<PAGE>

                                                                    EXHIBIT 10.4
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                           ADMINISTRATION AGREEMENT


                                     AMONG


                         CHASE MANHATTAN BANK DELAWARE
                        NOT IN ITS INDIVIDUAL CAPACITY
                          BUT SOLELY AS OWNER TRUSTEE



                                      AND


                        NAVISTAR FINANCIAL CORPORATION
                                 ADMINISTRATOR


                                      AND


                             THE BANK OF NEW YORK
                               INDENTURE TRUSTEE



                           DATED AS OF MARCH 9, 2000
<PAGE>

          ADMINISTRATION AGREEMENT, dated as of March 9, 2000 among CHASE
MANHATTAN BANK DELAWARE, not in its individual capacity, but solely as Owner
Trustee (the "Owner Trustee"), NAVISTAR FINANCIAL CORPORATION, a Delaware
corporation, as administrator (the "Administrator"), and THE BANK OF NEW YORK, a
New York banking corporation, not in its individual capacity but solely as
Indenture Trustee (the "Indenture Trustee").

                             W I T N E S S E T H :

          WHEREAS, the Owner Trustee, not in its individual capacity, but acting
solely as Owner Trustee under the Trust Agreement, is issuing Notes pursuant to
an Indenture, dated as of March 9, 2000 (as amended and supplemented from time
to time, the "Indenture"), between Chase Manhattan Bank Delaware (not in its
individual capacity, but solely as Owner Trustee under the Trust Agreement) and
the Indenture Trustee;

          WHEREAS, the Owner Trustee has entered into (or assumed) certain
agreements in connection with the issuance of the Notes and the Certificates,
including (i) the Pooling and Servicing Agreement, (ii) the Note Depository
Agreement and (iii) the Indenture;

          WHEREAS, pursuant to the Basic Documents, the Owner Trustee is
required to perform certain duties in connection with (a) the Notes and the
Collateral and (b) the Certificates;

          WHEREAS, the Owner Trustee desires to have the Administrator perform
certain of the duties of the Owner Trustee referred to in the preceding clause,
and to provide such additional services consistent with the terms of this
Agreement and the Basic Documents as the Owner Trustee may from time to time
request;

          WHEREAS, the Administrator has the capacity to provide the services
required hereby and is willing to perform such services for the Owner Trustee on
the terms set forth herein;

          NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties agree as follows:

          1.   Certain Definitions.  Capitalized terms used but not otherwise
               -------------------
defined herein shall have the respective meanings assigned them in Part I of
Appendix A to the Pooling and Servicing Agreement of even date herewith among
----------
Chase Manhattan Bank Delaware, acting as Owner Trustee of the Navistar Financial
2000-A Owner Trust, Navistar Financial Retail Receivables Corporation and
Navistar Financial Corporation, as Servicer (as it may be amended, supplemented
or modified from time to time, the "Pooling and Servicing Agreement").  All
references herein to "the Agreement" or "this Agreement" are to this
Administration Agreement as it may be amended, supplemented or modified from
time to time, the exhibits hereto and the capitalized terms used herein which
are defined in such Appendix A, and all references herein to Sections and
                    ----------
subsections are to Sections and subsections of this Agreement unless otherwise
specified.  The rules of construction set forth in Part II of such Appendix A
                                                                   ----------
shall be applicable to this Agreement.

                                      -1-
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     2.   Duties of the Administrator.
          ---------------------------

     (a)  Duties with Respect to the Note Depository Agreements and the
          -------------------------------------------------------------
          Indenture.
          ---------

     (i)  The Administrator agrees to perform all its duties as Administrator
  and the duties of the Owner Trustee under the Indenture and the Note
  Depository Agreement. In addition, the Administrator shall consult with the
  Owner Trustee regarding the duties of the Owner Trustee under the Indenture or
  the Note Depository Agreement. The Administrator shall monitor the performance
  of the Owner Trustee and shall advise the Owner Trustee when action is
  necessary to comply with the duties of the Owner Trustee under the Indenture
  or the Note Depository Agreement. The Administrator shall prepare for
  execution by the Owner Trustee or shall cause the preparation by other
  appropriate Persons of all such documents, reports, filings, instruments,
  certificates, notices and opinions as it shall be the duty of the Owner
  Trustee to prepare, file or deliver pursuant to the Indenture or the Note
  Depository Agreement. In furtherance of the foregoing, the Administrator shall
  take all appropriate action that it is the duty of the Owner Trustee to take
  pursuant to the Indenture including such of the foregoing as are required with
  respect to the following matters under the Indenture (references are to
  sections of the Indenture):

     (A)  the preparation of or obtaining of the documents and instruments
required for authentication of the Notes and delivery of the same to the
Indenture Trustee (Section 2.2);

     (B)  causing the Note Register to be kept and giving the Indenture Trustee
notice of any appointment of a new Note Registrar and the location, or change in
location, of the Note Register (Section 2.4);

     (C)  the notification of Noteholders of the final principal payment on
their Notes (Section 2.7(e));

     (D)  the preparation, obtaining or filing of the instruments, opinions and
certificates and other documents required for the release of collateral (Section
2.9);

     (E)  the preparation of Definitive Notes and arranging the delivery thereof
(Section 2.12);

     (F)  the maintenance of an office in the Borough of Manhattan, the City of
New York, for registration of transfer or exchange of Notes (Section 3.2);

     (G)  causing newly appointed Paying Agents, if any, to deliver to the
Indenture Trustee the instrument specified in the Indenture regarding funds held
in trust (Section 3.3(c));

     (H)  the direction to the Indenture Trustee to deposit monies with Paying
Agents, if any, other than the Indenture Trustee (Section 3.3(b));

     (I)  [RESERVED];

                                      -2-
<PAGE>

     (J) the preparation of all supplements, amendments, financing statements,
continuation statements, instruments of further assurance and other instruments,
in accordance with Section 3.5 of the Indenture, necessary to protect the Trust
Estate (Section 3.5);

     (K) the delivery of the Opinion of Counsel on the Closing Date, in
accordance with Section 3.6(a) of the Indenture, as to the Trust Estate, and the
annual delivery of the Opinion of Counsel, the Officers' Certificate and certain
other statements, in accordance with Sections 3.6(b) and 3.9 of the Indenture,
as to compliance with the Indenture (Sections 3.6 and 3.9);

     (L) the identification to the Indenture Trustee in an Officers' Certificate
of a Person with whom the Owner Trustee has contracted to perform its duties
under the Indenture (Section 3.7(b));

     (M) the notification of the Indenture Trustee and the Rating Agencies of a
Servicer Default pursuant to the Pooling and Servicing Agreement and, if such
Servicer Default arises from the failure of the Servicer to perform any of its
duties under the Pooling and Servicing Agreement, the taking of all reasonable
steps available to remedy such failure (Section 3.7(d));

     (N) the preparation and obtaining of documents and instruments required for
the release of the Owner Trustee from its obligations under the Indenture
(Section 3.11(b));

     (O) the delivery of notice to the Indenture Trustee of each Event of
Default under the Indenture, each Servicer Default, each default by the Seller
under the Pooling and Servicing Agreement and each default by NFC under the
Purchase Agreement (Section 3.19);

     (P) the monitoring of the Owner Trustee's obligations as to the
satisfaction and discharge of the Indenture and the preparation of an Officers'
Certificate and the obtaining of the Opinion of Counsel and the Independent
Certificate relating thereto (Section 4.1);

     (Q) the compliance with any written directive of the Indenture Trustee with
respect to the sale of the Trust Estate in a commercially reasonable manner if
an Event of Default shall have occurred and be continuing (Section 5.4);

     (R) the preparation and delivery of notice to Noteholders of the removal of
the Indenture Trustee and the appointment of a successor Indenture Trustee
(Section 6.8);

     (S) the preparation of any written instruments required to confirm more
fully the authority of any co-trustee or separate trustee and any written
instruments necessary in connection with the resignation or removal of any co-
trustee or separate trustee (Sections 6.8 and 6.10);

                                      -3-
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     (T)  the furnishing of the Indenture Trustee with the names and addresses
of Noteholders during any period when the Indenture Trustee is not the Note
Registrar (Section 7.1);

     (U)  the preparation and, after execution by the Owner Trustee, the filing
with the Commission, any applicable state agencies and the Indenture Trustee of
documents required to be filed on a periodic basis with, and summaries thereof
as may be required by rules and regulations prescribed by, the Commission and
any applicable state agencies and the transmission of such summaries, as
necessary, to the Noteholders (Section 7.3);

     (V)  the preparation of an Issuer Request and Officer's Certificate and the
obtaining of an Opinion of Counsel and Independent Certificates, if necessary,
for the release of the Trust Estate (Sections 8.4 and 8.5);

     (W)  the preparation of Issuer Orders and the obtaining of Opinions of
Counsel with respect to the execution of supplemental indentures and the mailing
to the Noteholders of notices with respect to such supplemental indentures
(Sections 9.1, 9.2 and 9.3);

     (X)  the execution and delivery of new Notes conforming to any supplemental
indenture (Section 9.6);

     (Y)  the notification of Noteholders and the Rating Agencies of redemption
of the Notes or the duty to cause the Indenture Trustee to provide such
notification (Sections 10.1 and 10.2);

     (Z)  the preparation of all Officer's Certificates, Opinions of Counsel and
Independent Certificates with respect to any requests by the Owner Trustee to
the Indenture Trustee to take any action under the Indenture (Section 11.1(a));

     (AA) the preparation and delivery of Officers' Certificates and the
obtaining of Independent Certificates, if necessary, for the release of property
from the lien of the Indenture (Section 11.1(b));

     (BB) the notice or other communication to the Rating Agencies, upon the
failure of the Indenture Trustee to give such notice or other communication
pursuant to Section 11.4 (Section 11.4);

     (CC) the preparation and delivery to Noteholders and the Indenture Trustee
of any agreements with respect to alternate payment and notice provisions
(Section 11.6); and

     (DD) the recording of the Indenture, if applicable (Section 11.15).

     (ii) In addition, the Administrator will indemnify the Owner Trustee and
its agents for, and hold them harmless against, any losses, liability or expense
incurred without gross negligence, willful misconduct or bad faith on their
part, arising out of or in connection with the acceptance or administration of
the transactions contemplated by the Trust

                                      -4-
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Agreement, including the reasonable costs and expenses of defending themselves
against any claim or liability in connection with the exercise or performance of
any of their powers or duties under the Trust Agreement.

     (b)  Additional Duties.
          -----------------

     (i)   In addition to the duties of the Administrator set forth above, the
Administrator shall perform such calculations and shall prepare for execution by
the Owner Trustee or shall cause the preparation by other appropriate Persons of
all such documents, reports, filings, instruments, certificates, notices and
opinions as it shall be the duty of the Owner Trustee to prepare, file or
deliver pursuant to the Basic Documents, and at the request of the Owner Trustee
shall take all appropriate action that it is the duty of the Owner Trustee to
take pursuant to the Basic Documents. Subject to Section 7 of this Agreement,
and in accordance with the directions of the Owner Trustee, the Administrator
shall administer, perform or supervise the performance of such other activities
in connection with the Collateral (including the Basic Documents) as are not
covered by any of the foregoing provisions and as are expressly requested by the
Owner Trustee and are reasonably within the capability of the Administrator.

     (ii)  Notwithstanding anything in this Agreement or the Basic Documents to
the contrary, the Administrator shall be responsible for promptly notifying the
Owner Trustee if any withholding tax is imposed on the payments from the Owner
Trust Estate to a Certificateholder as contemplated in Section 5.2(c) of the
Trust Agreement. Any such notice shall specify the amount of any withholding tax
required to be withheld by the Owner Trustee pursuant to such provision.

     (iii) Notwithstanding anything in this Agreement or the Basic Documents to
the contrary, the Administrator shall be responsible for performance of the
duties of the Owner Trustee set forth in Sections 5.2(d), 5.4(a), (b), (c) and
(d) and the last two sentences of Section 5.4, and Section 5.5 of the Trust
Agreement with respect to, among other things, accounting and reports to
Certificateholders.

     (iv)  The Administrator may satisfy any obligations it may have with
respect to clauses (ii) and (iii) above by retaining, at the expense of the
Owner Trust Estate payable by the Administrator, a firm of independent public
accountants acceptable to the Owner Trustee which shall perform the obligations
of the Administrator thereunder. If a withholding tax specified in the previous
clause (ii) is due, such accountants or the Administrator shall provide the
Owner Trustee with a letter specifying which withholding tax specified in the
preceding clause (ii) is then required and specifying the procedures to be
followed to comply with the Code (a) on or before March 15, 2000 if such
withholding tax is due in connection with a payment made on the first
Distribution Date or (b) in all other instances, thirty days before such tax is
to be withheld. Such accountants or the Administrator shall update such letter
if and to the extent it shall no longer be accurate.

     (v)   The Administrator shall perform the duties of the Administrator
specified in Section 6.10 of the Trust Agreement required to be performed in
connection with the

                                      -5-
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resignation or removal of the Owner Trustee, and any other duties expressly
required to be performed by the Administrator under the Trust Agreement.

     (vi)   In carrying out the foregoing duties or any of its other obligations
under this Agreement, the Administrator may enter into transactions with or
otherwise deal with any of its Affiliates; provided, however, that the terms of
                                           --------  -------
any such transactions or dealings shall be in accordance with any directions
received from the Owner Trustee and shall be, in the Administrator's opinion, no
less favorable to the Owner Trust Estate than would be available from Persons
that are not Affiliates of the Administrator.

     (vii)  The Administrator hereby agrees to execute on behalf of the Owner
Trustee all such documents, reports, filings, instruments, certificates and
opinions as it shall be the duty of the Owner Trustee to prepare, file or
deliver pursuant to the Basic Documents.

     (viii) Notwithstanding anything in this Agreement or the Basic Documents to
the contrary, the Administrator shall be responsible for performance of the
duties of NFRRC set forth in Section 2.6(iii) of the Trust Agreement.

     (c)    Non-Ministerial Matters.
            -----------------------

     (i)    With respect to matters that in the reasonable judgment of the
Administrator are non-ministerial, the Administrator shall not take any action
unless, within a reasonable time before the taking of such action, the
Administrator shall have notified the Owner Trustee of the proposed action and
the Owner Trustee shall not have withheld consent or provided an alternative
direction. For the purpose of the preceding sentence, "non-ministerial matters"
shall include:

     (A)    the amendment of or any supplement to the Indenture;

     (B)    the initiation of any claim or lawsuit for the benefit of the Owner
Trust Estate and the compromise of any action, claim or lawsuit brought for the
benefit of or against the Owner Trust Estate;

     (C)    the amendment, change or modification of any of the Basic Documents;

     (D)    the appointment of successor Note Registrars, successor Paying
Agents and successor Indenture Trustees pursuant to the Indenture or the
appointment of successor Administrators or successor Servicers, or the consent
to the assignment by the Note Registrar, Paying Agent or Indenture Trustee of
its obligations under the Indenture; and

     (E)    the removal of the Indenture Trustee.

     (ii)   Notwithstanding anything to the contrary in this Agreement, the
Administrator shall not be obligated to, and shall not, (x) make any payments to
the Noteholders under the Basic Documents, (y) sell the Trust Estate pursuant to
Section 5.4 of the Indenture or (z) take any other action that the Owner Trustee
directs the Administrator not to take on its behalf.

                                      -6-
<PAGE>

          3.   Successor Servicer and Administrator.  The Owner Trustee shall
               ------------------------------------
undertake, as promptly as possible after the giving of notice of termination to
the Servicer of the Servicer's rights and powers pursuant to Section 8.02 of the
Pooling and Servicing Agreement, to enforce the provisions of Sections 8.02,
8.03 and 8.04 of the Pooling and Servicing Agreement with respect to the
appointment of a successor Servicer.  Such successor Servicer shall, upon
compliance with Sections 10(e)(ii) and (iii), become the successor Administrator
hereunder.

          4.   Records.  The Administrator shall maintain appropriate books of
               -------
account and records relating to services performed hereunder, which books of
account and records shall be accessible for inspection by the Owner Trustee and
the Seller at any time during normal business hours.

          5.   Compensation.  As compensation for the performance of the
               ------------
Administrator's obligations under this Agreement and as reimbursement for its
expenses related thereto, the Servicer shall pay the Administrator a monthly fee
in the amount of $1,500.

          6.   Additional Information To Be Furnished to the Owner Trustee.  The
               -----------------------------------------------------------
Administrator shall furnish to the Owner Trustee from time to time such
additional information regarding the Collateral as the Owner Trustee shall
reasonably request.

          7.   Independence of the Administrator.  For all purposes of this
               ---------------------------------
Agreement, the Administrator shall be an independent contractor and shall not be
subject to the supervision of the Owner Trustee with respect to the manner in
which it accomplishes the performance of its obligations hereunder.  Unless
expressly authorized by the Owner Trustee, the Administrator shall have no
authority to act for or represent the Owner Trust Estate or the Owner Trustee in
any way and shall not otherwise be deemed an agent of the Owner Trustee.

          8.   No Joint Venture.  Nothing contained in this Agreement (i) shall
               ----------------
constitute the Administrator and the Owner Trustee as members of any
partnership, joint venture, association, syndicate, unincorporated business or
other separate entity, (ii) shall be construed to impose any liability as such
on any of them or (iii) shall be deemed to confer on any of them any express,
implied or apparent authority to incur any obligation or liability on behalf of
the others.

          9.   Other Activities of Administrator.  Nothing herein shall prevent
               ---------------------------------
the Administrator or its Affiliates from engaging in other businesses or, in its
sole discretion, from acting in a similar capacity as an administrator for any
other person or entity even though such person or entity may engage in business
activities similar to those of the Owner Trust Estate, the Owner Trustee or the
Indenture Trustee.

          10.  Term of Agreement; Resignation and Removal of Administrator.
               --------------------------------------------- -------------

          (a)  This Agreement shall continue in force until termination of the
Trust Agreement, upon which event this Agreement shall automatically terminate.

          (b)  Subject to Section 10(e), the Administrator may resign its duties
hereunder by providing the Owner Trustee with at least 60 days' prior written
notice.

                                      -7-
<PAGE>

          (c)   Subject to Section 10(e), the Owner Trustee may remove the
Administrator without cause by providing the Administrator with at least 60
days' prior written notice.

          (d)   Subject to Section 10(e), at the sole option of the Owner
Trustee, the Administrator may be removed immediately upon written notice of
termination from the Owner Trustee to the Administrator if any of the following
events shall occur:

          (i)   the Administrator shall default in the performance of any of its
     duties under this Agreement and, after notice from the Owner Trustee of
     such default, shall not cure such default within ten days (or, if such
     default cannot be cured in such time, shall not give within ten days such
     assurance of cure as shall be reasonably satisfactory to the Owner
     Trustee);

          (ii)  a court having jurisdiction in the premises shall enter a decree
     or order for relief, and such decree or order shall not have been vacated
     within 60 days, in respect of the Administrator in any involuntary case
     under any applicable bankruptcy, insolvency or other similar law now or
     hereafter in effect or appoint a receiver, liquidator, assignee, custodian,
     trustee, sequestrator or similar official for the Administrator or any
     substantial part of its property or order the winding-up or liquidation of
     its affairs; or

          (iii) the Administrator shall commence a voluntary case under any
     applicable bankruptcy, insolvency or other similar law now or hereafter in
     effect, shall consent to the entry of an order for relief in an involuntary
     case under any such law, or shall consent to the appointment of a receiver,
     liquidator, assignee, trustee, custodian, sequestrator or similar official
     for the Administrator or any substantial part of its property, shall
     consent to the taking of possession by any such official of any substantial
     part of its property, shall make any general assignment for the benefit of
     creditors or shall fail generally to pay its debts as they become due.

          The Administrator agrees that if any of the events specified in
clauses (ii) or (iii) of this Section 10(d) shall occur, it shall give written
notice thereof to the Owner Trustee and the Indenture Trustee within seven days
after the happening of such event.

          (e)   No resignation or removal of the Administrator pursuant to this
Section 10 shall be effective until (i) a successor Administrator shall have
been appointed by the Owner Trustee, (ii) such successor Administrator shall
have agreed in writing to be bound by the terms of this Agreement in the same
manner as the Administrator is bound hereunder, and (iii) the Rating Agency
Condition has been satisfied with respect to such proposed appointment.

          11.   Action upon Termination, Resignation or Removal.  Promptly upon
                -----------------------------------------------
the effective date of termination of this Agreement pursuant to Section 10(a) or
the resignation or removal of the Administrator pursuant to Section 10(b) or
(c), respectively, the Administrator shall be entitled to be paid all fees and
reimbursable expenses accruing to it to the effective date of such termination,
resignation or removal. The Administrator shall forthwith upon such termination
pursuant to Section 10(a) deliver to the Owner Trustee all property and
documents of or relating to the Collateral then in the custody of the
Administrator. In the event of the resignation or removal of the Administrator
pursuant to Section 10(b) or (c), respectively, the Administrator shall
cooperate

                                      -8-
<PAGE>

with the Owner Trustee and take all reasonable steps requested to assist the
Owner Trustee in making an orderly transfer of the duties of the Administrator.

          12.   Notices.  All demands, notices and communications upon or to the
                -------
Owner Trustee, the Indenture Trustee, the Administrator or the Rating Agencies
under this Agreement shall be delivered as specified in Appendix B to the
                                                        ----------
Pooling and Servicing Agreement.

          13.   Amendments.
                ----------

          (a)   This Agreement may be amended from time to time with prior
notice to the Rating Agencies by a written amendment duly executed and delivered
by the Owner Trustee, the Administrator and the Indenture Trustee, without the
consent of the Securityholders, for any of the following purposes:

          (i)   to add provisions hereof for the benefit of the Securityholders
     or to surrender any right or power herein conferred upon the Administrator;

          (ii)  to cure any ambiguity or to correct or supplement  any provision
     herein which may be inconsistent with any other provision herein or in any
     other Basic Document;

          (iii) to evidence and provide for the appointment of a successor
     Administrator hereunder and to add to or change any of the provisions of
     this Agreement as shall be necessary to facilitate such succession; and

          (iv)  to add any provisions to, or change in any manner or eliminate
     any of the provisions of, this Agreement, or modify in any manner the
     rights of the Securityholders; provided, however, that such amendment under
                                    --------  -------
     this Section 13(a)(iv) shall not, as evidenced by an Opinion of Counsel,
     materially and adversely affect in any material respect the interest of any
     Securityholder.

Prior to the execution of any amendment pursuant to this Section 13(a), the
Administrator shall furnish written notification of the substance of such
amendment to each of the Rating Agencies.

          (b)   This Agreement may also be amended by the Owner Trustee, the
Administrator and the Indenture Trustee with prior notice to the Rating Agencies
and with the written consent of the holders of Notes evidencing at least a
majority in the Outstanding Amount as of the close of the immediately preceding
Distribution Date of (i) the Class A Notes and the Class B Notes voting together
as a single class, and of (ii) the Class A Notes voting as a single class, and
the holders of Certificates evidencing a majority of the ownership interest in
the Trust as of the close of the preceding Distribution Date for the purpose of
adding any provisions to, changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of
Securityholders; provided, however, that no such amendment may (i) increase or
                 --------  -------
reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on Receivables or distributions that are required to be
made for the benefit of the Securityholders, (ii) reduce the percentage of the
holders of Securities which are required to consent to any amendment of this
Agreement or (iii) modify or alter any provision of this Section 13, except to

                                      -9-
<PAGE>

provide that certain additional provisions of this Agreement and the Basic
Documents cannot be modified or waived without the consent of each
Securityholder affected thereby, without, in any such case, the consent of the
holders of all the outstanding Securities.

          (c)  Notwithstanding Sections 13(a) and (b), the Administrator may not
amend this Agreement without the permission of the Seller, which permission
shall not be unreasonably withheld.

          14.  Successors and Assigns.  This Agreement may not be assigned by
               ----------------------
the Administrator unless such assignment is previously consented to in writing
by the Owner Trustee and subject to the satisfaction of the Rating Agency
Condition in respect thereof. An assignment with such consent and satisfaction,
if accepted by the assignee, shall bind the assignee hereunder in the same
manner as the Administrator is bound hereunder. Notwithstanding the foregoing,
this Agreement may be assigned by the Administrator without the consent of the
Owner Trustee to a corporation or other organization that is a successor (by
merger, consolidation or purchase of assets) to the Administrator, provided that
such successor organization executes and delivers to the Owner Trustee and the
Indenture Trustee an agreement in which such corporation or other organization
agrees to be bound hereunder by the terms of such assignment in the same manner
as the Administrator is bound hereunder. Subject to the foregoing, this
Agreement shall bind any successors or assigns of the parties hereto.

          15.  GOVERNING LAW.  All questions concerning the construction,
               -------------
validity and interpretation of this Agreement shall be governed by and construed
and enforced in accordance with the internal laws of the State of Illinois,
without giving effect to any choice of law or conflict provision or rule
(whether of the State of Illinois or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Illinois.

          16.  Headings.  The section headings hereof have been inserted for
               --------
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.

          17.  Separate Counterparts. This Agreement may be executed by the
               ---------------------
parties in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.

          18.  Severability of Provisions.  If any one or more of the covenants,
               --------------------------
agreements, provisions or terms of this Agreement shall for any reason
whatsoever be held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions
or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the holders thereof.

          19.  Not Applicable to Navistar Financial Corporation in Other
               ---------------------------------------------------------
Capacities. Nothing in this Agreement shall affect any obligation Navistar
----------
Financial Corporation may have in any other capacity.

                                      -10-
<PAGE>

          20.  Limitation of Liability of Owner Trustee and Indenture Trustee.
               --------------------------------------------------------------
(a) Notwithstanding anything contained herein to the contrary, this instrument
has been executed by Chase Manhattan Bank Delaware, not in its individual
capacity but solely as Owner Trustee on behalf of the Trust and in no event
shall Chase Manhattan Bank Delaware in its individual capacity have any
liability for the representations, warranties, covenants, agreements or other
obligations of the Owner Trustee (other than representations, warranties,
covenants, agreements or other obligations made in its individual capacity)
hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto, as to all of which recourse shall be had solely to the assets
of the Owner Trust Estate.  For all purposes of this Agreement, in the
performance of any duties or obligations of the Owner Trustee hereunder, the
Owner Trustee shall be subject to, and entitled to the benefits of, the terms
and provisions of Article VI of the Trust Agreement.

          (b)  Notwithstanding anything contained herein to the contrary, this
Agreement has been executed by The Bank of New York, not in its individual
capacity but solely in its capacity as Indenture Trustee and in no event shall
The Bank of New York have any liability for the representations, warranties,
covenants, agreements or other obligations of the Owner Trustee hereunder or in
any of the certificates, notices or agreements delivered pursuant hereto, as to
all of which recourse shall be had solely to the assets of the Owner Trust
Estate.

          21.  Third-Party Beneficiary.  Each of the Seller, only to the
               -----------------------
extent provided in Section 13(c), and the Owner Trustee is a third-party
beneficiary to this Agreement and is entitled to the rights and benefits
hereunder and may enforce the provisions hereof as if it were a party hereto.

          22.  Merger and Integration.  Except as specifically stated otherwise
               ----------------------
herein, this Agreement sets forth the entire understanding of the parties
relating to the subject matter hereof, and all prior understandings, written or
oral, are superseded by this Agreement. This Agreement may not be modified,
amended, waived, or supplemented except as provided herein.

                           *     *     *     *     *

                                      -11-
<PAGE>

     IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers as of the day and year first above
written.

                              CHASE MANHATTAN BANK DELAWARE, not in
                              its individual capacity,but solely as Owner
                              Trustee on behalf of the Trust


                              By:___________________________________________
                              Name:  John J. Cashin
                              Title: Vice President


                              THE BANK OF NEW YORK, as Indenture Trustee


                              By:___________________________________________
                              Name:  Erwin Soriano
                              Title: Assistant Treasurer


                              NAVISTAR FINANCIAL CORPORATION, as
                              Administrator


                              By:___________________________________________
                              Name:  R. Wayne Cain
                              Title: Vice President and Treasurer

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