March 28, 2002

Curt Phillips
Chief Financial Officer
Automotive Finance Corporation
310 East 96th Street
Suite 300
Indianapolis, IN  46240

RE:  Ugly Duckling  Corporation  Master Loan and Security  Agreement dated as of
     August 24, 2001


Dear Sir:

With this letter we are  requesting a waiver under  Article VIII Section 8.0 (o)
No Defaults for December 2001 and January 2002.

As previously  discussed  with you, we hit  termination  charge-off  triggers on
three of our  securitized  trusts in December  and one  termination  delinquency
trigger on a trust in January 2002. These trigger  breaches  constitute an event
of default under the Insurance  Agreements in each of these trusts.  Each of the
trusts  were  only in  breach  of the  termination  trigger  test for the  month
indicated  and have  since been under  these  levels.  MBIA,  our  insurer,  has
indicated they will retain but not exercise  their rights under the  termination
events to, among other things,  transition  servicing and retain all future cash
flows  from  the  trusts  to  pay  off  the  A  bondholder,  assuming  continued
improvement in the performance of the trusts.

To  further  validate  MBIA's  intent,  we are  scheduled  to  close  our  first
securitization  of 2002 on April 2nd with  MBIA  acting  as the  insurer  on the
transaction.

Thank  you for  your  time  and  consideration.  I have  provided  an area on an
attached page for your signature authorizing the waiver. Please call me with any
further questions at 602-852-6635.


Sincerely,



Bob Fulton
Treasurer
Ugly Duckling Corporation






The undersigned hereby waive as requested above:

Automotive Finance Corporation

By:      _________________________
Name:    _________________________
Title:   _________________________