respect to the
related Series subject to the Security Interests of the Secured Parties.

        Subject to Section 4.03 hereof, the Collateral Agent shall not be liable
by reason of any insufficiency in any Spread Account resulting from any loss on
any Eligible Investment included therein except for losses attributable to the
Collateral Agent's failure to make payments on Eligible Investments as to which
the Collateral Agent, in its commercial capacity, is obligated to make.

      Section   Distributions; Priority of Payments.

        On or before each Deficiency Claim Date with respect to any Series, the
Collateral Agent will make the following calculations on the basis of
information (including, without limitation, the amount of any Deficiency Claim
Amount with respect to any Series) received pursuant to Section 4.11 of the
applicable Securitization Agreement (or other section referenced in the related
Series Supplement), with respect to each such

                                    -24-
<PAGE>
Series from the Servicer thereunder; provided, however, that if the Collateral
Agent receives notice from Financial Security of the occurrence of an Insurance
Agreement Event of Default with respect to any Series, such notice shall be
determinative for the purposes of determining the Requisite Amount for such
Series:

            FIRST, determine the amounts to be on deposit in the respective
      Spread Accounts (taking into account amounts to be deposited into the
      related Spread Accounts) on the next succeeding Distribution Date which
      will be available to satisfy any Deficiency Claim Amount.

            SECOND, determine (i) the amounts, if any, to be distributed from
      each Spread Account related to each Series with respect to which there
      exists a Deficiency Claim Amount, and (ii) whether, following distribution
      from the related Spread Accounts to the respective Trustees for deposit
      into the respective Collection Account with respect to which there exists
      a Deficiency Claim Amount, a Deficiency Claim Amount will continue to
      exist with respect to one or more Series.

            THIRD, if a Deficiency Claim Amount will continue to exist with
      respect to one or more Series other than the Series 1997-1 Notes following
      the distributions from the related Spread Accounts contemplated by
      paragraph SECOND above, determine the amount, if any, to be distributed to
      the Trustee with respect to each Series from unrelated Spread Accounts
      other than the Series 1997-1 Spread Account in respect of such Deficiency
      Claim Amount(s). This determination shall be made in accordance with the
      distribution priority scheme set forth in Section 3.03(b) below.

      On such Deficiency Claim Date related to a Series, the Collateral Agent
shall deliver a certificate to each Trustee in respect of which the Collateral
Agent has received a Deficiency Notice stating the amount, if any, to be
distributed to such Trustee on the next Distribution Date in respect of such
Deficiency Claim Amount.

        On each Distribution Date, following the deposit into the respective
Spread Accounts of the amounts required to be deposited therein pursuant to the
respective Securitization Agreements and if the Trustee has received a
Deficiency Notice with respect to one or more such Series, or with respect to
priority SIXTH below to the extent the amount referred to therein is due and
owing, the Collateral Agent shall make the following distributions in the
following order of priority:


                                    -25-
<PAGE>
            FIRST, if with respect to any Series there exists a Deficiency Claim
      Amount, from the Spread Account related to such Series, to the Trustee for
      deposit in the related Collection Account the amount of such Deficiency
      Claim Amount.

            SECOND, if with respect to any Series other than the Series 1997-1
      Notes there continues to exist a Deficiency Claim Amount after deposit
      into the Collection Account of amounts distributed pursuant to priority
      FIRST of this Section 3.03(b), from amounts, if any, on deposit in each
      unrelated Spread Account other than the Series 1997-1 Spread Account in
      excess of the related Requisite Amount, an amount in the aggregate up to
      the aggregate of the Deficiency Claim Amounts for all Series other than
      the Series 1997-1 Notes, for deposit in the respective Collection Accounts
      pro rata in accordance with the respective Deficiency Claim Amounts.

            THIRD, if with respect to any Series other than the Series 1997-1
      Notes there continues to exist a Deficiency Claim Amount after deposit
      into the Collection Account of amounts distributed pursuant to priority
      FIRST and SECOND of this Section 3.03(b), from each unrelated Spread
      Account other than the Series 1997-1 Spread Account pro rata in accordance
      with amounts on deposit therein, an amount up to the aggregate of the
      remaining Deficiency Claim Amounts for all Series other than the Series
      1997-1 Notes, to the respective Trustees for deposit in the respective
      Collection Accounts pro rata in accordance with the respective Deficiency
      Claim Amounts.

            FOURTH, if with respect to one or more Series other than the Series
      1997-1 Notes there exists a Spread Account Shortfall, from amounts, if
      any, (1) on deposit in each Spread Account other than the Series 1997-1
      Spread Account in excess of the related Requisite Amount or (2) on deposit
      in any Spread Account other than the Series 1997-1 Spread Account with
      respect to which the Final Termination Date shall have occurred on such
      Distribution Date or a prior Distribution Date, an amount in the aggregate
      up to the aggregate of the Spread Account Shortfalls for all Series other
      than the Series 1997-1 Notes for deposit into each Spread Account other
      than the Series 1997-1 Spread Account pro rata in accordance with the
      respective Spread Account Shortfalls.

            FIFTH, if with respect to one or more Series, amounts have been
      withdrawn from the related Spread Account pursuant to priority THIRD of
      this Section 3.03(b) on such Distribution Date and/or prior Distribution
      Dates and such amounts have not been redeposited in full into such Spread

                                    -26-
<PAGE>
      Account pursuant to this priority FIFTH (such amounts in the aggregate for
      a Series "Unreimbursed Amounts"), from amounts, if any, (1) on deposit in
      each Spread Account other than the Series 1997-1 Spread Account in excess
      of the related Requisite Amount; or (2) on deposit in any Spread Account
      other than the Series 1997-1 Spread Account with respect to which the
      Final Termination Date shall have occurred on such Distribution Date or a
      prior Distribution Date, an amount up to the aggregate of the Unreimbursed
      Amounts for all such Series for deposit into each Spread Account other
      than the Series 1997-1 Spread Account with respect to which there exist
      Unreimbursed Amounts pro rata in accordance with the respective
      Unreimbursed Amounts.

            SIXTH, if any amounts are owed to the Trustee, the Collateral Agent
      or Backup Servicer for reasonable out-of-pocket expenses in connection
      with the administration of the Trust, including the expenses incurred in
      the transition to a successor Servicer and such amounts have not been
      paid, then from amounts (if any) on deposit in the related Spread Account,
      an amount up to the amount so owed, to be paid to the Trustee, the
      Collateral Agent and the Backup Servicer.

            SEVENTH, any funds in a Spread Account in excess of the applicable
      Requisite Amount and any funds in a Spread Account with respect to a
      Series for which the Final Termination Date shall have occurred after
      distribution pursuant to priorities FIRST through SIXTH will be released
      to the Reversionary Holders as provided in the related Securitization
      Agreement (or, if the related Securitization Agreement does not so
      provide, to the Transferor), in each case, free and clear of the Lien
      established hereunder.

      Section   General Provisions Regarding Spread Accounts.

        Promptly upon the establishment (initially or upon any relocation) of a
Spread Account hereunder, the Collateral Agent shall advise the Transferor and
each Secured Party in writing of the name and address of the depository
institution or trust company where such Spread Account has been established (if
not Harris Trust and Savings Bank or any successor Collateral Agent in its
commercial banking capacity), the name of the officer of the depository
institution responsible for overseeing such Spread Account, the account number
and the individuals whose names appear on the signature cards for such Spread
Account. The Transferor shall cause each such depository institution or trust
company to execute a written agreement, in form and substance satisfactory to
the Controlling Party, waiving, and the Collateral Agent by its execution of
this Agreement hereby waives (except to the extent expressly provided herein),
in each case to the extent permitted under applicable law, (i) any banker's or

                                    -27-
<PAGE>
other statutory or similar Lien, and (ii) any right of set-off or other similar
right under applicable law with respect to such Spread Account, and any other
Spread Account, and agreeing, and the Collateral Agent by its execution of this
Agreement hereby agrees, to notify the Transferor, the Collateral Agent, and
each Secured Party of any charge or claim against or with respect to such Spread
Account. The Collateral Agent shall give the Transferor and each Secured Party
at least ten (10) Business Days' prior written notice of any change in the
location of such Spread Account or in any related account information. If the
Collateral Agent changes the location of any Spread Account, it shall change the
location of the other Spread Accounts, so that all Spread Accounts shall at all
times be located at the same depository institution. Anything herein to the
contrary notwithstanding, unless otherwise consented to by the Controlling Party
in writing, the Collateral Agent shall have no right to change the location of
any Spread Account.

        Upon the written request of the Controlling Party, the Transferor, or
any Reversionary Holder, the Collateral Agent shall cause, at the expense of the
Transferor, the depository institution at which any Spread Account is located to
forward to the requesting party copies of all monthly account statements for
such Spread Account.

        If at any time any Spread Account ceases to be an Eligible Deposit
Account, the Collateral Agent shall notify the Controlling Party of such fact
and shall establish within five (5) Business Days of such determination in
accordance with paragraph (a) of this Section, a successor Spread Account
thereto, which shall be an Eligible Deposit Account, at another depository
institution or trust company acceptable to the Controlling Party and shall
establish successor Spread Accounts with respect to all other Spread Accounts,
each of which shall be an Eligible Deposit Account, at the same depository
institution. The Transferor shall cause such depository institution to execute a
written agreement under terms provided for in paragraph (a) of this Section.

        No passbook, certificate of deposit or other similar instrument
evidencing a Spread Account shall be issued, and all contracts, receipts and
other papers, if any, governing or evidencing a Spread Account shall be held by
the Collateral Agent.

      Section Reports by the Collateral Agent. The Collateral Agent shall report
to the Transferor, Financial Security, the Trustee and the Servicer on a monthly
basis no later than each Distribution Date with respect to the amount on deposit
in each Spread Account and the identity of the investments included therein as
of the last day of the related

                                    -28-
<PAGE>
Monthly Period, and shall provide accountings of deposits into and withdrawals
from the Spread Accounts, and of the investments made therein, upon the request
of the Transferor, Financial Security or the Servicer.


                                     ARTICLE

                              THE COLLATERAL AGENT

      Section Appointment and Powers. Subject to the terms and conditions
hereof, each of the Secured Parties hereby appoints Harris Trust and Savings
Bank as the Collateral Agent with respect to the Series 1997-1 Collateral and
the related Collateral subsequently specified in a Series Supplement, and Harris
Trust and Savings Bank hereby accepts such appointment and agrees to act as
Collateral Agent with respect to the Series 1997-1 Collateral, and upon
execution of any Series Supplement, shall be deemed to accept such appointment,
and agree to act as Collateral Agent with respect to such Collateral, in each
case, for the Secured Parties, to maintain custody and possession of such
Collateral (except as otherwise provided hereunder) and to perform the other
duties of the Collateral Agent in accordance with the provisions of this
Agreement. Each Secured Party hereby authorizes the Collateral Agent to take
such action on its behalf, and to exercise such rights, remedies, powers and
privileges hereunder, as the Controlling Party may direct and as are
specifically authorized to be exercised by the Collateral Agent by the terms
hereof, together with such actions, rights, remedies, powers and privileges as
are reasonably incidental thereto. The Collateral Agent shall act upon and in
compliance with the written instructions of the Controlling Party delivered
pursuant to this Agreement promptly following receipt of such written
instructions; provided, however, that the Collateral Agent shall not act in
accordance with any instructions (i) which are not authorized by, or in
violation of the provisions of, this Agreement, (ii) which are in violation of
any applicable law, rule or regulation or (iii) for which the Collateral Agent
has not received reasonable indemnity. Receipt of such instructions shall not be
a condition to the exercise by the Collateral Agent of its express duties
hereunder, except where this Agreement provides that the Collateral Agent is
permitted to act only following and in accordance with such instructions.

      Section Performance of Duties. The Collateral Agent shall have no duties
or responsibilities except those expressly set forth in this Agreement and the
other Transaction Documents to which the Collateral Agent is a party as
Collateral Agent or as directed by the Controlling Party in accordance with this
Agreement. The Collateral Agent shall not be required to take

                                    -29-
<PAGE>
any discretionary actions hereunder except at the written direction and with the
indemnification of the Controlling Party.

      Section Limitation on Liability. Neither the Collateral Agent nor any of
its directors, officers or employees, shall be liable for any action taken or
omitted to be taken by it or them hereunder, or in connection herewith, except
that the Collateral Agent shall be liable for its gross negligence, bad faith or
willful misconduct; nor shall the Collateral Agent be responsible for the
validity, effectiveness, value, sufficiency or enforceability against the
Transferor of this Agreement or any of the Collateral (or any part thereof).
Notwithstanding any term or provision of this Agreement, the Collateral Agent
shall incur no liability to the Transferor or the Secured Parties for any action
taken or omitted by the Collateral Agent in connection with the Collateral,
except for the negligence, bad faith or willful misconduct on the part of the
Collateral Agent, and, further, shall incur no liability to the Secured Parties
except for negligence, bad faith or willful misconduct in carrying out its
duties to the Secured Parties. Subject to Section 4.04 hereof, the Collateral
Agent shall be protected and shall incur no liability to any such party in
relying upon the accuracy, acting in reliance upon the contents, and assuming
the genuineness of any notice, demand, certificate, signature, instrument or
other document reasonably believed by the Collateral Agent to be genuine and to
have been duly executed by the appropriate signatory, and (absent actual
knowledge to the contrary) the Collateral Agent shall not be required to make
any independent investigation with respect thereto. The Collateral Agent shall
at all times be free independently to establish to its reasonable satisfaction,
but shall have no duty to independently verify, the existence or nonexistence of
facts that are a condition to the exercise or enforcement of any right or remedy
hereunder or under any of the Transaction Documents. The Collateral Agent may
consult with counsel, and shall not be liable for any action taken or omitted to
be taken by it hereunder in good faith and in accordance with the written advice
of such counsel. The Collateral Agent shall not be under any obligation to
exercise any of the remedial rights or powers vested in it by this Agreement or
to follow any direction from the Controlling Party unless it shall have received
reasonable security or indemnity satisfactory to the Collateral Agent against
the costs, expenses and liabilities which might be incurred by it in the
exercise thereof.

      Section Reliance upon Documents. In the absence of negligence, bad faith
or willful misconduct on its part, the Collateral Agent shall be entitled to
conclusively rely on any communication, instrument, paper or other document
reasonably believed by it to be genuine and correct and to have been signed or
sent by the proper Person or Persons and shall have no

                                    -30-
<PAGE>
liability in acting, or omitting to act, where such action or omission to act is
in reliance upon any statement or opinion contained in any such document or
instrument.

      Section   Successor Collateral Agent.

        Merger. Any Person into which the Collateral Agent may be converted or
merged, or with which it may be consolidated, or to which it may sell or
transfer its trust business and assets as a whole or substantially as a whole,
or any Person resulting from any such conversion, merger, consolidation, sale or
transfer to which the Collateral Agent is a party, shall (provided it is
otherwise qualified to serve as the Collateral Agent hereunder) be and become a
successor Collateral Agent hereunder and be vested with all of the title to and
interest in the Collateral and all of the trusts, powers, discretions,
immunities, privileges and other matters as was its predecessor without the
execution or filing of any instrument or any further act, deed or conveyance on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding, except to the extent, if any, that any such action is necessary
to perfect, or continue the perfection of, the security interest of the Secured
Parties in the Collateral.

        Resignation. The Collateral Agent and any successor Collateral Agent may
resign only (i) upon a determination that by reason of a change in legal
requirements, the performance of its duties under this Agreement would cause it
to be in violation of such legal requirements in a manner which would result in
a material adverse effect on the Collateral Agent, and the Controlling Party
does not elect to waive the Collateral Agent's obligation to perform those
duties which render it legally unable to act or elect to delegate those duties
to another Person, or (ii) with the prior written consent of the Controlling
Party. The Collateral Agent shall give not less than 60 days' prior written
notice of any such permitted resignation by registered or certified mail to the
other Secured Party and the Transferor; provided, that such resignation shall
take effect only upon the date which is the latest of (i) the effective date of
the appointment of a successor Collateral Agent and the acceptance in writing by
such successor Collateral Agent of such appointment and of its obligation to
perform its duties hereunder in accordance with the provisions hereof, (ii)
delivery of the Collateral to such successor to be held in accordance with the
procedures specified in Article II hereof, and (iii) receipt by the Controlling
Party of an Opinion of Counsel to the effect described in Section 5.02 hereof.
Notwithstanding the preceding sentence, if, by the contemplated date of
resignation specified in the written notice of resignation delivered as
described above, no successor Collateral Agent or temporary successor Collateral
Agent has been appointed Collateral Agent or becomes

                                    -31-
<PAGE>
the Collateral Agent pursuant to subsection (d) hereof, the resigning Collateral
Agent may petition a court of competent jurisdiction in New York, New York for
the appointment of a successor.

        Removal. The Collateral Agent may be removed by the Controlling Party at
any time, with or without cause, by an instrument or concurrent instruments in
writing delivered to the Collateral Agent, the other Secured Party and the
Transferor. A temporary successor may be removed at any time to allow a
successor Collateral Agent to be appointed pursuant to subsection (d) below. Any
removal pursuant to the provisions of this subsection (c) shall take effect only
upon the date which is the latest of (i) the effective date of the appointment
of a successor Collateral Agent and the acceptance in writing by such successor
Collateral Agent of such appointment and of its obligation to perform its duties
hereunder in accordance with the provisions hereof, (ii) delivery of the
Collateral to such successor to be held in accordance with the procedures
specified in Article II hereof and (iii) receipt by the Controlling Party of an
Opinion of Counsel to the effect described in Section 5.02 hereof.

        Acceptance by Successor. The Controlling Party shall have the sole right
to appoint each successor Collateral Agent. Every temporary or permanent
successor Collateral Agent appointed hereunder shall execute, acknowledge and
deliver to its predecessor and to each Secured Party and the Transferor an
instrument in writing accepting such appointment hereunder and the relevant
predecessor shall execute, acknowledge and deliver such other documents and
instruments as will effectuate the delivery of all Collateral to the successor
Collateral Agent to be held in accordance with the procedures specified in
Article II hereof, whereupon such successor, without any further act, deed or
conveyance, shall become fully vested with all the estates, properties, rights,
powers, duties and obligations of its predecessor. Such predecessor shall,
nevertheless, on the written request of either Secured Party or the Transferor,
execute and deliver an instrument transferring to such successor all the
estates, properties, rights and powers of such predecessor hereunder. In the
event that any instrument in writing from the Transferor or a Secured Party is
reasonably required by a successor Collateral Agent to more fully and certainly
vest in such successor the estates, properties, rights, powers, duties and
obligations vested or intended to be vested hereunder in the Collateral Agent,
any and all such written instruments shall, at the request of the temporary or
permanent successor Collateral Agent, be forthwith executed, acknowledged and
delivered by the Transferor. The designation of any successor Collateral Agent
and the instrument or instruments removing any Collateral Agent and appointing a
successor

                                    -32-
<PAGE>
hereunder, together with all other instruments provided for herein, shall be
maintained with the records relating to the Collateral and, to the extent
required by applicable law, filed or recorded by the successor Collateral Agent
in each place where such filing or recording is necessary to effect the transfer
of the Collateral to the successor Collateral Agent or to protect or continue
the perfection of the security interests granted hereunder.

        Any resignation or removal of a Collateral Agent and appointment of a
successor Collateral Agent shall be effected with respect to this Agreement and
all Series Supplements simultaneously, so that at no time is there more than one
Collateral Agent acting hereunder and under all Series Supplements.

      Section Indemnification. The Transferor shall indemnify the Collateral
Agent, its directors, officers, employees and agents for, and hold the
Collateral Agent, its directors, officers, employees and agents harmless
against, any loss, liability or expense (including the costs and expenses of
defending against any claim of liability) arising out of or in connection with
the Collateral Agent's acting as Collateral Agent hereunder, except such loss,
liability or expense as shall result from the negligence, bad faith or willful
misconduct of the Collateral Agent or its officers or agents. The obligation of
the Transferor under this Section shall survive the termination of this
Agreement and the resignation or removal of the Collateral Agent. The Collateral
Agent covenants and agrees that the obligations of the Transferor hereunder and
under Section 4.07 hereof shall be limited to the extent provided in Section
2.08 hereof, and further covenants not to take any action to enforce its rights
to indemnification hereunder with respect to the Transferor and to payment under
Section 4.07 hereof except in accordance with the provisions of Section 8.05
hereof, or otherwise to assert any Lien or take any other action in respect of
the Collateral or the Trust Estate of a Series until the applicable Final
Termination Date.

      Section Compensation and Reimbursement. The Transferor agrees for the
benefit of the Secured Parties and as part of the Secured Obligations (a) to pay
to the Collateral Agent, on each Distribution Date, the Collateral Agent Fee for
all services rendered by it hereunder (which compensation shall not be limited
by any provision of law in regard to the compensation of a collateral trustee);
and (b) to reimburse the Collateral Agent upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Collateral Agent in
accordance with any provision of, or carrying out its duties and obligations
under, this Agreement (including the reasonable compensation and fees and the
expenses and

                                    -33-
<PAGE>
disbursements of its agents, any independent certified public accountants and
independent counsel), except any expense, disbursement or advances as may be
attributable to negligence, bad faith or willful misconduct on the part of the
Collateral Agent.

      Section Representations and Warranties of the Collateral Agent. The
Collateral Agent represents and warrants to the Transferor and to each Secured
Party as follows:

              Due Organization. The Collateral Agent is an Illinois banking
      corporation, duly organized, validly existing and in good standing under
      the laws of the State of Illinois, and is duly authorized and licensed
      under applicable law to conduct its business as presently conducted.

              Corporate Power. The Collateral Agent has all requisite right,
      power and authority to execute and deliver this Agreement and to perform
      all of its duties as Collateral Agent hereunder.

              Due Authorization. The execution and delivery by the Collateral
      Agent of this Agreement and the other Transaction Documents to which it is
      a party, and the performance by the Collateral Agent of its duties
      hereunder and thereunder, have been duly authorized by all necessary
      corporate proceedings and no further approvals or filings, including any
      governmental approvals, are required for the valid execution and delivery
      by the Collateral Agent, or the performance by the Collateral Agent, of
      this Agreement and such other Transaction Documents.

              Valid and Binding Agreement. The Collateral Agent has duly
      executed and delivered this Agreement and each other Transaction Document
      to which it is a party, and each of this Agreement and each such other
      Transaction Document constitutes the legal, valid and binding obligation
      of the Collateral Agent, enforceable against the Collateral Agent in
      accordance with its terms, except as (i) such enforceability may be
      limited by bankruptcy, insolvency, reorganization and similar laws
      relating to or affecting the enforcement of the rights of creditors of
      federally insured depository institutions, rights generally and (ii) the
      availability of equitable remedies may be limited by equitable principles
      of general applicability.

      Section Waiver of Setoffs. The Collateral Agent hereby expressly waives
any and all rights of setoff that the Collateral Agent may otherwise at any time
have under applicable law with respect to any Spread Account and agrees that
amounts in

                                    -34-
<PAGE>
the Spread Accounts shall at all times be held and applied solely in accordance
with the provisions hereof.

      Section Control by the Controlling Party. The Collateral Agent shall
comply with notices and instructions given by the Transferor only if accompanied
by the written consent of the Controlling Party, except that if any Default
shall have occurred and be continuing, the Collateral Agent shall act upon and
comply with notices and instructions given by the Controlling Party alone in the
place and stead of the Transferor.


                                     ARTICLE

                           COVENANTS OF THE TRANSFEROR

      Section Preservation of Collateral. Subject to the rights, powers and
authorities granted to the Collateral Agent and the Controlling Party in this
Agreement, the Transferor, on behalf of itself and as the agent of the
Reversionary Holders, shall take such action as is necessary and proper with
respect to the Collateral in order to preserve and maintain such Collateral. The
Transferor will do, execute, acknowledge and deliver, or cause to be done by the
Reversionary Holders, or others, executed, acknowledged and delivered, such
instruments of transfer or take such other steps or actions as may be necessary,
or required by the Controlling Party, to perfect the Security Interests granted
hereunder in the Collateral, to ensure that such Security Interests rank prior
to all other Liens and to preserve the priority of such Security Interests and
the validity and enforceability thereof. Upon any delivery or substitution of
Collateral, the Transferor, on behalf of itself and as the agent of the
Reversionary Holders, shall be obligated to execute such documents and perform
such actions (or cause the Reversionary Holders to so execute and perform) as
are necessary to create in the Collateral Agent for the benefit of the Secured
Parties a valid first priority Lien on, and valid and perfected, first priority
security interest in, the Collateral so delivered and to deliver such Collateral
to the Collateral Agent, free and clear of any other Lien, together with
satisfactory assurances thereof, and to pay any reasonable costs incurred by any
of the Secured Parties or the Collateral Agent (including its agents) or
otherwise in connection with such delivery.

      Section Opinions as to Collateral. Not more than 90 days nor less than 30
days prior to (i) each anniversary of the date hereof during the term of this
Agreement and (ii) each date on which the Transferor proposes to take any action
contemplated by Section 5.06 hereof, the Transferor shall, at its own cost and
expense, furnish to each Secured Party and the Collateral Agent an Opinion of
Counsel with respect to each Series either

                                    -35-
<PAGE>
(a) stating that, in the opinion of such counsel, such action has been taken
with respect to the execution and filing of any financing statements and
continuation statements and other actions as are necessary to perfect, maintain
and protect the lien and security interest of the Collateral Agent (and the
priority thereof), on behalf of the Secured Parties, with respect to such
Collateral against all creditors of, and purchasers from, the Transferor and the
Reversionary Holders and reciting the details of such action, or (b) stating
that, in the opinion of such counsel, no such action is necessary to maintain
such perfected lien and security interest. Such Opinion of Counsel shall further
describe each execution and filing of any financing statements and continuation
statements and such other actions as will, in the opinion of such counsel, be
required to perfect, maintain and protect the lien and security interest of the
Collateral Agent, on behalf of the Secured Parties, with respect to such
Collateral against all creditors of, and purchasers from, the Transferor and the
Reversionary Holders for a period, specified in such Opinion, continuing until a
date not earlier than eighteen months from the date of such Opinion.

      Section Notices. In the event that the Transferor acquires knowledge of
the occurrence and continuance of any Insurance Agreement Event of Default or
Servicer Termination Event or of any event of default or like event, howsoever
described or called, under any of the Transaction Documents, the Transferor
shall immediately give notice thereof to the Collateral Agent and each Secured
Party.

      Section Waiver of Stay or Extension Laws; Marshalling of Assets. The
Transferor, on behalf of itself and as agent for the Reversionary Holders,
covenants, to the fullest extent permitted by applicable law, that neither it
nor any Reversionary Holder will at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any appraisement,
valuation, stay, extension or redemption law wherever enacted, now or at any
time hereafter in force, in order to prevent or hinder the enforcement of this
Agreement or any absolute sale of the Collateral or any part thereof, or the
possession thereof by any purchaser at any sale under Article VII of this
Agreement; and the Transferor, on behalf of itself and as agent for the
Reversionary Holders, to the fullest extent permitted by applicable law, for
itself, each Reversionary Holder, and all who may claim under it or them, hereby
waives the benefit of all such laws, and covenants that neither it nor any
Reversionary Holder will hinder, delay or impede the execution of any power
herein granted to the Collateral Agent, but will suffer and permit the execution
of every such power as though no such law had been enacted. The Transferor, for
itself, each Reversionary Holders, and all who may claim under it or them,
waives, to the fullest extent permitted by applicable law, all

                                    -36-
<PAGE>
right to have the Collateral marshalled upon any foreclosure or
other disposition thereof.

      Section Noninterference, etc. The Transferor, on behalf of itself and as
agent for the Reversionary Holders, agrees that neither the Transferor nor any
Reversionary Holder shall (i) waive or alter any of its rights under the
Collateral (or any agreement or instrument relating thereto) without the prior
written consent of the Controlling Party; or (ii) fail to pay any tax,
assessment, charge or fee levied or assessed against the Collateral, or to
defend any action, if such failure to pay or defend may adversely affect the
priority or enforceability of the Transferor's or any Reversionary Holder's
right, title or interest in and to the Collateral or the Collateral Agent's lien
on, and security interest in, the Collateral for the benefit of the Secured
Parties; or (iii) take any action, or fail to take any action, if such action or
failure to take action would interfere with the enforcement of any rights under
the Transaction Documents.

      Section   Transferor Changes.

        Change in Name, Structure, etc. The Transferor shall not change its
name, identity or corporate structure unless it shall have given each Secured
Party and the Collateral Agent at least 60 days' prior written notice thereof,
shall have effected any necessary or appropriate assignments or amendments
thereto and filings of financing statements or amendments thereto, and shall
have delivered to the Collateral Agent and each Secured Party an Opinion of
Counsel of the type described in Section 5.02 hereof.

        Relocation of the Transferor. Neither NAFI nor the Transferor shall
change its principal executive office unless it gives each Secured Party and the
Collateral Agent at least 90 days' prior written notice of any relocation of its
principal executive office. If the Transferor relocates its principal executive
office or principal place of business from Florida, the Transferor shall give
prior notice thereof to the Controlling Party and the Collateral Agent and shall
effect such appropriate recordations and filings as are necessary and shall
provide an Opinion of Counsel to the Controlling Party and the Collateral Agent,
to the effect that, upon the recording of any necessary assignments or
amendments to previously-recorded assignments and filing of any necessary
amendments to the previously filed financing or continuation statements or upon
the filing of one or more specified new financing statements, and the taking of
such other actions as may be specified in such opinion, the security interests
in the Collateral shall remain, after such relocation, valid and perfected and
first in priority.


                                    -37-
<PAGE>
                                     ARTICLE

                  CONTROLLING PARTY; INTERCREDITOR PROVISIONS

      Section Appointment of Controlling Party. From and after the Closing Date
of a Series until the Insurer Termination Date related to such Series, Financial
Security shall be the Controlling Party with respect to such Series and shall be
entitled to exercise all the rights given the Controlling Party hereunder with
respect to such Series. From and after the Insurer Termination Date related to
such Series until the Trustee Termination Date related to such Series, the
Trustee shall be the Controlling Party with respect to such Series.
Notwithstanding the foregoing, in the event that a Financial Security Default
shall have occurred and be continuing, the Trustee shall be the Controlling
Party with respect to such Series until the applicable Trustee Termination Date.
If prior to an Insurer Termination Date, the Trustee shall have become the
Controlling Party with respect to a Series as a result of the occurrence of a
Financial Security Default and either such Financial Security Default is cured
or for any other reason ceases to exist or the Trustee Termination Date with
respect to a Series occurs, then upon such cure or other cessation or on such
Trustee Termination Date, as the case may be, Financial Security shall, upon
notice thereof being duly given to the Collateral Agent, again be the
Controlling Party with respect to such Series.

      Section   Controlling Party's Authority.

        The Transferor hereby irrevocably appoints the Controlling Party, and
any successor to the Controlling Party appointed pursuant to Section 6.01
hereof, its true and lawful attorney, with full power of substitution, in the
name of the Transferor, the Secured Parties or otherwise, at the expense of the
Transferor, to the extent permitted by law to exercise, at any time and from
time to time while any Insurance Agreement Event of Default has occurred and is
continuing, any or all of the following powers with respect to all or any of the
Collateral related to the relevant Series: (i) to demand, sue for, collect,
receive and give acquittance for any and all monies due or to become due upon or
by virtue thereof, (ii) to settle, compromise, compound, prosecute or defend any
action or proceeding with respect thereto, (iii) to direct the Collateral Agent
to sell, transfer, assign or otherwise deal with the same or the proceeds
thereof as fully and effectively as if the Collateral Agent were the absolute
owner thereof, and (iv) to extend the time of payment of any or all thereof and
to make any allowance or other adjustments with respect thereto.

        With respect to each Series and the related Collateral, each Secured
Party hereby irrevocably and unconditionally

                                    -38-
<PAGE>
constitutes and appoints the Controlling Party with respect to such Series, and
any successor to such Controlling Party appointed pursuant to Section 6.01
hereof from time to time, as the true and lawful attorney-in-fact of such
Secured Party for so long as such Secured Party is the Non-Controlling Party,
with full power of substitution, to execute, acknowledge and deliver any notice,
document, certificate, paper, pleading or instrument and to do in the name of
the Controlling Party as well as in the name, place and stead of such Secured
Party such acts, things and deeds for and on behalf of and in the name of such
Secured Party under this Agreement with respect to such Series which such
Secured Party could or might do or which may be necessary, desirable or
convenient in such Controlling Party's sole discretion to effect the purposes
contemplated hereunder and, without limitation, exercise full right, power and
authority to take, or defer from taking, any and all acts with respect to the
administration of the Collateral related to such Series, and the enforcement of
the rights of the Secured Parties hereunder with respect to such Series, on
behalf of and for the benefit of such Controlling Party and such Non-Controlling
Party, as their interests may appear.

      Section Rights of Secured Parties. With respect to each Series and the
related Collateral, the Non-Controlling Party at any time expressly agrees that
it shall not assert any rights that it may otherwise have, as a Secured Party
with respect to the Collateral, to direct the maintenance, sale or other
disposition of the Collateral or any portion thereof, notwithstanding the
occurrence and continuance of any Insurance Agreement Event of Default or
Servicer Termination Event with respect to such Series or any non-performance by
the Transferor or any Reversionary Holders of any obligation owed to such
Secured Party hereunder or under any other Transaction Document, and each party
hereto agrees that the Controlling Party shall be the only Person entitled to
assert and exercise such rights.

      Section   Degree of Care.

        Controlling Party. Notwithstanding any term or provision of this
Agreement, the Controlling Party shall incur no liability to the Transferor or
any Reversionary Holder for any action taken or omitted by the Controlling Party
in connection with the Collateral, except for any gross negligence, bad faith or
willful misconduct on the part of the Controlling Party and, further, shall
incur no liability to the Non-Controlling Party except for a breach of the terms
of this Agreement or for gross negligence, bad faith or willful misconduct in
carrying out its duties, if any, to the Non-Controlling Party. The Controlling
Party shall be protected and shall incur no liability to any such party in
relying upon the accuracy, acting in reliance upon the contents and assuming the
genuineness of any notice, demand,

                                    -39-
<PAGE>
certificate, signature, instrument or other document believed by the Controlling
Party to be genuine and to have been duly executed by the appropriate signatory,
and (absent manifest error or actual knowledge to the contrary) the Controlling
Party shall not be required to make any independent investigation with respect
thereto. The Controlling Party shall, at all times, be free independently to
establish to its reasonable satisfaction the existence or nonexistence, as the
case may be, of any fact the existence or nonexistence of which shall be a
condition to the exercise or enforcement of any right or remedy under this
Agreement or any of the Transaction Documents.

        The Non-Controlling Party. The Non-Controlling Party shall not be liable
to the Transferor or any Reversionary Holder for any action or failure to act by
the Controlling Party or the Collateral Agent in exercising, or failing to
exercise, any rights or remedies hereunder.


                                     ARTICLE

                              REMEDIES UPON DEFAULT

      Section Remedies upon a Default. If a Default with respect to a Series has
occurred and is continuing, the Collateral Agent shall, at the written direction
of the Controlling Party, take whatever action at law or in equity as may appear
necessary or desirable in the judgment of the Controlling Party to collect and
satisfy all Secured Obligations, including, but not limited to, foreclosure upon
the Collateral and all other rights available to secured parties under
applicable law or to enforce performance and observance of any obligation,
agreement or covenant under any of the Transaction Documents related to such
Series.

      Section Waiver of Default. The Controlling Party shall have the sole
right, to be exercised in its complete discretion, to waive any Default by a
writing setting forth the terms, conditions and extent of such waiver signed by
the Controlling Party and delivered to the Collateral Agent, the other Secured
Party and the Transferor. Any such waiver shall be binding upon the
Non-Controlling Party and the Collateral Agent. Unless such writing expressly
provides to the contrary, any waiver so granted shall extend only to the
specific event or occurrence which gave rise to the Default so waived and not to
any other similar event or occurrence occurring subsequent to the date of such
waiver.

      Section   Restoration of Rights and Remedies.  If the
Collateral Agent has instituted any proceeding to enforce any
right or remedy under this Agreement, and such proceeding has

                                    -40-
<PAGE>
been discontinued or abandoned for any reason, or has been determined adversely
to such Collateral Agent, then and in every such case the Transferor, the
Collateral Agent and each of the Secured Parties and each Reversionary Holder
shall, subject to any determination in such proceeding, be restored severally
and respectively to their former positions hereunder, and thereafter all rights
and remedies of the Secured Parties shall continue as though no such proceeding
had been instituted.

      Section No Remedy Exclusive. No right or remedy herein conferred upon or
reserved to the Collateral Agent, the Controlling Party or either of the Secured
Parties is intended to be exclusive of any other right or remedy, and every
right or remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law, in equity or otherwise (but, in each case, shall be subject to
the provisions of this Agreement limiting such remedies), and each and every
right, power and remedy whether specifically herein given or otherwise existing
may be exercised from time to time and as often and in such order as may be
deemed expedient by the Controlling Party, and the exercise of or the beginning
of the exercise of any right or power or remedy shall not be construed to be a
waiver of the right to exercise at the same time or thereafter any other right,
power or remedy.


                                     ARTICLE

                                  MISCELLANEOUS

      Section Further Assurances. Each party hereto shall take such action and
deliver such instruments to any other party hereto, in addition to the actions
and instruments specifically provided for herein, as may be reasonably requested
or required to effectuate the purpose or provisions of this Agreement or to
confirm or perfect any transaction described or contemplated herein.

      Section Waiver. Any waiver by any party of any provision of this Agreement
or any right, remedy or option hereunder shall only prevent and estop such party
from thereafter enforcing such provision, right, remedy or option if such waiver
is given in writing and only as to the specific instance and for the specific
purpose for which such waiver was given. The failure or refusal of any party
hereto to insist in any one or more instances, or in a course of dealing, upon
the strict performance of any of the terms or provisions of this Agreement by
any party hereto or the partial exercise of any right, remedy or option
hereunder shall not be construed as a waiver or

                                    -41-
<PAGE>
relinquishment of any such term or provision, but the same shall continue in
full force and effect.

      Section Amendments, Waivers. No amendment, modification, waiver or
supplement to this Agreement or any provision of this Agreement shall in any
event be effective unless the same shall have been made or consented to in
writing by each of the parties hereto and each Rating Agency shall have
confirmed in writing that such amendment will not cause a reduction or
withdrawal of a rating on any Series; provided, however, that, for so long as
Financial Security shall be the Controlling Party with respect to a Series,
amendments, modifications, waivers or supplements hereto relating to such
Series, the related Collateral or Spread Account or any requirement hereunder to
deposit or retain any amounts in such Spread Account or to distribute any
amounts therein as provided in Section 3.03 hereof shall be effective if made or
consented to in writing by Financial Security, the Transferor and the Collateral
Agent (the consent of which shall not be withheld or delayed with respect to any
amendment that does not adversely affect the Collateral Agent) but shall in no
circumstances require the consent of the Trustee or the Securityholders related
to such Series or any other Series or any Reversionary Holder.

      Section Severability. In the event that any provision of this Agreement or
the application thereof to any party hereto or to any circumstance or in any
jurisdiction governing this Agreement shall, to any extent, be invalid or
unenforceable under any applicable statute, regulation or rule of law, then such
provision shall be deemed inoperative to the extent that it is invalid or
unenforceable, and the remainder of this Agreement, and the application of any
such invalid or unenforceable provision to the parties, jurisdictions or
circumstances other than to whom or to which it is held invalid or
unenforceable, shall not be affected thereby nor shall the same affect the
validity or enforceability of any other provision of this Agreement. The parties
hereto further agree that the holding by any court of competent jurisdiction
that any remedy pursued by the Collateral Agent, or any of the Secured Parties,
hereunder is unavailable or unenforceable shall not affect in any way the
ability of the Collateral Agent or any of the Secured Parties to pursue any
other remedy available to it or them (subject, however, to the provisions of
this Agreement limiting such remedies).

      Section Nonpetition Covenant. Notwithstanding any prior termination of
this Agreement, each of the parties hereto agrees that it shall not, prior to
one year and one day after the Final Scheduled Distribution Date with respect to
each Series, acquiesce, petition or otherwise invoke or cause the Transferor or
the Trust to invoke the process of the United States of

                                    -42-
<PAGE>
America, any State or other political subdivision thereof or any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government for the purpose of commencing or
sustaining a case by or against the Transferor or the Trust under a Federal or
state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Transferor or the Trust or all or any part of their respective properties
or assets or ordering the winding up or liquidation of the affairs of the
Transferor or the Trust. The parties agree that damages will be an inadequate
remedy for breach of this covenant and that this covenant may be specifically
enforced.

      Section Notices. All notices, demands, certificates, requests and
communications hereunder ("notices") shall be in writing and shall be effective
(a) upon receipt when sent through the U.S. mails, registered or certified mail,
return receipt requested, postage prepaid, with such receipt to be effective the
date of delivery indicated on the return receipt, or (b) one Business Day after
delivery to an overnight courier, or (c) on the date personally delivered to an
Authorized Officer of the party to which sent, or (d) on the date transmitted by
legible telecopier transmission with a confirmation of receipt, in all cases
addressed to the recipient as follows:

      (i)         If to the Transferor:

                  National Financial Auto Funding Trust
                  c/o Chase Manhattan Bank Delaware
                  802 Delaware Avenue
                  Wilmington, Delaware  19801
                  Attention:  Corporate Trust Administration

                  Telecopier No.:  (302) 575-5467
                  Confirmation No.:  (302) 575-5099

                  with a copy to:

                  Chase Manhattan Bank Delaware
                  c/o The Chase Manhattan Bank, N.A.
                  4 Chase Metrotech Center
                  Brooklyn, New York  11242
                  Attention:  Corporate Trust Administration

                  Telecopier No.:  (718) 242-3529
                  Confirmation No.:  (718) 242-7283

                                    -43-
<PAGE>
      (ii)        If to Financial Security:

                  Financial Security Assurance Inc.
                  350 Park Avenue
                  New York, New York 10022
                  Attention:  Surveillance Department
                  Re:  National Auto Finance 1997-1 Trust
                       6.35% Asset Backed Notes

                  Telecopier No.: (212) 339-3518
                                  (212) 339-3529
                  Confirmation: (212) 826-0100 (in each case in which notice or
                  other communication to Financial Security refers to a Default
                  or a claim on the Policy or in which failure on the part of
                  Financial Security to respond shall be deemed to constitute
                  consent or acceptance, then with a copy to the attention of
                  the Senior Vice President Surveillance)

      (iii) If to the Trustee:

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

                  Attention:  Indenture Trust Division

                  Telecopier No.:    (312) 461-3525
                  Confirmation No.:  (312) 461-4662


      (iv)        If to the Collateral Agent:

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

                  Attention:  Indenture Trust Division

                  Telecopier No.:    (312) 461-3525
                  Confirmation No.:  (312) 461-4662



                                    -44-
<PAGE>
      (v)         If to Moody's:

                  Moody's Investors Service, Inc.
                  99 Church Street
                  New York, New York 10007

                  Telecopier No.:  (212) 553-0344

      (vi)        If to Standard & Poor's:

                  Standard & Poor's Ratings Group
                  26 Broadway
                  New York, New York 10004

                  Telecopier No.:  (212) 208-1582

A copy of each notice given hereunder to any party hereto shall also be given to
(without duplication) Financial Security, the Transferor, the Trustee and the
Collateral Agent. Each party hereto may, by notice given in accordance herewith
to each of the other parties hereto, designate any further or different address
to which subsequent notices shall be sent.

      Section Term of this Agreement. This Agreement shall take effect on the
Closing Date of the Series 1997-1 Notes and shall continue in effect until the
last Final Termination Date to occur with respect to each Series. On such Final
Termination Date, this Agreement shall terminate, all obligations of the parties
hereunder shall cease and terminate and the Collateral, if any, held hereunder
and not to be used or applied in discharge of any obligations of the Transferor
or NAFI in respect of the Secured Obligations or otherwise under this Agreement,
shall be released to and in favor of the related Reversionary Holders, or, if
not otherwise identified, to the Transferor, provided that the provisions of
Sections 4.06, 4.07 and 8.05 hereof shall survive any termination of this
Agreement and the release of any Collateral upon such termination.

      Section   Assignments, Third-Party Rights; Reinsurance.

        This Agreement shall be a continuing obligation of the parties hereto
and shall (i) be binding upon the parties and their respective successors and
assigns, and (ii) inure to the benefit of and be enforceable by each Secured
Party and the Collateral Agent, and by their respective successors, transferees
and assigns. The Transferor shall not assign this Agreement, or delegate any of
its duties hereunder, without the prior written consent of the Controlling
Party.

        Financial Security shall have the right (unless a Financial Security
Default shall have occurred and be continuing)

                                    -45-
<PAGE>
to give participations in its rights under this Agreement and to enter into
contracts of reinsurance with respect to any Policy issued in connection with a
Series and each such participant or reinsurer shall be entitled to the benefit
of any representation, warranty, covenant and obligation of each party (other
than Financial Security) hereunder as if such participant or reinsurer was a
party hereto and, subject only to such agreement regarding such reinsurance or
participation, shall have the right to enforce the obligations of each such
other party directly hereunder; provided, however, that no such reinsurance or
participation agreement or arrangement shall relieve Financial Security of its
obligations hereunder, under the Transaction Documents to which it is a party or
under any such Policy, or shall change the status of Financial Security as a
"Controlling Party". In addition, nothing contained herein shall restrict
Financial Security from assigning to any Person pursuant to any liquidity
facility or credit facility any rights of Financial Security under this
Agreement or with respect to any real or personal property or other interests
pledged to Financial Security, or in which Financial Security has a security
interest, in connection with the transactions contemplated hereby. The terms of
any such assignment or participation shall contain an express acknowledgment by
such Person of the condition of this Section and the limitations of the rights
of Financial Security hereunder.

      Section Consent of Controlling Party. In the event that the Controlling
Party's consent is required under the terms hereof or under the terms of any
Transaction Document, it is understood and agreed that, except as otherwise
provided expressly herein, the determination whether to grant or withhold such
consent shall be made solely by the Controlling Party in its sole discretion.

      Section Trial by Jury Waived. Each of the parties hereto waives, to the
fullest extent permitted by law, any right it may have to a trial by jury in
respect of any litigation arising directly or indirectly out of, under or in
connection with this Agreement, any of the other Transaction Documents or any of
the transactions contemplated hereunder or thereunder. Each of the parties
hereto (a) certifies that no representative, agent or attorney of any other
party has represented, expressly or otherwise, that such other party would not,
in the event of litigation, seek to enforce the foregoing waiver and (b)
acknowledges that it has been induced to enter into this Agreement and the other
Transaction Documents to which it is a party, by among other things, this
waiver.

      Section   Governing Law.  This Agreement shall be
governed by and construed, and the obligations, rights and

                                    -46-
<PAGE>
remedies of the parties hereunder shall be determined, in accordance with the
laws of the State of New York.

      Section Consents to Jurisdiction. Each of the parties hereto irrevocably
submits to the jurisdiction of the United States District Court for the Southern
District of New York, any court in the state of New York located in the city and
county of New York, and any appellate court from any thereof, in any action,
suit or proceeding brought against it and related to or in connection with this
Agreement, the other Transaction Documents or the transactions contemplated
hereunder or thereunder or for recognition or enforcement of any judgment and
each of the parties hereto irrevocably and unconditionally agrees that all
claims in respect of any such suit or action or proceeding may be heard or
determined in such New York State court or, to the extent permitted by law, in
such federal court. Each of the parties hereto agrees that a final judgment in
any such action, suit or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
law. To the extent permitted by applicable law, each of the parties hereby
waives and agrees not to assert by way of motion, as a defense or otherwise in
any such suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of such courts, that the suit, action or proceeding is
brought in an inconvenient forum, that the venue of the suit, action or
proceeding is improper or that this Agreement or any of the other Transaction
Documents or the subject matter hereof or thereof may not be litigated in or by
such courts. The Transferor hereby irrevocably appoints and designates Harris
Trust and Savings Bank as its true and lawful attorney and duly authorized agent
for acceptance of service of legal process. The Transferor agrees that service
of such process upon such Person shall constitute personal service of such
process upon it. Subject to Section 8.05 hereof, nothing contained in this
Agreement shall limit or affect the rights of any party hereto to serve process
in any other manner permitted by law or to start legal proceedings relating to
any of the Transaction Documents against NAFI or the Transferor or their
respective property in the courts of any jurisdiction.

      Section Limitation of Liability. It is expressly understood and agreed by
the parties hereto that (a) Harris Trust and Savings Bank is executing this
Agreement not in its individual capacity but solely in its capacities as
Collateral Agent and trustee of the Trusts pursuant to the Securitization
Agreements and (b) in no case whatsoever shall Harris Trust and Savings Bank be
personally or corporately liable on, or for any loss in respect of, any of the
statements, representations, warranties, covenants, agreements or obligations of
the Trusts hereunder, all such liability, if any, being expressly waived by the
parties hereto.

                                    -47-
<PAGE>
      Section Determination of Adverse Effect. Any determination of an adverse
effect on the interest of the Secured Parties or the Securityholders shall be
made without consideration of the availability of funds under the Policies.

      Section Counterparts. This Agreement may be executed in two or more
counterparts by the parties hereto, and each such counterpart shall be
considered an original and all such counterparts shall constitute one and the
same instrument.

      Section Headings. The headings of sections and paragraphs and the Table of
Contents contained in this Agreement are provided for convenience only. They
form no part of this Agreement and shall not affect its construction or
interpretation.



                    [Remainder of Page Intentionally Blank]

                                    -48-
<PAGE>
      IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date set forth on the first page hereof.



NATIONAL FINANCIAL AUTO FUNDING TRUST


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




FINANCIAL SECURITY ASSURANCE INC.

By
   Name:
   Title:


HARRIS TRUST AND SAVINGS BANK,
   as Trustee


By
   Name:
   Title:


HARRIS TRUST AND SAVINGS BANK,
   as Collateral Agent


By
   Name:
   Title: