<PAGE>
                                                                    EXHIBIT 10.2

                                                                  EXECUTION COPY

================================================================================

                          SALE AND SERVICING AGREEMENT

                                      among

                        WFS FINANCIAL 2003-1 OWNER TRUST,
                                   as Issuer,

                         WFS RECEIVABLES CORPORATION 3,
                                   as Seller,

                                       and

                               WFS FINANCIAL INC,
                               as Master Servicer

                          Dated as of February 1, 2003

================================================================================

<PAGE>

                                TABLE OF CONTENTS

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                                           ARTICLE ONE

                                           DEFINITIONS

Section 1.01.  Definitions...............................................................    2
Section 1.02.  Usage of Terms............................................................   22
Section 1.03.  Calculations..............................................................   22

                                           ARTICLE TWO

                                     CONVEYANCE OF CONTRACTS

Section 2.01.  Conveyance of Contracts...................................................   23

                                          ARTICLE THREE

                                          THE CONTRACTS

Section 3.01.  Representations and Warranties of the Seller..............................   25
Section 3.02.  Purchase of Certain Contracts.............................................   30
Section 3.03.  Custody of Contract Files.................................................   31
Section 3.04.  Duties of Master Servicer as Custodian....................................   32
Section 3.05.  Instructions; Authority to Act............................................   33
Section 3.06.  Indemnification...........................................................   33
Section 3.07.  Effective Period and Termination..........................................   33
Section 3.08.  Nonpetition Covenant......................................................   34
Section 3.09.  Collecting Title Documents Not Delivered at the Closing Date..............   34

                                          ARTICLE FOUR

                            ADMINISTRATION AND SERVICING OF CONTRACTS

Section 4.01.  Duties of Master Servicer.................................................   35
Section 4.02.  Collection of Contract Payments...........................................   38
Section 4.03.  Realization upon Defaulted Contracts and Liquidated Contracts.............   39
Section 4.04.  Insurance.................................................................   39
Section 4.05.  Maintenance of Security Interests in Financed Vehicles....................   40
Section 4.06.  Covenants, Representations and Warranties of the Master Servicer..........   40
Section 4.07.  Repurchase of Contracts upon Breach of Covenant...........................   42
Section 4.08.  Servicing Compensation....................................................   42
Section 4.09.  Reporting by the Master Servicer..........................................   42
Section 4.10.  Annual Statement as to Compliance.........................................   45
Section 4.11.  Annual Independent Certified Public Accountants' Report...................   45
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                                        i
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Section 4.12.  Access to Certain Documentation and Information Regarding Contracts.......   46
Section 4.13.  Fidelity Bond.............................................................   46
Section 4.14.  Indemnification; Third Party Claims.......................................   46

                                          ARTICLE FIVE

                  DISTRIBUTIONS; SPREAD ACCOUNT; STATEMENTS TO SECURITYHOLDERS

Section 5.01.  Establishment of Trust Accounts...........................................   47
Section 5.02.  Collections; Net Deposits.................................................   49
Section 5.03.  Application of Collections................................................   49
Section 5.04.  Advances and Nonrecoverable Advances; Repurchase Amounts..................   50
Section 5.05.  Distributions.............................................................   50
Section 5.06.  Spread Account............................................................   52
Section 5.07.  Statements to Securityholders.............................................   53

                                           ARTICLE SIX

                                           THE SELLER

Section 6.01.  Corporate Existence.......................................................   55
Section 6.02.  Liability of Seller; Indemnities..........................................   55
Section 6.03.  Merger or Consolidation of, or Assumption of the Obligations of,
               the Seller; Certain Limitations...........................................   56
Section 6.04.  Limitation on Liability of Seller and Others..............................   57
Section 6.05.  Seller Not to Resign......................................................   58
Section 6.06.  Seller May Own Securities.................................................   58

                                          ARTICLE SEVEN

                                       THE MASTER SERVICER

Section 7.01.  Liability of Master Servicer; Indemnities.................................   59
Section 7.02.  Corporate Existence; Status as Master Servicer; Merger....................   60
Section 7.03.  Performance of Obligations................................................   60
Section 7.04.  Master Servicer Not to Resign; Assignment.................................   60
Section 7.05.  Limitation on Liability of Master Servicer and Others.....................   61

                                          ARTICLE EIGHT

                                             DEFAULT

Section 8.01.  Servicer Default..........................................................   63
Section 8.02.  Indenture Trustee to Act; Appointment of Successor........................   64
Section 8.03.  Repayment of Advances.....................................................   65
Section 8.04.  Notification to Noteholders and Certificateholders........................   65
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Section 8.05.  Waiver of Past Defaults...................................................   65
Section 8.06.  Backup Servicer...........................................................   65

                                          ARTICLE NINE

                                           TERMINATION

Section 9.01.  Optional Purchase of All Contracts........................................   67

                                           ARTICLE TEN

                                          MISCELLANEOUS

Section 10.01.  Amendment................................................................   69
Section 10.02.  Protection of Title to Trust.............................................   70
Section 10.03.  Governing Law............................................................   72
Section 10.04.  Notices..................................................................   72
Section 10.05.  Severability of Provisions...............................................   72
Section 10.06.  Assignment...............................................................   72
Section 10.07.  Third Party Beneficiaries................................................   72
Section 10.08.  Counterparts.............................................................   73
Section 10.09.  Headings.................................................................   73
Section 10.10.  Assignment by Issuer.....................................................   73
Section 10.11.  Limitation of Liability of Owner Trustee.................................   73
Section 10.12.  Limitation on Recourse Against WFSRC3....................................   73

                                            SCHEDULES

Schedule A     Schedule of Contracts...................................................    SA-1
Schedule B     Location of Contract Files..............................................    SB-1
Schedule C     Sequential Payment Triggers.............................................    SC-1
Schedule D     Spread Account Step Down Triggers.......................................    SD-1

                                            EXHIBITS

Exhibit A      Form of RIC.............................................................    A-1
Exhibit B      Form of Distribution Date Statement.....................................    B-1
</TABLE>

                                      iii
<PAGE>

      This SALE AND SERVICING AGREEMENT, dated as of February 1, 2003, is among
WFS Financial 2003-1 Owner Trust, as issuer (the "Issuer"), WFS Receivables
Corporation 3, as seller (the "Seller"), and WFS Financial Inc ("WFS"), as
master servicer (the "Master Servicer").

      WHEREAS, the Issuer desires to purchase from the Seller a portfolio of
receivables arising in connection with automobile retail installment sales
contracts and installment loans (collectively, the "Contracts") primarily
originated by motor vehicle dealers and purchased by WFS, which Contracts were
subsequently sold by WFS to the Seller;

      WHEREAS, the Seller is willing to sell the Contracts to the Issuer
pursuant to the terms hereof; and

      WHEREAS, the Master Servicer is willing to service the Contracts pursuant
to the terms hereof.

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

<PAGE>

                                   ARTICLE ONE

                                   DEFINITIONS

      Section 1.01. Definitions. Except as otherwise specified herein or as the
context may otherwise require, the following terms have the respective meanings
set forth below for all purposes of this Agreement. Capitalized terms used
herein that are not otherwise defined herein shall have the meanings ascribed
thereto in the Indenture.

      "Advance" means the aggregate amount, as of a Master Servicer Report Date,
that the Master Servicer is required to advance in respect of the Contracts
pursuant to Section 5.04(a).

      "Affiliate" of any specified Person means any other Person controlling or
controlled by or under common control with such specified Person. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" or "controlled" have meanings
correlative to the foregoing.

      "Aggregate Interest Distributable Amount" means, with respect to any
Distribution Date, the sum of the Interest Distributable Amounts for all Classes
of Notes.

      "Aggregate Net Liquidation Losses" means, with respect to any Collection
Period, the aggregate of the amounts by which (i) the principal amount of each
Contract that became a Liquidated Contract pursuant to clause (ii) or (iv) of
the definition of the term "Liquidated Contract" during such Collection Period
plus accrued and unpaid interest thereon (adjusted to the Net Contract Rate) to
the last Due Date in such Collection Period exceeds (ii) the Net Liquidation
Proceeds for such Contract.

      "Aggregate Principal Balance" means, with respect to any date and the
Outstanding Contracts, the aggregate of the Principal Balances of such Contracts
as of such date.

      "Aggregate Principal Distributable Amount" means the sum of the Class A
Undercollateralization Amount, the Class B Undercollateralization Amount, the
Class C Undercollateralization Amount, the Class D Undercollateralization Amount
and the Overcollateralization Amount.

      "Aggregate Repurchase Amount" means, with respect to the purchase of
Contracts pursuant to Section 9.01(a), an amount equal to the sum of the amounts
described in clauses (i) through (iii) of Section 9.01(e).

      "Agreement" means this Sale and Servicing Agreement, as the same may be
amended or supplemented from time to time.

      "APR" of a Contract means annual percentage rate and is the annual rate of
finance charges specified in such Contract.

                                       2
<PAGE>

       "Assignments" means, collectively, the original instrument of assignment
of a Contract and all other documents securing such Contract made by the Seller
to the Issuer (or in the case of any Contract acquired by the Seller from
another Person, from such other Person to the Seller and from the Seller to the
Issuer) which is in a form sufficient under the laws of the jurisdiction under
which the security interest in the related Financed Vehicle arises to permit the
assignee to exercise all rights granted by the Obligor under such Contract and
such other documents and all rights available under applicable law to the
Obligee under such Contract and which may, to the extent permitted by the laws
of such jurisdiction, be a blanket instrument of assignment covering other
Contracts as well and which may also, to the extent permitted by the laws of the
jurisdiction governing such Contract, be an instrument of assignment running
directly from the related Seller to the Issuer.

      "Available Funds" means, with respect to a Distribution Date, the sum of
Net Collections and the Spread Account Withdrawal Amount.

      "Backup Servicer" means Deutsche Bank Trust Company Americas, and its
successor.

      "Backup Servicer Event" means the occurrence of any of the following
events: (i) the Bank's long term senior debt rating is downgraded to B3 or less
by Moody's, (ii) an Event of Default or (iii) a Servicer Default.

      "Bank" means Western Financial Bank, and its successors.

      "Bankruptcy Code" has the meaning specified in the Trust Agreement.

      "Basic Documents" shall have the meaning specified in the Indenture.

      "Business Day" means any day that is not a Saturday, Sunday or other day
on which banking institutions in Los Angeles, California, Newark, Delaware or
New York, New York are authorized or obligated by law, executive order or
government decree to remain closed.

      "Certificate Distributable Amount" means the aggregate amount of the
Excess Spread Amount distributed to Certificateholders pursuant to Section
5.06(c).

      "Certificate Distribution Account" shall have the meaning specified in the
Trust Agreement.

      "Certificate Final Principal Distribution Date" means the September 2010
Distribution Date.

      "Certificate Percentage Interest" means, with respect to a Certificate,
the percentage specified on such Certificate as the Certificate Percentage
Interest, which percentage represents the beneficial interest of such
Certificate in the Issuer. The initial Certificate Percentage Interest held by
the Seller shall be 100%.

      "Certificate Register" shall have the meaning specified in the Trust
Agreement.

      "Certificate Registrar" shall have the meaning specified in the Trust
Agreement.


                                       3
<PAGE>

       "Certificateholders" shall have the meaning specified in the Trust
Agreement.

      "Certificates" means the Trust Certificates (as such term is defined in
the Trust Agreement).

      "Chapter 13 Bankruptcy Proceeding" means a bankruptcy proceeding under
Chapter 13 of Title 11 of the United States Code, as amended.

      "Chapter 13 Contract" means a Contract with respect to which the related
Obligor is subject to a Chapter 13 Bankruptcy Proceeding and is in compliance
with a Chapter 13 Plan of Reorganization.

      "Chapter 13 Plan of Reorganization" means a plan of reorganization (as
such plan may be modified with court approval) that has been approved by a court
with jurisdiction over an Obligor under a Contract in a Chapter 13 Bankruptcy
Proceeding.

      "Charge-Off Date" means, with respect to a Repossessed Vehicle Contract,
the earlier of (i) the date the related Repossessed Vehicle is sold and (ii) the
date 60 days (or longer if required by applicable law) from the date the related
Repossessed Vehicle is repossessed.

      "Class" means all Notes whose form is identical except for variation in
denomination, principal amount or owner.

      "Class A Notes" means, collectively, the Class A-1 Notes, the Class A-2
Notes, the Class A-3 Notes and the Class A-4 Notes.

      "Class A Principal Distributable Amount" means, with respect to any
Distribution Date, the amount distributable in respect of principal on the Class
A Notes on such Distribution Date which amount shall equal the greater of (i)
the outstanding principal amount of the Class A-1 Notes on that Distribution
Date (before giving effect to any payments made to holders of the Class A Notes
on that Distribution Date) and (ii) the excess of the principal amount of the
Class A Notes immediately prior to that Distribution Date over the lesser of (a)
82.15% of the Aggregate Principal Balance as of the last day of the related
Collection Period and (b) the excess of the Aggregate Principal Balance as of
the last day of the related Collection Period over the Overcollateralization
Floor Amount; provided, however, that on any Distribution Date that the Net
Charge-Off Percentage exceeds the Sequential Payment Trigger, the Class A
Principal Distributable Amount will be equal to the lesser of (i) the Aggregate
Principal Distributable Amount and (ii) the outstanding principal amount of the
Class A Notes; provided, further, that on the Final Scheduled Distribution Date
of any class of Class A Notes, the Class A Principal Distributable Amount will
not be less than the amount that is necessary to pay the outstanding principal
amount of that class of Class A Notes.

      "Class A Undercollateralization Amount" means, with respect to a
Distribution Date, the excess, if any, of the Class A Note principal amount on
that Distribution Date (before giving effect to any payments made to Holders of
the Notes on such Distribution Date) over the Aggregate Principal Balance as of
the last day of the related Collection Period.


                                       4
<PAGE>

      "Class A-1 Final Scheduled Distribution Date" means the February 2004
Distribution Date.

      "Class A-1 Note" shall have the meaning specified in the Indenture.

      "Class A-1 Rate" means 1.31% per annum.

      "Class A-2 Final Scheduled Distribution Date" means the March 2006
Distribution Date.

      "Class A-2 Note" shall have the meaning specified in the Indenture.

      "Class A-2 Rate" means 1.50% per annum.

      "Class A-3 Final Scheduled Distribution Date" means the August 2007
Distribution Date.

      "Class A-3 Note" shall have the meaning specified in the Indenture.

      "Class A-3 Rate" means 2.03% per annum.

      "Class A-4 Final Scheduled Distribution Date" means the September 2010
Distribution Date.

      "Class A-4 Note" shall have the meaning specified in the Indenture.

      "Class A-4 Rate" means 2.74% per annum.

      "Class B Final Scheduled Distribution Date" means the September 2010
Distribution Date.

      "Class B Note" shall have the meaning specified in the Indenture.

      "Class B Principal Distributable Amount" means, with respect to any
Distribution Date, the amount distributable in respect of principal on the Class
B Notes on such Distribution Date which amount shall equal the excess of (i) the
sum of (a) the principal amount of the Class A Notes (after taking into account
payment of the Class A Principal Distributable Amount for that Distribution
Date) and (b) the principal amount of the Class B Notes immediately prior to
such Distribution Date over (ii) the lesser of (a) 87.27% of the Aggregate
Principal Balance as of the last day of the related Collection Period and (b)
the excess of the Aggregate Principal Balance as of the last day of the related
Collection Period over the Overcollateralization Floor Amount; provided,
however, that on any Distribution Date that the Net Charge-Off Percentage
exceeds the Sequential Payment Trigger, the Class B Principal Distributable
Amount will be equal to the lesser of (i) the excess of the Aggregate Principal
Distributable Amount over the Class A Principal Distributable Amount and (ii)
the outstanding principal amount of the Class B Notes; provided, further, that
on the Class B Final Scheduled Distribution Date, the Class B Principal
Distributable Amount will not be less than the amount that is necessary to pay
the outstanding principal amount of the Class B Notes.

      "Class B Rate" means 2.94% per annum.


                                       5
<PAGE>

      "Class B Undercollateralization Amount" means, with respect to a
Distribution Date, the excess, if any, of the sum of the principal amounts of
the Class A Notes and Class B Notes on that Distribution Date (before giving
effect to any payments made to Holders of the Notes on such Distribution Date)
over the sum of the Class A Undercollateralization Amount and the Aggregate
Principal Balance as of the last day of the related Collection Period.

      "Class C Final Scheduled Distribution Date" means the September 2010
Distribution Date.

      "Class C Note" shall have the meaning specified in the Indenture.

      "Class C Principal Distributable Amount" means, with respect to any
Distribution Date, the amount distributable in respect of principal on the Class
C Notes on such Distribution Date which amount shall equal the excess of (i) the
sum of (a) the aggregate principal amounts of the Class A Notes and the Class B
Notes (after taking into account payment of the Class A Principal Distributable
Amount and the Class B Principal Distributable Amount for that Distribution
Date) and (b) the principal amount of the Class C Notes immediately prior to
such Distribution Date over (ii) the lesser of (a) 92.69% of the Aggregate
Principal Balance as of the last day of the related Collection Period and (b)
the excess of the Aggregate Principal Balance as of the last day of the related
Collection Period over the Overcollateralization Floor Amount; provided,
however, that on any Distribution Date that the Net Charge-Off Percentage
exceeds the Sequential Payment Trigger, the Class C Principal Distributable
Amount will be equal to the lesser of (i) the excess of the Aggregate Principal
Distributable Amount over the sum of (a) the Class A Principal Distributable
Amount and (b) the Class B Principal Distributable Amount and (ii) the
outstanding principal amount of the Class C Notes; provided, further, that on
the Class C Final Scheduled Distribution Date, the Class C Principal
Distributable Amount will not be less than the amount that is necessary to pay
the outstanding principal amount of the Class C Notes.

      "Class C Rate" means 3.56% per annum.

      "Class C Undercollateralization Amount" means, with respect to a
Distribution Date, the excess, if any, of the sum of the principal amounts of
the Class A Notes, Class B Notes and Class C Notes on such Distribution Date
(before giving effect to any payments made to Holders of the Notes on that
Distribution Date) over the sum of the Class A Undercollateralization Amount,
the Class B Undercollateralization Amount and the Aggregate Principal Balance as
of the last day of the related Collection Period.

      "Class D Final Scheduled Distribution Date" means the September 2010
Distribution Date.

      "Class D Note" shall have the meaning specified in the Indenture.

      "Class D Principal Distributable Amount" means, with respect to any
Distribution Date, the excess of the Aggregate Principal Distributable Amount
over the sum of the Class A Principal Distributable Amount, the Class B
Principal Distributable Amount and the Class C Principal Distributable Amount;
provided, however, that, on the Class D Note Final Scheduled Distribution Date,
the Class D Principal Distributable Amount will not be less than the amount that
is necessary to pay the outstanding principal amount of the Class D Notes;
provided, further,


                                       6
<PAGE>

that the Class D Principal Distributable Amount on any Distribution Date will
not exceed the outstanding principal amount of the Class D Notes.

      "Class D Rate" means 3.99% annum.

      "Class D Undercollateralization Amount" means, with respect to a
Distribution Date, the excess, if any, of the principal amount of the Notes on
such Distribution Date (before giving effect to any payment to Holders of the
Notes on such Distribution Date) over the sum of the Class A
Undercollateralization Amount, the Class B Undercollateralization Amount, Class
C Undercollateralization Amount and the Aggregate Principal Balance as of the
last day of the related Collection Period.

      "Closing Date" means February 27, 2003.

      "Collection Account" means the account established and maintained as such
pursuant to Section 5.01.

      "Collection Period" means, with respect to any Distribution Date, the
period commencing on the first day of the month preceding the month in which
such Distribution Date occurs (or from, but excluding, the Cut-Off Date in the
case of the first Distribution Date) through the last day of such month.

      "Contract" means each retail installment sales contract and security
agreement or installment loan agreement and security agreement which has been
executed by an Obligor and pursuant to which such Obligor purchased, financed or
pledged the Financed Vehicle described therein, agreed to pay the deferred
purchase price (i.e., the purchase price net of any down payment) or amount
borrowed, together with interest, as therein provided in connection with such
purchase or loan, granted a security interest in such Financed Vehicle, and
undertook to perform certain other obligations as specified in such Contract and
which has been conveyed to the Issuer pursuant to this Agreement.

      "Contract Documents" means, with respect to each Contract, (i) the
Contract; (ii) either the original Title Document for the related Financed
Vehicle or a duplicate copy thereof issued or certified by the Registrar of
Titles which issued the original thereof, together with evidence of perfection
of the security interest in the related Financed Vehicle granted by such
Contract, as determined by the Master Servicer to be permitted or required to
perfect such security interest under the laws of the applicable jurisdiction
(or, in the case of a Contract listed on the Schedule of Contracts, written
evidence from the Dealer selling such Financed Vehicle that the Title Document
for such Financed Vehicle showing the Seller as first lienholder has been
applied for); (iii) the related Assignments; (iv) any agreement(s) modifying the
Contract (including, without limitation, any extension agreement(s)); and (v)
documents evidencing the existence of physical damage insurance covering such
Financed Vehicle.

      "Contract Files" means the Contract Documents and all other papers and
computerized records customarily kept by the Master Servicer and all
Subservicers, as the case may be, in servicing contracts and loans comparable to
the Contracts.


                                       7
<PAGE>

       "Contract Number" means, with respect to any Contract included in the
Trust, the number assigned to such Contract by the Master Servicer, which number
is set forth in the related Schedule of Contracts.

      "Contract Rate" means, with respect to a Contract, the interest rate borne
by such Contract.

      "Contracts" means the Contracts sold to the Issuer by the Seller.

      "Controlling Class" shall have the meaning specified in the Indenture.

      "Corporate Trust Office" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of the execution of this Agreement is
located at 280 Park Avenue - 9th Floor, New York, New York 10017, Attention:
Corporate Trust & Agency Services - Structured Finance Services; or at such
other address as the Indenture Trustee may designate from time to time by notice
to the Certificateholders, the Master Servicer and the Seller.

      "Cut-Off Date" means February 26, 2003.

      "Cut-Off Date Aggregate Principal Balance" means $1,350,000,000, the
Aggregate Principal Balances as of the Cut-Off Date.

      "Dealer" means the seller of a Financed Vehicle, which seller originated
and assigned the related Contract, including the Bank.

      "Defaulted Contract" means, with respect to any Collection Period, a
Contract (i) which is, at the end of such Collection Period, delinquent in the
amount of at least two monthly payments or (ii) with respect to which the
related Financed Vehicle has been repossessed or repossession efforts have been
commenced.

      "Definitive Notes" shall have the meaning specified in the Indenture.

      "Delinquent Contract" means any Contract that is 60 days or more
delinquent.

      "Delivery" means, when used with respect to Trust Account Property:

            (i) with respect to certificated securities, bankers' acceptances,
      commercial paper, negotiable certificates of deposit and any other
      obligations which evidence a right to the payment of money and is not
      itself a security agreement or lease and is of a type which is in ordinary
      course of business transferred by delivery with necessary endorsement or
      assignment (collectively, "Physical Property"): (A) the Indenture Trustee
      or the Owner Trustee, as the case may be, or its Financial Intermediary
      acquires possession of the Physical Property, and evidence that any such
      Physical Property that is in registerable form has been registered in the
      name of the Trustee, its Financial Intermediary, its custodian or its
      nominee; (B) the Financial Intermediary, not a clearing corporation, sends
      the Indenture Trustee or the Owner Trustee, as the case may be,
      confirmation of the transfer and also by book entry or otherwise
      identifies as belonging to


                                       8
<PAGE>

      the Indenture Trustee or the Owner Trustee, as the case may be, the
      Physical Property in the Financial Intermediary's possession; or (C) with
      respect to a clearing corporation, appropriate entries to the account of
      the Indenture Trustee or the Owner Trustee, as the case may be, or a
      Person designated by him or her and, if certificated, it is both, in the
      custody of the clearing corporation or another clearing corporation, a
      custodian bank or a nominee of any of them and, in bearer form or endorsed
      in blank by the appropriate person or registered in the name of the
      clearing corporation, custodian bank, or a nominee of any of them;

            (ii) with respect to any Trust Account Property that is a book-entry
      security held through the Federal Reserve System pursuant to federal
      book-entry regulations, the following procedures, all in accordance with
      applicable law, including applicable federal regulations and Articles 8
      and 9 of the UCC: (A) book-entry registration of such property to an
      appropriate book-entry account maintained with a Federal Reserve Bank by
      the Indenture Trustee or the Owner Trustee, as the case may be, of a
      deposit advice or other written confirmation of such book-entry
      registration; (B) the making by any such custodian of entries in its books
      and records identifying such book-entry security held through the Federal
      Reserve System pursuant to federal book-entry regulations as belonging to
      the Indenture Trustee or the Owner Trustee, as the case may be, and
      indicating that such custodian holds such Trust Account Property solely as
      agent for the Indenture Trustee or the Owner Trustee, as the case may be,
      and the making by the Indenture Trustee or the Owner Trustee, as the case
      may be, of entries in its books and records establishing that it holds
      such Trust Account Property solely as trustee pursuant to Section 5.01;
      and (C) such additional or alternative procedures as may hereafter become
      necessary to effect complete transfer of ownership of any such Trust
      Account Property to the Indenture Trustee or the Owner Trustee, as the
      case may be, consistent with changes in applicable law or regulations or
      the interpretation thereof; and

            (iii) with respect to any Trust Account Property that is an
      uncertificated security under Article 8 of the UCC and that is not
      governed by clause (ii) above, registration of the transfer to, and
      ownership of such Trust Account Property by, the Indenture Trustee or the
      Owner Trustee, as the case may be, its custodian or its nominee by the
      issuer of such Trust Account Property.

      "Depositor" means the Seller in its capacity as Depositor under the Trust
Agreement, and its successors.

      "Distribution Date" means the 20th day of each calendar month or, if any
such date shall not be a Business Day, the next succeeding Business Day,
commencing April 21, 2003.

      "Distribution Date Statement" shall have the meaning specified in Section
4.09(a).

      "Due Date" means, as to any Contract, the date upon which an installment
of Monthly P&I is due.

      "Eligible Account" means (i) a segregated trust account in the corporate
trust department that is maintained with a depository institution or trust
company, commercial paper or other


                                       9
<PAGE>

short-term debt obligations of which have credit ratings from Standard & Poor's
at least equal to "A-1+," from Moody's equal to "Prime-1" and from Fitch equal
to "F1+," which account is fully insured up to applicable limits by the FDIC or
(ii) a general ledger account or deposit account that is (A) guaranteed by an
entity the long-term unsecured debt obligations of which are rated "Aa2" by
Moody's and "AAA" by each of Standard & Poor's and Fitch or the commercial paper
or other short-term debt obligations of which have credit ratings from Standard
& Poor's at least equal to "A-1+," from Moody's equal to "Prime-1" and from
Fitch equal to "F1+" or (B) that otherwise will not result in the qualification,
reduction or withdrawal by any Rating Agency of its then-applicable rating on
any Class of Notes. If any Eligible Account falls below the ratings specified in
(i) or (ii) above, all monies in such Eligible Account will be moved within 15
days to an account meeting the requirements of an Eligible Account.

      "Eligible Investments" means any one or more of the following obligations
or securities, all of which shall be denominated in United States dollars:

                  (i) direct obligations of, and obligations fully guaranteed as
      to timely payment of principal and interest by, the United States or any
      agency or instrumentality of the United States the obligations of which
      are backed by the full faith and credit of the United States; general
      obligations of or obligations guaranteed as to timely payment of principal
      and interest by FNMA or FHLMC;

                  (ii) demand and time deposits in, certificates of deposit of,
      banker's acceptances issued by, or federal funds sold by any depository
      institution or trust company (including the Indenture Trustee or the Owner
      Trustee) incorporated under the laws of the United States or any state and
      subject to supervision and examination by federal or state banking
      authorities, so long as at the time of such investment or contractual
      commitment providing for such investment either the long-term, unsecured
      debt obligations of such depository institution or trust company have
      credit ratings from Moody's at least equal to "Aa2" and shall have
      commercial paper or other short-term debt obligations rated at least
      "A-1+" by Standard & Poor's, "Prime-1" by Moody's and "F1+" by Fitch;

                  (iii) means commercial paper given the highest rating by each
      Rating Agency at the time of such investment; provided that the issuer of
      such commercial paper must have a long-term unsecured debt rating of at
      least "A-1" from Moody's and "AAA" from each of Standard & Poor's and
      Fitch.;

                  (iv) means money market funds having a rating from each Rating
      Agency in the highest investment category granted by each Rating Agency,
      including funds for which the Indenture Trustee or any of its affiliates
      is investment manager or advisor.;

                  (v) the RIC, provided that (A)(1) it is guaranteed by an
      entity which has long-term, unsecured debt obligations rated "AAA" by each
      of Standard & Poor's and Fitch and at least "Aa2" by Moody's or (2) such
      investment will not result in a qualification, reduction or withdrawal by
      any Rating Agency of its then-applicable rating on any Class of Notes and
      (B) it has not ceased to be an Eligible Investment in accordance with
      Section 2 thereof; if the investments in this paragraph fall below the


                                       10
<PAGE>

      specified ratings, the invested monies shall be moved to Eligible
      Investments within two Business Days such investments fall below the
      specified ratings and no additional funds may be invested in the RIC until
      the RIC once again becomes an Eligible Investment; and

                  (vi) any other investments which meet the criteria of each
      Rating Agency as being consistent with their then-current rating of each
      Class of Notes.

      "Estimated Sale Value" means, with respect to a Repossessed Vehicle, the
estimated sale value determined in good faith (and in accordance with its credit
and collection policy) by the Master Servicer as of the related Charge-Off Date.

      "Excess Spread Amount" means, with respect to a Distribution Date, the
excess of the Spread Account Balance over the Specified Spread Account Balance
(after giving effect to all deposits to, and withdrawals (other than withdrawals
pursuant to Section 5.06(c)) from the Spread Account on such Distribution Date).

      "Exchange Act" means the Securities Exchange Act of 1934, as amended.

      "FDIC" means the Federal Deposit Insurance Corporation, and its
successors.

      "FHLMC" means the Federal Home Loan Mortgage Corporation, and its
successors.

      "Final Scheduled Distribution Date" means the Class A-1 Final Scheduled
Distribution Date, the Class A-2 Final Scheduled Distribution Date, the Class
A-3 Final Scheduled Distribution Date, the Class A-4 Final Scheduled
Distribution Date, the Class B Final Scheduled Distribution Date, the Class C
Final Scheduled Distribution Date or the Class D Final Scheduled Distribution
Date, as the case may be.

      "Financed Vehicle" means, as to any Contract, an automobile or light-duty
truck, together with all accessions thereto, securing the related Obligor's
indebtedness under such Contract.

      "Financial Intermediary" means a bank, broker, clearing corporation or the
Person (or the nominee of any of them) that in the ordinary course of its
business maintains security accounts for its customers and is acting in that
capacity.

      "Fitch" means Fitch Ratings, and its successors.

      "FNMA" means the Federal National Mortgage Association, and its
successors.

      "Gross Charge-Off Amount" means, with respect to any Collection Period,
the sum of (i) the excess of the outstanding Principal Balances of all
Repossessed Vehicle Contracts as to which the related Charge-Off Dates have
occurred during the related Collection Period over the aggregate Estimated Sale
Values of the related Repossessed Vehicles, (ii) the excess of the aggregate
Estimated Sale Values of Repossessed Vehicles sold during the related Collection
Period over the net sales proceeds of such Repossessed Vehicles, (iii) the
outstanding Principal Balances of Contracts, other than Repossessed Vehicle
Contracts and Chapter 13 Contracts, that have become 120 days past due during
the related Collection Period, (iv) the amount by which


                                       11
<PAGE>

the outstanding Principal Balances of Contracts that have become Chapter 13
Contracts during the related Collection Period have been reduced by the related
Chapter 13 Plans of Reorganization and (v) the outstanding Principal Balances,
as such balances have been previously reduced by the related Chapter 13 Plans of
Reorganization, of Chapter 13 Contracts that are no longer in compliance with
their Chapter 13 Plans of Reorganization and are more than 120 days past due as
of the last day of the related Collection Period; provided that, with respect to
any Contract, in no event shall the aggregate amount included in the Gross
Charge-Off Amounts for all Collection Periods exceed the outstanding Principal
Balance of such Contract as of the date it becomes a Defaulted Contract.

      "Holder" means, with respect to a (i) Certificate, the Person in whose
name such Certificate is registered in the Certificate Register and (ii) Note,
the Person in whose name such Note is registered in the Note Register.

      "Indenture" means the Indenture, dated as of February 1, 2003, between the
Issuer and the Indenture Trustee, as the same may be amended or supplemented
from time to time.

      "Indenture Trustee" means the Person acting as trustee under the
Indenture, its successors in interest and any successor trustee under the
Indenture and, initially, will be Deutsche Bank Trust Company Americas.

      "Independent," when used with respect to any specified Person, means such
a Person who (i) is in fact independent of the Issuer, the Seller or WFS, (ii)
is not a director, officer or employee of any Affiliate of the Issuer, the
Seller or WFS, (iii) is not a person related to any officer or director of the
Issuer, the Seller, WFS or any of their respective Affiliates, (iv) is not a
holder (directly or indirectly) of more than 10% of any voting securities of the
Issuer, the Seller, WFS or any of their respective Affiliates and (v) is not
connected with the Issuer, the Seller or WFS as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions;
provided that a person who is an Independent director or Independent officer of
the Seller may be an Independent director or Independent officer of an Affiliate
of the Seller which is a special purpose bankruptcy remote entity.

      "Insolvency Event" means, with respect to a specified Person, (i) the
entry of a decree or order for relief by a court or regulatory authority having
jurisdiction in respect of such Person in an involuntary case under the federal
bankruptcy laws, as now or hereafter in effect, or any other present or future,
federal or state, bankruptcy, insolvency or similar law, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator or other
similar official for such Person or for any substantial part of its property, or
ordering the winding-up or liquidation of such Person's affairs, and the
continuance of any such decree or order unstayed and in effect for a period of
60 consecutive days; (ii) the commencement of an involuntary case under the
federal bankruptcy laws, as now or hereinafter in effect, or any other present
or future federal or state bankruptcy, insolvency or similar law and such case
is not dismissed within 60 days; or (iii) the commencement by such Person of a
voluntary case under the federal bankruptcy laws, as now or hereinafter in
effect, or any other present or future federal or state, bankruptcy, insolvency
or similar law, or the consent by such Person to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator
or other similar official for such Person or for any substantial part of its
property, or the making by such Person of an assignment


                                       12
<PAGE>

for the benefit of creditors or the failure by such Person generally to pay its
debts as such debts become due or the taking of corporate action by such Person
in furtherance of any the foregoing.

      "Insolvency Proceeds" shall have the meaning specified in Section 9.01(b).

      "Insurance Policy" means, with respect to a Financed Vehicle, the policies
of comprehensive and collision insurance and the LDI Policy.

      "Insurance Proceeds" means proceeds paid pursuant to any Insurance Policy
and amounts (exclusive of rebated premiums) paid by any insurer under any other
insurance policy related to a Financed Vehicle, a Contract or an Obligor.

      "Interest Carryover Shortfall" means, with respect to any Distribution
Date and a Class of Notes, the excess, if any, of the sum of the Interest
Distributable Amount for such Class on the immediately preceding Distribution
Date over the amount in respect of interest that is actually deposited in the
Note Distribution Account with respect to such Class on such preceding
Distribution Date, plus, to the extent permitted by applicable law, interest on
the amount of interest due but not paid to Noteholders of such Class on the
preceding Distribution Date at the related Interest Rate for the related
Interest Period.

      "Interest Distributable Amount" means, with respect to any Distribution
Date and a Class of Notes, the sum of the Monthly Interest Distributable Amount
and the Interest Carryover Shortfall, in each case for such Class of Notes on
such Distribution Date. For all purposes of this Agreement and the other Basic
Documents, interest with respect to the (i) Class A-1 Notes shall be computed on
the basis of a 360-day year and the actual number of days elapsed since the
immediately preceding Distribution Date (or, with respect to the first
Distribution Date, from, and including, February 27, 2003) and (ii) Class A-2
Notes, Class A-3 Notes, Class A-4 Notes, Class B Notes, Class C Notes and Class
D Notes shall be computed on the basis of a 360-day year consisting of twelve
30-day months.

      "Interest Period" means, with respect to any Distribution Date and (i) the
Class A-1 Notes, the period from, and including, the Distribution Date
immediately preceding such Distribution Date (or, in the case of the first
Distribution Date from, and including, February 27, 2003) to, but excluding,
such Distribution Date and (ii) the Class A-2 Notes, the Class A-3 Notes, the
Class A-4 Notes, the Class B Notes, the Class C Notes and the Class D Notes, the
period from, and including, the 20th day of the month in which the Distribution
Date immediately preceding such Distribution Date occurs (or in the case of the
first Distribution Date from and including February 27, 2003) to, but excluding,
the 20th day of the month of such Distribution Date.

      "Interest Rate" means the Class A-1 Rate, the Class A-2 Rate, the Class
A-3 Rate, the Class A-4 Rate, the Class B Rate, the Class C Rate or the Class D
Rate, as applicable.

      "Issuer" means the WFS Financial 2003-1 Owner Trust.

      "LDI Policy" means the limited dual interest policy providing coverage for
physical damage to, or loss of, a Financed Vehicle.


                                       13
<PAGE>

       "Lien" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to the respective Contract by operation of law.

      "Liquidated Contract" means a Contract which (i) has been the subject of a
Prepayment; (ii) was a Defaulted Contract and with respect to which the related
Financed Vehicle was repossessed and, after any cure period required by law has
expired, the Master Servicer has charged-off any losses prior to the end of the
four-month period referred to in clause (iv); (iii) has been paid in full on or
after its Maturity Date; or (iv) has become delinquent as to all or part of four
or more payments of Monthly P&I. The Principal Balance of a Liquidated Contract
will be deemed to be zero.

      "Liquidation Expenses" means reasonable out-of-pocket expenses (not to
exceed Liquidation Proceeds), other than any overhead expenses, incurred by the
Master Servicer in connection with the realization of the full amounts due under
any Contract (including the attempted liquidation of a Contract which is brought
current and is no longer in default during such attempted liquidation) and the
sale of any property acquired in respect thereof which are not recoverable under
any Insurance Policy.

      "Liquidation Proceeds" means amounts received by the Master Servicer
(before reimbursement for Liquidation Expenses) in connection with the
realization of the amounts due and to become due under any Defaulted Contract
and the sale of any property acquired in respect thereof.

      "Master Servicer" means WFS in its capacity as the master servicer of the
Contracts under Section 4.01, and, in each case upon succession in accordance
herewith, each successor servicer in the same capacity pursuant to Section 4.01
and each successor master servicer pursuant to Section 8.02.

      "Master Servicer Report Date" means, with respect to any Distribution
Date, the fifth Business Day prior to such Distribution Date.

      "Maturity Date" means, with respect to any Contract, the date on which the
last scheduled payment of such Contract shall be due and payable (after giving
effect to all Prepayments received prior to the date of determination) as such
date may be extended pursuant to Section 4.02.

      "Monthly Interest Distributable Amount" means, with respect to any
Distribution Date, the sum of all interest accrued for the related Interest
Period on each Class of Notes at the related Interest Rate for such Class on the
outstanding principal amount of the Notes of such Class on the immediately
preceding Distribution Date, after giving effect to all payments of principal to
the Noteholders of such Class on or prior to such Distribution Date (or, in the
case of the first Distribution Date, on the original principal amount of such
Class of Notes).

      "Monthly P&I" means, with respect to any Contract, the amount of each
monthly installment of principal and interest payable to the Obligee of such
Contract in accordance with the terms thereof, exclusive of any charges
allocable to the financing of any insurance premium and charges which represent
late payment charges or extension fees.


                                       14
<PAGE>

       "Moody's" means Moody's Investors Service, and its successors.

      "Net Charge-Off Percentage" means, with respect to any Distribution Date
and the related Collection Period, the percentage equivalent of a fraction, (a)
the numerator of which is equal to the excess of the sum of the Gross Charge-Off
Amounts for such Collection Period and all prior Collection Periods over the sum
of Recoveries for such Collection Period and all prior Collection Periods and
(b) the denominator of which is equal to the Cut-Off Date Aggregate Principal
Balance.

      "Net Collections" means, with respect to any Distribution Date and the
related Collection Period, the sum of (i) all amounts collected on or in respect
of the Contracts during such Collection Period, including, Monthly P&I, the
Aggregate Repurchase Amount, if any, Liquidation Proceeds (only to the extent of
the related Net Liquidation Proceeds), Insurance Proceeds (only to the extent of
the related Net Insurance Proceeds), less the sum of (A) any late payments of
interest retained by the Master Servicer as reimbursement for Advances pursuant
to Section 5.04 and (B) any installments of Monthly P&I or Prepayments retained
by the Master Servicer as reimbursement for Nonrecoverable Advances pursuant to
Section 5.04; (ii) the Advance for such Collection Period to the extent actually
made; (iii) the investment earnings on funds in the Collection Account for such
Distribution Date (which, except as otherwise provided in Section 5.01, shall be
the RIC Reinvestment Earnings); and (iv) the aggregate Repurchase Amount for
Repurchased Contracts deposited in or credited to the Collection Account
pursuant to Section 5.04(c) on the related Master Servicer Report Date.

      "Net Contract Rate" means, with respect to any Contract, its Contract Rate
less the sum of the Servicing Fee Percent.

      "Net Insurance Proceeds" means, with respect to any Contract, Insurance
Proceeds net of any such amount applied to the repair of the related Financed
Vehicle, released to the related Obligor in accordance with the normal servicing
procedures of the Master Servicer or representing expenses incurred by the
Master Servicer and recoverable hereunder.

      "Net Liquidation Proceeds" means the amount derived by subtracting from
the Liquidation Proceeds of a Contract the related Liquidation Expenses.

      "Nonrecoverable Advance" means any Advance proposed to be made or
previously made by the Master Servicer which, in its good faith judgment, would
not be or will not be ultimately recoverable by the Master Servicer from late
payments, Insurance Proceeds or Liquidation Proceeds.

      "Note" has the meaning set forth in the Indenture.

      "Note Balance" means with respect to any Distribution Date, the aggregate
outstanding principal amount of the Class A-1 Notes, the Class A-2 Notes, the
Class A-3 Notes, the Class A-4 Notes, the Class B Notes, the Class C Notes and
the Class D Notes, in each case as of the immediately preceding Distribution
Date (after giving effect to any distributions of principal made on such
preceding Distribution Date).


                                       15
<PAGE>

       "Note Distribution Account" means the account established and maintained
as such pursuant to Section 5.01.

      "Note Register" shall have the meaning specified in the Indenture.

      "Obligee" means the Person to whom an Obligor is indebted under a
Contract.

      "Obligor" on a Contract means the purchaser or co-purchasers of the
Financed Vehicle and any other Person who owes payments under the Contract.

      "Offered Securities" shall have the meaning specified in Section
6.03(b)(ii).

      "Officers' Certificate" means a certificate signed by the chairman, the
president or a Vice President, and by the treasurer, an assistant treasurer, the
controller, an assistant controller, the secretary or an assistant secretary of
any Person delivering such certificate and delivered to the Person to whom such
certificate is required to be delivered. In the case of an Officers' Certificate
of the Master Servicer, at least one of the signing officers must be a Servicing
Officer. Unless otherwise specified, any reference herein to an Officers'
Certificate shall be to an Officers' Certificate of the Master Servicer.

      "Opinion of Counsel" means a written opinion of counsel (who may be
counsel to the Seller or the Master Servicer) acceptable to the Indenture
Trustee or the Owner Trustee, as the case may be.

      "Original Pool Balance" means $1,350,000,000.

      "Outstanding" means, with respect

            (i) to a Contract and as of time of reference thereto, a Contract
      that has not reached its Maturity Date, has not been fully prepaid, has
      not become a Liquidated Contract and has not been repurchased pursuant to
      Section 3.02, 4.07 or 9.01; and

            (ii) to the Securities, as of the date of determination, all Notes
      of one Class or of all Classes, all Certificates or all Notes and
      Certificates, as the case may be, theretofore authenticated and delivered
      except:

                  (A) Securities theretofore cancelled by the applicable
            Registrar or delivered to the applicable Registrar for cancellation;

                  (B) Securities or portions thereof the payment for which money
            in the necessary amount has been theretofore deposited with the
            applicable Trustee or any Paying Agent, as the case may be, in trust
            for the Holders of such Securities (provided, however, that if such
            Securities are to be redeemed or repurchased, notice of such
            redemption or repurchase has been duly given or provision for such
            notice has been made, satisfactory to the applicable Trustee); and


                                       16
<PAGE>

                  (C) Securities in exchange for or in lieu of other Securities
            which have been authenticated and delivered unless proof
            satisfactory to the applicable Trustee is presented that any such
            Securities are held by a bona fide purchaser;

provided, however, that in determining whether the Holders of a specified
Outstanding Amount of Securities have given any request, demand, authorization,
direction, notice, consent or waiver hereunder or under any other Basic
Document, Securities owned by the Issuer, any other obligor upon the Securities,
the Seller, WFS or any of their respective Affiliates shall be disregarded and
deemed not to be Outstanding prior to the date on which the Notes have been paid
in full, except that, in determining whether the applicable Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Securities that the applicable Trustee knows to
be so owned shall be so disregarded. Securities so owned that have been pledged
in good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the applicable Trustee the pledgee's right so to act with
respect to such Securities and that the pledgee is not the Issuer, any other
obligor upon the Securities, the Seller, WFS or any of their respective
Affiliates.

      "Outstanding Amount" means the aggregate principal amount of all Notes of
one Class or of all Classes, as the case may be, Outstanding at the date of
determination.

      "Overcollateralization Amount" means, with respect to a Distribution Date,
the greater of (i) 4.00% of the Aggregate Principal Balance as of the last day
of the related Collection Period and (ii) the Overcollateralization Floor
Amount.

      "Overcollateralization Floor Amount" means 1.30% of the Cut-Off Date
Aggregate Principal Balance.

      "Owner" shall have the meaning specified in the Trust Agreement.

      "Owner Trustee" means the Person acting as Owner Trustee under the Trust
Agreement, its successors in interest and any successor owner trustee under the
Trust Agreement and, initially, will be Chase Manhattan Bank USA, National
Association.

      "Owner Trustee Corporate Trust Office" shall have the meaning specified in
the Trust Agreement.

      "Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.

      "Physical Property" shall have the meaning specified in the definition of
the term "Delivery."

      "Prepayment" means any of the following: (i) payment to the Master
Servicer of 100% of the outstanding principal balance of a Contract, exclusive
of any Contract referred to in clause (ii), (iii) or (iv) of the definition of
the term "Liquidated Contract," together with all accrued and unpaid interest
thereon to the date of such payment, or (ii) payment by the Seller or the Master
Servicer, as the case may be, of the purchase price of a Contract in connection
with


                                       17
<PAGE>

the purchase of a Contract pursuant to Section 3.02 or 4.07, or payment by the
Seller or the Certificateholder, as the case may be, of the purchase price of a
Contract in connection with the purchase of all Contracts pursuant to Section
9.01.

      "Principal Balance" means, with respect to a Contract that is a (i) Rule
of 78's Contract, the amount set forth as the Principal Balance of such Contract
on the Schedule of Contracts, such amount being the total of all Monthly P&I
received on or after February 27, 2003 less any unearned interest as of the Due
Date for such Contract immediately preceding February 27, 2003, computed in
accordance with the Rule of 78's, less all amounts received on or in respect of
such Contract on or after February 27, 2003 that are allocable to principal and
(ii) Simple Interest Contract, the actual principal balance under the terms
thereof.

      "Rating Agency" means each of Moody's, Standard & Poor's and Fitch.

      "Record Date" means, with respect to a Class of Notes or the Certificates
and any Distribution Date, the Business Day immediately preceding such
Distribution Date or, in the case of the Notes, in the event that Definitive
Notes are issued, the 15th day of the month preceding the month in which such
Distribution Date occurs.

      "Recoveries" means, with respect to any Collection Period, the sum of (i)
the excess of actual sales proceeds for Repossessed Vehicles sold during such
Collection Period over the sum of (a) the Estimated Sales Values of such
Repossessed Vehicles and (b) any amounts required by law to be remitted to the
related Obligor and (ii) any insurance proceeds and other amounts received in
that Collection Period from the related Obligors or otherwise in connection with
Repossessed Vehicle Contracts, Chapter 13 Contracts and Contracts that have
become 120 days past due.

      "Registrar" means the Note Registrar or the Certificate Registrar, as the
case may be.

      "Registrar of Titles" means the agency, department or office having the
responsibility for maintaining records of titles to motor vehicles and issuing
documents evidencing such titles in the jurisdiction in which a particular
Financed Vehicle is registered.

      "Repossessed Vehicle" means the Financed Vehicle under a Repossessed
Vehicle Contract.

      "Repossessed Vehicle Contract" means a Defaulted Contract for which the
related Financed Vehicle has been repossessed by the Master Servicer.

      "Repurchase Amount" means, with respect to any Contract, the amount, as of
the date of repurchase, required to prepay in full the principal of and accrued
interest on such Contract to the Due Date in the Collection Period in which such
repurchase occurs.

      "Repurchased Contract" means a Contract repurchased as of the related
Master Servicer Report Date by the Master Servicer pursuant to Section 4.07 or
by the Seller pursuant to Section 3.02.


                                       18
<PAGE>

       "Responsible Officer" means any officer within the Corporate Trust and
Agency Group (or any successor group) of the Indenture Trustee including any
Vice President, assistant secretary or any other officer or assistant officer of
the Indenture Trustee customarily performing functions similar to those
performed by the persons who at the time shall be such officers, respectively,
or to whom any corporate trust matter is referred at the Indenture Trustee's
Corporate Trust Office because of his knowledge of and familiarity with the
particular subject.

      "RIC" means the reinvestment contract provided by the Bank and WFAL2 or a
subsidiary thereof, substantially in the form of Exhibit A.

      "RIC Reinvestment Earnings" means, with respect to any Distribution Date,
the related Collection Period and the Contracts that were Outstanding at the
beginning of such Collection Period, the amount by which the sum of the Monthly
Interest Distributable Amount for such Distribution Date exceeds the sum of (i)
the aggregate amount of interest on the Contracts (adjusted with respect to each
Contract to the Class D Rate and exclusive of such collections that have been
paid to the Master Servicer in reimbursement of a previous Advance) that is part
of Net Collections for such Distribution Date and (ii) the amount of the Advance
as to interest for such Distribution Date (assuming for this purpose that an
Advance was made in respect of each Contract (other than Liquidated Contracts)
for which the Master Servicer has not received one or more payments of Monthly
P&I due under such Contract).

      "Rule of 78's Contract" means a Contract as to which payments thereunder
are applied on the basis of the Rule of 78's.

      "Schedule of Contracts" means the list or lists of Contracts attached as
Schedule A to this Agreement, which Contracts are being transferred to the Owner
Trustee as part of the Trust Estate, which list or lists shall set forth the
following information with respect to each such Contract in numbered columns:

<TABLE>
<CAPTION>

                   Information                       Column Number
                   -----------                       -------------
<S>                                                  <C>
Contract Number ("ACCT NBR")....................           2
Date of Origination ("ORG DT")..................           9
Maturity Date ("MAT DT")........................          15
Monthly P&I ("P&I").............................          10
Original Principal Balance ("ORIG AMT").........          16 Top
Principal Balance ("PRIN BAL")..................          16 Bottom
Discount Rate ("APR")...........................           7
</TABLE>

      "Securities" means the Notes and the Certificates.

      "Securityholders" means the Holders of the Notes and the Certificates.

      "Seller" means WFSRC3, in its capacity as the Seller of Contracts under
this Agreement, and each successor thereto (in the same capacity) pursuant to
Section 6.03.

      "Sequential Payment Trigger" means, with respect to any Distribution Date,
the percentage set forth in Schedule C.


                                       19
<PAGE>

      "Servicer Default" means an event specified in Section 8.01.

      "Servicing Fee" means, as to any Distribution Date, an amount equal to the
product of the Servicing Fee Percent and the Aggregate Principal Balance as of
the first day of the related Collection Period. The Servicing Fee for the first
Distribution Date will be grossed up a proportionate amount to account for the
additional days in such Collection Period.

      "Servicing Fee Percent" means one-twelfth of 1.25% per annum.

      "Servicing Officer" means any officer of the Master Servicer involved in,
or responsible for, the administration and servicing of the Contracts whose name
appears on a list of servicing officers furnished to the Indenture Trustee and
the Owner Trustee by the Master Servicer pursuant to Section 4.01.

      "Simple Interest Contract" means a Contract as to which interest is
calculated each day on the basis of the actual principal balance of such
Contract on such day.

      "Specified Spread Account Balance" means, with respect to any Distribution
Date, an amount equal to 0.50% of the Cut-off Date Aggregate Principal Balance;
provided, however, that, if the Net Charge-Off Percentage for such Distribution
Date is greater than the related Spread Account Trigger, the specified Spread
Account and Balance for such Distribution Date will be equal to 1.20% of the
Cut-Off Date Aggregate Principal Balance. Notwithstanding the foregoing, in no
event shall the Specified Spread Account Balance be greater than the Outstanding
Amount of the Notes.

      "Spread Account" means the account established and maintained as such
pursuant to Section 5.01.

      "Spread Account Balance" means the amount on deposit in the Spread
Account.

      "Spread Account Trigger" means, with respect to any Distribution Date, the
percentage set forth in Schedule D.

      "Spread Account Initial Deposit" means $6,750,000, 100% of which will be
cash.

      "Spread Account Withdrawal Amount" means, with respect to a Distribution
Date, the lesser of (i) the Spread Account Balance (prior to any deposits and
withdrawals therefrom on such Distribution Date) and (ii) the excess of (a) the
sum of the Aggregate Principal Distributable Amount, the Aggregate Interest
Distributable Amount, the Servicing Fee (including any unpaid Servicing Fees
with respect to one or more prior Collection Periods) and the accrued and unpaid
fees and expenses due to each of the Indenture Trustee and the Owner Trustee
over (b) the sum of the Overcollateralization Amount and Net Collections.

      "Standard & Poor's" means Standard & Poor's Rating Services, a Division of
The McGraw-Hill Companies, Inc., and its successors in interest.

      "State" means any one of the 50 states of the United States or the
District of Columbia.


                                       20
<PAGE>

       "Statistical Calculation Date" means February 8, 2003.

      "Statistical Calculation Date Principal Balance" means the sum of the
Principal Balances of selected Contracts as of the Statistical Calculation Date,
which amount is equal to $1,225,630,179.52.

      "Subservicer" means any subservicer engaged by the Master Servicer to
subservice a Contract pursuant to Section 4.01.

      "Subservicing Agreement" means an agreement between the Master Servicer
and a Subservicer relating to the servicing of one or more Contracts.

      "Third Party Lender" means an independent finance company which has
originated or acquired one or more Contracts and assigned such Contract(s) to
WFS.

      "Title Document" means, with respect to any Financed Vehicle, the
certificate of title for, or other evidence of ownership of, such Financed
Vehicle issued by the Registrar of Titles in the jurisdiction in which such
Financed Vehicle is registered.

      "Trust" means the Issuer.

      "Trust Account Property" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form of
deposit accounts, physical property, book-entry securities, uncertificated
securities or otherwise) and all proceeds of the foregoing.

      "Trust Accounts" shall have the meaning specified in Section 5.01(a).

      "Trust Agreement" means the Trust Agreement, dated February 14, 2003, as
amended and restated as of February 27, 2003, among the Depositor and the Owner
Trustee, as the same may be amended or supplemented from time to time.

      "Trust Estate" shall have the meaning specified in the Trust Agreement.

      "Trustee" means the Indenture Trustee or the Owner Trustee, as the case
may be.

      "UCC" means the Uniform Commercial Code as in effect in the applicable
jurisdiction.

      "United States" means the United States of America.

      "Vehicle Receivables" shall have the meaning specified in Section
6.03(b)(ii).

      "Vice President" of any Person means any vice president of such Person,
whether or not designated by a number or words before or after the title "Vice
President," who is a duly elected officer of such Person.

      "WFAL2" means WFS Financial Auto Loans 2, Inc., a wholly owned subsidiary
of WFS, and its successors and assigns.


                                       21
<PAGE>

       "WFS" means WFS Financial Inc, a majority-owned operating subsidiary of
the Bank, and its successors and assigns.

      "WFSRC3" means WFS Receivables Corporation 3, a wholly-owned subsidiary of
WFS, and its successors and assigns.

Section 1.02. Usage of Terms. With respect to all terms in this Agreement,
unless the context otherwise requires: (i) a term has the meaning assigned to
it; (ii) an accounting term not otherwise defined has the meaning assigned to it
in accordance with generally accepted accounting principles as in effect from
time to time in the United States; (iii) "or" is not exclusive; (iv) "including"
means including without limitation; (v) words in the singular include the plural
and words in the plural include the singular; (vi) any agreement, instrument or
statute defined or referred to herein or in any instrument or certificate
delivered in connection herewith means such agreement, instrument or statute as
from time to time amended, modified or supplemented and includes (in the case of
agreements or instruments) references to all attachments thereto and instruments
incorporated therein; (vii) references to a Person are also to its permitted
successors and assigns; (viii) the words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement ;
(ix) Section, subsection, Schedule and Exhibit, as applicable, references
contained in this Agreement are references to Sections, subsections, Schedules
and Exhibits in or to this Agreement unless otherwise specified; and (x)
references to "writing" include printing, typing, lithography and other means of
reproducing words in a visible form.

Section 1.03. Calculations. Except as otherwise provided herein, all interest
rate and basis point calculations hereunder will be made on the basis of a
360-day year and the actual number of days elapsed since the immediately
preceding Distribution Date or the Closing Date, in the case of the first
Distribution Date (or, in the case of the Class A-2 Notes, the Class A-3 Notes,
the Class A-4 Notes, the Class B Notes, the Class C Notes and the Class D Notes,
on the basis of a 360-day year and twelve 30-day months) and will be carried out
to at least six decimal places. Collections of interest on Rule of 78's
Contracts shall be calculated as if such Contracts were actuarial contracts the
scheduled principal balances of which are the Principal Balances thereof, and
collections of interest on Simple Interest Contracts will be calculated in
accordance with the terms thereof.


                                       22
<PAGE>

                                  ARTICLE TWO

                             CONVEYANCE OF CONTRACTS

      Section 2.01. Conveyance of Contracts.

      (a) In consideration of the Issuer's delivery to or upon the order of the
Seller of the Certificates and $1,350,000,000 aggregate principal amount of
Notes, the Seller hereby grants, transfers, assigns and otherwise conveys to the
Issuer, without recourse (subject to the obligations herein), and hereby grants
a security interest in all of its right, title and interest (exclusive of the
amount, if any, allocable to any rebatable insurance premium financed by any
Contract) in, to and under the Contracts (which Contracts shall be listed in the
Schedule of Contracts), including, without limitation, all payments of Monthly
P&I received after the Cut-Off Date; all Net Liquidation Proceeds and Net
Insurance Proceeds with respect to any Financed Vehicle to which a Contract
relates received after the Cut-Off Date and all other proceeds received on or in
respect of such Contracts (other than payments of Monthly P&I received on or
prior to the Cut-Off Date) and any and all security interests in the Financed
Vehicles; the Contract Documents relating to the Contracts; and all proceeds in
any way delivered with respect to the foregoing, all rights to payments with
respect to the foregoing and all rights to enforce the foregoing.

      (b) WFS hereby authorizes and will cause the filing of UCC-1 financing
statements naming WFS as debtor and the Seller as secured party and describing
the Contracts as collateral with the Office of the Secretary of State of the
State of California. The Seller hereby authorizes and will cause, on or prior to
the Closing Date, the filing of UCC-1 financing statements, naming the Seller as
debtor and the Trust as secured party and describing the Contracts as
collateral, with the Office of the Secretary of State of the State of
California. The Trust has caused the filing of UCC-1 financing statements,
naming the Trust as debtor and the Indenture Trustee, on behalf of the
Noteholders, as secured party and describing the Contracts as collateral, with
the office of the Secretary of State of the State of Delaware. The grant of a
security interest to the Indenture Trustee and the rights of the Indenture
Trustee in the Contracts shall be governed by the Indenture. From time to time,
the Master Servicer shall cause to be taken such actions as are necessary to
continue the perfection of the respective interests of the Indenture Trustee and
the Trust in the Contracts and to continue the first priority security interest
of the Indenture Trustee in the Financed Vehicles and their proceeds (other
than, as to such priority, any statutory lien arising by operation of law after
the Closing Date which is prior to such interest), including, without
limitation, the filing of financing statements, amendments thereto or
continuation statements and the making of notations on records or documents of
title.

      If any change in the name, identity or corporate structure of the Seller
or WFS or the relocation of the chief executive office of any of them would make
any financing or continuation statement or notice of lien filed under this
Agreement or the other Basic Documents seriously misleading within the meaning
of applicable provisions of the UCC or any title statute, the Master Servicer,
within the time period required by applicable law, shall file such financing
statements or amendments as may be required to preserve and protect the
interests of the Indenture Trustee, the Owner Trustee and the Securityholders in
the Contracts, Financed


                                       23
<PAGE>

Vehicles and the proceeds thereof. Promptly thereafter, the Master Servicer
shall deliver to the Indenture Trustee and the Owner Trustee an Opinion of
Counsel stating that, in the opinion of such counsel, all financing statements
or amendments necessary fully to preserve and protect the interests of the
Indenture Trustee, the Owner Trustee and Securityholders in the Contracts,
Financed Vehicles and the proceeds thereof have been filed, and reciting the
details of such filings.

      During the term of this Agreement, the Seller and WFS shall each maintain
its chief executive office in one of the states of the United States, other than
Louisiana or Tennessee.

      The Master Servicer shall pay all reasonable costs and disbursements in
connection with the perfection and the maintenance of perfection, as against all
third parties, of the Indenture Trustee's right, title and interest in and to
the Contracts and in connection with maintaining the first priority security
interest in the Financed Vehicles and the proceeds thereof.


                                       24
<PAGE>

                                  ARTICLE THREE

                                  THE CONTRACTS

      Section 3.01. Representations and Warranties of the Seller. The Seller
hereby makes the following representations and warranties on which the Issuer is
deemed to have relied in acquiring the Contracts. Such representations and
warranties speak as of the execution and delivery of this Agreement and as of
the Closing Date, but shall survive the sale, transfer and assignment of the
Contracts to the Issuer and the pledge thereof to the Indenture Trustee pursuant
to the Indenture. The representations and warranties set forth in Sections
3.01(b)(ii), (iv), (xvi), (xxviii) and (xxix) may not be waived.

      (a) As to the Seller:

            (i) Organization and Good Standing. The Seller is duly organized and
      validly existing as a corporation in good standing under the laws of the
      State of California, with power and authority to own its properties and to
      conduct its business, and has the corporate power, authority and legal
      right to acquire and own the Contracts.

            (ii) Due Qualification. The Seller is duly qualified to do business
      as a foreign corporation in good standing, and shall have obtained all
      necessary licenses and approvals, in all jurisdictions in which the
      ownership or lease of property or the conduct of its business shall
      require such qualifications.

            (iii) Power and Authority. The Seller has the corporate power and
      authority to execute and deliver this Agreement and to carry out its
      terms; the Seller has full power and authority to sell and assign the
      property to be sold and assigned to and deposited with the Issuer, and has
      duly authorized such sale and assignment to the Issuer by all necessary
      corporate action; and the execution, delivery and performance of this
      Agreement has been duly authorized by the Seller by all necessary
      corporate action.

            (iv) Binding Obligation. This Agreement constitutes (A) a valid
      sale, transfer and assignment of the Contracts, enforceable against
      creditors of and purchasers from the Seller and (B) a legal, valid and
      binding obligation of the Seller enforceable in accordance with its terms,
      except as such enforceability may be limited by bankruptcy, insolvency,
      reorganization or other similar laws affecting the enforcement of
      creditors' rights in general and by general principles of equity,
      regardless of whether such enforceability shall be considered in a
      proceeding in equity or at law.

            (v) No Violation. The consummation of the transactions contemplated
      by this Agreement and the fulfillment of the terms hereof do not conflict
      with, result in any breach of any of the terms and provisions of, or
      constitute (with or without notice or lapse of time) a default under, the
      articles of incorporation or bylaws of the Seller, or any indenture,
      agreement or other instrument to which the Seller is a party or by which
      it is bound; nor result in the creation or imposition of any Lien upon any
      of its properties pursuant to the terms of any such indenture, agreement
      or other instrument (other than pursuant to the Basic Documents to which
      the Seller is a party); nor violate any law or, to


                                       25
<PAGE>

      the best of the Seller's knowledge, any order, rule or regulation
      applicable to the Seller of any court or of any federal or state
      regulatory body, administrative agency or other governmental
      instrumentality having jurisdiction over the Seller or its properties.

            (vi) No Proceedings. There are no proceedings or investigations
      pending, or to the Seller's best knowledge, threatened, before any court,
      regulatory body, administrative agency or other governmental
      instrumentality having jurisdiction over the Seller or its properties: (A)
      asserting the invalidity of this Agreement or any of the other Basic
      Documents, the Notes or the Certificates, (B) seeking to prevent the
      issuance of the Notes or the Certificates or the consummation of any of
      the transactions contemplated by this Agreement or any of the other Basic
      Documents, (C) seeking any determination or ruling that might materially
      and adversely affect the performance by the Seller of its obligations
      under, or the validity or enforceability of, this Agreement, any of the
      other Basic Documents, the Notes or the Certificates or (D) which might
      adversely affect the federal or state income tax attributes of the Notes
      or the Certificates.

      (b) As to each Contract or all of the Contracts, as the case may be:

            (i) Schedule of Contracts. The information pertaining to such
      Contract set forth in the related Schedule of Contracts was true and
      correct in all material respects at the Closing Date and the calculations
      of the Principal Balances appearing in such Schedule of Contracts for each
      such Contract at the Closing Date and at each Distribution Date thereafter
      prior to the related Maturity Date have been performed in accordance with
      this Agreement and are accurate.

            (ii) Security Interests. As of the Closing Date, the Seller has
      taken all steps necessary to perfect its security interest against the
      Obligors in the Financed Vehicles securing the Contracts and such Contract
      granted a valid and enforceable first priority security interest in favor
      of WFS (or to the Bank, a Dealer or a Third Party Lender, which security
      interest has been assigned to WFS) in the related Financed Vehicle, and
      such security interest has been duly perfected and is prior to all other
      liens upon and security interests in such Financed Vehicle which now exist
      or may hereafter arise or be created (except, as to priority, for any lien
      for unpaid taxes or unpaid storage or repair charges which may arise after
      the Closing Date). The Seller has caused the filing of all appropriate
      financing statements in the proper filing office in the appropriate
      jurisdictions under applicable law in order to perfect the security
      interest in the Contracts granted to the Issuer hereunder. All financing
      statements filed against the Seller in favor of the Issuer in connection
      herewith describing the Contracts contain a statement to the following
      effect: "A purchase of or security interest in any collateral described in
      this financing statement will violate the rights of the Issuer unless the
      Issuer authorizes it."

            (iii) Title Documents. (A) If the related Financed Vehicle was
      originated in a State in which notation of a security interest on the
      Title Document is required or permitted to perfect such security interest,
      the Title Document for such Financed Vehicle shows, or if a new or
      replacement Title Document is being applied for with respect to such
      Financed Vehicle the Title Document will be received within 180 days of
      the Closing Date and will show WFS named as the original secured party
      under the related


                                       26
<PAGE>

      Contract as the holder of a first priority security interest in such
      Financed Vehicle, and (B) if the related Financed Vehicle was originated
      in a State in which the filing of a financing statement under the UCC is
      required to perfect a security interest in motor vehicles, such filings or
      recordings have been duly made and show WFS named as the original secured
      party under the related Contract, and in either case, the Indenture
      Trustee and the Owner Trustee have the same rights as such secured party
      has or would have (if such secured party were still the owner of the
      Contract) against all parties claiming an interest in such Financed
      Vehicle. With respect to each Contract for which the Title Document has
      not yet been returned from the Registrar of Titles, WFS has received
      written evidence from the related Dealer that such Title Document showing
      WFS as first lienholder has been applied for.

            (iv) Title to the Contracts. Immediately prior to the issuance of
      the Notes and the Certificates, the Seller had good and indefeasible title
      to and was the sole owner of each Contract to be transferred to the Issuer
      pursuant to Section 2.01 free of liens, claims, encumbrances and rights of
      any Person and, upon transfer of such Contract to the Issuer pursuant to
      Section 2.01, the Issuer will have good and indefeasible title to and will
      be the sole owner of such Contract free of liens, claims, encumbrances and
      rights of any Person, except for the Lien of the Indenture Trustee under
      the Indenture.

            (v) Current in Payment. As of the Closing Date, such Contract is no
      more than 30 days delinquent in payment as to all or any portion of any
      installment of Monthly P&I.

            (vi) Tax Liens. As of the Closing Date, there is no lien against the
      related Financed Vehicle for delinquent taxes.

            (vii) Rescission, Offset, Etc. As of the Closing Date, there is no
      right of rescission, offset, defense or counterclaim to the obligation of
      the Obligor to pay the unpaid principal or interest due under such
      Contract; the operation of the terms of such Contract or the exercise of
      any right thereunder will not render such Contract unenforceable in whole
      or in part or subject to any right of rescission, offset, defense or
      counterclaim, and no such right of rescission, offset, defense or
      counterclaim has been asserted.

            (viii) Mechanics' Liens. As of the Closing Date, there are no liens
      or claims for work, labor, material or storage affecting the related
      Financed Vehicle which are or may become a lien prior to or equal with the
      security interest granted by such Contract.

            (ix) Compliance with Laws. Such Contract, and the sale of the
      Financed Vehicle sold thereunder, complied, at the time it was made, in
      all material respects with all applicable state and federal laws (and
      regulations thereunder), including without limitation usury, equal credit
      opportunity, fair credit reporting, truth-in-lending or other similar
      laws, the Federal Trade Commission Act, and applicable state laws
      regulating retail installment sales contracts and loans in general and
      motor vehicle retail installment contracts and loans in particular; and
      the consummation of the transactions herein contemplated, including,
      without limitation, the transfer of ownership of the Contracts to


                                       27
<PAGE>

      the Issuer and the receipt of interest by the Securityholders, will not
      involve the violation of any applicable state or federal law.

            (x) Valid and Binding. Such Contract is the legal, valid and binding
      obligation of the Obligor thereunder and is enforceable in accordance with
      its terms, except as enforcement may be limited by bankruptcy, insolvency
      or similar laws affecting the enforcement of creditors' rights generally;
      all parties to such Contract had full legal capacity to execute and
      deliver such Contract and all other documents related thereto and to grant
      the security interest purported to be granted thereby; and the terms of
      such Contract have not been waived or modified in any respect, except by
      instruments that are part of the Contract Documents.

            (xi) Enforceability. Such Contract contains customary and
      enforceable provisions such as to render the rights and remedies of the
      holder or assignee thereof adequate for the realization against the
      collateral of the benefits of the security, subject, as to enforceability,
      to bankruptcy, insolvency, reorganization or similar laws affecting the
      enforcement of creditors' rights generally.

            (xii) No Default. As of the Closing Date, there was no default,
      breach, violation or event permitting acceleration existing under such
      Contract (except payment delinquencies permitted by clause (v) of this
      subsection) and no event which, with notice and the expiration of any
      grace or cure period, would constitute such a default, breach, violation
      or event permitting acceleration under such Contract, and the Seller has
      not waived any such default, breach, violation or event permitting
      acceleration except payment delinquencies permitted by clause (v) of this
      subsection.

            (xiii) Insurance. At the Closing Date, the related Financed Vehicle
      will be covered by (A) a comprehensive and collision insurance policy (1)
      in an amount at least equal to the lesser of (a) its actual cash value or
      (b) the principal amount due from the Obligor under the related Contract,
      (2) naming WFS as a loss payee and (3) insuring against loss and damage
      due to fire, theft, transportation, collision and other risks generally
      covered by comprehensive and collision coverage or (B) a LDI Policy;
      provided, however, that if such Financed Vehicle has an unpaid principal
      balance of less than $4,000.00 or the related Contract has six or fewer
      months remaining before its Maturity Date, it will not be required to be
      covered by the insurance described in this subparagraph. Each of the
      Seller, WFS and the Master Servicer shall at all times comply with all of
      the provisions of such insurance policies and the LDI Policy applicable to
      such Financed Vehicle.

            (xiv) Acquisition of Contract. Such Contract was either acquired by
      WFS (or its predecessor in interest) from a Dealer or a Third Party Lender
      with which it ordinarily does business or the Bank or originated directly
      by WFS in the ordinary course of its business, and no adverse selection
      procedures have been utilized in selecting such Contract from all other
      similar contracts purchased by the Seller.

            (xv) Scheduled Payments. As of the Closing Date, scheduled payments
      under such Contract are applied in accordance with the Rule of 78's method
      or the simple


                                       28
<PAGE>

      interest method and are due monthly in level payments through its Maturity
      Date sufficient to fully amortize the principal balance of such Contract
      by its Maturity Date, assuming timely payment by Obligors on Simple
      Interest Contracts, except that the payment in the first or last month in
      the life of the Contract may be minimally different from the level
      payment.

            (xvi) One Original. There is only one original of such Contract and
      such original, together with all other Contract Documents, is being held
      by the Master Servicer pursuant to Section 3.04. The Seller has received a
      written acknowledgement from the Master Servicer that the Master Servicer
      is holding the Contract Documents that constitute or evidence the
      Contracts solely on behalf and for the benefit of the Issuer. None of the
      Contract Documents that constitute or evidence each Contract has any marks
      or notations indicating that it has been pledged, assigned or otherwise
      conveyed to any Person other than the Issuer.

            (xvii) Characteristics. As of the Statistical Calculation Date such
      Contract had (A) a Principal Balance of not less than $1,001.84 nor more
      than $97,880.44, (B) an original term of not less than 12 months nor
      greater than 84 months, (C) a remaining maturity of not less than three
      months nor greater than 84 months and (D) an APR of not less than 5.00%.

            (xviii) Identification. The Master Servicer and WFS have clearly
      marked their electronic records to indicate that such Contract is owned by
      the Issuer.

            (xix) Maturity. As of the Closing Date such Contract did not have a
      Maturity Date later than the 90th day prior to the end of the Collection
      Period immediately preceding the Certificate Final Principal Distribution
      Date.

            (xx) Principal Balance. At the Closing Date the initial Principal
      Balance of such Contract was not greater than the purchase price of the
      related vehicle.

            (xxi) Location of Contract Files. The Contract Files are kept at one
      or more of the locations listed in Schedule B.

            (xxii) Finance Charge. With respect to each Contract, such Contract
      provides for the payment of a finance charge calculated at its APR based
      on the Rule of 78's or the simple interest method and such APR shall be
      equal to or greater than 5.00% for Rule of 78's Contracts and Simple
      Interest Contracts.

            (xxiii) WFS, Bank and Third Party Lender Originations. With respect
      to the Contracts, the aggregate Principal Balance as of the Statistical
      Calculation Date of such Contracts purchased by WFS from the Bank and
      Third Party Lenders or originated directly by WFS is not more than
      approximately 2.70% of the Statistical Calculation Date Principal Balance.

            (xxiv) Simple Interest Contracts. As of the Statistical Calculation
      Date, approximately 97.93% of the Contracts by Statistical Calculation
      Date Principal Balance


                                       29
<PAGE>

      shall be Simple Interest Contracts and approximately 2.07% of the
      Contracts by Statistical Calculation Date Principal Balance shall be Rule
      of 78's Contracts.

            (xxv) New or Pre-Owned Vehicles. At least 28.42% of the Contracts by
      Statistical Calculation Date Principal Balance were Contracts that
      financed new vehicles and not greater than 71.58% were Contracts that
      financed pre-owned vehicles.

            (xxvi) States of Origination. Approximately 37.42% of the Contracts
      by Statistical Calculation Date Principal Balance were originated or
      purchased by WFS in California and approximately 62.58% of the Contracts
      by Statistical Calculation Date Principal Balance were originated in
      states other than California.

            (xxvii) No Government Entity Obligors. Each Contract shall have an
      Obligor that is not a local, state or federal governmental entity.

            (xxviii) Chattel Paper. Each Contract constitutes "chattel paper"
      within the meaning of the applicable UCC.

            (xxix) Priority of Interest. This Agreement creates a valid and
      continuing security interest (as defined in the UCC) in the Contracts in
      favor of the Issuer, which security interest is prior to all other Liens,
      and is enforceable as such as against creditors of and purchasers from the
      Seller. Other than the security interest granted to the Issuer pursuant to
      this Agreement, the Seller has not pledged, assigned, sold, granted a
      security interest in, or otherwise conveyed any of the Contracts. The
      Seller has not authorized the filing of and is not aware of any financing
      statements against the Seller that include a description of collateral
      covering the Contracts other than any financing statement relating to the
      security interest granted to the Issuer hereunder, the security interest
      granted to the Indenture Trustee under the Indenture or that has been
      terminated.

            (xxx) Contract Characteristics as of the Closing Date. The
      representations and warranties made in this Section with respect to
      certain Contracts as of the Statistical Calculation Date shall also be
      true and correct in every material respect for all Contracts as of the
      Closing Date.

      Section 3.02. Purchase of Certain Contracts. The representations and
warranties of the Seller set forth in Section 3.01 shall survive delivery of the
Contract Documents to the Owner Trustee and shall continue until the termination
of this Agreement. Upon discovery by the Seller, the Master Servicer or the
Owner Trustee, as the case may be, that any of such representations and
warranties was incorrect as of the time made or that any of the Contract
Documents relating to any such Contract has not been properly executed by the
Obligor or contains a material defect or has not been received by the Owner
Trustee, such Person making such discovery shall give prompt notice to the other
such Persons. If any such defect, incorrectness or omission materially and
adversely affects the interest of the Noteholders, the Certificateholders, the
Indenture Trustee, the Owner Trustee or the Issuer the Seller shall, within 90
days after discovery thereof or receipt of notice thereof, cure the defect or
eliminate or otherwise cure the circumstances or condition in respect of which
such representation or warranty was incorrect as of the time made. If the Seller
is unable to do so, it shall purchase


                                       30
<PAGE>

such Contract on the Master Servicer Report Date next succeeding the end of such
90-day period from the Issuer for an amount equal to the related Repurchase
Amount in the manner set forth in Section 5.04. Upon any such purchase, the
Owner Trustee shall execute and deliver such instruments of transfer or
assignment, in each case without recourse, as shall be necessary to vest in the
Seller title to any Contract purchased hereunder. The sole remedy of the Issuer,
the Owner Trustee, the Indenture Trustee or the Securityholders with respect to
a breach of the Seller's representations and warranties pursuant to Section 3.01
shall be to enforce the Seller's obligation to repurchase Contracts pursuant to
this Section; provided, however, that the Seller shall indemnify the Owner
Trustee, the Indenture Trustee, the Issuer and the Securityholders against all
costs, expenses, losses, damages, claims and liabilities, including reasonable
fees and expenses of counsel, which may be asserted against or incurred by any
of them as a result of third-party claims arising out of the events or facts
giving rise to such breach.

      Section 3.03. Custody of Contract Files.

      (a) Subject to Sections 3.07, 7.04 and 8.01, the Owner Trustee hereby
irrevocably appoints the Master Servicer, and the Master Servicer hereby accepts
such appointment, to act as the agent of the Owner Trustee as custodian of the
Contract Documents and any and all other documents that the Master Servicer
shall keep on file, in accordance with its customary procedures, relating to a
Contract, Obligor or Financed Vehicle, which are hereby constructively delivered
to the Owner Trustee with respect to each Contract:

            (i) the original of the Contract;

            (ii) documents evidencing the existence of physical damage insurance
      covering the Financed Vehicles;

            (iii) the original credit application fully executed by the Obligor;
      and

            (iv) the original certificate of title or such documents that the
      Master Servicer shall keep on file, in accordance with its customary
      procedures, evidencing the security interest of the Master Servicer in the
      Financed Vehicle.

      (b) The Master Servicer shall maintain the Contract Documents held by it
(by itself or through one or more Subservicers) in a file area physically
separate from the other installment sales contracts and installment loans owned
or serviced by it or any of its Affiliates, which area shall be clearly marked
to indicate the Issuer as the owner of, and the security interest of the
Indenture Trustee in, the Contract Documents and shall mark the Contracts in the
same manner. Notwithstanding the foregoing, if failure to do so will not result
in the qualification, reduction or withdrawal by any Rating Agency of its
then-applicable rating on any Class of Notes, the Master Servicer shall not be
required to segregate or mark the Contracts and the file area may contain
contract documents for other motor vehicle retail installment sales contracts
and installment loans owned or serviced by the Master Servicer.

      The Master Servicer shall cause the electronic record of the Contracts
maintained by it to be clearly marked to indicate that the Contracts have been
sold to the Issuer and shall not in any way assert or claim an ownership
interest in the Contracts. It is intended by the Master Servicer's and the
Seller's agreement pursuant to this Section that the Owner Trustee shall be


                                       31
<PAGE>

deemed to have possession of the Contract Documents for purposes of Section
9-313 of the UCC of the state in which the Contract Documents are located.

      Section 3.04. Duties of Master Servicer as Custodian.

      (a) Safekeeping. The Master Servicer shall hold the Contract Files on
behalf of the Owner Trustee, the Indenture Trustee for the use and benefit of
all present and future Securityholders, and maintain such accurate and complete
accounts, records and computer systems pertaining to each Contract File as shall
enable the Issuer to comply with this Agreement. In performing its duties as
custodian the Master Servicer shall act with reasonable care, using that degree
of skill and attention that the Master Servicer exercises with respect to the
files relating to all comparable automobile contracts that the Master Servicer
owns or services for itself or others. The Master Servicer shall conduct, or
cause to be conducted, periodic physical inspections of the Contract Files held
by it under this Agreement and of the related accounts, records and computer
systems, and shall maintain them in such a manner as shall enable the Owner
Trustee and the Indenture Trustee to verify the accuracy of the Master
Servicer's record keeping. The Master Servicer shall promptly report to the
Owner Trustee and the Indenture Trustee any failure on its part to hold the
Contract Files and maintain its accounts, records and computer systems as herein
provided and shall promptly take appropriate action to remedy any such failure.

      (b) Maintenance of and Access to Records. The Master Servicer shall
maintain each Contract File at one of its offices specified in Schedule B or at
such other location as shall be specified to the Owner Trustee and the Indenture
Trustee by 30 days' prior written notice. The Master Servicer shall permit the
Owner Trustee and the Indenture Trustee or their respective duly authorized
representatives, attorneys or auditors to inspect the Contract Files and the
related accounts, records and computer systems maintained by the Master Servicer
at such times as such Persons may request. On or prior to the first Business Day
after the 14th day of each calendar month, the Master Servicer shall deliver a
data tape to the Backup Servicer containing information necessary for the Backup
Servicer to generate the statement required pursuant to Section 3.07(h) of the
Indenture and otherwise necessary for the servicing and administration of the
Contracts.

      (c) Release of Documents. Upon instruction from the Indenture Trustee (a
copy of which shall be furnished to the Owner Trustee), the Master Servicer
shall release any Contract File to the Indenture Trustee, the Indenture
Trustee's agent, or the Indenture Trustee's designee, as the case may be, at
such place or places as the Indenture Trustee may designate, as soon as
practicable.

      (d) Title Documents. The Master Servicer shall deliver to the Indenture
Trustee and the Owner Trustee (i) within 120 days of the Closing Date, a
schedule of Title Documents for Financed Vehicles which, as of the Closing Date
did not show the Master Servicer as first lienholder and (ii) within 180 days of
the Closing Date, a schedule of Title Documents for Financed Vehicles which as
of the date prior to such delivery do not show the Master Servicer as first
lienholder and as to which the Seller is obligated to repurchase pursuant to the
provisions hereof.


                                       32
<PAGE>

      Section 3.05. Instructions; Authority to Act. The Master Servicer shall be
deemed to have received proper instructions (a copy of which shall be furnished
to the Owner Trustee) with respect to the Contract Files upon its receipt of
written instructions signed by a Responsible Officer of the Indenture Trustee.

      Section 3.06. Indemnification. Subject to Section 8.02, the Master
Servicer shall indemnify the Issuer, the Owner Trustee, the Indenture Trustee,
the Backup Servicer and the Securityholders for any and all liabilities,
obligations, losses, compensatory damages, payments, costs or expenses of any
kind whatsoever (including the reasonable fees and expenses of counsel) that may
be imposed on, incurred by or asserted against the Issuer, the Owner Trustee,
the Indenture Trustee, the Backup Servicer, the Noteholders or the
Certificateholders as the result of any improper act or omission in any way
relating to the maintenance and custody by the Master Servicer of the Contract
Files, or the failure of the Master Servicer to perform its duties and service
the Contracts in compliance with the terms of this Agreement; provided, however,
that the Master Servicer shall not be liable to the Owner Trustee for any
portion of any such amount resulting from the willful misfeasance, bad faith or
negligence of the Owner Trustee and the Master Servicer shall not be liable to
the Indenture Trustee for any portion of any such amount resulting from the
willful misfeasance, bad faith or negligence of the Indenture Trustee. The
Master Servicer shall also indemnify and hold harmless the Issuer, the Trust
Estate and the Securityholders against any taxes that may be asserted at any
time against any of them with respect to the Contracts, including any sales,
gross receipts, general corporation, personal property, privilege or license
taxes (but exclusive of federal or other income taxes arising out of payments on
the Contracts) and the costs and expenses in defending against such taxes. The
Master Servicer shall immediately notify the Owner Trustee, the Indenture
Trustee and the Backup Servicer if a claim is made by a third party with respect
to the Contracts, shall assume, with the consent of the Owner Trustee, the
Indenture Trustee and the Backup Servicer, the defense of any such claim, pay
all expenses in connection therewith, including counsel fees, and shall promptly
pay, discharge and satisfy any judgment or decree which may be entered against
it or the Issuer.

      Section 3.07. Effective Period and Termination. The Master Servicer's
appointment as custodian shall become effective as of the Cut-Off Date and shall
continue in full force and effect until terminated under this Section, upon the
termination of the Issuer or the repurchase of all of the Contracts by the
Seller, whichever is first to occur. If the Master Servicer shall resign in
accordance with the provisions of this Agreement or if all of the rights and
obligations of the Master Servicer shall have been terminated pursuant to
Section 8.01, the appointment of the Master Servicer as custodian shall be
terminated by the Indenture Trustee, by the Holders of Notes evidencing not less
than a majority of the Outstanding Amount of the Notes, by the Owner Trustee or
by Certificateholders evidencing not less than a majority of the aggregate
Certificate Percentage Interest, in the same manner as the Indenture Trustee,
the Owner Trustee or such Holders may terminate the rights and obligations of
the Master Servicer pursuant to Section 8.01. As soon as practicable after any
termination of such appointment, the Master Servicer shall, at its own expense,
deliver the Contract Files to the Owner Trustee or its agent or as designated by
the Owner Trustee at such place or places as the Owner Trustee may reasonably
designate and shall cooperate in good faith to effect such delivery.


                                       33
<PAGE>

      Section 3.08. Nonpetition Covenant.

      (a) Neither the Seller nor the Master Servicer shall petition or otherwise
invoke the process of any court or government authority for the purpose of
commencing or sustaining a case against the Issuer under any federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Issuer or any substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Issuer.

      (b) The Master Servicer shall not, nor cause the Seller to, petition or
otherwise invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Seller under any federal
or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Seller or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Seller.

      Section 3.09. Collecting Title Documents Not Delivered at the Closing
Date. In the case of any Contract in respect of which written evidence from the
Dealer selling or transferring the related Financed Vehicle that the Title
Document for such Financed Vehicle showing the Master Servicer as first
lienholder has been applied for from the Registrar of Titles was delivered to
the Owner Trustee on the Closing Date in lieu of a Title Document, the Master
Servicer shall use its best efforts to collect such Title Document from the
Registrar of Titles as promptly as possible. If such Title Document showing the
Master Servicer as first lienholder is not received by the Master Servicer or
the related Subservicer within 180 days after the Closing Date, then the
representation and warranty in Section 3.01(b)(iii) in respect of such Contract
shall be deemed to have been incorrect in a manner that materially and adversely
affects the Certificateholders.


                                       34
<PAGE>

                                  ARTICLE FOUR

                    ADMINISTRATION AND SERVICING OF CONTRACTS

      Section 4.01. Duties of Master Servicer. The Master Servicer, acting alone
or through one or more Subservicers as provided in this Section, shall, as agent
for the Indenture Trustee and the Owner Trustee, manage, service, administer and
make collections on the Contracts. The Master Servicer agrees that its servicing
of the Contracts shall be carried out in accordance with customary and usual
procedures of financial institutions which service motor vehicle retail
installment sales contracts and installment loans and, to the extent more
exacting, the procedures used by the Master Servicer in respect of such
contracts serviced by it for its own account. In accordance with the foregoing,
the Master Servicer may, whenever an Obligor has become delinquent or the Master
Servicer believes an Obligor may become delinquent, in order to preserve the
ultimate collectability of amounts due on a Contract, modify the payment
schedule on any Contract by reducing the APR on such Contract without the
consent of any Rating Agency; provided, however, that the new APR shall not be
less than the sum of (i) the Class D Rate and (ii) the Servicing Fee Percent. In
addition, in order to preserve the Trust Estate, the Master Servicer may,
without the consent of any Rating Agency, reduce the principal amount of a
Contract (i.e., write-down a portion of the principal amount due on such
Contract and, accordingly, lower the Monthly P&I on such Contract) to the extent
funds are available in the Spread Account to cover such reduction; provided,
however, the total amount of such modifications pursuant to the immediately
preceding sentence and this sentence and reductions (i) may not affect more than
1% of the Original Pool Balance through the Distribution Date nine months prior
to the Class D Final Scheduled Distribution Date and (ii) during a Collection
Period shall not affect Contracts having an aggregate Principal Balance greater
than 0.1% of the Aggregate Principal Balance at the beginning of such Collection
Period. Any such modifications or reductions exceeding such limits may be made
only with the consent of each Rating Agency. The Master Servicer may also extend
the Maturity Date on a Contract in accordance with Section 4.02. The Master
Servicer's duties shall include collection and posting of all payments,
responding to inquiries of Obligors on the Contracts, investigating
delinquencies, sending payment coupons to Obligors, reporting tax information to
Obligors, accounting for collections, furnishing monthly and annual statements
to the Indenture Trustee and the Owner Trustee with respect to distributions and
filing applicable United States tax returns for the Issuer on an annual basis,
based on a tax year for the Issuer that is the calendar year. The Master
Servicer shall have, subject to the terms hereof, full power and authority,
acting alone, and subject only to the specific requirements and prohibitions of
this Agreement, to do any and all things in connection with such managing,
servicing, administration and collection that it may deem necessary or
desirable; provided, however, that the Master Servicer shall commence
repossession efforts in respect of any Financed Vehicle respecting which the
related Contract is four or more months delinquent. Without limiting the
generality of the foregoing, but subject to the provisions of this Agreement,
the Master Servicer is authorized and empowered by the Indenture Trustee and the
Owner Trustee to execute and deliver, on behalf of itself, the Trust, the
Noteholders, the Certificateholders, the Indenture Trustee, the Owner Trustee or
any of them, any and all instruments of satisfaction or cancellation, or of
partial or full release or discharge, and all other comparable instruments, with
respect to the Contracts or to the Financed Vehicles. The Owner Trustee shall
furnish the Master Servicer all documents necessary or appropriate to enable the
Master Servicer to carry out its servicing and administrative duties hereunder.


                                       35
<PAGE>

      On the Closing Date, the Master Servicer shall deliver to the Indenture
Trustee and the Owner Trustee a list of Servicing Officers involved in, or
responsible for, the administration and servicing of the Contracts, which list
shall from time to time be updated by the Master Servicer on request of the
Owner Trustee or the Indenture Trustee.

      The Master Servicer may enter into Subservicing Agreements with one or
more Subservicers approved by the Indenture Trustee for the servicing and
administration of certain of the Contracts (including holding the related
Contract Files as custodian). The Master Servicer shall notify each Rating
Agency promptly if a Subservicer is hired. References herein to actions taken or
to be taken by the Master Servicer in servicing the Contracts include actions
taken or to be taken by a Subservicer on behalf of the Master Servicer. Each
Subservicing Agreement will be upon such terms and conditions as are not
inconsistent with this Agreement and as the Master Servicer and the Subservicer
have agreed. With the approval of the Master Servicer, a Subservicer may
delegate its servicing obligations to third-party servicers, but such
Subservicer will remain obligated under the related Subservicing Agreement. The
Master Servicer and a Subservicer may enter into amendments thereto or different
forms of Subservicing Agreements; provided, however, that any such amendments or
different forms shall be consistent with and not violate the provisions of this
Agreement or materially adversely affect the rights of Noteholders or
Certificateholders hereunder.

      The Master Servicer shall be entitled to terminate any Subservicing
Agreement that may exist in accordance with the terms and conditions of such
Subservicing Agreement and without any limitation by virtue of this Agreement;
provided, however, that in the event of termination of any Subservicing
Agreement by the Master Servicer or the related Subservicer, the Master Servicer
shall either act directly as servicer of the related Contract or enter into a
Subservicing Agreement with a successor Subservicer approved by the Indenture
Trustee which will be bound by the terms of the related Subservicing Agreement.

      Notwithstanding any Subservicing Agreement, any of the provisions of this
Agreement relating to agreements or arrangements between the Master Servicer or
a Subservicer or reference to actions taken through such Persons or otherwise,
the Master Servicer shall remain obligated and liable to the Indenture Trustee,
the Owner Trustee and the Securityholders for the servicing and administering of
the Contracts in accordance with the provisions of this Agreement without
diminution of such obligation or liability by virtue of such Subservicing
Agreements or arrangements or by virtue of indemnification from a Subservicer
and to the same extent and under the same terms and conditions as if the Master
Servicer alone were servicing and administering the Contracts. The Master
Servicer shall be entitled to enter into an agreement with a Subservicer for
indemnification of the Master Servicer and nothing contained in this Agreement
shall be deemed to limit or modify such indemnification.

      Any Subservicing Agreement that may be entered into and any other
transactions or servicing arrangements relating to the Contracts involving a
Subservicer or an Affiliate of the Master Servicer in its capacity as such, and
not as an originator of Contracts, shall be deemed to be between the Subservicer
or such Affiliate, as the case may be, and the Master Servicer alone, and none
of the Indenture Trustee, the Owner Trustee, the Noteholders nor the
Certificateholders shall be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to the Subservicer
except as set forth in the immediately succeeding paragraph.


                                       36
<PAGE>

      In the event the Master Servicer shall for any reason no longer be acting
as servicer under this Agreement (including by reason of a Servicer Default),
the Indenture Trustee or its designee may, at the sole discretion of the
Indenture Trustee, thereupon assume all of the rights and obligations of such
Master Servicer under each Subservicing Agreement selected by the Indenture
Trustee in its sole discretion. In such event, the Indenture Trustee, its
designee or the successor servicer for the Indenture Trustee shall be deemed to
have assumed all of the Master Servicer's interest therein and to have replaced
the Master Servicer as a party to each such Subservicing Agreement to the same
extent as if such Subservicing Agreement had been assigned to the assuming party
except that the Master Servicer shall not thereby be relieved of any liability
or obligations under the Subservicing Agreement. The Master Servicer shall, upon
request of the Indenture Trustee but at the expense of the Master Servicer,
deliver to the assuming party all documents and records relating to each such
Subservicing Agreement and the Contracts then being serviced and an accounting
of amounts collected and held by it and otherwise use its best efforts to effect
the orderly and efficient transfer of the Subservicing Agreement to the assuming
party.

      The Master Servicer shall deposit in or credit to the Collection Account
within two Business Days of receipt all collections of Monthly P&I received
after the Cut-Off Date on or in respect of the Contracts together with the
proceeds of all Prepayments and any accompanying interest; provided, however,
that, to the extent any such installment of Monthly P&I or any such Prepayment
proceeds are received in respect of a Contract as to which there is an
outstanding and unreimbursed Advance or Advances, such installment or proceeds
shall, to the extent of any such unreimbursed Advance or Advances, be retained
by the Master Servicer in reimbursement of itself. The Master Servicer shall
likewise deposit in the Collection Account within two Business Days of receipt
all Net Liquidation Proceeds and Net Insurance Proceeds after deducting
therefrom the amount of any outstanding and unreimbursed Advances made by it in
respect of such Contract. The foregoing notwithstanding, the Master Servicer
may, in the event it determines that it has made a Nonrecoverable Advance or
Advances, reimburse itself from unrelated installments of Monthly P&I or
Prepayment proceeds to the extent it shall, concurrently with the withholding of
any such installment or proceeds from deposit in or credit to the Collection
Account as required above, furnish to the Indenture Trustee and the Owner
Trustee a certificate of a Servicing Officer setting forth the basis for the
Master Servicer's determination, the amount of and Contract with respect to
which such Nonrecoverable Advance was made and the installment or installments
or other proceeds respecting which reimbursement has been taken; provided,
however, that the Master Servicer must provide such certificate within three
months of such Nonrecoverable Advance or Advances. The foregoing requirements
for deposit in the Collection Account are exclusive, it being understood that
collections in the nature of late payment charges or extension fees or
collections allocable to payments to be made by the Master Servicer on behalf of
Obligors for payment of insurance premiums or similar items need not be
deposited in the Collection Account and may be retained by the Master Servicer
as additional servicing compensation or for application on behalf of Obligors,
as the case may be.

      With respect to payments of Monthly P&I made by Obligors to the Master
Servicer's lock box, the Master Servicer shall direct the Person maintaining the
lock box to deposit the amount collected on or in respect of the Contracts to
the Collection Account.


                                       37
<PAGE>

      In those cases where a Subservicer is servicing a Contract pursuant to a
Subservicing Agreement, the Master Servicer shall cause the Subservicer to remit
to the Master Servicer for deposit in the Collection Account, on a daily basis,
within two Business Days after receipt by the Subservicer, all proceeds of
Contracts and all Net Liquidation Proceeds and Net Insurance Proceeds received
by the Subservicer.

      In order to facilitate the servicing of the Contracts by the Master
Servicer, the Master Servicer shall retain, subject to and only to the extent
permitted by the provisions of this Agreement, all collections on or in respect
of the Contracts prior to the time they are remitted or credited, in accordance
with such provisions, to the Collection Account, as the case may be. The Master
Servicer acknowledges that the unremitted collections on the Contracts are part
of the Trust Estate and the Master Servicer agrees to act as custodian and
bailee of the Indenture Trustee and the Owner Trustee in holding such monies and
collections. The Master Servicer agrees, for the benefit of the Indenture
Trustee, the Owner Trustee and the Securityholders, to act as such custodian and
bailee, and to hold and deal with such monies and such collections, as custodian
and bailee for the Indenture Trustee and the Owner Trustee, in accordance with
the provisions of this Agreement.

      The Master Servicer shall retain all data (including, without limitation,
computerized records) relating directly to or maintained in connection with the
servicing of the Contracts at the address of the Master Servicer set forth as
Schedule B to this Agreement, at the office of any Subservicer or, upon 15 days'
notice to the Indenture Trustee and the Owner Trustee, at such other place where
the servicing offices of the Master Servicer are located, and shall give the
Indenture Trustee and the Owner Trustee access to all data at all reasonable
times. While a Servicer Default shall be continuing, the Master Servicer shall,
on demand of the Indenture Trustee or the Owner Trustee, deliver or cause to be
delivered to the Indenture Trustee or the Owner Trustee, as the case may be, all
data (including, without limitation, computerized records and, to the extent
transferable, related operating software) necessary for the servicing of the
Contracts and all monies collected by it and required to be deposited in or
credited to the Collection Account.

      The Master Servicer shall, or cause the Administrator to, prepare, execute
and deliver all certificates or other documents required to be delivered by the
Trust pursuant to the Sarbanes-Oxley Act of 2002 or the rules and regulations
promulgated thereunder.

      Section 4.02. Collection of Contract Payments. The Master Servicer shall
use its best efforts to collect all payments called for under the terms and
provisions of the Contracts as and when the same shall become due and shall use
its best efforts to cause each Obligor to make all payments in respect of his or
her Contract to the Master Servicer. Consistent with the foregoing, the Master
Servicer may in its discretion (i) waive any late payment charges in connection
with delinquent payments on a Contract or prepayment charges and (ii) in order
to work out a default or an impending default due to the financial condition of
the Obligor, modify the payment schedule of a Delinquent Contract (subject to
the next sentence) or extend the Maturity Date of a Delinquent Contract by up to
90 days in the aggregate past the originally scheduled date of the last payment
on such Contract; provided, however, the Master Servicer shall not defer
payments more than three times over the life of such Contract; provided,
further, that in the case of any extension granted pursuant to clause (ii) the
Master Servicer makes an Advance in respect of


                                       38
<PAGE>

such extension and in no event can the last payment on such Contract be extended
beyond the last day of the Collection Period ending immediately prior to the
Class D Final Scheduled Distribution Date. The Master Servicer shall not extend
the Maturity Date of a Contract except as provided in clause (ii) of the
preceding sentence and shall not modify any Contracts except in accordance with
the criteria and limitations specified in Section 4.01.

      Section 4.03. Realization upon Defaulted Contracts and Liquidated
Contracts. The Master Servicer shall use its best efforts, consistent with the
servicing standard specified in Section 4.01, to repossess or otherwise convert
the ownership of the Financed Vehicle securing any Contract as to which no
satisfactory arrangements can be made for collection of delinquent payments.
Such servicing procedures may include reasonable efforts to realize upon any
recourse to Dealers and selling the Financed Vehicle at public or private sale.
In connection with such repossession or other conversion, the Master Servicer
shall follow such practices and procedures as it shall deem necessary or
advisable and as shall be normal and usual for prudent holders of motor vehicle
retail installment sales contracts and installment loans and as shall be in
compliance with all applicable laws, and, in connection with the repossession of
any Financed Vehicle or any Contract in default, may commence and prosecute any
proceedings in respect of such Contract in its own name or, if the Master
Servicer deems it necessary, in the name of the Owner Trustee or on behalf of
the Owner Trustee. The Master Servicer's obligations under this Section are
subject to the provision that, in the case of damage to a Financed Vehicle from
an uninsured cause, the Master Servicer shall not be required to expend its own
funds in repairing such Financed Vehicle unless it shall determine (i) that such
restoration will increase the proceeds of liquidation of the related Contract,
after reimbursement to itself for such expenses, and (ii) that such expenses
will be recoverable by it either as Liquidation Expenses or as expenses
recoverable under an applicable Insurance Policy. In the event that the Master
Servicer determines that, in its best judgment, further collection efforts by it
as to a Liquidated Contract will not result in the realization of additional Net
Liquidation Proceeds to the Trust, the Master Servicer may, in the name of the
Owner Trustee, and for the benefit of the Trust, sell the Liquidated Contract to
any party not affiliated with the Master Servicer free and clear of the rights
of the Issuer. The Master Servicer shall be responsible for all other costs and
expenses incurred by it in connection with any action taken in respect of a
Defaulted Contract; provided, however, that it shall be entitled to
reimbursement of such costs and expenses to the extent they constitute
Liquidation Expenses or expenses recoverable under an applicable Insurance
Policy. All Net Liquidation Proceeds, Net Insurance Proceeds and proceeds of the
sale of Contracts hereunder shall be deposited directly in or credited to the
Collection Account (without deposit in any intervening account) to the extent
required by Section 5.02.

      Section 4.04. Insurance. To the extent the Obligor fails to maintain a
comprehensive and collision insurance policy in an amount at least equal to the
lesser of (i) the actual cash value of the Financed Vehicle or (ii) the
principal amount due from the Obligor under the related Contract, the Master
Servicer shall obtain the LDI Policy in respect of such Financed Vehicle;
provided, however, that the Master Servicer shall not be required to maintain
such insurance in respect of any Financed Vehicle as to which the related
Contract has an unpaid principal balance of less than $4,000 or the related
Contract has six or fewer months remaining before its Maturity Date.


                                       39
<PAGE>

      Section 4.05. Maintenance of Security Interests in Financed Vehicles. The
Master Servicer shall take such steps as are necessary to maintain continuous
perfection and priority of the security interest created by each Contract in the
related Financed Vehicle, including obtaining the execution by the Obligors and
the recording, registering, filing, re-recording, re-registering and refiling of
all security agreements, financing statements, continuation statements or other
instruments as are necessary to maintain the security interest granted by
Obligors under the respective Contracts. The Owner Trustee and the Indenture
Trustee each hereby authorizes the Master Servicer to take such steps as are
necessary to re-perfect such security interest on behalf of the Issuer in the
event of the relocation of a Financed Vehicle or for any other reason.

      Section 4.06. Covenants, Representations and Warranties of the Master
Servicer. The Master Servicer hereby makes the following covenants,
representations and warranties on which the Issuer is deemed to have relied in
acquiring the Contracts. Such covenants, representations and warranties speak as
of the execution and delivery of this Agreement and as of the Closing Date, but
shall survive the sale, transfer and assignment of the Contracts to the Issuer
and the pledge thereof to the Indenture Trustee pursuant to the Indenture.

      (a) The Master Servicer covenants as to the Contracts:

                  (i) Lien in Force. The Financed Vehicle securing each Contract
      shall not be released from the lien granted by the Contract in whole or in
      part, except as contemplated herein.

                  (ii) Impairment. The Master Servicer shall not impair the
      rights of the Noteholders and Certificateholders in the Contracts.

                  (iii) Amendments. The Master Servicer shall not amend the
      terms of any Contract, except that extensions or modifications may be
      granted in accordance with Section 4.02.

                  (iv) Transfers. The Master Servicer may consent to the sale or
      transfer by an Obligor of any Financed Vehicle only if the original
      Obligor under the related Contract remains liable under such Contract and
      the transferee assumes all of the Obligor's obligations thereunder.

                  (v) Security Interest. The Master Servicer shall maintain the
      perfection and priority of the Issuer's and the Indenture Trustee's
      security interests in the Contracts.

      (b) The Master Servicer represents, warrants and covenants:

                  (i) Organization and Good Standing. The Master Servicer (A)
      has been duly organized and is validly existing as a corporation in good
      standing under the laws of the State of California, (B) has qualified to
      do business as a foreign corporation and is in good standing in each
      jurisdiction where the character of its properties or the nature of its
      activities makes such qualification necessary and (C) has full power,


                                       40
<PAGE>

      authority and legal right to own its property, to carry on its business as
      presently conducted and to enter into and perform its obligations under
      this Agreement.

                  (ii) Power and Authority. The execution and delivery by the
      Master Servicer of this Agreement are within the corporate power of the
      Master Servicer and have been duly authorized by all necessary corporate
      action on the part of the Master Servicer. Neither the execution and
      delivery of this Agreement, nor the consummation of the transactions
      herein contemplated, nor compliance with the provisions hereof, will
      conflict with or result in a breach of, or constitute a default under, any
      of the provisions of any law, governmental rule, regulation, judgment,
      decree or order binding on the Master Servicer or its properties or the
      articles of incorporation or bylaws of the Master Servicer, or any of the
      provisions of any indenture, mortgage, contract or other instrument to
      which the Master Servicer is a party or by which it is bound or result in
      the creation or imposition of any lien, charge or encumbrance upon any of
      its property pursuant to the terms of any such indenture, mortgage,
      contract or other instrument.

                  (iii) Governmental Consents. The Master Servicer is not
      required to obtain the consent of any other party or consent, license,
      approval or authorization, or registration or declaration with, any
      governmental authority, bureau or agency in connection with the execution,
      delivery, performance, validity or enforceability of this Agreement,
      except (in each case) such as have been obtained and are in full force and
      effect.

                  (iv) Binding Obligation. This Agreement has been duly executed
      and delivered by the Master Servicer and, assuming the due authorization,
      execution and delivery thereof by the Owner Trustee and the Indenture
      Trustee, constitutes a legal, valid and binding instrument enforceable
      against the Master Servicer in accordance with its terms (subject to
      applicable bankruptcy and insolvency laws and other similar laws affecting
      the enforcement of creditors' rights generally).

                  (v) No Proceedings. There are no actions, suits or proceedings
      pending or, to the knowledge of the Master Servicer, threatened against or
      affecting the Master Servicer, before or by any court, administrative
      agency, arbitrator or governmental body with respect to any of the
      transactions contemplated by this Agreement, or which will, if determined
      adversely to the Master Servicer, materially and adversely affect it or
      its business, assets, operations or condition, financial or otherwise, or
      adversely affect the Master Servicer's ability to perform its obligations
      hereunder. The Master Servicer is not in default with respect to any order
      of any court, administrative agency, arbitrator or governmental body so as
      to materially and adversely affect the transactions contemplated by the
      above-mentioned documents.

                  (vi) Other Consents. The Master Servicer has obtained or made
      all necessary consents, approvals, waivers and notifications of creditors,
      lessors and other nongovernmental persons, in each case in connection with
      the execution and delivery of, and the consummation of the transactions
      contemplated by, this Agreement.


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<PAGE>

      Section 4.07. Repurchase of Contracts upon Breach of Covenant. The Master
Servicer or the Owner Trustee shall inform the other party and the Indenture
Trustee promptly, in writing, upon the discovery of any breach pursuant to
Section 4.02, 4.05 or 4.06. Unless the breach shall have been cured within 30
days following such discovery, the Master Servicer shall purchase any Contract
materially and adversely affected by such breach. In consideration of the
purchase of such Contract, the Master Servicer shall remit the Repurchase Amount
in the manner specified in Section 5.04. The sole remedy of the Issuer, the
Owner Trustee, the Indenture Trustee, the Certificateholders or the Noteholders
with respect to a breach pursuant to Section 4.02, 4.05 or 4.06 shall be to
require the Master Servicer to purchase Contracts pursuant to this Section;
provided, however, that the Master Servicer shall indemnify the Owner Trustee,
the Indenture Trustee, the Issuer and the Securityholders against all costs,
expenses, losses, damages, claims and liabilities, including reasonable fees and
expenses of counsel, which may be asserted against or incurred by any of them as
a result of third-party claims arising out of the events or facts giving rise to
such breach. The Owner Trustee shall have no duty to conduct any affirmative
investigation as to the occurrence of any condition requiring the repurchase of
any Contract pursuant to this Section.

      Section 4.08. Servicing Compensation. As compensation for the performance
of its obligations under this Agreement and subject to the terms of this
Section, the Master Servicer shall be entitled to receive on each Distribution
Date the Servicing Fee. As servicing compensation in addition to the Servicing
Fee, the Master Servicer shall be entitled to retain all late payment charges,
extension fees and similar items paid in respect of the Contracts. The Master
Servicer shall pay all expenses incurred by it in connection with its servicing
activities hereunder and shall not be entitled to reimbursement of such expenses
except to the extent provided in Section 4.03.

      Section 4.09. Reporting by the Master Servicer.

      (a) On each Master Servicer Report Date, the Master Servicer shall
transmit to the Owner Trustee, the Indenture Trustee, the Backup Servicer and
each Rating Agency a statement, substantially in the form of Exhibit B (the
"Distribution Date Statement"), setting forth with respect to the next
succeeding Distribution Date:

                  (i) the Interest Distributable Amount for each Class of Notes;

                  (ii) the Class A Principal Distributable Amount, the Class B
      Principal Distributable Amount, the Class C Principal Distributable Amount
      and the Class D Principal Distributable Amount for such Distribution Date;

                  (i) the amount of principal actually distributed to each Class
      of Noteholders on such Distribution Date;

                  (ii) with respect to each Class of Notes, the excess, if any,
      of the Aggregate Principal Distributable Amount over the amount of
      principal actually distributed on the Notes on such Distribution Date;

                  (iii) the Net Collections for such Distribution Date;


                                       42
<PAGE>

                  (iv) the amount to be on deposit in the Spread Account on such
      Distribution Date, before and after giving effect to deposits thereto and
      withdrawals therefrom to be made in respect of such Distribution Date;

                  (v) the Servicing Fee with respect to the related Collection
      Period;

                  (vi) the amount of any Interest Carryover Shortfall on such
      Distribution Date and the change in such amounts from those with respect
      to the immediately preceding Distribution Date;

                  (vii) the aggregate amount of Monthly P&I which was due on the
      Contracts during the related Collection Period and was delinquent as of
      the end of the related Collection Period (any such payment of Monthly P&I
      being presumed to be delinquent to the extent that it was not deposited in
      or credited to the Collection Account during such Collection Period);

                  (viii) the amount set forth in clause (ix) above which is
     being advanced  concurrently  with such  Distribution Date Statement by the
     Master  Servicer  pursuant to Section 5.04,  the amount of any such Advance
     being  deposited  in or credited to the  Collection  Account on such Master
     Servicer Report Date;

                  (ix) the aggregate amount of any Nonrecoverable Advances
      deducted by the Master Servicer from amounts otherwise required to be
      deposited by the Master Servicer in the Collection Account during the
      related Collection Period;

                  (x) the Aggregate Net Liquidation Losses for the related
      Collection Period;

                  (xi) the amount of Contracts which have had their APR or
      principal amount modified pursuant to Section 4.01 and the percentage that
      amount constitutes of the Original Principal Balance on a cumulative
      basis; in addition the aggregate Principal Balance of Contracts so
      modified as a percentage of the Aggregate Principal Balance for the most
      recent Distribution Date;

                  (xii) the Spread Account Withdrawal Amount and the Excess
      Spread Account Amount, if any, for such Distribution Date;

                  (xiii) the Certificate Distributable Amount;

                  (xiv) the Net Charge-Off Percentage;

                  (xv) the sum of the Principal Balances of Delinquents
      Contracts;

                  (xvi) the sum of the Principal Balance of Contracts that
      became Defaulted Contracts during the related Collection Period;

                  (xvii) the Aggregate Principal Balance at the beginning and
      end of the related Collection Period;


                                       43
<PAGE>

      (xviii) Repurchase Amounts included in Net Collections for such
Distribution Date;

      (xix) the Overcollateralization Amount and the amount by which the
Aggregate Principal Balance exceeds the outstanding principal amount of the
Notes (after giving effect to any payments made to Holders of the Notes on that
Distribution Date);

      (xx) Net Collections excluding any Advance and Repurchase Amounts included
in Net Collections for such Distribution Date; and

      (xxi) the amount otherwise distributable to the Certificateholders.

Each such Distribution Date Statement shall be accompanied by an Officers'
Certificate of the Master Servicer stating that the computations reflected in
such statement were made in conformity with the requirements of this Agreement.

      (b) On each Master Servicer Report Date, the Master Servicer shall deliver
to the Owner Trustee, the Indenture Trustee and each Rating Agency a report, in
respect of the immediately preceding Collection Period, setting forth the
following:

                  (i) the aggregate amount, if any, paid by or due from it for
      the purchase of Contracts which the Seller or the Master Servicer has
      become obligated to purchase pursuant to Section 3.02 or 4.07 or the
      Seller has elected to purchase pursuant to Section 9.01;

                  (ii) the net amount of funds which have been deposited in or
      credited to the Collection Account in respect of such Collection Period
      after giving effect to all permitted deductions therefrom pursuant to
      Section 5.02;

                  (iii) upon request of any of the Owner Trustee, the Indenture
      Trustee or a Rating Agency, with respect to each Contract that became a
      Liquidated Contract during such Collection Period, the following
      information:

                        (A) its Contract Number;

                        (B) the effective date as of which such Contract became
                  a Liquidated Contract;

                        (C) its Monthly P&I and Principal Balance as of the
                  immediately preceding Distribution Date (or as of the Cut-Off
                  Date in the case of the first Distribution Date); and

                        (D) if less than 100% of the outstanding principal
                  balance of and accrued and unpaid interest was recovered on
                  such Liquidated Contract, the amount of the Net Liquidation
                  Proceeds or Net Insurance Proceeds;


                                       44
<PAGE>

                  (iv) upon request of any of the Owner Trustee, the Indenture
      Trustee or a Rating Agency, the Contract Numbers, Monthly P&I, Principal
      Balances and Maturity Dates of all Contracts which became Defaulted
      Contracts during such Collection Period;

                  (v) any other information relating to the Contracts reasonably
      requested by the Owner Trustee, the Indenture Trustee and each Rating
      Agency; and

                  (vi) the amount of Net Liquidation Proceeds and Net Insurance
      Proceeds which have been deposited in or credited to the Collection
      Account in respect of the Collection Period ending immediately prior to
      such Master Servicer Report Date and the cumulative amount of Net
      Liquidation Proceeds and Net Insurance Proceeds deposited in or credited
      to the Collection Account during the preceding Collection Periods.

      Section 4.10. Annual Statement as to Compliance. The Master Servicer shall
deliver to the Owner Trustee, the Indenture Trustee and each Rating Agency, on
or before 90 days after the end of each fiscal year of the Master Servicer,
beginning with the fiscal year ended December 31, 2003, an Officers' Certificate
of the Master Servicer stating that (i) a review of the activities of the Master
Servicer during the preceding fiscal year (or since the Closing Date in the case
of the first such Officers' Certificate) and of its performance under this
Agreement has been made under such officers' supervision and (ii) to the best of
such officers' knowledge, based on such review, the Master Servicer has
fulfilled all its obligations under this Agreement throughout such year and that
no default under this Agreement has occurred and is continuing, or, if there has
been a default in the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status thereof. A copy of such
certificate and the report referred to in Section 4.11 may be obtained by any
Certificateholder, Certificate Owner, Noteholder or Note Owner by a request in
writing to the Owner Trustee addressed to the Owner Trustee Corporate Trust
Office. Upon the telephone request of the Owner Trustee, the Indenture Trustee
will promptly furnish the Owner Trustee a list of Noteholders as of the date
specified by the Owner Trustee.

      Section 4.11. Annual Independent Certified Public Accountants' Report. On
or before 90 days after the end of the first fiscal year of the Master Servicer
which ends more than three months after the Closing Date and each fiscal year
thereafter, the Master Servicer at its expense shall cause a firm of
nationally-recognized independent certified public accountants (who may also
render other services to the Master Servicer) to furnish a report to the
Indenture Trustee, the Owner Trustee and each Rating Agency to the effect that
(i) they have audited the balance sheet of the Master Servicer as of the last
day of said fiscal year and the related statements of operations, retained
earnings and cash flows for such fiscal year and have issued an opinion thereon,
specifying the date thereof, (ii) they have also audited certain documents and
the records relating to the servicing of the Contracts and the distributions on
the Notes and the Certificates hereunder, (iii) their audit as described under
clauses (i) and (ii) above was made in accordance with generally accepted
auditing standards and accordingly included such tests of the accounting records
and such other auditing procedures as they considered necessary in the
circumstances and (iv) their audits described under clauses (i) and (ii) above
disclosed no exceptions which, in their opinion, were material, relating to the
servicing of such Contracts in accordance with this Agreement and the making of
distributions on the Notes and Certificates in accordance with this


                                       45
<PAGE>

Agreement, or, if any such exceptions were disclosed thereby, setting forth such
exceptions which, in their opinion, were material.

      Section 4.12. Access to Certain Documentation and Information Regarding
Contracts. The Master Servicer shall provide to the Indenture Trustee and the
Securityholders access to the Contract Files in such cases where the
Certificateholders or Noteholders shall be required by applicable statutes or
regulations to review such documentation. Access shall be afforded without
charge, but only upon reasonable request and during the normal business hours at
the designated offices of the Master Servicer and each related Subservicer, if
any. Nothing in this Section shall affect the obligation of the Master Servicer
to observe any applicable law prohibiting disclosure of information regarding
the Obligors and the failure of the Master Servicer to provide access to
information as a result of such obligation shall not constitute a breach of this
Section.

      Section 4.13. Fidelity Bond. The Master Servicer shall maintain a fidelity
bond in such form and amount as is customary for banks acting as custodian of
funds and documents in respect of mortgage loans or consumer contracts on behalf
of institutional investors.

      Section 4.14. Indemnification; Third Party Claims. Subject to Section
8.02, the Master Servicer agrees to indemnify and hold the Indenture Trustee,
the Owner Trustee and the Securityholders harmless against any and all claims,
losses, penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments and any reasonable other costs, fees and expenses that the Indenture
Trustee, the Owner Trustee, the Noteholders or the Certificateholders may
sustain because of the failure of the Master Servicer to perform its duties and
service the Contracts in compliance with the terms of this Agreement. The Master
Servicer shall immediately notify the Indenture Trustee and the Owner Trustee if
a claim is made by a third party with respect to the Contracts, assume, with the
consent of the Indenture Trustee and the Owner Trustee, the defense of any such
claim and pay all expenses in connection therewith, including counsel fees, and
promptly pay, discharge and satisfy any judgment or decree which may be entered
against it or Indenture Trustee, the Owner Trustee, the Noteholders or the
Certificateholders.


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<PAGE>

                                  ARTICLE FIVE

          DISTRIBUTIONS; SPREAD ACCOUNT; STATEMENTS TO SECURITYHOLDERS

      Section 5.01. Establishment of Trust Accounts.

      (a) Prior to the Closing Date, the Master Servicer shall open, at a
depository institution (which may be the Indenture Trustee or the Bank), the
following accounts (the "Trust Accounts"):

                  (i) an account in the name of the Indenture Trustee (the
      "Collection Account"), bearing a designation clearly indicating that the
      funds deposited therein are held for the benefit of the Securityholders;

                  (ii) an account in the name of the Indenture Trustee (the
      "Spread Account"), bearing a designation clearly indicating that the funds
      deposited therein are held for the benefit of the Securityholders;

                  (iii) an account in the name of the Indenture Trustee (the
      "Note Distribution Account") bearing a designation clearly indicating that
      the funds deposited therein are held for the benefit of the Noteholders;
      and

                  (iv) an account in the name of the Owner Trustee (the
      "Certificate Distribution Account") bearing a designation clearly
      indicating that the funds deposited therein are held for the benefit of
      the Certificateholders.

      The Trust Accounts shall be Eligible Accounts and relate solely to the
Securities and to the Contracts and Eligible Investments. The Master Servicer
shall give the Indenture Trustee and the Owner Trustee at least five Business
Days' written notice of any change in the location of any Trust Account and any
related account identification information. All monies deposited in or credited
to, from time to time, the Trust Accounts shall be part of the Trust Estate and
all monies deposited in or credited to, from time to time, the Collection
Account, the Spread Account, the Certificate Distribution Account and the Note
Distribution Account shall be invested by the Indenture Trustee in Eligible
Investments pursuant to Section 5.01(b).

      (b) All funds in the Collection Account, the Spread Account, the Note
Distribution Account and the Certificate Distribution Account shall be invested
by the Indenture Trustee in Eligible Investments. Unless and until the RIC is no
longer an Eligible Investment, all funds in such Trust Accounts, in each case
that are available for investment in Eligible Investments, shall be invested in
the RIC; provided, however, that funds in the Spread Account, the Note
Distribution Account and the Certificate Distribution Account may only be
invested in the RIC with the consent of Moody's. If the RIC is no longer an
Eligible Investment then, subject to the limitations set forth herein, the
Master Servicer shall direct the Indenture Trustee in writing to invest funds in
the foregoing Trust Accounts in Eligible Investments, other than the RIC. All
such investments shall be in the name of the Indenture Trustee for the benefit
of the Noteholders and the Certificateholders, as applicable. All income or
other gain from investment of monies deposited in or credited to the Collection
Account (including without limitation the RIC Reinvestment Earnings) shall be
deposited in or credited to the Collection Account immediately


                                       47
<PAGE>

upon receipt, and any loss resulting from such investment shall be charged to
the Collection Account. All income or other gain from investment of monies
deposited in or credited to the Spread Account (including without limitation the
RIC Reinvestment Earnings) shall be deposited in or credited to the Spread
Account immediately upon receipt, and any loss resulting from such investment
shall be charged to the Spread Account. All income or other gain from investment
of monies deposited in or credited to the Note Distribution Account (including
without limitation the RIC Reinvestment Earnings) shall be deposited in or
credited to the Note Distribution Account immediately upon receipt, and any loss
resulting from such investment shall be charged to the Note Distribution
Account. All income or other gain from investment of monies deposited in or
credited to the Certificate Distribution Account (including without limitation
the RIC Reinvestment Earnings) shall be deposited in or credited to the
Certificate Distribution Account immediately upon receipt, and any loss
resulting from such investment shall be charged to the Certificate Distribution
Account. The maximum permissible maturities of any investments of funds in the
Collection Account, the Spread Account, the Note Distribution Account and the
Certificate Distribution Account on any date shall not be later than one
Business Day immediately preceding the Distribution Date next succeeding the
date of such investment; provided, however, that such funds may be invested by
the Indenture Trustee in Eligible Investments (other than the RIC) that mature
on the Business Day before the Distribution Date. No investment in Eligible
Investments may be sold prior to its maturity.

      (c) (i) The Indenture Trustee shall possess all right, title and interest
in all funds on deposit from time to time in the Trust Accounts and in all
proceeds thereof (including all income thereon) and all such funds, investments,
proceeds and income shall be part of the Trust Estate. The Trust Accounts, other
than the Certificate Distribution Account, shall be under the sole dominion and
control of the Indenture Trustee for the benefit of the Noteholders and the
Certificateholders, as the case may be. The Certificate Distribution Account
shall be in the name of the Owner Trustee for the benefit of the
Certificateholders. If, at any time, any of the Trust Accounts ceases to be an
Eligible Account, the Indenture Trustee (or the Master Servicer on its behalf)
shall within ten Business Days (or such longer period, not to exceed 30 calendar
days, as to which each Rating Agency may consent) establish a new Trust Account
as an Eligible Account and shall transfer any cash or any investments to such
new Trust Account.

            (ii) With respect to the Trust Account Property, the Indenture
Trustee agrees, by its acceptance hereof, that:

                  (A) any Trust Account Property that is held in deposit
            accounts shall be held solely in the Eligible Accounts, subject to
            the last sentence of Section 5.01(c)(i); and each such Eligible
            Account shall be subject to the exclusive custody and continuous
            control of the Indenture Trustee within the meaning of Section
            9-104(a) of the applicable UCC, and the Indenture Trustee shall have
            sole signature authority with respect thereto;

                  (B) any Trust Account Property that constitutes Physical
            Property shall be delivered to the Indenture Trustee in accordance
            with paragraph (i) of the definition of the term "Delivery" and
            shall be held, pending maturity or disposition, solely by the
            Indenture Trustee or a Financial Intermediary acting solely for the
            Indenture Trustee;


                                       48
<PAGE>

                  (C) any Trust Account Property that is a book-entry security
            held through the Federal Reserve System pursuant to federal
            book-entry regulations shall be delivered in accordance with
            paragraph (ii) of the definition of the term "Delivery" and shall be
            maintained by the Indenture Trustee, pending maturity or
            disposition, through continued book-entry registration of such Trust
            Account Property as described in such paragraph; and

                  (D) any Trust Account Property that is an "uncertificated
            security" under Article Eight of the UCC and that is not governed by
            clause (C) above shall be delivered to the Indenture Trustee in
            accordance with paragraph (iii) of the definition of the term
            "Delivery" and shall be maintained by the Indenture Trustee, pending
            maturity or disposition, through continued registration of the
            Indenture Trustee's (or its nominee's) ownership of such security.

            (iii) The Master Servicer shall have the power, revocable by the
Indenture Trustee or by the Owner Trustee with the consent of the Indenture
Trustee, to instruct the Indenture Trustee to make withdrawals and payments from
the Trust Accounts for the purpose of permitting the Master Servicer or the
Owner Trustee to carry out its respective duties hereunder or permitting the
Indenture Trustee to carry out its duties under the Indenture.

      Section 5.02. Collections; Net Deposits.

      (a) Subject to Section 5.03 and subsection (b) hereof, the Master Servicer
shall remit or credit all payments by the Obligors on the Contracts, all
payments on behalf of Obligors on the Contracts and all Net Liquidation Proceeds
and Net Insurance Proceeds to the Collection Account (within two Business Days
as specified in Section 4.01); provided that the Master Servicer shall retain
from collection of late payments and Net Liquidation Proceeds or Net Insurance
Proceeds in respect of a Contract an amount equal to previously unreimbursed
Advances in respect of such Contract made pursuant to Section 5.04.

      (b) So long as the Master Servicer is WFS, the Master Servicer shall have
the right, on a basis not more frequently than once per month (although deposits
shall be made into the Collection Account within two Business Days pursuant to
Section 4.01), to deduct from amounts received that are otherwise required to be
deposited in or credited to the Collection Account and, to the extent such
amounts are insufficient, to require that the Indenture Trustee withdraw and
deliver to it from the Collection Account, amounts due to be paid hereunder to
the Master Servicer or to the Seller after giving effect to application of the
payment priorities specified in this Article for the month (or other applicable
period), and to pay such amounts to itself as Master Servicer or to the Seller,
as the case may be. Notwithstanding the foregoing, the Master Servicer shall
maintain the records and accounts for such deposits and credits on a gross
basis.

      Section 5.03. Application of Collections. On or prior to the last day of
each Collection Period, all collections for each such Collection Period shall be
applied by the Master Servicer as follows: with respect to each Contract
(including a Defaulted Contract), payments by or on behalf of an Obligor shall
be applied first to late payment and extension fees, second to interest accrued
on the Contract, third to principal due on the Contract and fourth to
administrative charges, if any. Any excess shall be applied to prepay the
principal balance of the Contract.


                                       49
<PAGE>

      Section 5.04. Advances and Nonrecoverable Advances; Repurchase Amounts.

      (a) If, as of the end of any Collection Period, one or more payments of
Monthly P&I due under any Contract (other than a Liquidated Contract)
Outstanding at the end of such Collection Period shall not have been received by
the Master Servicer and deposited in or credited to the Collection Account
pursuant to Section 5.02(a), the Master Servicer shall make, concurrently with
the furnishing of the related Distribution Date Statement to the Indenture
Trustee and the Owner Trustee, the Advance for such Collection Period by
depositing in or crediting to the Collection Account with respect to each
Contract 30 days of interest on the Principal Balance of such Contract at a rate
equal to the sum of (i) the Class D Rate and (ii) the Servicing Fee Percent for
each month that the related Monthly P&I is delinquent at the end of such
Collection Period. The Master Servicer shall account for such deposit or credit
in accordance with Section 4.01. The foregoing notwithstanding, the Master
Servicer shall not make an Advance in respect of a Contract if the Master
Servicer shall have determined that any such Advance, if made, would constitute
a Nonrecoverable Advance. Any such determination shall be evidenced by an
Officers' Certificate furnished to the Indenture Trustee and the Owner Trustee
setting forth the basis for such determination.

      (b) If the Master Servicer determines that it has made a Nonrecoverable
Advance or Advances, the Master Servicer shall reimburse itself, without
interest, from unrelated installments of Monthly P&I or Prepayment proceeds to
the extent it shall, concurrently with the withholding of any such installment
or proceeds from deposit in or credit to the Collection Account as required by
Section 5.02, furnish to the Indenture Trustee and the Owner Trustee a
certificate of a Servicing Officer setting forth the basis for the Master
Servicer's determination, the amount of, and Contract with respect to which,
such Nonrecoverable Advance was made and the installment or installments or
other proceeds respecting which reimbursement has been taken; provided, however,
that the Master Servicer must provide such certificate within three months of
such Nonrecoverable Advance or Advances.

      (c) The Master Servicer or the Seller, as the case may be, shall remit or
credit to the Collection Account the aggregate Repurchase Amount with respect to
Repurchased Contracts on the Master Servicer Report Date next succeeding the
last day of the related cure period specified in Section 3.02 or 4.07, as the
case may be. In addition, the Master Servicer and the Seller shall deposit or
cause to be deposited in the Collection Account the aggregate Repurchase Amount
with respect to Repurchased Contracts.

      (d) The Master Servicer and the Seller shall deposit or caused to be
deposited into the Collection Account the Aggregate Repurchase Amount of
Contracts purchased pursuant to Section 9.01(a).

      Section 5.05. Distributions.

      (a) Subject to Section 5.05(e), on each Distribution Date the Master
Servicer shall instruct the Indenture Trustee (based on the information
contained in the Distribution Date Statement delivered on the related Master
Servicer Report Date pursuant to Section 4.09) to make the following deposits
and distributions for receipt by the Master Servicer or deposit in the


                                       50
<PAGE>

applicable account by 11:00 a.m. (New York time), to the extent of the Available
Funds for such Distribution Date, in the following order of priority:

                  (i) to the Master Servicer, the Servicing Fee, including any
      unpaid Servicing Fees with respect to one or more prior Collection
      Periods;

                  (ii) to the Indenture Trustee, any accrued and unpaid fees and
      expenses payable to the Indenture Trustee and to the Owner Trustee, any
      accrued and unpaid fees and expenses payable to the Owner Trustee, in each
      case to the extent such fees and expenses have not been previously paid by
      the Master Servicer;

                  (iii) to the Note Distribution Account, the Interest
      Distributable Amount for each class of Class A Notes, for payment of
      interest on each class of Class A Notes, pro rata in proportion to their
      respective outstanding principal amounts;

                  (iv) to the Note Distribution Account, the Class A
      Undercollateralization Amount, for payment of principal on the Notes in
      the priority set forth in Section 5.05(b);

                  (v) to the Note Distribution Account, the Interest
      Distributable Amount for the Class B Notes, for payment of interest on the
      Class B Notes;

                  (vi) to the Note Distribution Account, the Class B
      Undercollateralization Amount, for payment of principal on the Notes in
      the priority set forth in Section 5.05(b);

                  (vii) to the Note Distribution Account, the Interest
      Distributable Amount for the Class C Notes, for payment of interest on the
      Class C Notes;

                  (viii) to the Note Distribution Account, the Class C
      Undercollateralization Amount, for payment of principal on the Notes in
      the priority set forth in Section 5.05(b);

                  (ix) to the Note Distribution Account, the Interest
      Distributable Amount for the Class D Notes, for payment of interest on the
      Class D Notes; and

                  (x) to the Note Distribution Account, an amount equal to the
      sum of the Class D Undercollateralization Amount and the
      Overcollateralization Amount, for payment of principal on the Notes in the
      priority set forth in Section 5.05(b).

      (b) On each Distribution Date, the Master Servicer shall instruct the
Indenture Trustee (based on the information contained in the Distribution Date
Statement delivered on the related Master Servicer Report Date pursuant to
Section 4.09), to distribute any amount deposited into the Note Distribution
Account as payment of principal on the Notes pursuant to Section 5.05(a) in the
following amounts and order of priority:

                  (i) to the Holders of the Class A Notes, in the priority set
      forth in Section 5.05(c), the Class A Principal Distributable Amount,
      until the Class A Notes are paid in full;


                                       51
<PAGE>

                  (ii) to the Holders of the Class B Notes, the Class B
      Principal Distributable Amount, until the Class B Notes are paid in full;

                  (iii) to the Holders of the Class C Notes, the Class C
      Principal Distributable Amount, until the Class C Notes are paid in full;
      and

                  (iv) to the Holders of the Class D Notes, the Class D
      Principal Distributable Amount, until the Class D Notes are paid in full.

                  (c) On each Distribution Date, the Master Servicer shall
      instruct the Indenture Trustee (based on the information contained in the
      Distribution Date Statement delivered on the related Master Servicer
      Report Date pursuant to Section 4.09), to distribute the Class A Principal
      Distributable Amount in the following order of priority:

                  (i) to the Holders of the Class A-1 Notes until the Class A-1
      Notes are paid in full;

                  (ii) to the Holders of the Class A-2 Notes until the Class A-2
      Notes are paid in full;

                  (iii) to the Holders of the Class A-3 Notes until the Class
      A-3 Notes are paid in full; and

                  (iv) to the Holders of the Class A-4 Notes until the Class A-4
      Notes are paid in full.

      (d) On each Distribution Date, the Master Servicer shall instruct the
Indenture Trustee (based on the information contained in the Distribution Date
Statement delivered on the related Master Servicer Report Date pursuant to
Section 4.09), to distribute any excess amounts remaining from Available Funds
after making the distributions described in Section 5.05(a) to the Spread
Account. On each Distribution Date, the Master Servicer shall instruct the
Indenture Trustee to distribute the Excess Spread Amount pursuant to Section
5.06(c).

      (e) Notwithstanding the Section 5.02(a), after the Notes have been
declared due and payable pursuant to Section 5.02 of the Indenture, all
Available Funds shall be remitted to the Indenture Trustee for distribution in
accordance with Sections 2.07(c) and 5.06(a) of the Indenture.

      Section 5.06. Spread Account.

      (a) On or prior to the Closing Date, WFSRC3 shall deposit the Spread
Account Initial Amount into the Spread Account. The Spread Account will be held
for the benefit of the Securityholders in order to effectuate the subordination
of the rights of the Securityholders to the extent described above.

      (b) On each Distribution Date, the Master Servicer shall instruct the
Indenture Trustee to withdraw the Spread Account Withdrawal Amount from the
Spread Account and distribute such amount as part of Available Funds in
accordance with Section 5.05(a).


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<PAGE>

      (c) On each Distribution Date, the Master Servicer shall instruct the
Indenture Trustee to distribute the Excess Spread Amount, first, to WFSRC3 until
WFSRC3 has received full payment of the Spread Account Initial Deposit and
second, all remaining funds to the Certificate Distribution Account for
distribution to Certificateholders in accordance with Section 5.02 of the Trust
Agreement.

      (d) Amounts held in the Spread Account shall be invested in the manner
specified in Section 5.01(b), and such investments shall be made in accordance
with written instructions from the Master Servicer; provided that, if the
Indenture Trustee does not receive any such written instructions prior to any
date on which an investment decision must be made, the Indenture Trustee shall
invest such amounts held in the Spread Account in Eligible Investments
consisting of commercial paper given the highest rating by each Rating Agency at
the time of such investment. All such investments shall be made in the name of
the Indenture Trustee or its nominee and such investments shall not be sold or
disposed of prior to their maturity.

      (e) Upon termination of the Issuer pursuant to Section 9.01, any amounts
on deposit in the Spread Account, after payments of amounts due to the
Securityholders, will be distributed first, to WFSRC3 until WFSRC3 has received
full repayment of the Spread Account Initial Deposit and second, to the
Certificate Distribution Account for distribution to Certificateholders in
accordance with the Section 5.02 of the Trust Agreement.

      Section 5.07. Statements to Securityholders.

      (a) On each Distribution Date, (i) the Indenture Trustee shall include
with each distribution to each Noteholder of record as of the related Record
Date and (ii) the Owner Trustee shall include with each distribution to each
Certificateholder of record as of the related Record Date a statement, prepared
by the Master Servicer, based on the information in the Distribution Date
Statement furnished pursuant to Section 4.09, setting forth for such
Distribution Date the following information as of the related Record Date or
such Distribution Date, as the case may be:

                  (i) the amount of such distribution allocable to principal
      (stated separately for each Class of Notes);

                  (ii) the amount of such distribution allocable to interest
      (stated separately for each Class of Notes);

                  (iii) the Interest Distributable Amount for each Class of
      Notes;

                  (iv) the amount of any Interest Carryover Shortfall on such
      Distribution Date and the change in such amounts from those with respect
      to the immediately preceding Distribution Date;

                  (v) the amount of the Servicing Fee paid to the Master
      Servicer with respect to the related Collection Period;


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<PAGE>

                  (vi) the Class A Principal Distributable Amount, the Class B
      Principal Distributable Amount, the Class C Principal Distributable Amount
      and the Class D Principal Distributable Amount;

                  (vii) with respect to each Class of Notes, the excess, if any,
      of the amount distributable in respect of principal on such Class of Notes
      over the amount allocated for the payment of principal on such Class of
      Notes;

                  (viii) the Aggregate Net Liquidation Losses for the related
      Collection Period;

                  (ix) the aggregate Principal Balance of Delinquent Contracts
      as of the close of business on the last day of such Collection Period;

                  (x) the Aggregate Principal Balance as of the close of
      business on the last day of such Collection Period;

                  (xi) the principal amount of each Class of Notes as of such
      Distribution Date, after giving effect to payments allocated to principal
      reported under clause (i) above;

                  (xii) the Certificate Distributable Amount;

                  (xiii) the amount on deposit in the Spread Account on such
      Distribution Date, after giving effect to distributions made on such
      Distribution Date, and the change in such balance from the immediately
      preceding Distribution Date;

                  (xiv) the Overcollateralization Amount and the amount by which
      the Aggregate Principal Balance exceeds the outstanding principal amount
      of the Notes (after giving effect to any payments made to Holders of the
      Notes on that Distribution Date);

                  (xv) the Spread Account Withdrawal Amount and the Excess
      Spread Account Amount; and

                  (xvi) the amount of Net Collections.

Each amount set forth pursuant to clauses (i), (ii), (iv) and (v) above shall be
expressed in the aggregate and as a dollar amount per $1,000.00 original
principal amount of a Note.

      (b) Within a reasonable period of time after the end of each calendar
year, but not later than the latest date permitted by law, the Indenture Trustee
shall mail to each Person who at any time during such calendar year shall have
been a Holder of a Note a statement or statements, prepared by the Master
Servicer, which in the aggregate contain the sum of the amounts set forth in
clauses (i), (ii), (iv) and (v) of above for such calendar year or, in the event
such Person shall have been a Holder of a Note during a portion of such calendar
year, for the applicable portion of such year, for the purposes of such
Noteholder's preparation of federal income tax returns. In addition, the Master
Servicer shall furnish to the Indenture Trustee for distribution to such Person
at such time any other information necessary under applicable law for the
preparation of such income tax returns.


                                       54
<PAGE>

                                  ARTICLE SIX

                                   THE SELLER

      Section 6.01. Corporate Existence. During the term of this Agreement, the
Seller will keep in full force and effect its existence, rights and franchises
as a corporation under the laws of the jurisdiction of its incorporation and
will obtain and preserve its qualification to do business in each jurisdiction
in which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the other Basic Documents and each other
instrument or agreement necessary or appropriate to the proper administration of
this Agreement and the transactions contemplated hereby. In addition, all
transactions and dealings between the Seller and its Affiliates will be
conducted on an arm's-length basis.

      Section 6.02. Liability of Seller; Indemnities. The Seller shall be liable
in accordance herewith only to the extent of the obligations specifically
undertaken by such Seller under this Agreement.

      The Seller shall indemnify, defend and hold harmless the Issuer, the Owner
Trustee, the Indenture Trustee, the Backup Servicer and the Master Servicer from
and against any taxes that may at any time be asserted against any such Person
with respect to the transactions contemplated herein and in the other Basic
Documents, including any sales, gross receipts, general corporation, tangible
personal property, privilege or license taxes (but, in the case of the Issuer,
not including any taxes asserted with respect to, and as of the date of, the
sale of the Contracts to the Issuer or the issuance and original sale of the
Securities, or asserted with respect to ownership of the Contracts, or federal
or other income taxes arising out of distributions on the Certificates or the
Notes) and costs and expenses in defending against the same.

      The Seller shall indemnify, defend and hold harmless the Issuer, the Owner
Trustee, the Indenture Trustee, the Backup Servicer and the Securityholders from
and against any loss, liability or expense incurred by reason of such Seller's
willful misfeasance, bad faith or negligence (other than errors in judgment) in
the performance of its duties under this Agreement, or by reason of reckless
disregard of its obligations and duties under this Agreement.

      The Seller shall indemnify, defend and hold harmless the Issuer, the Owner
Trustee, the Indenture Trustee and the Backup Servicer from and against all
costs, expenses, losses, claims, damages and liabilities arising out of or
incurred in connection with the acceptance or performance of the trusts and
duties herein and, in the case of the Owner Trustee, in the Trust Agreement and,
in the case of the Indenture Trustee, in the Indenture, except to the extent
that such cost, expense, loss, claim, damage or liability, in the case of (i)
the Owner Trustee, shall be due to the willful misfeasance, bad faith or
negligence of the Owner Trustee or shall arise from the breach by the Owner
Trustee of any of its representations or warranties set forth in Section 7.03 of
the Trust Agreement, (ii) the Indenture Trustee, shall be due to the willful
misfeasance, bad faith or negligence of the Indenture Trustee or (iii) the
Backup Servicer, shall be due to the willful misfeasance, bad faith or
negligence of the Backup Servicer.

      Indemnification under this Section shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation. If the
Seller shall have made any indemnity


                                       55
<PAGE>

payments pursuant to this Section and the Person to or on behalf of whom such
payments are made thereafter shall collect any of such amounts from others, such
Person shall promptly repay such amounts to such Seller, without interest.

      Section 6.03. Merger or Consolidation of, or Assumption of the Obligations
of, the Seller; Certain Limitations.

      (a) The Seller shall not consolidate with nor merge into any other
corporation or convey, transfer or lease substantially all of its assets as an
entirety to any Person unless the corporation formed by such consolidation or
into which such Seller has merged or the Person which acquires by conveyance,
transfer or lease substantially all the assets of the Seller as an entirety, can
lawfully perform the obligations of the Seller hereunder and executes and
delivers to the Owner Trustee and the Indenture Trustee an agreement in form and
substance reasonably satisfactory to the Owner Trustee and the Indenture
Trustee, which contains an assumption by such successor entity of the due and
punctual performance and observance of each covenant and condition to be
performed or observed by the Seller under this Agreement. The Seller shall
provide notice of any merger, consolidation or succession pursuant to this
Section to each Rating Agency and will deliver to the Owner Trustee and the
Indenture Trustee a letter from each Rating Agency to the effect that such
merger, consolidation or succession will not result in a qualification,
downgrading or withdrawal of its then-current ratings of each Class of Notes.
The Seller and WFS each shall maintain separate corporate offices.

      (b)

                  (i) Subject to clause (b)(ii) below, the purpose of the Seller
      shall be to engage in any lawful activity for which a corporation may be
      organized under the laws of California Revised Statutes.

                  (ii) Notwithstanding clause (b)(i) above, the actual business
      activities of the Seller shall be limited to those activities incident to
      and necessary or convenient to accomplish the following purposes: (A) to
      acquire, own, hold, sell, transfer, assign, pledge, finance, refinance and
      otherwise deal with, retail installment sales contracts and installment
      loans secured by automobiles and light duty trucks (the "Vehicle
      Receivables"); (B) to authorize, issue, sell and deliver one or more
      series of obligations, consisting of one or more classes of notes,
      certificates or other securities (the "Offered Securities") that are
      collateralized by or evidence an interest in Vehicle Receivables and are
      rated in an investment grade category by at least one nationally
      recognized statistical rating agency; and (C) to negotiate, authorize,
      execute, deliver and assume the obligations of any agreement relating to
      the activities set forth in clauses (A) and (B) above, including any
      pooling and servicing agreement, indenture, reimbursement agreement,
      credit support agreement, receivables purchase agreement or underwriting
      agreement or to engage in any lawful activity which is incidental to the
      activities contemplated by any such agreement. So long as any outstanding
      debt of the Seller or Offered Securities are rated by any nationally
      recognized statistical rating organization, such Seller shall not issue
      notes or otherwise incur debt unless (1) the Seller has made a written
      request to the related nationally recognized statistical rating
      organization to issue notes or incur borrowings which notes or borrowings
      are rated by the related nationally


                                       56
<PAGE>

      recognized statistical rating organization the same as or higher than the
      rating afforded such debt or securities or (2) such notes or borrowings
      (a) are fully subordinated (and which shall provide for payment only after
      payment in respect of all outstanding rated debt or Offered Securities) or
      are nonrecourse against any assets of the Seller other than the assets
      pledged to secure such notes or borrowings, (b) do not constitute a claim
      against the Seller in the event such assets are insufficient to pay such
      notes or borrowings and (c) where such notes or borrowings are secured by
      the rated debt or Offered Securities, are fully subordinated (and which
      shall provide for payment only after payment in respect of all outstanding
      rated debt or Offered Securities) to such rated debt or Offered
      Securities.

      (c) Notwithstanding any other provision of this Section and any provision
of law, the Seller shall not do any of the following:

                  (i) engage in any business or activity other than as set forth
      in clause (b) above;

                  (ii) without the affirmative vote of a majority of the members
      of the board of directors of the Seller (which must include the
      affirmative vote of at least two duly appointed Independent directors) (A)
      dissolve or liquidate, in whole or in part, or institute proceedings to be
      adjudicated bankrupt or insolvent, (B) consent to the institution of
      bankruptcy or insolvency proceedings against it, (C) file a petition
      seeking or consent to reorganization or relief under any applicable
      federal or state law relating to bankruptcy, (D) consent to the
      appointment of a receiver, liquidator, assignee, trustee, sequestrator (or
      other similar official) of the corporation or a substantial part of its
      property, (E) make a general assignment for the benefit of creditors, (F)
      admit in writing its inability to pay its debts generally as they become
      due or (G) take any corporate action in furtherance of the actions set
      forth in clauses (A) through (F) above; provided, however, that no
      director may be required by any shareholder of the Seller to consent to
      the institution of bankruptcy or insolvency proceedings against the Seller
      so long as it is solvent; or

                  (iii) merge or consolidate with any other corporation, company
      or entity or sell all or substantially all of its assets or acquire all or
      substantially all of the assets or capital stock or other ownership
      interest of any other corporation, company or entity (except for the
      acquisition of Vehicle Receivables and the sale of Vehicle Receivables to
      one or more trusts in accordance with the terms of clause (b)(ii) above,
      which shall not be otherwise restricted by Section 6.03(c)).

      Section 6.04. Limitation on Liability of Seller and Others. The Seller and
any director or officer or employee or agent of the Seller may rely in good
faith on any document of any kind, prima facie properly executed and submitted
by any Person respecting any matters arising hereunder. The Seller and any
director or officer or employee or agent of the Seller shall be reimbursed by
the Owner Trustee or the Indenture Trustee, as the case may be, for any
contractual damages, liability or expense incurred by reason of the Owner
Trustee's or the Indenture Trustee's willful misfeasance, bad faith or
negligence (except for errors in judgment) in the performance of their
respective duties hereunder, or by reason of reckless disregard of their
respective obligations and duties hereunder. The Seller shall not be under any
obligation to


                                       57
<PAGE>

appear in, prosecute or defend any legal action that shall not be incidental to
its obligations under this Agreement, and that in its opinion may involve it in
any expense or liability. The indemnities contained in this Section shall
survive the resignation or termination of the Owner Trustee or the termination
of this Agreement.

      Section 6.05. Seller Not to Resign. Subject to the provisions of Section
6.03, the Seller shall not resign from the obligations and duties hereby imposed
on it as Seller hereunder.

      Section 6.06. Seller May Own Securities. The Seller and any Affiliate
thereof may in its individual or any other capacity become the owner or pledgee
of Securities with the same rights as it would have if it were not such Seller
or an Affiliate thereof, except as expressly provided herein or in any Basic
Document. Securities so owned by or pledged to the Seller or an Affiliate
thereof shall have an equal and proportionate benefit under the provisions of
this Agreement, without preference, priority or distinction as among all of the
Notes.


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<PAGE>

                                  ARTICLE SEVEN

                               THE MASTER SERVICER

      Section 7.01. Liability of Master Servicer; Indemnities. Subject to
Section 8.02, the Master Servicer shall be liable in accordance herewith only to
the extent of the obligations specifically undertaken by the Master Servicer
under this Agreement. Such obligations shall include the following:

            (a) The Master Servicer shall indemnify, defend and hold harmless
      the Issuer, the Owner Trustee, the Indenture Trustee, the Backup Servicer
      and the Securityholders from and against any and all costs, expenses,
      losses, damages, claims and liabilities, arising out of or resulting from
      the use, ownership or operation by the Master Servicer, any Subservicer or
      any of their respective Affiliates of a Financed Vehicle.

            (b) The Master Servicer shall indemnify, defend and hold harmless
      the Issuer, the Owner Trustee, the Indenture Trustee and the Backup
      Servicer from and against any taxes that may at any time be asserted
      against the Owner Trustee, the Indenture Trustee or the Issuer with
      respect to the transactions contemplated herein, including, without
      limitation, any sales, gross receipts, general corporation, tangible
      personal property, privilege or license taxes (but not including any taxes
      asserted with respect to, and as of the date of, the sale of the Contracts
      to the Issuer or the issuance and original sale of the Securities, or
      asserted with respect to ownership of the Contracts, or federal or other
      income taxes arising out of distributions on the Securities) and costs and
      expenses in defending against the same.

            (c) The Master Servicer shall indemnify, defend and hold harmless
      the Issuer, the Owner Trustee, the Indenture Trustee, the Backup Servicer
      and the Securityholders from and against any and all costs, expenses,
      losses, claims, damages and liabilities to the extent that such cost,
      expense, loss, claim, damage or liability arose out of, or was imposed
      upon any such Person through, the negligence, willful misfeasance or bad
      faith of the Master Servicer in the performance of its duties under this
      Agreement or by reason of reckless disregard of its obligations and duties
      under this Agreement.

            (d) The Master Servicer shall indemnify, defend and hold harmless
      the Owner Trustee and the Indenture Trustee from and against any and all
      costs, expenses, losses, claims, damages and liabilities arising out of or
      incurred in connection with the acceptance or performance of the trusts
      and duties herein or the Trust Agreement contained, except to the extent
      that such cost, expense, loss, claim, damage or liability (i) shall be due
      to the willful misfeasance, bad faith or negligence (except for errors in
      judgment) of the Owner Trustee or the Indenture Trustee, as the case may
      be; (ii) relates to any tax other than the taxes with respect to which
      either the Seller or Master Servicer shall be required to indemnify the
      Owner Trustee and the Indenture Trustee; (iii) shall arise from the Owner
      Trustee's or the Indenture Trustee's breach of any of their respective
      representations or warranties set forth herein, in the Trust Agreement or
      in the Indenture; or (iv) shall be one as to which the Seller is required
      to indemnify the Owner Trustee or the Indenture Trustee, as the case may
      be.


                                       59
<PAGE>

            (e) The Master Servicer shall pay the Owner Trustee compensation,
      reimbursement or other payments owed to it by the Seller pursuant to
      Sections 8.01 and 8.02 of the Trust Agreement if the Seller fails to remit
      such compensation, reimbursement or payment in a timely manner.

      Indemnification under this Section shall survive the resignation or
removal of the Owner Trustee or the Indenture Trustee or the termination of this
Agreement of the Trust Agreement and shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation. If the
Master Servicer shall have made any indemnity payments pursuant to this Section
and the Person to or on behalf of whom such payments are made thereafter
collects any of such amounts from others, such Person shall promptly repay such
amounts to the Master Servicer, without interest.

Section 7.02. Corporate Existence; Status as Master Servicer; Merger. The Master
Servicer shall not consolidate with or merge into any other corporation or
convey, transfer or lease all or substantially all of its assets as an entirety
to any Person unless the corporation formed by such consolidation or into which
the Master Servicer has merged or the Person which acquires by conveyance,
transfer or lease substantially all the assets of the Master Servicer as an
entirety can lawfully perform the obligations of the Master Servicer hereunder
and executes and delivers to the Indenture Trustee and the Owner Trustee an
agreement in form and substance reasonably satisfactory to the Indenture Trustee
and the Owner Trustee, which contains an assumption by such successor entity of
the due and punctual performance or observance of each covenant and condition to
be performed or observed by the Master Servicer under this Agreement. Notice
shall be sent to each Rating Agency by the Master Servicer of any consolidation,
merger or succession pursuant to this Section.

      Section 7.03. Performance of Obligations.

      (a) The Master Servicer shall punctually perform and observe all of its
obligations and agreements contained in this Agreement.

      (b) The Master Servicer shall not take any action, or permit any action to
be taken by others, which would excuse any person from any of its covenants or
obligations under any of the Contract Documents or under any other instrument
included in the Trust Estate, or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any of the Contract Documents or any such
instrument, except as expressly provided herein and therein.

      Section 7.04. Master Servicer Not to Resign; Assignment.

      (a) The Master Servicer shall not resign from the duties and obligations
hereby imposed on it except upon determination by its board of directors that by
reason of change in applicable legal requirements the continued performance by
the Master Servicer of its duties hereunder would cause it to be in violation of
such legal requirements in a manner which would result in a material adverse
effect on the Master Servicer or its financial condition, said determination to
be evidenced by a resolution of its board of directors to such effect
accompanied by an Opinion of Counsel, satisfactory to the Owner Trustee and the
Indenture


                                       60
<PAGE>

Trustee, to such effect. No such resignation shall become effective unless and
until (i) a new servicer acceptable to the Owner Trustee and the Indenture
Trustee is willing to service the Contracts and enters into a servicing
agreement with the Issuer in form and substance substantially similar to this
Agreement and satisfactory to the Owner Trustee and the Indenture Trustee and
(ii) each Rating Agency confirms that the selection of such new servicer will
not result in the qualification, reduction or withdrawal of its then-current
rating of each Class of Notes assigned by such Rating Agency. No such
resignation shall affect the obligation of the Master Servicer to repurchase
Contracts pursuant to Section 4.07.

      (b) Except as specifically permitted in this Agreement, the Master
Servicer may not assign this Agreement or any of its rights, powers, duties or
obligations hereunder; provided that the Master Servicer may assign this
Agreement in connection with a consolidation, merger, conveyance, transfer or
lease made in compliance with Section 7.02.

      (c) Except as provided in Sections 7.04(a) and (b), the duties and
obligations of the Master Servicer under this Agreement shall continue until
this Agreement shall have been terminated as provided in Section 9.01 or the
Issuer shall have been terminated as provided by the terms of the Trust
Agreement, and shall survive the exercise by the Owner Trustee or the Indenture
Trustee of any right or remedy under this Agreement, or the enforcement by the
Owner Trustee, the Indenture Trustee or any Certificateholder or Noteholder of
any provision of the Notes, the Certificates or this Agreement.

      (d) The resignation of the Master Servicer in accordance with this Section
shall not affect the rights of the Seller hereunder. If the Master Servicer
resigns pursuant to this Section, its appointment as custodian can be terminated
pursuant to Section 3.07.

      Section 7.05. Limitation on Liability of Master Servicer and Others.

      (a) Neither the Master Servicer nor any of the directors, officers,
employees or agents of the Master Servicer shall be under any liability to the
Issuer, the Noteholders or the Certificateholders, except as provided under this
Agreement, for any action taken or for refraining from the taking of any action
pursuant to this Agreement or for errors in judgment; provided, however, that
this provision shall not protect the Master Servicer or any such person against
any liability that would otherwise be imposed by reason of willful misfeasance,
bad faith or negligence (except errors in judgment) in the performance of duties
or by reason of reckless disregard of obligations and duties under this
Agreement. The Master Servicer and any director, officer, employee or agent of
the Master Servicer may rely in good faith on any document of any kind prima
facie properly executed and submitted by any person respecting any matters
arising under this Agreement.

      (b) The Master Servicer and any director or officer or employee or agent
of the Master Servicer shall be reimbursed by the Owner Trustee or the Indenture
Trustee, as the case may be, for any contractual damages, liability or expense
incurred by reason of such Trustee's willful misfeasance, bad faith or
negligence (except errors in judgment) in the performance of such Trustee's
duties under this Agreement or by reason of reckless disregard of its
obligations and duties under this Agreement.


                                       61
<PAGE>

      Except as provided in this Agreement, the Master Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action that
shall not be incidental to its duties to service the Contracts in accordance
with this Agreement, and that in its opinion may involve it in any expense or
liability; provided, however, that the Master Servicer may undertake any
reasonable action that it may deem necessary or desirable in respect of this
Agreement and the other Basic Documents and the rights and duties of the parties
to this Agreement and the other Basic Documents and the interests of the
Securityholders under the Basic Documents.


                                       62
<PAGE>

                                  ARTICLE EIGHT

                                     DEFAULT

      Section 8.01. Servicer Default. If any one of the following events (a
"Servicer Default") shall occur and be continuing:

            (a) any failure by the Master Servicer or the Issuer, to deposit or
      credit, or to deliver to the Indenture Trustee for deposit, in any of the
      Trust Accounts any amount required hereunder to be as deposited, credited
      or delivered or to direct the Indenture Trustee to make any required
      distributions therefrom, that shall continue unremedied for a period of
      three Business Days after written notice of such failure is received from
      the Owner Trustee or the Indenture Trustee or after discovery of such
      failure by an officer of the Master Servicer;

            (b) any failure by the Master Servicer to deliver to the Indenture
      Trustee or the Owner Trustee a report in accordance with Section 4.09 or
      Section 4.10 by the fourth Business Day prior to the Distribution Date
      with respect to which such report is due, or the Master Servicer shall
      have defaulted in the due observance of any provision of Section 7.02
      (other than failure to enter into an assumption agreement under Section
      7.02, which is a Servicer Default only if such failure continues for ten
      Business Days);

            (c) failure on the part of the Seller, the Issuer or the Master
      Servicer duly to observe or to perform in any material respect any other
      covenants or agreements of the Master Servicer or the Seller set forth in
      this Agreement or any other Basic Document, which failure shall (i)
      materially and adversely affect the rights of the Owner Trustee, the
      Indenture Trustee, the Certificateholders or Noteholders and (ii) continue
      unremedied for a period of 30 days after the date on which written notice
      of such failure, requiring the same to be remedied, shall have been given
      (A) to the Master Servicer or the Seller (as the case may be) by the Owner
      Trustee or the Indenture Trustee or (B) to the Master Servicer or the
      Seller (as the case may be), and to the Owner Trustee and the Indenture
      Trustee by the Holders of Notes evidencing not less than 25% of the
      Outstanding Amount of the Notes of the Controlling Class, or, if the Notes
      have been paid in full, by Certificateholders evidencing not less than 25%
      of the aggregate Certificate Percentage Interest;

            (d) the occurrence of an Insolvency Event with respect to the
      Seller, the Issuer or the Master Servicer; or

            (e) any representation, warranty or statement of the Master
      Servicer, the Issuer or the Seller made in this Agreement or any
      certificate, report or other writing delivered pursuant hereto shall prove
      to be incorrect in any material respect as of the time when the same shall
      have been made (excluding, however, any representation or warranty to
      which Section 3.01 or 4.06 shall be applicable so long as the Master
      Servicer or the Seller shall be in compliance with Section 3.02 or 4.07,
      as the case may be), and the incorrectness of such representation,
      warranty or statement has a material adverse effect on the Noteholders or
      the Certificateholders and, within 30 days after written notice


                                       63
<PAGE>

      thereof shall have been given to the Master Servicer or the Seller by the
      Indenture Trustee or the Owner Trustee or by the Holders of Notes
      evidencing not less than 25% of the Outstanding Amount of the Notes of the
      Controlling Class, or Certificateholders evidencing not less than 25% of
      the aggregate Certificate Percentage Interest, the circumstance or
      condition in respect of which such representation, warranty or statement
      was incorrect shall not have been eliminated or otherwise cured;

then, and in each and every case, so long as such Servicer Default shall not
have been remedied, either the Indenture Trustee, the Holders of Notes
evidencing not less than a majority of the Outstanding Amount of the Notes of
the Controlling Class (or, if the Notes have been paid in full and the Indenture
has been discharged in accordance with its terms, by the Owner Trustee or by
Certificateholders evidencing not less than a majority of the aggregate
Certificate Percentage Interest), by notice then given in writing to the Master
Servicer (and to the Indenture Trustee and the Owner Trustee if given by the
Noteholders or the Certificateholders) may terminate all the rights and
obligations of the Master Servicer under this Agreement. Upon such termination
or a termination pursuant to Section 8.06, termination of the Master Servicer as
custodian can be made pursuant to Section 3.07. On or after the receipt by the
Master Servicer of written notice of termination pursuant to this Section or
Section 8.06, all authority and power of the Master Servicer under this
Agreement, whether with respect to the Notes, the Certificates, the Contracts or
otherwise, shall, without further action, pass to and be vested in the Indenture
Trustee, the Backup Servicer or such successor Master Servicer as may be
appointed under Section 8.02, as the case may be; and, without limitation, the
Indenture Trustee and the Owner Trustee are hereby authorized and empowered to
execute and deliver, for the benefit of the predecessor Master Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement of the Contracts and related documents, or otherwise. The Master
Servicer shall cooperate with the Indenture Trustee and the Owner Trustee in
effecting the termination of the responsibilities and rights of the predecessor
Master Servicer under this Agreement, including the transfer to the Indenture
Trustee or the Backup Servicer, as the case may be, for administration by it of
all cash amounts that shall at the time be held by the predecessor Master
Servicer for deposit, or shall thereafter be received by it with respect to any
Contract.

      Section 8.02. Indenture Trustee to Act; Appointment of Successor. Upon the
Master Servicer's receipt of notice of termination pursuant to Section 8.01 or
Section 8.06 or resignation pursuant to Section 7.04, the Indenture Trustee, or
in the case of a termination pursuant to Section 8.06, the Backup Servicer,
shall be the successor to the Master Servicer in its capacity as servicer under
this Agreement, and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Master Servicer by the terms and
provisions of this Agreement, except that neither the Indenture Trustee nor the
Backup Servicer shall be obligated to purchase Contracts pursuant to Section
4.07 unless the obligation to repurchase arose after the date of the notice of
termination given to the Master Servicer pursuant to Section 8.01 or Section
8.06, as the case may be, or be subject to any obligation of the Master Servicer
to indemnify or hold harmless any Person as set forth in this Agreement arising
from the acts or omissions of the predecessor Master Servicer. Any successor
Master Servicer, including the Backup Servicer, shall have the rights (including
any right of indemnity) of the Master Servicer. Furthermore, the Backup Servicer
shall have a right of indemnity under Articles Six and Seven


                                       64
<PAGE>

hereof in connection with the performance of its duties prior to becoming the
successor Master Servicer. As compensation therefor, the Indenture Trustee or
the Backup Servicer, as the case may be, shall be entitled to such compensation
(whether payable out of the Collection Account or otherwise) as the Master
Servicer would have been entitled to under this Agreement if no such notice of
termination shall have been given. If, however, a bankruptcy trustee or similar
official has been appointed for the Master Servicer, and no Servicer Default
other than such appointment has occurred, such trustee or official may have the
power to prevent the Indenture Trustee or the Noteholders from effecting a
transfer of servicing. Notwithstanding the above, in the event of a termination
of the Master Servicer pursuant to Section 8.01, the Indenture Trustee may, if
it shall be unwilling to act, or shall, if it shall be legally unable so to act,
appoint, or petition a court of competent jurisdiction to appoint, any
established financial institution, having a net worth of not less than
$50,000,000 and whose regular business shall include the servicing of motor
vehicle retail installment sales contracts, as the successor to the Master
Servicer under this Agreement. Pending appointment of any such successor Master
Servicer, the Indenture Trustee shall act in such capacity as provided above. In
connection with such appointment, the Indenture Trustee may make such
arrangements for the compensation of such successor out of payments on Contracts
it and such successor shall agree. The Indenture Trustee and such successor
shall take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession.

      Section 8.03. Repayment of Advances. If the identity of the Master
Servicer shall change, the predecessor Master Servicer shall be entitled to
receive reimbursement for outstanding Advances pursuant to Section 5.04 with
respect to all Advances made by the predecessor Master Servicer.

      Section 8.04. Notification to Noteholders and Certificateholders. Upon any
termination of, or appointment of a successor to, the Master Servicer pursuant
to this Article, the Owner Trustee shall give prompt written notice thereof to
Certificateholders at their respective addresses appearing in the Certificate
Register, and the Indenture Trustee shall give prompt written notice thereof to
Noteholders at their respective addresses appearing in the Note Register and to
each Rating Agency.

      Section 8.05. Waiver of Past Defaults. The Holders of Notes evidencing not
less than a majority of the Outstanding Amount of the Notes of the Controlling
Class, or, if all the Notes have been paid in full and the Indenture has been
discharged in accordance with its terms, Certificateholders evidencing not less
than a majority of the aggregate Certificate Percentage Interest (in the case of
any default which does not adversely affect the Indenture Trustee or the
Noteholders) may, on behalf of all Securityholders waive in writing any default
by the Master Servicer in the performance of its obligations hereunder and its
consequences, except a default in making any required deposits to or payments
from any of the Trust Accounts in accordance with this Agreement or in respect
of a covenant or provisions hereof which cannot be modified without the consent
of each Securityholder. Upon any such waiver of a past default, such default
shall cease to exist, and any Servicer Default arising therefrom shall be deemed
to have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other default or impair any right consequent
thereto.


                                       65
<PAGE>

      Section 8.06. Backup Servicer. If a Backup Servicer Event has occurred and
continuing, the Holders of Notes evidencing not less than a majority of the
Outstanding Amount of the Notes of the Controlling Class, by notice then given
in writing to the Master Servicer, the Indenture Trustee and the Owner Trustee
may terminate all the rights and obligations of the Master Servicer under this
Agreement. Upon such termination, the Backup Servicer shall become successor
Master Servicer in accordance with Sections 8.01 and 8.02.


                                       66
<PAGE>

                                  ARTICLE NINE

                                   TERMINATION

      Section 9.01. Optional Purchase of All Contracts.

      (a) On any Distribution Date following the last day of a Collection Period
as of which the Aggregate Principal Balance is less than or equal to
$135,000,000, the Seller shall have the option to purchase the remaining
Contracts from the Issuer. Notice of the exercise of such option shall be given
by the Seller to the Owner Trustee and the Indenture Trustee not later than the
25th day of the month immediately preceding the month of the related
Distribution Date. To exercise such option, the Seller shall pay to the
Indenture Trustee for the benefit of the Securityholders, by deposit in the
Collection Account on the Business Day immediately preceding the related
Distribution Date, the Aggregate Repurchase Amount, and shall succeed to all
interests in and to the Issuer. Such purchase shall be deemed to have occurred
on the last day of such Collection Period. In addition, if the Master Servicer
or the Seller has outstanding senior debt and such debt is not rated "investment
grade" by Moody's at the time of exercising the option pursuant to this Section,
then the Master Servicer or such Seller shall deliver to the Owner Trustee, the
Indenture Trustee and Moody's, an Opinion of Counsel to the effect that such
optional purchase is not a fraudulent conveyance.

      (b) Upon any sale of the assets of the Issuer pursuant to Section 5.04 of
the Indenture, the Master Servicer shall instruct the Indenture Trustee to
deposit the proceeds from such sale after all payments and reserves therefrom
have been made (the "Insolvency Proceeds") in the Collection Account. On the
Distribution Date on which the Insolvency Proceeds are deposited in the
Collection Account (or, if such proceeds are not so deposited on a Distribution
Date, on the Distribution Date immediately following such deposit), the Master
Servicer shall instruct the Indenture Trustee to distribute funds on deposit in
the Collection Account (including such Insolvency Proceeds and any funds on
deposit in the Spread Account in accordance with Section 5.06(a) of the
Indenture.

      (c) As described in Article Nine of the Trust Agreement, notice of any
termination of the Issuer shall be given by the Master Servicer to the Owner
Trustee and the Indenture Trustee as soon as practicable after the Master
Servicer has received notice thereof.

      (d) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder and
the Owner Trustee will succeed to the rights of, and assume the obligations of,
the Indenture Trustee pursuant to this Agreement.

      (e) On a Distribution Date on which an optional purchase pursuant to
Section 9.01(a) of all remaining Contracts in the Issuer occur, the Master
Servicer shall instruct the Indenture Trustee to make the following
distributions of the Aggregate Repurchase Amount and any Net Collections on
deposit in the Collection Account in the following priorities:

                  (i) to the Master Servicer, any accrued and unpaid Servicing
      Fees with respect to one or more prior Collection Periods;


                                       67
<PAGE>

                  (ii) to the Owner Trustee and Indenture Trustee, any accrued
      and unpaid fees and expenses;

                  (iii) to the Note Distribution Account, the Redemption Price
      for full payment of outstanding principal and accrued interest on the
      Notes;

                  (iv) to WFSRC3 until WFSRC3 has received full repayment of the
      Spread Account Initial Deposit; and

                  (v) to the Certificate Distribution Account, for distribution
      to Certificateholders in accordance with Section 5.02 of the Trust
      Agreement as determined by the Master Servicer.


                                       68
<PAGE>

                                   ARTICLE TEN

                                  MISCELLANEOUS

      Section 10.01. Amendment.

      (a) This Agreement may be amended by the Seller, the Master Servicer and
the Owner Trustee on behalf of the Issuer, collectively, without the consent of
any Securityholders, (i) to cure any ambiguity, to correct or supplement any
provisions in this Agreement which are inconsistent with the provisions herein,
or to add any other provisions with respect to matters or questions arising
under this Agreement that shall not be inconsistent with the provisions of this
Agreement, (ii) to add or provide any credit enhancement for any Class of Notes
and (iii) to change any provision applicable for determining the Specified
Spread Account Balance or the manner in which the Spread Account is funded;
provided, however, that any such action shall not, as evidenced by an Opinion of
Counsel, adversely affect in any material respect the interests of any
Securityholder and provided, further, that in connection with any amendment
pursuant to clause (ii) and (iii) above, the Master Servicer shall deliver to
the Owner Trustee and the Indenture Trustee a letter from Standard & Poor's to
the effect that such amendment will not cause its then-current rating on any
Class of Notes to be qualified, reduced or withdrawn and the Master Servicer
shall provide Moody's notice of such amendment; and provided, further, that this
Agreement may not be amended to alter the rights or obligations of the Indenture
Trustee without the prior consent of the Indenture Trustee.

      (b) This Agreement may also be amended from time to time by the Seller,
the Master Servicer and the Owner Trustee on behalf of the Issuer, with the
consent of the Holders of Notes holding not less than a majority of the
Outstanding Amount of the Notes and the consent of Certificateholders evidencing
not less than a majority of the Certificate Percentage Interest, for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Noteholders or the Certificateholders; provided, however, that no such amendment
shall increase or reduce in any manner the amount of, or accelerate or delay the
timing of (i)(A) collections of payments on the Contracts or distributions that
shall be required to be made on any Note or Certificate or any Interest Rate,
(B) except as otherwise provided in Section 10.01(a), the Specified Spread
Account Balance, or the manner in which the Spread Account is funded or (ii)
reduce the aforesaid percentage of the Outstanding Amount of the Notes, the
Holders of which are required to consent to any such amendment, without the
consent of the Holders of all Notes and Certificates of the relevant Class then
outstanding.

      (c) Prior to the execution of any such amendment or consent, the Indenture
Trustee shall furnish written notification of the substance of such amendment or
consent, as prepared by the Seller, the Master Servicer and the Owner Trustee on
behalf of the Issuer, at the expense of the such party, together with a copy
thereof, to each Rating Agency.

      (d) Promptly after the execution of any such amendment or consent, the
Owner Trustee and the Indenture Trustee, as the case may be, shall furnish the
written notification of the substance of the amendment or consent described in
Section 10.01(c), at the expense of the Seller, the Master Servicer or the Owner
Trustee on behalf of the Issuer, as the case may be, to


                                       69
<PAGE>

each Certificateholder and Noteholder, respectively. It shall not be necessary
for the consent of Noteholders and Certificateholders pursuant to Section
10.01(b) to approve the particular form of any proposed amendment or consent,
but it shall be sufficient if such consent shall approve the substance thereof.
The manner of obtaining such consents and of evidencing the authorization by
Noteholders and Certificateholders of the execution thereof shall be subject to
such reasonable requirements as the Owner Trustee or the Indenture Trustee may
prescribe.

      (e) Prior to the execution of any amendment to this Agreement, the Owner
Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating
that the execution of such amendment is authorized or permitted by this
Agreement. The Owner Trustee may, but shall not be obligated to, enter into any
such amendment which affects the Owner Trustee's own rights, duties or
immunities under this Agreement or otherwise.

      Section 10.02. Protection of Title to Trust.

      (a) The Master Servicer shall execute and file such financing statements
and cause to be executed and filed such continuation statements, all in such
manner and in such places as may be required by law fully to preserve, maintain
and protect the perfection and priority of the interest of the Issuer, the
Securityholders, the Indenture Trustee and the Owner Trustee in the Contracts
and in the proceeds thereof. The Master Servicer shall deliver (or cause to be
delivered) to the Owner Trustee and the Indenture Trustee file-stamped copies
of, or filing receipts for, any document filed as provided above, as soon as
available following such filing.

      (b) Neither WFS, the Seller nor the Master Servicer shall change its name,
identity or corporate structure in any manner that would, could or might make
any financing statement or continuation statement filed in accordance with
Section 10.02(a) seriously misleading within the meaning of Section 9-507 of the
UCC, unless it shall have given the Owner Trustee and the Indenture Trustee at
least 60 days' prior written notice thereof and shall have promptly filed
appropriate amendments to all previously filed financing statements or
continuation statements.

      (c) WFS, the Seller and the Master Servicer shall give the Owner Trustee
and the Indenture Trustee at least 60 days' prior written notice of any
relocation of the principal executive office of WFS or the Seller and the Master
Servicer or the Subservicers (in the case of notice provided by the Master
Servicer) if, as a result of such relocation, the applicable provisions of the
UCC would require the filing of any amendment of any previously filed financing
or continuation statement or of any new financing statement and shall promptly
file any such amendment or new financing statement. The Master Servicer shall at
all times maintain each office from which it shall service Contracts, and its
principal executive office, within the United States.

      (d) The Master Servicer shall maintain or cause to be maintained accounts
and records as to each Contract accurately and in sufficient detail to permit
(i) the reader thereof to know at any time the status of such Contract,
including payments and recoveries made and payments owing (and the nature of
each) and (ii) reconciliation between payments or recoveries on (or with respect
to) each Contract and the amounts from time to time deposited in or credited to
the Collection Account in respect of such Contract.


                                       70
<PAGE>

      (e) The Master Servicer shall maintain or cause to be maintained its
computer systems and those of Subservicers so that, from and after the time of
sale under this Agreement of the Contracts, the Master Servicer's and
Subservicer's master computer records (including any backup archives) that shall
refer to a Contract indicate clearly the interest of the Issuer and the
Indenture Trustee in such Contract and that such Contract is owned by the Issuer
and has been pledged to the Indenture Trustee. Indication of the Issuer's
ownership of and the Indenture Trustee's interest in a Contract shall be deleted
from or modified on the Master Servicer's computer systems when, and only when,
the related Contract shall have been paid in full or repurchased or shall have
become a Liquidated Contract.

      (f) If at any time the Seller, the Master Servicer or a Subservicer shall
propose to sell, grant a security interest in, or otherwise transfer any
interest in automotive retail installment sales contracts to any prospective
purchaser, lender or other transferee, the Master Servicer shall give or cause
to be given to such prospective purchaser, lender or other transferee computer
tapes, records or print-outs (including any restored from back-up archives)
that, if they shall refer in any manner whatsoever to any Contract, shall
indicate clearly that such Contract has been sold and is owned by the Issuer and
has been pledged to the Indenture Trustee.

      (g) The Master Servicer shall permit the Owner Trustee, the Indenture
Trustee and its agents, at any time during normal business hours, to inspect,
audit and make copies of and abstracts from the Master Servicer's records
regarding any Contract.

      (h) Upon request, the Master Servicer shall furnish to the Owner Trustee
and the Indenture Trustee, within five Business Days, a list of all Contracts
then held as part of the Trust Estate, together with a reconciliation of such
list to the Schedule of Contracts and to each of the Distribution Date
Statements furnished before such request indicating removal of Contracts from
the Issuer.

                  (i) The Master Servicer shall deliver to the Owner Trustee,
      the Indenture Trustee and each Rating Agency:

                  (i) promptly after the execution and delivery of this
      Agreement and of each amendment hereto, an Opinion of Counsel stating
      that, in the opinion of such counsel, the Indenture Trustee holds a
      perfected security interest in the Contracts, that the Issuer holds title
      to the Contracts subject to the security interest of the Indenture
      Trustee; and

                  (ii) within 90 days after the beginning of each calendar year
      beginning with the first calendar year beginning more than three months
      after the Cut-Off Date, an Opinion of Counsel, dated as of a date during
      such 90-day period, either (A) stating that, in the opinion of such
      counsel, all financing statements and continuation statements have been
      executed and filed that are necessary fully to preserve and protect the
      interest of the Owner Trustee and the Indenture Trustee in the Contracts,
      and reciting the details of such filings or referring to prior Opinions of
      Counsel in which such details are given or (B) stating that, in the
      opinion of such counsel, no such action shall be necessary to preserve and
      protect such interest.


                                       71
<PAGE>

      Section 10.03. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of California and the obligations, rights,
and remedies of the parties under the Agreement shall be determined in
accordance with such laws, except that the duties of the Owner Trustee and the
Indenture Trustee shall be governed by the laws of the State of New York.

      Section 10.04. Notices. All demands, notices and communications upon or to
the Seller, the Master Servicer, the Owner Trustee, the Indenture Trustee or the
Rating Agencies under this Agreement shall be in writing, personally delivered
or mailed by certified mail, return receipt requested, and shall be deemed to
have been duly given upon receipt in the case of (i) WFSRC3, at 444 East Warm
Springs Road #116, Las Vegas, Nevada 89119, Attention: Keith Ford, (ii) the
Master Servicer, 23 Pasteur, Irvine, California 92618, Attention: Legal
Department, (iii) the Issuer or the Owner Trustee, at the Corporate Trust Office
(with, in the case of the Issuer, a copy to the Seller), (iv) the Indenture
Trustee, at 280 Park Avenue - 9th Floor, New York, New York 10017, Attention:
Corporate Trust & Agency Services - Structured Finance Services, (v) Moody's, to
Moody's Investors Service, Inc., ABS Monitoring Department, 99 Church Street,
New York, New York 10007, (vi) Standard & Poor's, to Standard & Poor's, 55 Water
Street, New York, New York 10041, Attention of Asset Backed Surveillance
Department and (vii) Fitch, to Fitch Ratings, One State Street Plaza, New York,
New York 10004, Attention: Asset Backed Securities - Auto Group, 32nd Floor; or,
as to each of the foregoing, at such other address as shall be designated by
written notice to the other parties. Any notice required or permitted to be to
be mailed to a Securityholder shall be given by first class mail, postage
prepaid, at the address of such Holder as shown in the Note Register or the
Certificate Register, as the case may be. Any notice so mailed within the time
prescribed herein shall be conclusively presumed to have been duly given,
whether or not such Securityholder shall receive such notice.

      Section 10.05. Severability of Provisions. If one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever 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 Notes or
Certificates or the rights of the Holders thereof.

      Section 10.06. Assignment. Notwithstanding anything to the contrary
contained herein, as provided in Sections 6.03, 7.02 and 8.04, this Agreement
may not be assigned by the Seller or the Master Servicer without the prior
written consent of Holders of Notes of each Class evidencing not less than 66
2/3% of the Outstanding Amount of Notes of such Class and Certificateholders
evidencing not less than 66 2/3% of the aggregate Certificate Percentage
Interest.

      Section 10.07. Third Party Beneficiaries. Except as otherwise specifically
provided herein, the parties hereto hereby manifest their intent that no third
party shall be deemed a third party beneficiary of this Agreement, and
specifically that the Obligors are not third party beneficiaries of this
Agreement.


                                       72
<PAGE>

      Section 10.08. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall together
constitute but one and the same instrument.

      Section 10.09. Headings. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.

      Section 10.10. Assignment by Issuer. The Seller hereby acknowledges and
consents to any mortgage, pledge, assignment and grant of a security interest by
the Issuer to the Indenture Trustee pursuant to the Indenture for the benefit of
the Noteholders of all right, title and interest of the Issuer in, to and under
the Contracts or the assignment of any or all of the Issuer's rights and
obligations hereunder to the Indenture Trustee.

      Section 10.11. Limitation of Liability of Owner Trustee. Notwithstanding
anything contained herein to the contrary, this instrument has been
countersigned by Chase Manhattan Bank USA, National Association not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall Chase Manhattan Bank USA, National Association in its
individual capacity or any beneficial owner of the Issuer have any liability for
the representations, warranties, covenants, agreements or other obligations of
the Issuer hereunder, as to all of which recourse shall be had solely to the
assets of the Issuer. For all purposes of this Agreement, in the performance of
any duties or obligations of the Issuer hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of
Articles Six, Seven and Eight of the Trust Agreement.

      Section 10.12. Limitation on Recourse Against WFSRC3. Notwithstanding
anything to the contrary contained in this Agreement, the obligations of WFSRC3
under the Basic Documents are solely the corporate obligations of WFSRC3, and
shall be payable by WFSRC3, solely as provided by the Basic Documents. WFSRC3
shall only be required to pay (i) any fees, expenses, indemnities or other
liabilities that it may incur under the Basic Documents from funds available
pursuant to, and in accordance with, the payment priorities set forth in this
Agreement and (ii) to the extent WFSRC3 has additional funds available (other
than funds described in the preceding clause (i)) that would be in excess of
amounts that would be necessary to pay the debt and other obligations of WFSRC3
incurred in accordance with WFSRC3's certificate of incorporation and all
financing documents to which WFSRC3 is a party. The agreement set forth in the
preceding sentence shall constitute a subordination agreement for purposes of
Section 510(a) of the Bankruptcy Code. In addition, no amount owing by WFSRC3
hereunder in excess of the liabilities that it is required to pay in accordance
with the preceding sentence shall constitute a "claim" (as defined in Section
101(5) of the Bankruptcy Code) against it.


                                       73
<PAGE>

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

                             WFS FINANCIAL 2003-1 OWNER TRUST

                             By: CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION,
                                 not in its individual capacity but solely as
                                 Owner Trustee on behalf of the Trust

                             By:
                                ----------------------------------------------
                                 Name:
                                 Title:


                             WFS RECEIVABLES CORPORATION 3,
                                 as Seller

                             By:
                                ----------------------------------------------
                                 Name:
                                 Title:


                             WFS FINANCIAL INC,
                                 as Master Servicer

                             By:
                                ----------------------------------------------
                                 Name:
                                 Title:

Acknowledged and accepted as of the day and year first above written:

DEUTSCHE BANK TRUST COMPANY AMERICAS, not in its individual capacity but solely
as Indenture Trustee and Backup Servicer

By:
   --------------------------------
    Name:
    Title:

                                                    Sale and Servicing Agreement

<PAGE>

                                                                      SCHEDULE A

                              SCHEDULE OF CONTRACTS

            [Omitted--Schedule of Contracts on file at the offices of the
            Seller, the Master Servicer, the Owner Trustee and the Indenture
            Trustee.]


                                      SA-1
<PAGE>

                                                                      SCHEDULE B

                           LOCATION OF CONTRACT FILES

<TABLE>
<S>                                      <C>
WFS Financial Inc                        WFS Financial Inc
23 Pasteur                               6061 N. State Highway 161
Irvine, CA  92618                        Irving, TX  75038
714-727-1000                             972-870-8060
</TABLE>


                                     SB-1

<PAGE>

                                                                      SCHEDULE C

                           SEQUENTIAL PAYMENT TRIGGERS
<TABLE>
<CAPTION>
                 Distribution Date         Sequential Payment Trigger
                 -----------------         --------------------------
<S>                                        <C>
                    April 2003                       0.15%
                     May 2003                        0.30%
                     June 2003                       0.45%
                     July 2003                       0.60%
                    August 2003                      0.75%
                  September 2003                     0.90%
                   October 2003                      1.05%
                   November 2003                     1.20%
                   December 2003                     1.37%
                   January 2004                      1.54%
                   February 2004                     1.71%
                    March 2004                       1.88%
                    April 2004                       2.05%
                     May 2004                        2.22%
                     June 2004                       2.39%
                     July 2004                       2.56%
                    August 2004                      2.73%
                  September 2004                     2.90%
                   October 2004                      3.07%
                   November 2004                     3.24%
                   December 2004                     3.37%
                   January 2005                      3.50%
                   February 2005                     3.63%
                    March 2005                       3.76%
                    April 2005                       3.89%
                     May 2005                        4.02%
                     June 2005                       4.15%
                     July 2005                       4.28%
                    August 2005                      4.41%
                  September 2005                     4.54%
                   October 2005                      4.67%
</TABLE>


                                     SB-1
<PAGE>

<TABLE>
<CAPTION>

                 Distribution Date         Sequential Payment Trigger
                 -----------------         --------------------------
<S>                                        <C>
                   November 2005                     4.80%
                   December 2005                     4.93%
                   January 2006                      5.07%
                   February 2006                     5.20%
                    March 2006                       5.33%
                    April 2006                       5.47%
                     May 2006                        5.60%
                     June 2006                       5.73%
                     July 2006                       5.87%
                    August 2006                      6.00%
                  September 2006                     6.13%
                   October 2006                      6.27%
                   November 2006                     6.40%
                   December 2006                     6.53%
                   January 2007                      6.67%
                   February 2007                     6.80%
                    March 2007                       6.93%
                    April 2007                       7.07%
                     May 2007                        7.20%
                     June 2007                       7.33%
                     July 2007                       7.47%
                    August 2007                      7.60%
                  September 2007                     7.73%
                   October 2007                      7.87%
            On and after November 2007               8.00%
</TABLE>


                                     SB-2
<PAGE>

                                                                      SCHEDULE D

                        SPREAD ACCOUNT STEP DOWN TRIGGERS

<TABLE>
<CAPTION>
                 Distribution Date      Spread Account Step Down Trigger
                 -----------------      --------------------------------
<S>                                     <C>
                    April 2003                       0.15%
                     May 2003                        0.30%
                     June 2003                       0.45%
                     July 2003                       0.60%
                    August 2003                      0.75%
                  September 2003                     0.90%
                   October 2003                      1.05%
                   November 2003                     1.20%
                   December 2003                     1.37%
                   January 2004                      1.54%
                   February 2004                     1.71%
                    March 2004                       1.88%
                    April 2004                       2.05%
                     May 2004                        2.22%
                     June 2004                       2.39%
                     July 2004                       2.56%
                    August 2004                      2.73%
                  September 2004                     2.90%
                   October 2004                      3.07%
                   November 2004                     3.24%
                   December 2004                     3.37%
                   January 2005                      3.50%
                   February 2005                     3.63%
                    March 2005                       3.75%
                    April 2005                       3.95%
                     May 2005                        4.15%
                     June 2005                       4.25%
                     July 2005                       4.25%
                    August 2005                      4.35%
                  September 2005                     4.35%
                   October 2005                      4.55%
                   November 2005                     4.65%
                   December 2005                     4.65%
                   January 2006                      4.75%
                   February 2006                     4.85%
                    March 2006                       4.95%
                    April 2006                       4.95%
                     May 2006                        5.05%
                     June 2006                       5.05%
                     July 2006                       5.15%
</TABLE>


                                     SB-1
<PAGE>

<TABLE>
<CAPTION>

                 Distribution Date      Spread Account Step Down Trigger
                 -----------------      --------------------------------
<S>                                     <C>
                    August 2006                      5.15%
                  September 2006                     5.15%
                   October 2006                      5.25%
                   November 2006                     5.25%
                   December 2006                     5.25%
                   January 2007                      5.25%
             On or after February 2007               5.35%
</TABLE>


                                     SB-2
<PAGE>

                                                                       EXHIBIT A

                                  [FORM OF RIC]


                                      A-1
<PAGE>

                                                                       EXHIBIT B

                      [FORM OF DISTRIBUTION DATE STATEMENT]


                                      B-1