EXECUTION COPY









                            INDEMNIFICATION AGREEMENT


                                      among


                       FINANCIAL SECURITY ASSURANCE INC.,

                      NATIONAL FINANCIAL AUTO FUNDING TRUST

                                       and

                        FIRST UNION CAPITAL MARKETS CORP.








                            Dated as of July 23, 1997


                       National Auto Finance 1997-1 Trust
                    6.35% Automobile Receivables-Backed Notes
                                   $66,891,200

<PAGE>
                                TABLE OF CONTENTS


                                                                           Page

Section 1.  Definitions......................................................1

Section 2.  Representations, Warranties and
                  Agreements of Financial Security...........................4

Section 3.  Representations, Warranties and
                  Agreements of the Underwriter..............................7

Section 4.  Indemnification..................................................8

Section 5.  Indemnification Procedures.......................................9

Section 6.  Contribution....................................................10

Section 7.  Miscellaneous...................................................11



EXHIBIT A  Opinion of Assistant General Counsel


<PAGE>
                            INDEMNIFICATION AGREEMENT



        INDEMNIFICATION AGREEMENT dated as of July 23, 1997, among FINANCIAL
SECURITY ASSURANCE INC. ("Financial Security"), NATIONAL FINANCIAL AUTO FUNDING
TRUST (the "Company") and FIRST UNION CAPITAL MARKETS CORP. (the "Underwriter"):

      Section Definitions. For purposes of this Agreement, the following terms
shall have the meanings provided below:

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

      "Commission" means the SEC Commission.

      "Company Party" means any of the Company, its subsidiaries and affiliates
and any trustee, holder of beneficial ownership interest, director, officer,
employee, agent or "controlling person" (as such term is used in the Securities
Act) of any of the foregoing.

      "Federal Securities Laws" means the Securities Act, the Securities
Exchange Act of 1934, the Trust Indenture Act of 1939, the Investment Company
Act of 1940, the Investment Advisers Act of 1940 and the Public Utility Holding
Company Act of 1935, each as amended from time to time, and the rules and
regulations in effect from time to time under such Acts.

      "Financial Security Agreements" means this Agreement, the Spread Account
Agreement and the Insurance Agreement.

      "Financial Security Information" has the meaning provided in Section 2(g)
hereof.

      "Financial Security Party" means any of Financial Security, its parent,
subsidiaries and affiliates, and any shareholder, director, officer, employee,
agent or "controlling person" (as such term is used in the Securities Act) of
any of the foregoing.

      "Indemnified Party" means any party entitled to any indemnification
pursuant to Section 4 hereof.

      "Indemnifying Party" means any party required to provide indemnification
pursuant to Section 4 hereof.


<PAGE>
      "Indenture" means the Indenture dated as of June 29, 1997, between
National Auto Finance 1997-1 Trust and Harris Trust and Savings Bank, as
Indenture Trustee and Trust Collateral Agent.

      "Insurance Agreement" means the Insurance and Indemnity Agreement, dated
as of July 23, 1997, among Financial Security, the Trust, the Company and NAFI,
as the same may be amended, amended and restated, supplemented or otherwise
modified from time to time in accordance with the terms thereof.

      "Losses" means (a) any actual out-of-pocket damages incurred by the party
entitled to indemnification or contribution hereunder, (b) any actual
out-of-pocket costs or expenses incurred by such party, including reasonable
fees or expenses of its counsel and other expenses incurred in connection with
investigating or defending any claim, action or other proceeding which entitle
such party to be indemnified hereunder (subject to the limitations set forth in
Section 5 hereof), to the extent not paid, satisfied or reimbursed from funds
provided by any other Person other than an affiliate of such party (provided
that the foregoing shall not create or imply any obligation to pursue recourse
against any such other Person), plus (c) interest on the amount paid by the
party entitled to indemnification or contribution from the date of such payment
to the date of payment by the party who is obligated to indemnify or contribute
hereunder at the statutory rate applicable to judgments for breach of contract.

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

      "Offering Document" means the Prospectus and any other material or
documents delivered by the Underwriter or any Underwriter Party to any Person in
connection with the offer or sale of the Securities.

      "Person" means any individual, partnership, joint venture, corporation,
limited liability company, limited liability partnership, trust, unincorporated
organization or other organization or entity (whether governmental or private).

      "Policy" means the financial guaranty insurance policy delivered by
Financial Security with respect to the Securities.

      "Prospectus" means any prospectus or preliminary prospectus relating to
the Securities included in the Registration Statement or filed with the
Commission (including all documents, if any, incorporated by reference therein
and the information, if any, deemed to be part thereof pursuant to the Rules and
Regulations), as the same may be amended or supplemented from time to time;
provided, however, that if any revised prospectus shall be

<PAGE>
provided by the Company for use in connection with the offering of the
Securities which differs from the Prospectus filed with the Commission pursuant
to Rule 424 of the Securities Act (whether or not such revised prospectus is
required to be filed by the Seller pursuant to Rule 424 of the Securities Act),
the term "Prospectus" shall refer to such revised Prospectus from and after the
time it is first provided to the Underwriter or any Underwriter Party for such
use.

      "Registration Statement" means the registration statement on Form S-3 (No.
333-28829) including a prospectus and any amendments thereto relating to the
Securities, and any registration statement required to be filed under the
Securities Act or the Rules and Regulations (including all documents, if any,
incorporated by reference therein and the information, if any, deemed to be part
thereof pursuant to the Rules and Regulations), as the same may be amended or
supplemented from time to time.

      "Rules and Regulations" means the rules and regulations of the Commission
under the Securities Act.

      "Sale and Servicing Agreement" means the Sale and Servicing Agreement,
dated as of June 29, 1997, among the Trust, the Company, NAFI, as Servicer, and
Harris Trust and Savings Bank, not in its individual capacity but solely as
Trust Collateral Agent.

      "Securities" means the National Auto Finance 1997-1 Trust $66,891,200
6.35% Automobile Receivables-Backed Notes, described in the Offering Document
and issued pursuant to the Indenture and covered by the Policy.

      "Securities Act" means the Securities Act of 1933, as amended from time to
time, and any rule or regulation in effect from time to time under such Act.

      "Spread Account Agreement" means the Master Spread Account Agreement dated
as of July 23, 1997, by and among the Company, Financial Security, the
Collateral Agent and the Trustee specified therein, as the same may be amended,
amended and restated, supplemented or otherwise modified from time to time in
accordance with the terms thereof.

      "Trust" means the National Auto Finance 1997-1 Trust, a Delaware business
trust.

      "Underwriter Information" has the meaning provided in Section 3(c) hereof.

<PAGE>
      "Underwriter Party" means any of the Underwriter, its parent, subsidiaries
and affiliates and any shareholder, director, officer, employee, agent or
"controlling person" (as such term is used in the Securities Act) of any of the
foregoing.

      "Underwriting Agreement" means the Underwriting Agreement dated as of July
17, 1997, between the Company and the Underwriter, with respect to the offer and
sale of the Securities, as the same may be amended, amended and restated,
supplemented or otherwise modified from time to time in accordance with the
terms thereof.

      Section Representations, Warranties and Agreements of Financial Security.
Financial Security represents, warrants and agrees with the parties hereto as
follows:

              Organization, Etc. Financial Security is a stock insurance company
      duly organized, validly existing and authorized to transact financial
      guaranty insurance business under the laws of the State of New York.

              Authorization, Etc.  The Policy and the Financial
      Security Agreements have been duly authorized, executed and
      delivered by Financial Security.

              Validity, Etc. The Policy and the Financial Security Agreements
      constitute valid and binding obligations of Financial Security,
      enforceable against Financial Security in accordance with their terms,
      subject, as to the enforcement of remedies, to bankruptcy, insolvency,
      reorganization, rehabilitation, moratorium and other similar laws
      affecting the enforceability of creditors' rights generally applicable in
      the event of the bankruptcy or insolvency of Financial Security and to the
      application of general principles of equity and subject, in the case of
      this Agreement, to principles of public policy limiting the right to
      enforce the indemnification provisions contained herein.

              Exemption From Registration.  The Policy is exempt
      from registration under the Securities Act.

              No Conflicts. Neither the execution or delivery by Financial
      Security of the Policy or the Financial Security Agreements, nor the
      performance by Financial Security of its obligations thereunder, will
      conflict with any provision of the certificate of incorporation or the
      bylaws of Financial Security nor result in a breach of, or constitute a
      default under, any material agreement or other instrument to which
      Financial Security is a party or by which any of its property is bound nor
      violate any judgment,

<PAGE>
      order or decree applicable to Financial Security of any governmental or
      regulatory body, administrative agency, court or arbitrator having
      jurisdiction over Financial Security (except that, in the published
      opinion of the Commission, the indemnification provisions of this
      Agreement, insofar as they relate to indemnification for liabilities
      arising under the Securities Act, are against public policy as expressed
      in the Securities Act and are therefore unenforceable).

                  Financial Information. The consolidated balance sheets of
      Financial Security as of December 31, 1995 and December 31, 1996 and the
      related consolidated statements of income, changes in shareholder's equity
      and cash flows for the fiscal years then ended and the interim
      consolidated balance sheet of Financial Security as of March 31, 1997, and
      the related statements of income, changes in shareholder's equity and cash
      flows for the interim period then ended, furnished by Financial Security
      to the Underwriter, fairly present in all material respects the financial
      condition of Financial Security as of such dates and for such periods in
      accordance with generally accepted accounting principles consistently
      applied (subject as to interim statements to normal year-end adjustments)
      and since the date of the most current interim consolidated balance sheet
      referred to above there has been no change in the financial condition of
      Financial Security which would materially and adversely affect its ability
      to perform its obligations under the Policy.

                  Financial Security Information. The information in the
      Prospectus set forth under the caption "The Insurer", or such additional
      information as may be deemed to be included in the Prospectus pursuant to
      the second paragraph under the heading "Incorporation of Certain Documents
      By Reference" on page S-3 of the Prospectus (as revised from time to time
      in accordance with the provisions hereof, the "Financial Security
      Information") is limited and does not purport to provide the scope of
      disclosure required to be included in a prospectus with respect to a
      registrant in connection with the offer and sale of securities of such
      registrant registered under the Securities Act. Within such limited scope
      of disclosure, however, as of the date of the Prospectus and as of the
      date hereof, the Financial Security Information does not contain any
      untrue statement of a material fact, or omit to state a material fact
      necessary to make the statements contained therein, in the light of the
      circumstances under which they were made, not misleading.

                  Additional Information.  Financial Security will
      furnish to the Underwriter or the Company, upon request of

<PAGE>
      the Underwriter or the Company, as the case may be, copies of Financial
      Security's most recent financial statements (annual or interim, as the
      case may be) which fairly present in all material respects the financial
      condition of Financial Security as of the dates and for the periods
      indicated, in accordance with generally accepted accounting principles
      consistently applied except as noted therein (subject, as to interim
      statements, to normal year-end adjustments). In addition, if the delivery
      of a Prospectus relating to the Securities is required at any time prior
      to the expiration of nine months after the time of issuance of the
      Prospectus in connection with the offering or sale of the Securities, the
      Company or the Underwriter will notify Financial Security of such
      requirement to deliver a Prospectus and Financial Security will promptly
      provide the Underwriter and the Company with any revisions to the
      Financial Security Information that are in the judgment of Financial
      Security necessary to prepare an amended Prospectus or a supplement to the
      Prospectus.

                  Opinion of Counsel. Financial Security will furnish to the
      Underwriter and the Company on the closing date for the sale of the
      Securities an opinion of its Assistant General Counsel, to the effect set
      forth in Exhibit A attached hereto, dated such closing date and addressed
      to the Company and the Underwriter.

                  Consents and Reports of Independent Accountants. Financial
      Security will furnish to the Underwriter and the Company, upon request, as
      comfort from its independent accountants in respect of its financial
      condition, (i) at the expense of the Person specified in the Insurance
      Agreement, a copy of the Prospectus, including either a manually signed
      consent or a manually signed report of Financial Security's independent
      accountants, and (ii) the quarterly review letter by Financial Security's
      independent accountants in respect of the most recent interim financial
      statements of Financial Security.

Nothing in this Agreement shall be construed as a representation or warranty by
Financial Security concerning the rating of its claims-paying ability by Moody's
Investors Service, Inc. or Standard & Poor's Ratings Services, a division of The
McGraw Hill Companies, or any other rating agency (collectively, the "Rating
Agencies"). The Rating Agencies, in assigning such ratings, take into account
facts and assumptions not described in the Prospectus and the facts and
assumptions considered by the Rating Agencies, and the ratings issued thereby,
are subject to change over time.

<PAGE>
      Section Representations, Warranties and Agreements of the Underwriter. The
Underwriter represents, warrants and agrees with the parties hereto as follows:

                  Compliance With Laws. The Underwriter will comply in all
      material respects with all legal requirements in connection with offers
      and sales of the Securities and make such offers and sales in the manner
      provided in the Offering Document.

                  Offering Document. The Underwriter will not use, or distribute
      to other broker-dealers for use, any Offering Document in connection with
      the offer and sale of the Securities unless such Offering Document
      includes such information as has been furnished by Financial Security for
      inclusion therein and the information therein concerning Financial
      Security has been approved by Financial Security in writing. Financial
      Security hereby consents to the information in respect of Financial
      Security included in the Prospectus. Each Offering Document will include
      the following statement:

            "The Policy is not covered by the property/ casualty insurance
            security fund specified in Article 76 of the New York Insurance
            Law".

      Each Offering Document including financial information with respect to
      Financial Security prepared in accordance with generally accepted
      accounting principles will include the following statement immediately
      preceding such financial information:

            "The New York State Insurance Department recognizes only statutory
            accounting practices for determining and reporting the financial
            condition and results of operations of an insurance company, for
            determining its solvency under the New York Insurance Law, and for
            determining whether its financial condition warrants the payment of
            a dividend to its stockholders. No consideration is given by the New
            York State Insurance Department to financial statements prepared in
            accordance with generally accepted accounting principles in making
            such determinations."

                  Underwriter Information. All material provided by the
      Underwriter for inclusion in the Offering Document (as revised from time
      to time, the "Underwriter Information"), insofar as such information
      relates to the Underwriter and the manner of offer and sale of the
      Securities, is true and correct in all material respects. In respect of
      the

<PAGE>
      Prospectus, the parties hereto acknowledge and agree that the Underwriter
      Information is limited to the following: (i) the fifth paragraph on the
      front cover page of the Offering Document concerning market making
      activities; (ii) the first sentence of the last paragraph on the front
      cover page of the Offering Document concerning the terms of the offering;
      (iii) the first paragraph on page S-2 of the Offering Document concerning
      market making activities; (iv) the third paragraph on page S-2 of the
      Offering Document concerning stabilization activities; and (v) the
      information under the caption "Underwriting" in the Offering Document.

      Section   Indemnification.

            Financial Security agrees, upon the terms and subject to the
conditions provided herein, to indemnify, defend and hold harmless each Company
Party and each Underwriter Party against (i) any and all Losses incurred by them
with respect to the offer and sale of the Securities and resulting from
Financial Security's breach of any of its representations, warranties or
agreements set forth in Section 2 hereof and (ii) any and all Losses to which
any Company Party or Underwriter Party may become subject, under the Securities
Act or otherwise, insofar as such Losses arise out of or result from an untrue
statement of a material fact contained in any Offering Document or the omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement or omission was made in the Financial
Security Information included therein in accordance with the provisions hereof.

            The Underwriter agrees, upon the terms and subject to the conditions
provided herein, to indemnify, defend and hold harmless each Financial Security
Party and each Company Party against (i) any and all Losses incurred by them
with respect to the offer and sale of the Securities and resulting from the
Underwriter's breach of any of its representations, warranties or agreements set
forth in Section 3 hereof and (ii) any and all Losses to which any Financial
Security Party or Company Party may become subject, under the Securities Act or
otherwise, insofar as such Losses arise out of or result from an untrue
statement of a material fact contained in any Offering Document or the omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent, but only
to the extent, that such untrue statement or omission was made in the
Underwriter Information included therein.

            Upon the incurrence of any Losses for which a party is
entitled to indemnification hereunder, the Indemnifying Party

<PAGE>
shall reimburse the Indemnified Party promptly upon establishment by the
Indemnified Party to the Indemnifying Party of the Losses incurred.

      Section Indemnification Procedures. Except as provided below in Section 6
with respect to contribution, the indemnification provided herein by an
Indemnifying Party shall be the exclusive remedy of any and all Indemnified
Parties for the breach of a representation, warranty or agreement hereunder by
an Indemnifying Party; provided, however, that each Indemnified Party shall be
entitled to pursue any other remedy at law or in equity for any such breach so
long as the damages sought to be recovered shall not exceed the Losses incurred
thereby resulting from such breach. In the event that any action or regulatory
proceeding shall be commenced or claim asserted which may entitle an Indemnified
Party to be indemnified under this Agreement, such party shall give the
Indemnifying Party written or telegraphic notice of such action or claim
reasonably promptly after receipt of written notice thereof. The Indemnifying
Party shall be entitled to participate in and, upon notice to the Indemnified
Party, assume the defense of any such action or claim in reasonable cooperation
with, and with the reasonable cooperation of, the Indemnified Party. The
Indemnified Party shall have the right to employ its own counsel in any such
action in addition to the counsel of the Indemnifying Party, but the fees and
expenses of such separate counsel shall be at the expense of the Indemnified
Party unless (i) the employment of counsel by the Indemnified Party at its
expense have been authorized in writing by the Indemnifying Party, (ii) the
Indemnifying Party has not in fact employed counsel to assume the defense of
such action or proceeding within a reasonable time after receiving notice of the
commencement of the action or proceeding or (iii) the named parties to any such
action or proceeding (including any impleaded parties) include both the
Indemnifying Party and one or more Indemnified Parties, and the Indemnified
Parties shall have been advised by counsel that there may be one or more legal
defenses available to them which are different from or additional to those
available to the Indemnifying Party (it being understood, however, that the
Indemnifying Party shall not, in connection with any one such action or
proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of more than
one separate firm of attorneys at any time for all Company Parties, one such
firm for all Underwriter Parties and one such firm for all Financial Security
Parties, as the case may be, which firm shall be designated in writing by the
Company in respect of the Company Parties, by the Underwriter in respect of the
Underwriter Parties and by Financial Security in respect of the Financial
Security Parties), in each of which cases the fees and expenses of counsel will
be at the expense of the

<PAGE>
Indemnifying Party and all such fees and expenses will be reimbursed promptly as
they are incurred. The Indemnifying Party shall not be liable for any settlement
of any such claim or action unless the Indemnifying Party shall have consented
thereto or be in default in its obligations hereunder. Any failure by an
Indemnified Party to comply with the provisions of this Section shall relieve
the Indemnifying Party of liability only if such failure is prejudicial to the
position of the Indemnifying Party and then only to the extent of such
prejudice.

      Section   Contribution.

            To provide for just and equitable contribution if the
indemnification provided by any Indemnifying Party is determined to be
unavailable for any Indemnified Party (other than due to application of this
Section 6), each Indemnifying Party shall contribute to the Losses arising from
any breach of any of its representations, warranties or agreements contained in
this Agreement on the basis of the relative fault of each of the parties as set
forth in Section 6(b) below; provided, however, that an Indemnifying Party shall
in no event be required to contribute to all Indemnified Parties an aggregate
amount in excess of the Losses incurred by such Indemnified Parties resulting
from the breach of representations, warranties or agreements contained in this
Agreement.

            The relative fault of each Indemnifying Party, on the one hand, and
of each Indemnified Party, on the other, shall be determined by reference to,
among other things, whether the breach of, or alleged breach of, any
representations, warranties or agreements contained in this Agreement relates to
information supplied by, or action within the control of, the Indemnifying Party
or the Indemnified Party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such breach.

            The parties agree that Financial Security shall be solely
responsible for the Financial Security Information, the Underwriter shall be
solely responsible for the Underwriter Information and that the balance of each
Offering Document shall be the responsibility of the Company.

            Notwithstanding anything in this Section 6 to the contrary, the
Underwriter shall not be required to contribute an amount in excess of the
amount by which the total offering price of the Securities purchased by the
Underwriter exceeds the amount of any damages that such Underwriter has
otherwise been required to pay in respect of any breach by the Underwriter of
its representations or warranties contained in Section 3 hereof.

<PAGE>
            No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.

            Upon the incurrence of any Losses entitled to contribution
hereunder, the contributor shall reimburse the party entitled to contribution
promptly upon establishment by the party entitled to contribution to the
contributor of the Losses incurred.

      Section   Miscellaneous.

        Notices. All notices and other communications provided for under this
Agreement shall be delivered to the address set forth below or to such other
address as shall be designated by the recipient in a written notice to the other
party or parties hereto:

      If to Financial Security:

                              Financial Security Assurance Inc.
                              350 Park Avenue
                              New York, NY 10022
                              Attention: Senior Vice President --
                              Surveillance Department (with a copy to
                              the attention of the General Counsel)
                              Re:  National Auto Finance 1997-1 Trust,
                              6.35% Automobile Receivables-Backed
                              Notes
                              Confirmation: (212) 826-0100
                              Telecopy Nos.: (212) 339-3518,
                                             (212) 339-3529 (in each case
                              in which notice or other communication to
                              Financial Security refers to an Event of Default,
                              a claim on the Policy or with respect to which
                              failure on the part of Financial Security to
                              respond shall be deemed to constitute consent or
                              acceptance, then a copy of such notice or other
                              communication should also be sent to the attention
                              of each of the General Counsel and the
                              Head-Financial Guaranty Group and each such notice
                              shall be marked to indicate "URGENT MATERIAL
                              ENCLOSED.")


<PAGE>
      If to National Financial Auto Funding Trust
                               c/o Chase Manhattan Bank Delaware
                               802 Delaware Avenue
                               Wilmington, Delaware 19801
                               Attention:  Corporate Trust Administration
                               Telecopy No.:  (302) 575-5467
                               Confirmation:  (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
                               Telecopy No.:  (718) 242-3529
                               Confirmation:  (718) 242-7283

      If to the Underwriter:
 
                               First Union Capital Market Corp.
                               One First Union Center
                               Charlotte, North Carolina 28288-0610
                               Attention:  Reginald H. Imamura
                               Telecopy No.:  (704) 374-3254
                               Confirm No.:   (704) 374-6501

            Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

            Assignments.  This Agreement may not be assigned by any
party without the express written consent of each other party.
Any assignment made in violation of this Agreement shall be null
and void.

            Amendments.  Amendments of this Agreement shall be in
writing signed by each party hereto.

        Survival, Etc. The indemnity and contribution agreements contained in
this Agreement shall remain operative and in full force and effect, regardless
of (i) any investigation made by or on behalf of any Indemnifying Party, (ii)
the issuance of the Securities or (iii) any termination of this Agreement or the
Policy. The indemnification provided in this Agreement will be in addition to
any liability which the parties may otherwise

<PAGE>
have and shall in no way limit any obligations of the Company under the
Underwriting Agreement or the Insurance Agreement.

            Counterparts.  This Agreement may be executed in
counterparts by the parties hereto, and all such counterparts
shall constitute one and the same instrument.


                    [Remainder of Page Intentionally Blank]

<PAGE>
       IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first above written.


                                    FINANCIAL SECURITY ASSURANCE INC.


                                       By:
                                      Name:
                                          Title:


                                    FIRST UNION CAPITAL MARKETS CORP.


                                       By:
                                      Name:
                                     Title:


                                    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

<PAGE>
                                    EXHIBIT A


                      OPINION OF ASSISTANT GENERAL COUNSEL


      Based upon the foregoing, I am of the opinion that:


            Financial Security is a stock insurance company duly organized,
validly existing and authorized to transact financial guaranty insurance
business under the laws of the State of New York.

            The Policy and the Financial Security Agreements have been duly
authorized, executed and delivered by Financial Security.

            The Policy and the Financial Security Agreements constitute valid
and binding obligations of Financial Security, enforceable against Financial
Security in accordance with their terms, subject, as to the enforcement of
remedies, to bankruptcy, insolvency, reorganization, rehabilitation, moratorium
and other similar laws affecting the enforceability of creditors' rights
generally applicable in the event of the bankruptcy or insolvency of Financial
Security and to the application of general principles of equity and subject, in
the case of the Indemnification Agreement, to principles of public policy
limiting the right to enforce the indemnification provisions contained therein
insofar as they relate to indemnification for liabilities arising under
applicable securities laws.

            The Policy is exempt from registration under the Securities Act of
1933, as amended (the "Act").

            Neither the execution or delivery by Financial Security of the
Policy or the Financial Security Agreements, nor the performance by Financial
Security of its obligations thereunder, will conflict with any provision of the
certificate of incorporation or the bylaws of Financial Security or, to the best
of my knowledge, result in a breach of, or constitute a default under, any
agreement or other instrument to which Financial Security is a party or by which
it or any of its property is bound or, to the best of my knowledge, violate any
judgment, order or decree applicable to Financial Security of any governmental
or regulatory body, administrative agency, court or arbitrator having
jurisdiction over Financial Security (except that in the published opinion of
the Securities and Exchange Commission the indemnification provisions of the
Indemnification Agreement, insofar as they relate to indemnification for

                                       A-1
<PAGE>
liabilities arising under the Act, are against public policy as expressed in the
Act and are therefore unenforceable).

      In addition, please be advised that I have reviewed the description of
Financial Security under the caption "The Insurer" in the Prospectus Supplement
dated July 17, 1997, which supplements the Base Prospectus dated July 17, 1997
(the "Offering Document") of the Company with respect to the Securities. The
information provided in the Offering Document with respect to Financial Security
is limited and does not purport to provide the scope of disclosure required to
be included in a prospectus with respect to a registrant under the Act in
connection with the public offer and sale of securities of such registrant.
Within such limited scope of disclosure, however, there has not come to my
attention any information which would cause me to believe that the description
of Financial Security referred to above, as of the date of the Offering
Document, contained any untrue statement of a material fact or omitted to state
a material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading (except that no opinion
is rendered with respect to any financial statements or other financial
information contained or referred to therein).

                                       A-2