PLEDGE AGREEMENT


         This PLEDGE AGREEMENT is made as of September 29, 1997, by and among
(i) NATIONAL AUTO FINANCE COMPANY, INC., a Delaware corporation (the
"Borrower"), (ii) NATIONAL CHARTERED AUTO CORPORATION, a Delaware corporation
("NCAC") (each a "Pledgor" and together, the "Pledgors"), and (iii) BANKBOSTON,
N.A., a national banking association, as agent (hereinafter, in such capacity,
the "Agent") for itself and the other banking institutions (hereinafter,
collectively, the "Banks") which are or may become parties to a Revolving Credit
Agreement, dated as of September 29, 1997 (as amended and in effect from time to
time, the "Credit Agreement") among the Borrower, the Banks and the Agent.

         WHEREAS, the Borrower and NCAC together hold one hundred percent (100%)
of the beneficial interests in each of the National Financial Auto Funding Trust
("Trust I") and the National Financial Auto Funding Trust II ("Trust II" and
together with Trust I, the "Trusts"), which interests are represented by
Certificates of Beneficial Interest (the "Certificates");

         WHEREAS, it is a condition precedent to the Banks' making any loans or
otherwise extending credit to the Borrower under the Credit Agreement that each
Pledgor execute and deliver to the Agent, for the benefit of the Banks and the
Agent, a pledge agreement in substantially the form hereof; and

         WHEREAS, each Pledgor wishes to grant pledges and security interests in
favor of the Agent, for the benefit of the Banks and the Agent, as herein
provided;

         NOW, THEREFORE, in consideration of the premises contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:

         SS.1. PLEDGE OF INTERESTS. (a) To secure the due and prompt payment and
               -------------------
performance of the Obligations (as defined in the Credit Agreement), each
Pledgor hereby pledges, assigns, grants a continuing security interest in and
lien on, and delivers to the Agent for the benefit of the Banks and the Agent
all right, title and interest of the Pledgor, whether now existing or hereafter
arising in, to and under each Trust, (the "Pledged Interests"), and all rights
to receive any distributions or payments due or to become due to such Pledgor in
respect of its Pledged Interests under the terms of each Trust's governing
documents and all other economic benefits of such Pledgor's interest in each
Trust, whether cash, property or otherwise, at any time owing or payable to such
Pledgor on account of its interest in each Trust. The Certificates for such
interests accompanied by appropriate instruments of assignment thereof duly
executed in blank by the applicable Pledgor, have been delivered to the Agent.
This pledge and security interest is for collateral purposes only, and the Agent
shall not, by virtue of this Agreement, or its receipt of any distributions or
other amounts from any Trust, be deemed to have assumed or become liable for any
obligation of any Trust or Pledgor.
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                                       2

                  (b) In case any Pledgor shall acquire any additional interests
of any Trust or in other trusts which facilitate securitizations of receivables
by the Borrower, whether by purchase, dividend, distribution of capital or
otherwise, such Pledgor shall forthwith deliver to and pledge such interests or
other securities to the Agent under this Agreement and shall deliver to the
Agent forthwith any certificates therefor, accompanied by appropriate
instruments of assignment duly executed by such Pledgor in blank.

         SS.2. DEFINITIONS. Capitalized terms which are used herein without
               -----------
definition and which are defined in the Credit Agreement shall have the same
meanings herein as in the Credit Agreement. The term "Collateral" as used herein
means the interests and other property at any time, whether now or hereafter,
pledged to the Agent hereunder and all income therefrom, increases therein and
proceeds thereof, other than income, increases or proceeds received by the
Pledgor pursuant to ss.7 hereof.

         SS.3. PRO-RATA SECURITY FOR OBLIGATIONS. This Agreement and the pledge
               ---------------------------------
of the Collateral hereunder is made with the Agent for the benefit of the Banks
and the Agent as security for the Obligations. All amounts owing with respect to
the Obligations shall be secured pro rata by the Collateral without distinction
as to whether some Obligations are then due and payable and other Obligations
are not then due and payable. Upon any realization upon the Collateral by the
Agent, whether by receipt of distributions pursuant to ss.7 hereof or upon sale
of all or part of the Collateral pursuant to ss.8 hereof or otherwise, each
Pledgor agrees that the proceeds thereof shall be applied in accordance with the
provisions of ss.12.4 of the Credit Agreement.

         SS.4. LIQUIDATION, RECAPITALIZATION. Any sums paid upon or with respect
               -----------------------------
to any of the Pledged Interests upon the liquidation or dissolution of any Trust
relating thereto shall be paid over to the Agent for the benefit of the Banks
and the Agent to be held by it as security for the Obligations; and in case any
distribution of capital shall be made on or in respect of any of the Pledged
Interests or any property shall be distributed upon or with respect to any of
the Pledged Interests pursuant to the recapitalization or reclassification of
the capital of the Trust thereof or pursuant to the reorganization of such
trust, the property so distributed shall be delivered to the Agent for the
benefit of the Banks and the Agent to be held by it as security for the
Obligations. All sums of money and property paid or distributed in respect of
the Pledged Interests upon such a liquidation, dissolution, recapitalization or
reclassification which are received by any Pledgor shall, until paid or
delivered to the Agent, be held in trust for the Agent for the benefit of the
Banks and the Agent as security for the Obligations.

         SS.5. WARRANTY OF OWNERSHIP; NEGATIVE PLEDGE. Each Pledgor warrants
               --------------------------------------
that it is the sole record and beneficial owner of the Pledged Interests
described in ss.1 hereof, subject to no pledges, liens, security interests,
charges, options, restrictions or other encumbrances except the security
interest created by this Agreement, and that it has the power, authority and
legal right to pledge all of such Pledged Interests pursuant to this Agreement.
Each Pledgor covenants that it will defend the Agent's rights and security
interest in such Pledged Interests against the claims and demands of all persons
whomsoever; and each Pledgor covenants that it will have the like title to and

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right to pledge any other Collateral and will likewise defend the Agent's rights
and security interest therein. Each Pledgor represents and warrants that the
activities of each Trust are limited solely to those set forth in ss.2.07 of the
Trust Agreement governing each such Trust and each Pledgor agrees that it will
cause each Trust's activities to be so limited. Neither Pledgor will, nor will
it permit any Trust to, except for the pledge by Trust I to Bankers Trust
Company, as Trustee of National Financial Auto Receivables Master Trust, of the
right to receive certain distributions pursuant to and as further described in
the Consent and Amendment dated as of September 29, 1997 between Trust I, the
Borrower, First Union National Bank and Bankers Trust Company as Trustee of
National Financial Auto Receivables Master Trust, (a copy of which is attached
as Exhibit A) (i) create or incur or suffer to be created or incurred any lien,
encumbrance, mortgage, pledge, charge, restriction or other security interest of
any kind upon any of its property, revenues or assets, (ii) sell, assign, pledge
or otherwise transfer any of its property, revenues or assets or (iii) enter
into any agreement prohibiting the creation or assumption of any lien upon its
properties, revenues or assets, whether now owned or hereafter acquired.

         SS.6. POWER, AUTHORITY. The execution and delivery of this Agreement
               ----------------
and pledging of the Pledged Interests described in ss.ss.1 and 2 hereof are
within each Pledgor's power, have been duly authorized by all necessary action
and such execution and delivery and the pledging of such Pledged Interests do
not contravene any law or any rule or regulation thereunder or any provision of
the articles of organization, or other organizational or governing documents of
any Pledgor or of any judgment, decree or order of any tribunal or of any
agreement or instrument to which any Pledgor is a party or by which it or any of
its property is bound or constitute a default thereunder.

         SS.7. DISTRIBUTIONS, PRINCIPAL, INTEREST AND VOTING PRIOR TO MATURITY.
               ---------------------------------------------------------------
Unless and until an Event of Default (as defined herein) shall have occurred and
be continuing, each Pledgor shall be entitled (i) to receive all cash
distributions paid in respect of the Pledged Interests and (ii) if applicable,
to vote the Pledged Interests and to give consents, waivers and ratifications in
respect of the Pledged Interests; provided, however, that no vote shall be cast,
or consent, waiver or ratification given or action taken which would be
inconsistent with or violate any provision of the Credit Agreement, any other
Security Document or this Agreement.

         SS.8. REMEDIES. (a) An "Event of Default" hereunder shall mean (i) that
               --------
a representation, warranty or certification made in this Agreement or in any
document executed or delivered from time to time relating to this Agreement is
materially untrue, misleading or incomplete in its recital of any facts at the
time as of which such representation, warranty or certification, as the case may
be, is made, (ii) any Event of Default as that term is defined in the Credit
Agreement, whether or not any acceleration of the maturity of the amounts due in
respect of any of the Obligations shall have occurred, or (iii) any Event of
Default as that term is defined in any other Loan Document.

         (b) Upon the occurrence and during the continuance of an Event of
Default, the Agent shall thereafter have the following rights and remedies (to
the extent permitted by applicable law) in addition to the rights and remedies
of a secured party under the Uniform Commercial Code of Massachusetts, all such
rights and remedies being cumulative, not exclusive, and enforceable
alternatively, successively or concurrently:
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                                       4

                  (i) If the Agent so elects and gives notice of such election
         to the applicable Pledgor, the Agent may, to the extent such Pledgor
         would have such rights, vote any or all of the Pledged Interests
         possessing voting rights (whether or not the same shall have been
         transferred into its name or the name of its nominee or nominees) and
         give all consents, waivers and ratifications in respect of the Pledged
         Interests and otherwise act with respect thereto as though it were the
         outright owner thereof, each Pledgor hereby irrevocably constituting
         and appointing the Agent the proxy and attorney-in-fact of such
         Pledgor, with full power of substitution, to do so;

                  (ii) The Agent may demand, sue for, collect or make any
         compromise or settlement in respect of any Collateral held by it
         hereunder that it deems suitable;

                  (iii) After ten (10) days' notice to the applicable Pledgor,
         the Agent may sell, resell, assign and deliver, or otherwise dispose of
         any or all of the Collateral, for cash and/or credit and upon such
         terms at such place or places and at such time or times and to such
         persons, firms, companies or corporations as the Agent shall approve,
         all without demand for performance by such Pledgor or advertisement or
         any further notice whatsoever except such as may be required by law;
         and

                  (iv) The Agent may at any time, at its option, cause all or
         any part of the Pledged Interests held by it to be transferred into its
         name or the name of its nominee or nominees, receive any income thereon
         and hold such income as additional collateral or apply it to the
         Obligations.

         (c) Except as otherwise provided herein, the Agent may enforce its
rights hereunder without any other notice and without compliance with any other
condition precedent now or hereafter imposed by statute, rule of law or
otherwise (all of which are hereby expressly waived by each Pledgor, to the
fullest extent permitted by law). If any of the Collateral is sold by the Agent
upon credit or for future delivery, the Agent shall not be liable for the
failure of the purchaser to pay the same and, in such event, the Agent may
resell such Collateral. The Agent may buy any part or all of the Collateral at
any public sale and, if any part or all of the Collateral is of a type
customarily sold in a recognized market or is of a type which is the subject of
widely-distributed standard price quotations, the Agent may buy at private sale
and may make payments therefor by any means. The Agent shall apply the cash
proceeds actually received from any sale or other disposition to the reasonable
expenses of retaking, holding, preparing for sale, selling and the like, to
reasonable attorneys' fees, and all legal expenses, travel and other expenses
which may be incurred by the Agent in attempting to collect the Obligations or
to enforce this Agreement or in the prosecution or defense of any action or
proceeding related to the subject matter of this Agreement; and then to the
Obligations and any surplus shall be paid to the applicable Pledgor.

         (d) Each Pledgor recognizes that the Agent may be unable to effect a
public sale of the Pledged Interests by reason of certain prohibitions contained
in the Securities Act of 1933, as amended, but may be compelled to resort to one
or more private sales thereof to a restricted group of purchasers consistent
with applicable laws. Each Pledgor agrees that any such private sales may be at
prices and other terms less favorable to the seller than if sold at public sales

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and that such private sales shall not by reason thereof be deemed not to have
been made in a commercially reasonable manner. The Agent shall be under no
obligation to delay a sale of any of the Pledged Interests for the period of
time necessary to permit the issuer of such securities to register such
securities for public sale under the Securities Act of 1933, as amended, even if
the issuer would agree to do so.

         SS.9. MARSHALLING. Neither the Agent nor any Bank shall be required to
               -----------
marshal any present or future security for (including but not limited to this
Agreement and the Collateral pledged hereunder), or guaranties of, the
Obligations or any of them, or to resort to such security or guaranties in any
particular order; and all of its rights hereunder and in respect of such
securities and guaranties shall be cumulative and in addition to all other
rights, however existing or arising. To the extent that it lawfully may, each
Pledgor hereby agrees that it will not invoke any law relating to the
marshalling of collateral which might cause delay in or impede the enforcement
of the Agent's or any Bank's rights under this Agreement or under any other
instrument evidencing any of the Obligations or under which any of the
Obligations is outstanding or by which any of the Obligations is secured or
guaranteed, and, to the extent that it lawfully may, each Pledgor hereby
irrevocably waives the benefits of all such laws.

         SS.10. PLEDGOR'S OBLIGATIONS NOT AFFECTED. The obligations of each
                ----------------------------------
Pledgor hereunder shall remain in full force and effect without regard to, and
shall not be impaired by (a) any bankruptcy, insolvency, reorganization,
arrangement, readjustment, composition, liquidation or the like of such Pledgor;
(b) any exercise or nonexercise, or any waiver, by the Agent or any Bank of any
right, remedy, power or privilege under or in respect of any of the Obligations
or any security thereof (including this Agreement); (c) any amendment to or
modification of the Credit Agreement, the other Loan Documents or any of the
Obligations; (d) any amendment to or modification of any instrument (other than
this Agreement) securing any of the Obligations; or (e) the taking of additional
security for, or any guaranty of, any of the Obligations or the release or
discharge or termination of any security or guaranty for any of the Obligations;
and whether or not such Pledgor shall have notice or knowledge of any of the
foregoing.

         SS.11. TRANSFER BY PLEDGOR. Without the prior written consent of the
                -------------------
Agent, none of the Pledgors will sell, assign, transfer or otherwise dispose of,
grant any option with respect to, or pledge or grant any security interest in or
otherwise encumber any of the Collateral or any interest therein, except for the
pledge thereof provided for in this Agreement.

         SS.12. FURTHER ASSURANCES. Each Pledgor will do all such acts, and will
                ------------------
furnish to the Agent all such financing statements, certificates, legal opinions
and other documents and will obtain all such governmental consents and corporate
approvals and will do or cause to be done all such other things as the Agent may
reasonably request from time to time in order to give full effect to this
Agreement and to secure the rights of the Agent and the Banks hereunder.

         SS.13. AGENT'S EXONERATION. Under no circumstances shall the Agent be
                -------------------
deemed to assume any responsibility for, or obligation or duty with respect to,
any part or all of the Collateral of any nature or kind, other than the physical

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custody thereof, or any matters or proceedings arising out of or relating
thereto. The Agent shall not be required to take any action of any kind to
collect, preserve or protect its or any Pledgor's rights in the Collateral or
against other persons asserting rights in the Collateral. The Agent's prior
recourse to any part or all of the Collateral shall not constitute a condition
of any demand, suit or proceeding for payment or collection of the Obligations.

         SS.14. POWER OF ATTORNEY. (a) Each Pledgor acknowledges the Agent's
                -----------------
right, to the extent permitted by applicable law, singly to execute and file
financing or continuation statements and similar notices required by applicable
law, and amendments thereto, concerning the Collateral without execution by such
Pledgor. A carbon, photographic or other reproduction of this Agreement or any
financing statement covering the Collateral or any part thereof shall be
sufficient as a financing statement where permitted by law.

         (b) Each Pledgor hereby irrevocably appoints the Agent as its
attorney-in-fact, effective at all times subsequent to the occurrence and during
the continuance of an Event of Default with full authority in the place and
stead of such Pledgor and in the name of such Pledgor or otherwise, to take any
action and to execute any instrument which the Agent or any Bank may reasonably
deem necessary or advisable to accomplish the purpose of this Agreement,
including, without limitation, the power and right (i) to endorse such Pledgor's
name on any checks, notes, acceptances, money orders, drafts, filings or other
forms of payment or security that may come into the Agent's possession; and (ii)
to do all other things which the Agent then determines to be necessary to carry
out the terms of this Agreement. The power conferred on the Agent hereunder is
solely to protect the Agent's and each Bank's interests in the Collateral and
shall not impose any duty upon the Agent to exercise such power.

         SS.15. NO WAIVER. No act, failure or delay by the Agent or any Bank
                ---------
shall constitute a waiver of its rights and remedies hereunder or otherwise, nor
shall any single or partial exercise by the Agent of any right, remedy or power
hereunder preclude any other exercise or future exercise of any other right,
remedy or power. No single or partial waiver by the Agent or any Bank of any
default or right or remedy which it may have shall operate as a waiver of any
other default, right or remedy or of the same default, right or remedy on a
future occasion. Each Pledgor hereby waives presentment, notice of dishonor and
protest of all instruments included in or evidencing any of the Obligations or
the Collateral, and any and all other notices and demands whatsoever (except as
expressly provided herein).

         SS.16. NOTICES. Except as otherwise expressly provided herein, all
                -------
notices and other communications made or required to be given pursuant to this
Agreement shall be in writing and shall be delivered by hand, mailed by United
States registered or certified first-class mail, postage prepaid, or sent by
telecopy, facsimile, telegraph or telex and confirmed by letter, addressed as
follows:


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                                       7


                  (a)      if to any Pledgor, at:

                           621 N.W. 53rd Street,
                           Suite 200,
                           Boca Raton, Florida 33487
                           Attention: Kevin G. Adams

         or at such other address for notice as such Pledgor shall last have
         furnished in writing to the Agent;

                  (b)      if to the Agent, at:

                           100 Federal Street
                           Boston, Massachusetts  02110
                           Attention:  Timothy G. Clifford,
                                       Vice President

         or at such other address for notice as the Agent shall last have
         furnished in writing to the person giving the notice.

Any such notice or demand shall be deemed to have been duly given or made and to
have become effective (i) if delivered by hand, overnight courier or facsimile
to a responsible officer of the party to which it is directed, at time of the
receipt thereof by such officer or the sending of such facsimile, and, (ii) if
sent by registered or certified first-class mail, postage prepaid, on the third
Business Day following the mailing thereof.

         SS.17. TERMINATION. Upon irrevocable and final payment in full in cash
                -----------
and performance in full of the Obligations in accordance with their terms and
the performance by each Pledgor of all of its covenants and agreements
hereunder, this Agreement shall terminate and each Pledgor shall be entitled to
the return of such Collateral in the possession or control of the Agent as has
not theretofore been disposed of pursuant to the provisions hereof, together
with any moneys and other property at the time held by the Agent hereunder.

         SS.18. CONSENTS, AMENDMENTS, WAIVERS. Any term of this Agreement may be
                -----------------------------
amended, and the performance or observance by any Pledgor of any of the terms of
this Agreement may be waived (either generally or in a particular instance and
either retroactively or prospectively) only in accordance with ss.25 of the
Credit Agreement.

         SS.19. PARTIES IN INTEREST. This Agreement and all obligations of each
                -------------------
Pledgor shall be binding upon the successors and assigns of the parties hereto,
provided, that none of the Pledgors may assign or transfer its rights hereunder
without the prior written consent of the Agent.

         SS.20. GOVERNING LAW. This Agreement and the obligations of the
                -------------
Pledgors hereunder shall be deemed to be a contract under seal and shall for all

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purposes be governed by and construed in accordance with the laws of the
Commonwealth of Massachusetts.

         SS.21. MISCELLANEOUS PROVISIONS. If any term of this Agreement shall be
                ------------------------
held to be invalid, illegal or unenforceable, the validity of all other terms
hereof shall be in no way affected thereby, and this Agreement shall be
construed and be enforceable as if such invalid, illegal or unenforceable term
had not been included herein. Each Pledgor acknowledges receipt of a copy of
this Agreement. The descriptive section headings have been inserted for
convenience of reference only and do not define or limit the provisions hereof.
Terms used herein without definition which are defined in the Uniform Commercial
Code of Massachusetts have such defined meanings herein, unless the context
otherwise indicates or requires.

         SS.22. COUNTERPARTS. This Agreement and any amendment hereof may be
                ------------
executed in several counterparts and by each party on a separate counterpart,
each of which when so executed and delivered shall be an original, but all of
which together shall constitute one instrument. In proving this Agreement it
shall not be necessary to produce or account for more than one such counterpart
signed by the party against whom enforcement is sought.


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                                       9


         IN WITNESS WHEREOF, each Pledgor and the Agent have caused this
Agreement to be duly executed as an instrument under seal as of the date first
above written.


                                          NATIONAL AUTO FINANCE COMPANY,
                                            INC.


                                          By:  _________________________________
                                                Title:


                                          NATIONAL CHARTERED AUTO
                                              CORPORATION


                                          By:  _________________________________
                                                Title:

         The undersigned Trusts hereby join in the above Agreement for the sole
purpose of consenting to and being bound by the provisions of ss.5 thereof, the
undersigned hereby agreeing to cooperate fully and in good faith with the Agent
and the Pledgors in carrying out such provisions.

                                          NATIONAL FINANCIAL AUTO FUNDING
                                              TRUST I


                                          By: _________________________________
                                                Keith B. Stein, Co-Trustee


                                          NATIONAL FINANCIAL AUTO FUNDING
                                              TRUST II


                                          By: ________________________________
                                                Keith B. Stein, Co-Trustee

                                          BANKBOSTON, N.A., individually and as
                                                   Agent


                                          By: ________________________________
                                                   Timothy G. Clifford
                                                   Vice President