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                                                                   EXHIBIT 10.12

                           MASTER ALLOCATION AGREEMENT

      This MASTER ALLOCATION AGREEMENT ("Agreement") is effective as of the
first day of the consolidated return year beginning January 1, 2004, by and
among each of the undersigned companies (the "Companies", or individually,
"Company"):

                              WESTCORP ("Westcorp")
                     WESTERN AUTO INVESTMENTS, INC. ("WAI")
                        WESTERN CONSUMER PRODUCTS ("WCP")
                        WESTERN CONSUMER SERVICES ("WCS")
                       WESTERN FINANCIAL BANK (the "Bank")
                   WESTERN RECONVEYANCE COMPANY, INC. ("WREC")
                       WESTRAN SERVICES CORP. ("Westran")
                            WFS FINANCIAL INC ('WFS")
                     WFS FINANCIAL AUTO LOANS, INC. ("WFAL")
                   WFS FINANCIAL AUTO LOANS 2, INC. ("WFAL2")
                          WFS FUNDING, INC. ("Funding")
                         WFS INVESTMENTS, INC. ("WFSII")
                      WFS RECEIVABLES CORPORATION ("WFSRC")
                    WFS RECEIVABLES CORPORATION 2 ("WFSRC2")
                     WFS RECEIVABLES CORPORATION 3 ('WFSRCY)
                           WFS WEB INVESTMENTS ("WWI")
                     WESTFIN INSURANCE AGENCY, INC. ("WFIA")
                     WESTHRIFT LIFE INSURANCE COMPANY ("WT")
              THE HAMMOND COMPANY, THE MORTGAGE BANKERS ("THCTMB")
                    WFS RECEIVABLES CORPORATION 4 ("WFSRC4")
                 WESTERN FINANCIAL ASSOCIATE SOLUTIONS ("WFAS")

      This Agreement shall replace and supersede all previous Allocation
Agreements and Amendments existing among the various Companies.

                                    RECITALS

      A. Westcorp is the sole shareholder of Westran and WCP, each of which is a
California corporation, and WFSRC2 and WFSRC4 each of which is a Nevada
corporation, and is the sole shareholder of the Bank, a federally chartered
savings bank; and

      B. The Bank is the majority shareholder of WFS, a California corporation,
and is the sole shareholder of WFIA, WAI, THCTMB, WREC, WCS, WFAS each a
California corporation and WT, an Arizona corporation; and

      C. WFS is the sole shareholder of WFAL, WFAL2, WFSII, Funding, \/VWI,
WFSRC, and WFSRC3, each California corporations; and

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      D. Whereas, the Companies desire to obtain management and administrative
services along with provide for the reimbursement to Westcorp for the Westcorp
stock options that are granted to directors or associates of the Bank and WFS
from each other; and

      E. Whereas, the Companies are willing to provide such management and
administrative services and reimbursements to each other on the terms and
conditions described below; and

      F. Whereas, certain arrangements for the use of space have been terminated
and others have been created and the parties desire to have the Agreement
amended to reflect those changes; and

      G. Companies desire to set forth the terms of their relationship in order
to ensure that, in accordance with Office of Thrift Supervision ("OTS")
regulations, each Company functions as and remains a corporate entity separate
and apart from each other Company.

                                    AGREEMENT

      In consideration of the mutual promises set forth herein, and in reliance
upon the recitals set forth above, the parties agree as follows:

      1. Services Performed By One Company For the Benefit of Other Companies.
Certain services are performed by one Company ("Performing Company") for itself
and for other Companies ("Benefiting Company"). These costs are not always
directly traceable to each Benefiting Company; or such tracing cannot be
economically or practically accomplished; or the value of such goods and
services are not sufficiently substantial, as a portion of Performing Company's
total expenditure for such goods and services, as to be separately calculated.
Therefore, each Benefiting Company agrees that it shall reimburse Performing
Company for aggregate categories of such goods and services at the rates and
using the methods specified for each category in the attached Exhibit "A", as
amended from time to time, which is incorporated herein and made part of this
Agreement. The Companies have determined that the method and rate for each
category most accurately reflect the amount of services devoted by Performing
Company to each Benefiting Company. Methods and rates shall be calculated as of
the effective date of this agreement and recalculated each January 1st for the
upcoming year, or more frequently if a material change occurs.

      Performing Companies and the services currently provided by them are
described in a note to Exhibit A and may be changed from time to time by a
change to the note.

      2. Direct Costs. Direct costing shall be used when a specific service or
product directly benefits a Company and the costs of the service or product is
readily identifiable and measurable.

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For example, invoices from third party suppliers of goods or services, will be
treated as direct costs and paid directly by Benefiting Company as incurred.
Where appropriate, Companies shall enter into separate agreements for such goods
and services.

      Furthermore, Performing Companies are authorized to process invoices and
pay expenditures for Benefiting Companies that have deminimus costs and expenses
on behalf of the Benefiting Company, provided, however, that the Benefiting
Company will immediately initiate a cash transfer to the Performing Company to
reimburse it for said expenditures.

      3. Employee Stock Options. The Bank and WFS have agreed to pay Westcorp
for the cost of stock options granted to directors or associates as further
stated in the attached Exhibit C, as adjusted from time to time based on
directors or associate termination and in accordance with the Westcorp 2001
Stock Option Plan. Such payments shall be consistent with Westcorp's expense
under SFAS #148.

      4. Long Term Incentive Plan. The Bank and WFS have agreed to assume
current and future expense accruals related to the Long Term Incentive Plan
Agreements entered into between Westcorp and WFS or the Bank Associates.

      5. Space and Office Services. A Company, from time to time and at
different times, may permit another Company to occupy certain space at specific
locations owned or leased by Company. At particular locations, certain office
services, including without limitation, receptionist, telecommunications, and
photocopying services, may be included in the occupancy arrangement. Because
additional locations and services may be requested and provided and locations
and services may be changed or canceled, locations, services and the
compensation for them are as set forth in Exhibit "B", as amended from time to
time, attached hereto and incorporated herein.

      6. Time and Method of Payment. Reimbursement for allocated costs shall be
payable by each Company to others Companies on a monthly basis by the 20th day
of each month for expenses and costs incurred during the prior month. The
Accounting Department, under the direction of the Controller, shall administer
the reimbursement and reflect the reimbursement on the separate books and
records of each Company.

      7. Term.

            7.1 This Agreement shall commence as of the date stated above and
shall continue until terminated by the parties.

            7.2 This Agreement may be terminated immediately for breach of any
covenant, obligation, or duty herein contained or for violation of law,
ordinance, statute, rule or regulation (collectively referred to as "law")
governing the conduct of any party hereto.

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            7.3 Termination shall not affect the obligations of the Companies
with respect to any event occurring before termination. Each Company shall be
bound by and responsible for any transaction or expense properly agreed to or
incurred by another Company in connection with services performed hereunder but
not settled, paid or reimbursed prior to the date of any such termination. Upon
termination of this Agreement, the fee referred to above will be prorated, but
the due date thereof shall not be changed.

      8. Representations and Warranties of Company. Each Company on its behalf
alone represents and warrants to and for the benefit of other Companies as
follows:

            8.1 Corporate Existence and Qualifications. Company is a corporation
or association duly organized, validly existing and in good standing under the
laws of the United States or of the States of California, Nevada or Arizona, as
applicable, with full corporate power to own its properties and to carry on its
business as now owned and operated by Company.

            8.2 Licenses; Compliance with Laws. Company has all licenses,
franchises, permits and authorizations necessary for the lawful conduct by
Company of its business. Company has not violated, and is not in violation of,
any such licenses, franchises, permits or authorizations or any applicable
statutes, laws, ordinances, rules or regulations of any federal, state, or local
governmental bodies, agencies or subdivisions having, asserting or claiming
jurisdiction over it or over any part of its operations.

      9. Covenants Regarding Corporate Existence.

            9.1 Preservation of Corporate Existence and Qualifications. Each
Company shall keep in full effect its existence, rights and franchises as a
corporation or association under the laws of the jurisdiction in which organized
and will obtain and preserve its qualifications to carry on business as a
foreign corporation in each jurisdiction in which such qualification is or shall
be necessary.

            9.2 Observation of Corporate Formalities. Each Company shall at all
times observe the applicable legal requirements for the recognition of Company
as a corporate entity separate and apart from any other Company, including
without limitation the following:

                  (a) Each Company shall maintain corporate records and books of
account separate from those of other Companies;

                  (b) Each Company shall not at any time commingle its funds
with those of other Companies;

                  (c) Each Company shall hold meetings of its Board of Directors
as appropriate to authorize its corporate actions;

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                  (d) Each Company shall hold meetings of its shareholder(s) as
appropriate and as required by the Corporations Code of the jurisdiction in
which organized to authorize its corporate actions;

                  (e) Each Company shall file all reports required by the
Secretary of State in all jurisdictions in which Company is licensed or
qualified, including the annual statement by whatever name
denominated, in a timely manner; and

                  (f) Each.Company shall ensure that yearly franchise taxes are
paid in a timely manner so as to maintain its corporate existence uninterrupted.

            9.3 Advertising. Each Company will at all times hold itself out to
the public as an entity separate from any other Company and its advertising and
marketing shall reflect such separate corporate existence.

            9.4 OTS Regulations. Each Company shall comply with all applicable
OTS regulations. If required by 12 C.F.R. Section 563.37(b), any instrument
evidencing borrowing by Company shall indicate that no other Company is
responsible for any such debt.

      10. Liability: Consultation with Counsel. No Performing Company shall
assume responsibility or liability with respect to the business or affairs of
another Company except to the extent provided for in this Agreement. Each
Benefiting Company under this Agreement ("Indemnitor") shall indemnify, defend
and hold harmless the Performing Companies against and in respect of any and all
claims, demands, losses, costs, expenses, obligations, liabilities, damages,
recoveries and deficiencies (collectively the "Claims), including without
limitation interest penalties and attorney's fees, that such Performing Company
shall incur or suffer, which arise, result from or relate to (I) conduct by
Indemnitor of its business and operations and (ii) breach by Indemnitor of its
obligations pursuant to this Agreement. Notwithstanding anything contained
herein to the contrary, Indemnitor's obligations pursuant to this section shall
not be applicable to Claims arising directly from Performing Company's bad
faith, gross negligence or willful misconduct. This Agreement shall create no
right, benefit or privilege in favor of any person not a party hereto, and no
person not a party hereto shall have any recourse against Performing Company for
any advice, service or facility provided or omitted by Performing Company
pursuant to this Agreement. Performing Company may consult with legal counsel
(who may also be counsel to Indemnitor) concerning any questions that may arise
with respect to its duties and obligations hereunder, and it shall be fully
protected in respect of any action taken or omitted by it hereunder in good
faith reliance on any opinion of such counsel with respect to any such duty or
obligation.

      11. General.

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            11.1 This Agreement may be modified, amended or superseded in whole
or in part, at any time, by a writing executed by the parties hereto.

            11.2 This Agreement shall be governed by the laws of California,
except to the extent any such laws are superseded by federal law or regulation.

            11.3 This Agreement may be executed in counterparts, all of which,
taken together shall constitute one agreement.

            11.4 No Company shall assign this Agreement without the prior
written consent of the other Companies, which consent shall not unreasonably be
withheld.

            Wherefore, the undersigned have executed this Agreement on the date
set forth below to be effective as of the date first set forth above.

WESTCORP

By:___________________________________________             Date: _________, 2003
     Thomas A. Wolfe, President

WESTERN AUTO INVESTMENTS, INC.

By:___________________________________________             Date: __________2003
     John Coluccio, President

WESTRAN SERVICES CORP.

By:___________________________________________             Date: _________, 2003
     Shelley M. Chase, President

WESTERN FINANCIAL BANK

By:___________________________________________             Date: _________, 2003
     Thomas A. Wolfe, Vice Chairman &
     President

WFS FINANCIAL INC

By ___________________________________________             Date: _________, 2003
     Thomas A. Wolfe, President

WFS FINANCIAL AUTO LOANS, INC.

By:___________________________________________             Date: _________, 2003
     John Coluccio, President

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WFS FINANCIAL AUTO LOANS 2, INC

By:___________________________________________             Date: _________, 2003
     John Coluccio, President

WFS INVESTMENTS, INC.

By:___________________________________________             Date: _________, 2003
     Thomas A. Wolfe, President

WFS FUNDING, INC.

By:___________________________________________             Date: _________, 2003
    John Coluccio, President

WFS RECEIVABLES CORPORATION

By:___________________________________________             Date: _________, 2003
     John Coluccio, President

WESTFIN INSURANCE AGENCY, INC.

By:___________________________________________             Date: _________, 2003
     Thomas A. Wolfe, President

WESTHRIFT LIFE INSURANCE COMPANY

By:___________________________________________             Date: _________, 2003
     Shelley M. Chase, Vice President

THE HAMMOND COMPANY, THE MORTGAGE BANKERS

By:___________________________________________             Date: _________, 2003
     Thomas A. Wolfe, President & Chief Executive
     Officer

WFS WEB INVESTMENTS

By:___________________________________________             Date: _________, 2003
     Thomas Wolfe, President

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WESTERN RECONVEYANCE COMPANY, INC.

By:___________________________________________             Date: _________, 2003
     J. Keith Palmer, President, Chief Executive
     Officer & Treasurer

WESTERN CONSUMER SERVICES, INC.

By:___________________________________________             Date: _________, 2003
     Mark Olson, Vice President & Controller

WESTERN CONSUMER PRODUCTS

By:___________________________________________             Date: _________, 2003
     Mark Marty, President

WFS RECEIVABLES CORPORATION 2

By:___________________________________________             Date: _________, 2003
     Mark Olson, Vice President & Controller

WFS RECEIVABLES CORPORATION 3

By:___________________________________________             Date: _________, 2003
     John Coluccio, President

WFS RECEIVABLES CORPORATION 4

By:___________________________________________             Date: _________, 2003
     John Coluccio, President

WESTERN FINANCIAL ASSOCIATE SOLUTIONS

By:___________________________________________             Date: _________, 2003
     Karen Marchak, President

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