<PAGE>
 
                                                                    EXHIBIT 10.2




                       THIRD AMENDMENT TO LOAN AGREEMENT



     THIS THIRD AMENDMENT TO LOAN AGREEMENT (this "Amendment") is made and
entered into as of this 15th day of September, 1998, by and between METROTRANS
CORPORATION, a Georgia corporation, as borrower (the "Borrower"), and
NATIONSBANK, N.A., a national banking association, as lender (the "Lender").



                             W I T N E S S E T H:
                             ------------------- 


  WHEREAS, the Borrower and the Lender are parties to that certain Loan
Agreement, dated as of September 5, 1997, as amended by First Amendment to Loan
Agreement dated as of May 18th, 1998 and by Second Amendment to Loan Agreement
dated as of August 21st, 1998 (as amended, the "Loan Agreement"), pursuant to
which the Lender extended certain financial accommodations to the Borrower; and

  WHEREAS, the Borrower has requested, and the Lender has agreed, subject to the
terms hereof, to amend certain provisions of the Loan Agreement; and

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

  1.  DEFINITIONS.  All capitalized terms used herein and not expressly defined
herein shall have the same respective meanings given to such terms in the Loan
Agreement.

  2.  AMENDMENTS TO ARTICLE 1.

     (a)  Section 1.1 of the Loan Agreement is hereby amended by deleting the
definition of "Total Leverage Ratio."
               --------------------- 

     (b)  The Loan Agreement is hereby further amended by deleting all
references to "Total Leverage Ratio" wherever they appear.

  3.  AMENDMENTS TO ARTICLE 7.


     (a)  The Loan Agreement is hereby further amended by deleting Section 7.12
in its entirety and substituting in lieu thereof the following to read as
follows:


     "Section 7.12 Fixed Charge Ratio. As of the end of any fiscal quarter, the
                   ------------------
Borrower shall not permit the Fixed Charge Ratio to be less than 1.9:1.0"


     (b)  The Loan Agreement is hereby further amended by deleting Section 7.15
in its entirety.
<PAGE>
 
  4.  REPRESENTATIONS AND WARRANTIES.  The Borrower hereby represents and
warrants to and in favor of the Lender as follows:


     (a)  Each representation and warranty set forth in Article 4 of the Loan
Agreement, as amended hereby, is hereby restated and affirmed as true and
correct in all material respects as of the date hereof, except to the
extent previously fulfilled in accordance with the terms of the Loan
Agreement, as amended hereby, and to the extent relating specifically to
the Agreement Date or otherwise inapplicable;

     (b)  The Borrower has the corporate power and authority (i) to enter into
this Amendment, and (ii) to do all acts and things as are required or
contemplated hereunder to be done, observed and performed by it;

     (c)  This Amendment has been duly authorized, validly executed and
delivered by one or more Authorized Signatories of the Borrower, and constitutes
the legal, valid and binding obligations of the Borrower, enforceable against
the Borrower in accordance with its terms, subject, as to enforcement of
remedies, to the following qualifications: (i) an order of specific performance
and an injunction are discretionary remedies and, in particular, may not be
available where damages are considered an adequate remedy at law, and (ii)
enforcement may be limited by bankruptcy, insolvency, liquidation,
reorganization, reconstruction and other similar laws affecting enforcement of
creditors' rights generally (insofar as any such law relates to the bankruptcy,
insolvency or similar event of the Borrower); and

     (d)  The execution and delivery of this Amendment and performance by the
Borrower under the Loan Agreement, as amended hereby, does not and will not
require the consent or approval of any regulatory authority or governmental
authority or agency having jurisdiction over the Borrower which has not
already been obtained, nor be in contravention of or in conflict with the
Certificate of Incorporation or By-Laws of the Borrower, or any provision
of any statute, judgment, order, indenture, instrument, agreement, or
undertaking, to which the Borrower is party or by which the Borrower's
assets or properties are bound.

  5.  CONDITIONS PRECEDENT TO EFFECTIVENESS OF AMENDMENT.  The effectiveness of
this Amendment is subject to:



     (a)  all of the representations and warranties of the Borrower under
Section 4 hereof which are made as of the date hereof, shall be true and correct
in all material respects;


     (b)  receipt by the Lender of a certificate of the chief executive officer
of the Borrower certifying that no Default exists both before and after giving
effect to this Amendment; and


     (c)  receipt of any other documents or instruments that the Lender may
reasonably request, certified by an officer of the Borrower if so requested.

                                       2
<PAGE>
 
  6.  EFFECT OF AMENDMENT; NO NOVATION.  Except as expressly set forth herein,
the Loan Agreement shall remain in full force and effect and shall constitute
the legal, valid, binding and enforceable obligation of Borrower to the Lenders,
and Borrower hereby restates, ratifies and reaffirms each and every term and
condition set forth in the Loan Agreement, as amended hereby.  The terms of this
Amendment are not intended to and do not serve as a novation as to the Loan
Agreement or the Notes or the indebtedness evidenced thereby.  The parties
hereto expressly do not intend to extinguish any debt or security interest
created pursuant to the Loan Agreement or any document executed in connection
therewith.  Instead it is the express intention to affirm the Loan Agreement and
the security created thereby.


  7.  COUNTERPARTS.  This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which, when so executed and delivered, shall be deemed to be an original and all
of which counterparts, taken together, shall constitute but one and the same
instrument.


  8.  SUCCESSORS AND ASSIGNS.  This Amendment shall be binding upon and inure to
the benefit of the successors and permitted assigns of the parties hereto.


  9.  GOVERNING LAW.  THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAWS.


  12.  MEDIATION.  The Lender and Borrower agree that any and all disputes
arising out of or related to the execution of this Amendment, or the performance
thereunder shall be submitted to non-binding mediation.  The cost of the
mediation is to be shared equally by the Lender and Borrower.  The parties
further agree as follows:

       (a)   They each will make a good faith effort to resolve any and all
disputes pursuant to the mediation provision.


       (b)   They each will have parties present at the mediation session who
have authority to resolve any pending disputes between the parties.


       (c)   That they will devote and set aside whatever time is needed to
seek a resolution of any disputes between the parties.



                 [Remainder of page intentionally left blank]

                                       3
<PAGE>
 
  IN WITNESS WHEREOF, the parties hereto have executed this Amendment under seal
as of the day and year first above written.



BORROWER:                     METROTRANS CORPORATION



                              By: /s/ Richard M. Bruno
                                  _________________________________
                                  Richard M. Bruno
                                  Vice President and Chief Financial Officer



                                      [CORPORATE SEAL]



LENDER:                       NATIONSBANK, N.A.



                              By: /s/ Scot Turner
                                  _________________________________
                                  Scot Turner
                                  Assistant Vice President

                                       4