FINANCIAL SECURITY ASSURANCE INC.
                                 350 PARK AVENUE
                            NEW YORK, NEW YORK 10022

                               September 25, 1997


National Auto Finance Company, Inc.
One Park Place (Suite 200)
621 N.W. 53rd Street
Boca Raton, Florida  33487

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

          Re:  Insurance and Indemnity Agreement, dated as of November 21, 1995,
               among Financial Security Assurance Inc. ("Financial Security"),
               National Financial Auto Funding Trust (the "Transferor") and
               National Auto Finance Company, Inc. (formerly National Auto
               Finance Company L.P.) ("NAFI")
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Ladies and Gentlemen:

      Reference is hereby made to (i) the above-referenced Insurance and
Indemnity Agreement, (ii) the Insurance and Indemnity Agreement, dated as of
November 13, 1996, among Financial Security, the Transferor and NAFI and (iii)
the Insurance and Indemnity Agreement, dated as of July 23, 1997, among
Financial Security, the Transferor, NAFI and National Auto Finance 1997-1 Trust
(as amended, supplemented or otherwise modified as of the date hereof in
accordance with the respective terms thereof, and as the same may be further
amended, supplemented or otherwise modified from time to time in accordance with
the respective terms thereof, the "Series 1995-1 Insurance Agreement," the
"Series 1996-1 Insurance Agreement" and the "Series 1997-1 Insurance Agreement,"
respectively). Capitalized terms used herein and not defined herein shall have
the meanings assigned thereto in the Series 1995-1 Insurance Agreement.

      Pursuant to Section 5.02(d) of the Series 1995-1 Insurance Agreement,
Financial Security hereby permanently waives any Event of Default under Section
5.01 of the Series




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<PAGE>
1995-1 Insurance Agreement that shall have occurred prior to the date hereof and
the consequences thereof, including, without limitation, (i) Financial
Security's right to receive the Premium Supplement due and payable under the
Premium Letter and Section 5.02 of the Series 1995-1 Insurance Agreement and
(ii) the occurrence of an Event of Default under the Series 1996-1 Insurance
Agreement or the Series 1997-1 Insurance Agreement solely as a result of any
such Event of Default under the Series 1995-1 Insurance Agreement. Pursuant to
Section 5.02(d) of the Series 1995-1 Insurance Agreement, Financial Security
hereby further waives any right that it may have to collect the Premium
Supplement specified in the Premium Letter and the Series 1995-1 Insurance
Agreement as a result of any Event of Default under the Series 1995-1 Insurance
Agreement occurring on any date up through and including March 31, 1998. The
waiver granted by Financial Security in this paragraph shall extend only to the
specific events and occurrences expressly waived in this paragraph and not to
any other similar event or occurrence.

      Financial Security hereby reserves all of its rights and remedies, at law,
in equity or otherwise, arising out of or in connection with the documents
referenced herein and all related documents, except for the rights expressly and
specifically waived herein. Financial Security's failure to exercise any rights
or remedy (other than rights and remedies expressly and specifically waived)
shall not be construed as a waiver of any such right or remedy.





                                    FINANCIAL SECURITY ASSURANCE INC.

                                    By: /s/ Russell B. Brewer II
                                        ----------------------------
                                        Name:  Russell B. Brewer II
                                        Title:  Managing Director



cc:   The Chase Manhattan Bank Delaware,
        as Owner Trustee
      c/o The Chase Manhattan Bank, N.A.
      4 Chase Metrotech Center
      Brooklyn, New York  11242





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