ONYX ACCEPTANCE CORP, S-1/A, 2000-02-08

ONYX ACCEPTANCE CORP
S-1/A, 2000-02-08
PERSONAL CREDIT INSTITUTIONS

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<PAGE> 1

As filed with the Securities and Exchange Commission on February 8, 2000.

Registration No. 333-92573
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

----------

AMENDMENT NO. 2

FORM S-1

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

ONYX ACCEPTANCE CORPORATION
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 6141 33-0577635
- -------------------------------- ---------------------------- -----------------------
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) (Identification Number)
</TABLE>

27051 TOWNE CENTRE DRIVE, SUITE 100
FOOTHILL RANCH, CALIFORNIA 92610
(949) 465-3900
- --------------------------------------------------------------------------------
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)

DON P. DUFFY
EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
27051 TOWNE CENTRE DRIVE, SUITE 100
FOOTHILL RANCH, CALIFORNIA 92610
(949) 465-3900
- --------------------------------------------------------------------------------
(Name, address, including zip code, and telephone
number, including area code, of agent for service)

----------

copies to:

<TABLE>
<S> <C> <C>
J. KEVIN BOARDMAN MICHAEL A. KRAHELSKI MARK A. LINDGREN
ANDREWS & KURTH L.L.P. ONYX ACCEPTANCE CORPORATION LEONARD, STREET AND DEINARD
1717 MAIN STREET, SUITE 3700 27051 TOWNE CENTRE DRIVE, SUITE 100 PROFESSIONAL ASSOCIATION
DALLAS, TEXAS 75201 FOOTHILL RANCH, CALIFORNIA 92610 150 SOUTH FIFTH STREET, SUITE 2300
(214) 659-4400 (949) 465-3900 MINNEAPOLIS, MINNESOTA 55402
(612) 335-1500
</TABLE>

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective.

----------

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]

----------

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

<TABLE>
<CAPTION>
===================================================================================================================
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER SECURITY PRICE(2) REGISTRATION FEE(3)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Subordinated Notes due 2006..... $23,000,000 $1,000 $23,000,000 $6,072
===================================================================================================================
</TABLE>

(1) Includes $3,000,000 principal amount of subordinated notes that the
underwriters have the option to purchase to cover over-allotments, if any.

(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(o).

(3) Previously paid to the Commission on December 10, 1999 in connection with
the filing of the Registration Statement.

----------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

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

<PAGE> 2

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER
OR SALE IS NOT PERMITTED.

SUBJECT TO COMPLETION

PRELIMINARY PROSPECTUS DATED FEBRUARY 8, 2000

PROSPECTUS

LOGO

$20,000,000

ONYX ACCEPTANCE CORPORATION

% SUBORDINATED NOTES DUE , 2006
------------------------

The notes will mature and their principal will be payable on
, 2006. They will bear interest at a rate of % per year, and
we will make the first interest payment on , 2000. After that, we
will pay interest on the notes each year on the 15th of ,
, and . The notes are unsecured
obligations and your right to payment is subordinated in right of payment to all
of our senior indebtedness. We cannot redeem the notes prior to ,
2002. On and after , 2002, we may redeem all or a portion of the
notes at certain prices described in this prospectus. You may require us to
repurchase the notes if we experience a change in control.

The notes will not be listed on any securities exchange or quoted on Nasdaq
or any over-the-counter market. Miller & Schroeder Financial, Inc. and Peacock,
Hislop, Staley & Given, Inc., the underwriters, may make a market in the notes,
but they are not obligated to do so.

INVESTING IN THE NOTES INVOLVES RISKS WHICH ARE DESCRIBED IN "RISK FACTORS"
BEGINNING ON PAGE 9 OF THIS PROSPECTUS.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
------------------------

<TABLE>
<CAPTION>
PER NOTE TOTAL
-------- --------
<S> <C> <C>
Public offering price.......................................
Underwriting discounts and commissions......................
Proceeds to Onyx, before expenses...........................
</TABLE>

The underwriters may also purchase, in the aggregate, up to an additional
$3,000,000 principal amount of notes at the public offering price, less the
underwriting discount, within 30 days from the date of this prospectus to cover
over-allotments.

The underwriters expect to deliver the notes through the facilities of The
Depository Trust Company against payment in New York, New York on ,
2000.
------------------------

MILLER & SCHROEDER
PEACOCK, HISLOP, STALEY & GIVEN, INC.

------------------------

The date of this Prospectus is , 2000.
<PAGE> 3

Onyx Acceptance Corporation provides prime and near-prime automobile
lending to franchise and select independent car dealers. It provides service to
those dealers from its auto finance centers throughout the United States. Since
its inception in 1993, Onyx has purchased and securitized publicly over $3.4
billion in auto receivables. Onyx services its retail customers from its
Foothill Ranch complex in California.

<TABLE>
<CAPTION>
NINE MONTHS
YEARS ENDED DECEMBER 31, ENDED
----------------------------------------------------- SEPTEMBER 30,
1994 1995 1996 1997 1998 1999
------- -------- -------- -------- ---------- -------------
(IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
Total revenues.................. $ 2,095 $ 5,618 $ 22,627 $ 33,811 $ 60,392 $ 65,868
Net income (loss)............... (3,505) (3,187) 6,116 1,302 6,075 7,162
Net income (loss) per diluted
share......................... $ (1.89) $ (1.68) $ 1.09 $ 0.21 $ 0.95 $ 1.10
Diluted shares outstanding...... 2,158 2,234 5,586 6,294 6,425 6,528
Total assets.......... $57,095 $136,077 $ 54,083 $141,836 $ 275,422 $ 342,294
Stockholders' equity
(deficit)..................... (4,122) (7,896) 36,358 37,717 43,824 50,708
Servicing portfolio at period
end........................... 74,581 218,207 400,665 757,277 1,345,961 1,924,881
Contracts purchased............. 85,723 199,397 319,840 605,905 1,038,535 1,130,634
</TABLE>

[Bar Chart]
[Bar chart showing dollar amount of
revenues for the years ended December
31, 1994, 1995, 1996, 1997 and 1998
and for the nine months ended
September 30, 1999]

[Bar Chart]
[Bar chart showing dollar amount of
servicing portfolio for the years
ended December 31, 1994, 1995, 1996,
1997 and 1998 and for the nine months
ended September 30, 1999]

[Bar chart showing the number of
contracts purchased for the years
ended December 31, 1994, 1995, 1996,
1997 and 1998 and for the nine months
ended September 30, 1999]

[Bar Chart]

[Bar chart showing the number of
dealer relationships for each quarter
from the fourth quarter of 1997
through the third quarter of 1999]

[Bar Chart]
<PAGE> 4

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
PROSPECTUS SUMMARY ................................................. 1
Onyx ...................................................... 1
Business .................................................. 1
The Offering .............................................. 3
Summary Financial Data .................................... 6

RISK FACTORS ....................................................... 9
Risk Factors Relating to the Notes ........................ 9
Risk Factors Relating to Onyx ............................. 11
Risks Associated with the Year 2000 Problem ............... 17

USE OF PROCEEDS .................................................... 19

CAPITALIZATION ..................................................... 19

SELECTED FINANCIAL DATA ............................................ 19

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS .............................. 22
Overview .................................................. 22
Results of Operations ..................................... 25
Financial Condition ....................................... 28
Liquidity and Capital Resources ........................... 33
Securitizations ........................................... 35
Interest Rate Exposure and Hedging ........................ 36
Dividend Policy ........................................... 36
New Accounting Pronouncements ............................. 37
Year 2000 Compliance ...................................... 37

BUSINESS ........................................................... 38
General ................................................... 38
Background ................................................ 38
Market and Competition .................................... 38
Business Strategy ......................................... 38
Operations ................................................ 40
Underwriting and Purchasing of Contracts .................. 41
Servicing Procedures ...................................... 45
Collection Procedures ..................................... 45
Modifications and Extensions .............................. 46
Insurance ................................................. 47
Financing and Sale of Contracts ........................... 47
Government Regulation ..................................... 47
Litigation ................................................ 49
Employees ................................................. 49
Properties ................................................ 50

MANAGEMENT ......................................................... 51
Directors and Executive Officers .......................... 51
Executive Compensation .................................... 52
</TABLE>

-ii-
<PAGE> 5

<TABLE>
<CAPTION>
Page
----
<S> <C>
Directors' Compensation ................................... 55
Employment Agreements ..................................... 56
Stock Option Grants ....................................... 56
Compensation Committee Interlocks and Insider Participation 56

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ..................... 56
Certain Business Relationships ............................ 56
Indebtedness of Management ................................ 56

PRINCIPAL STOCKHOLDERS ............................................. 57

DESCRIPTION OF THE NOTES ........................................... 59
General ................................................... 59
Interest .................................................. 59
Optional Redemption By Us ................................. 60
Repurchase at Option of Holder ............................ 60
Subordination ............................................. 61
Events of Default And Remedies ............................ 62
Restrictive Covenants ..................................... 63
Modifications of the Indenture ............................ 66
Satisfaction and Discharge ................................ 67
Legal Defeasance and Covenant Defeasance .................. 67
Governing Law ............................................. 68
Concerning the Trustee .................................... 68

UNDERWRITING ....................................................... 68

LEGAL MATTERS ...................................................... 70

EXPERTS ............................................................ 70

WHERE YOU CAN FIND MORE INFORMATION ................................ 70

GLOSSARY ........................................................... 72

INDEX TO FINANCIAL STATEMENTS ...................................... 74
</TABLE>

-iii-
<PAGE> 6

FORWARD LOOKING STATEMENTS

This prospectus contains certain statements of a forward-looking nature
relating to future events or our future performance. These forward-looking
statements are based on our current expectations, assumptions, estimates and
projections about us and our industry. When used in this prospectus, the words
"expects," "believes," "anticipates," "estimates," "intends" and similar
expressions are intended to identify forward-looking statements. These
statements include, but are not limited to, statements of our plans, strategies
and prospects under the captions "Prospectus Summary," "Risk Factors," "Use of
Proceeds," "Management's Discussion and Analysis of Financial Condition and
Results of Operations," "Business" and other statements contained elsewhere in
this prospectus.

These forward-looking statements are only predictions and are subject
to risks and uncertainties that could cause actual events or results to differ
materially from those projected. The cautionary statements made in this
prospectus should be read as being applicable to all related forward-looking
statements wherever they appear in this prospectus. We assume no obligation to
update these forward looking statements publicly for any reason. Actual results
could differ materially from those anticipated in these forward-looking
statements.

-iv-
<PAGE> 7

PROSPECTUS SUMMARY

This summary highlights selected information from this prospectus and
may not contain all the information that may be important to you. You should
read the entire prospectus, including the financial data and related notes,
before making an investment decision. Unless we state otherwise, the terms
"Onyx," "our, "and "we" refer to Onyx Acceptance Corporation and its
subsidiaries, and the term "notes" refers to the ___% Subordinated Notes due
_____ 2006 we are offering pursuant to this prospectus. Certain industry terms
that we use are defined in the Glossary which begins on page 72.

ONYX

We are a specialized consumer finance company engaged principally in
the business of providing indirect automobile financing to franchised new car
dealerships and select used car dealerships throughout the United States. We
primarily purchase motor vehicle contracts from such dealerships. We focus our
efforts on acquiring motor vehicle contracts that are secured by late model used
motor vehicles and, to a lesser extent, new motor vehicles, that were entered
into with purchasers whom we believe have favorable credit profiles. We generate
revenues primarily through the purchase, warehousing, securitization and ongoing
servicing of motor vehicle contracts. Since we started purchasing, originating
and servicing motor vehicle contracts in February 1994, we have purchased or
originated more than $3.4 billion in motor vehicle contracts from approximately
7,100 dealers, and we have expanded our operations from a single office in
Orange County, California to major markets throughout the United States.

BUSINESS

Our principal objective is to become one of the leading sources of
near-prime auto lending in the United States by leveraging the experience of our
senior management team in this industry. We seek to attain and increase
profitability through the implementation of the following strategies:

o Targeted Market and Product Focus. We have positioned ourselves as one
of the lowest loan-to-value and payment-to-income lenders in the
near-prime auto finance market. We target the near-prime auto lending
market because we believe that it produces greater origination and
operating efficiencies than does the sub-prime lending market. We focus
on late model used motor vehicles, rather than new motor vehicles,
because we believe the risk of loss on used vehicles is lower due to
lower depreciation rates. Furthermore, motor vehicle contracts secured
by used motor vehicles generally bear interest at rates that are higher
than new motor vehicle contracts. In addition, we believe that the late
model used motor vehicle finance market is growing at a faster rate
than is the finance market for new motor vehicles.

o Localized Dealership Service. We provide a high level of service to our
dealership base by marketing to and servicing dealerships on a local
level through our auto finance centers. Our credit and account manager
teams service our dealers locally and are able to provide a quick
decision process with respect to potential motor vehicle contracts
submitted to us by our dealers for purchase. These teams use our
proprietary credit evaluation system based on our underwriting
standards. We strategically locate our auto finance centers in
geographic areas with many dealerships in order to facilitate personal
service.

o Expansion of Dealership Customer Base. We establish active
relationships with a substantial percentage of franchised dealerships
in the regions in which we do business through our existing auto
finance centers. We expect to establish additional dealer relationships
as we continue our expansion plans in the future.

-1-
<PAGE> 8
o Maintenance of Underwriting Standards and Portfolio Performance. We
have developed an underwriting process that is designed to achieve
attractive yields while minimizing delinquencies and losses. The
underwriting process emphasizes a personal, hands on analysis of the
creditworthiness of each applicant rather than sole reliance on a
credit scoring system. We also audit most motor vehicle contracts that
we purchase within days of their origination to further assure
adherence to our underwriting guidelines.

As these strategies indicate, our focus is on controlled growth, rather
than increasing our volume at any cost. We are committed to a long term
profitable growth strategy in the near-prime auto lending market.

We were incorporated in California in 1993, and reincorporated in
Delaware in 1996 in connection with our initial public offering of common stock
in March 1996. Our principal executive offices are located at 27051 Towne Centre
Drive, Suite 100, Foothill Ranch, California 92610, and our telephone number is
(949) 465-3900.

-2-
<PAGE> 9

THE OFFERING

<TABLE>
<C> <S>
Issuer.......................... Onyx Acceptance Corporation

Trustee......................... Bankers Trust Company.

Securities Offered.............. Up to $23,000,000 principal amount of ___% subordinated notes,
which includes $3,000,000 principal amount of subordinated notes
that the underwriters have the option to purchase to cover
over-allotments, if any.

Maturity........................ ____________, 2006

Interest Payment Dates.......... ________ 15, ________ 15, ________ 15 and ________ 15 of each
year. The first interest payment will be ________ 15, 2000, which
will represent interest accrued from __________, 2000.

Principal Payment............... We will not pay principal over the term of the notes. We plan to
pay the entire principal balance of the outstanding notes on
____________, 2006.

Optional Redemption............. On and after _______ 2002, we may redeem all or a portion of the
notes at a price equal to their outstanding principal amount plus
accrued interest, plus a premium as set forth in the following
table:

Date of Optional Redemption Premium Payable
--------------------------- ---------------
_______, 2002 through _______, 2003 5%

_______, 2003 through _______, 2004 3%

_______, 2004 through _______, 2005 1%

_______, 2005 through _______, 2006 None

See "Description of Notes - Optional Redemption By Us."

Ranking......................... The notes:

o are unsecured;

o rank junior to our current and future senior debt, including
debt we may incur under our existing and future credit
facilities;

o rank equally with our existing and future subordinated debt;
and

o rank senior to any subordinated debt held by any of our
affiliates or subsidiaries.
</TABLE>

-3-
<PAGE> 10

<TABLE>
<C> <S>
Assuming we had issued the notes and applied the proceeds as of
September 30, 1999, we would have had outstanding $226 million of
senior debt and $30 million of subordinated debt, including the
notes.

Restrictive Covenants........... The indenture governing the notes, among other things, will:

o require us to maintain a minimum tangible net worth of $35
million, subject to adjustments;

o restrict us from paying dividends on our capital stock or
making certain investments;

o require us to maintain certain financial ratios;

o restrict us from entering into certain transactions with
affiliates; and

o require us to maintain a NASDAQ listing for our common stock.

The covenants set forth in the indenture are more fully described
under "Description of Notes - Restrictive Covenants." These
covenants have significant exceptions.

Change of Control............... If we experience a change of control, you will have the option to
require us to repurchase your notes, in whole, at a price equal
to 101% of their principal amount plus accrued and unpaid
interest. For a description of the change of control provisions,
see "Description of the Notes - Repurchase at Option of Holder."

Use of Proceeds................. We expect to receive approximately $17.9 million of net proceeds
from this offering after deducting the underwriters' discounts
and commissions and estimated offering expenses payable by us. We
intend to use the net proceeds to pay down our lines of credit
used to finance residual interests in our securitizations and for
general corporate purposes. See "Use of Proceeds."

Absence of Public Market........ There is no existing market for the notes. We cannot provide you
with any assurance as to:

o the liquidity of any market that may develop for the notes;

o your ability to sell your notes; or

o the prices at which you will be able to sell your notes.
</TABLE>

-4-
<PAGE> 11

Miller & Schroeder Financial, Inc. and Peacock, Hislop,
Staley & Given, Inc., the underwriters, have advised us
that they currently intend to make a market in the notes
after the completion of this offering. The underwriters
do not, however, have any obligation to do so, and may
discontinue any market-making activities at any time
without any notice. We do not intend to apply for
listing of the notes on any securities exchange or for
quotation of the notes in any automated dealer quotation
system.

RISK FACTORS

You should carefully read "Risk Factors" beginning on page 9 for a
discussion of factors you should carefully consider before deciding to invest in
the notes.

-5-
<PAGE> 12

SUMMARY FINANCIAL DATA

The following table sets forth our summary consolidated financial and
operating data at the dates and for the periods indicated. You should also read
"Selected Financial Data," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and our consolidated financial statements
and related notes included elsewhere in this prospectus.

As required by the Financial Accounting Standards Board's Special
Report, "A Guide to Implementation of Statement 125 on Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities, Second
Edition," dated December 1998, and related guidance set forth in statements made
by the staff of the Securities and Exchange Commission on December 8, 1998, our
consolidated financial statements for 1996, 1997 and the first nine months of
1998 have been restated to reflect the change in the method of measuring and
accounting for credit enhancement assets on our securitization transactions to
the cash-out method from the cash-in method.

<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED
FOR THE YEARS ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------------- -------------------------
1996 1997 1998 1998 1999
-------- -------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net interest income .......................... $ 4,140 $ 5,036 $ 7,312 $ 6,052 $ 5,589
Servicing fee income ......................... 3,236 9,189 16,663 10,016 19,758
Gain on sale of contracts .................... 15,251 19,586 36,417 25,911 40,521
-------- -------- ---------- ---------- ----------
Total revenues ............................... 22,627 33,811 60,392 41,979 65,868
-------- -------- ---------- ---------- ----------
Provision for credit losses .................. 266 785 1,580 1,230 953
Operating expenses ........................... 15,394 30,740 48,427 34,612 52,672
-------- -------- ---------- ---------- ----------
Total expenses ............................... 15,660 31,525 50,007 35,842 53,625
-------- -------- ---------- ---------- ----------
Income before income taxes ................... 6,967 2,286 10,385 6,137 12,243
Income taxes ................................. 851 984 4,310 2,547 5,081
-------- -------- ---------- ---------- ----------
Net income ................................... $ 6,116 $ 1,302 $ 6,075 $ 3,590 $ 7,162
======== ======== ========== ========== ==========

OPERATING DATA:
Contracts purchased during the period ........ $319,840 $605,905 $1,038,535 $ 734,334 $1,130,634
Number of contracts purchased during the
period ..................................... 26,244 50,214 86,150 61,301 92,776
Contracts securitized and sold during the
period ..................................... $405,514 $527,276 $ 926,760 $ 646,760 $1,060,000
Number of active dealerships (at end of
period) .................................... 1,471 2,846 5,401 4,691 7,156
Operating expenses as a percentage of the
average servicing portfolio during
the period(1) .............................. 4.9% 5.5% 4.7% 4.9% 4.3%

SELECTED PORTFOLIO DATA:
Servicing portfolio (at end of period) ....... $400,665 $757,277 $1,345,961 $1,176,153 $1,924,881
Average servicing portfolio during the
period(1) .................................. $311,340 $563,343 $1,023,237 $ 945,077 $1,629,779
Number of contracts in servicing portfolio
(at end of period) ......................... 38,275 73,502 131,862 115,151 189,062
Weighted average annual percentage rate
(at end of period)(2) ...................... 14.72% 14.66% 14.72% 14.71% 14.73%
Delinquencies as a percentage of the dollar
amount of servicing portfolio (at end of
period)(3) ................................. 2.03% 2.51% 2.83% 2.02% 2.68%
Net charge-offs as a percentage of the
average servicing portfolio during the
period(1)................................... 1.63% 2.03% 1.72% 1.77% 1.75%
</TABLE>

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<PAGE> 13

<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF SEPTEMBER 30,
----------------------------- -------------------
1996 1997 1998 1998 1999
------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents ............. $ 603 $ 991 $ 1,929 $ 5,772 $ 4,788
Contracts held for sale(4) ............ 12,238 63,380 151,952 124,582 195,255
Credit enhancement assets ............. 37,144 71,736 112,953 101,031 130,900
Total assets .......................... 54,083 141,836 275,422 238,624 342,294
Warehouse borrowings .................. 10,108 60,506 150,044 119,006 187,529
Revolving credit and residual lines ... 2,500 30,000 49,556 45,972 56,695
Subordinated debt ..................... 0 0 10,000 10,000 10,000
Stockholders' equity .................. 36,358 37,717 43,824 41,340 50,708

OTHER DATA:
Ratio of earnings to fixed charges (5) 2.21x 1.29x 1.68x 1.55x 1.82x
EBITDA (6) ............................ $13,328 $ 10,742 $ 27,128 $ 18,096 $ 28,806
Ratio of EBITDA to cash interest
expenses(6) ......................... 1.96x 1.53x 1.92x 1.73x 2.09x
</TABLE>

- ----------

(1) Averages are based on daily balances

(2) The weighted averages are based on contracts outstanding at the end of
the period.

(3) Amounts for the nine months ended September 30, 1998 and 1999 are
annualized.

(4) Contracts held for sale excludes dealer participation and allowance
for credit losses.

(5) For purposes of computing our ratios of earnings to fixed charges, we
calculated earnings by adding fixed charges to income before income
taxes. Fixed charges consist of gross interest expense and one third of
our rent expense, which is the amount we believe is representative of
the interest factor component of our rent expense.

(6) EBITDA consists of earnings before interest, income taxes, depreciation
and amortization. EBITDA is presented as additional information because
it is a commonly used financial measure. We also believe it to be a
useful indicator of our ability to meet our debt service requirements.
We do not, however, intend it to be an alternative measure of operating
results or cash flow from operations.

RECENT DEVELOPMENTS

On February 1, 2000, we announced our financial and operational results
for the year ended December 31, 1999. The following preliminary financial data
for the year ended December 31, 1999 is unaudited and has been reviewed by our
independent public accountants and is subject to change. This data reflects all
adjustments (consisting only of normal recurring adjustments) which are, in our
opinion, necessary for a fair presentation of our financial position and
operating results for such period.

o net income increased 61% to $9.8 million for the year ended
December 31, 1999 compared to net income of $6.1 million for
the year ended December 31, 1998;

o total revenues increased 47% to $88.9 million for the year
ended December 31, 1999 compared to $60.4 million for the
year ended December 31, 1998;

o contract purchases increased 50% to $1.56 billion compared
to $1.04 billion for the year ended December 31, 1998;

o annualized net charge-offs as a percent of the average
servicing portfolio for the year ended December 31, 1999 was
1.85% compared to 1.72% for the year ended December 31, 1998;

o operating expenses as a percent of the average servicing
portfolio declined to 4.10% for the year ended December 31,
1999 compared to 4.73% for the year ended December 31, 1998;

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<PAGE> 14

o the amount of total delinquencies as a percent of the
servicing portfolio for the year ended December 31, 1999
was 3.24% compared to 2.83% for the year ended
December 31, 1998;

o the servicing portfolio increased 58% to $2.13 billion at
December 31, 1999 from $1.35 billion at December 31, 1998;

o off balance sheet reserves as a percent of securitization
assets increased to 4.41% at December 31, 1999 compared
to 4.31% at December 31, 1998;

o gains on sales of contracts totaled $53.9 million for the
year ended December 31, 1999 compared to $36.4 million for
the year ended December 31, 1998; and

o servicing fee income increased to $28.9 million for the year
ended December 31, 1999 compared to $16.7 million for the
year ended December 31, 1998.

-8-
<PAGE> 15

RISK FACTORS

Before you invest in the notes, you should carefully consider these
risk factors, as well as the other information contained in this prospectus. The
risks described below are not the only ones we face. Additional risks not
presently known to us or that we currently believe are unimportant may also hurt
our business operations.

RISK FACTORS RELATING TO THE NOTES

Our substantial indebtedness could adversely affect our financial
health and prevent us from fulfilling our obligations under the notes.

We have now and, after we sell these notes, will continue to have a
substantial amount of indebtedness. You should be aware that our substantial
indebtedness could have important consequences to you. For example, it could:

o make it more difficult for us to perform our obligations with
respect to the notes;

o increase our vulnerability to general adverse economic and
industry conditions;

o require us to dedicate a substantial portion of our cash flow
from operations to payments on our indebtedness, thereby
reducing amounts available for working capital, capital
expenditures and other general corporate purposes;

o limit our flexibility in planning for, or reacting to, changes
in our business and the industry in which we operate;

o place us at a competitive disadvantage compared to our
competitors that have less debt; and

o limit our ability to borrow additional funds.

Our ability to incur substantially more debt could further increase the
risks described above.

We may be able to incur substantial additional indebtedness in the
future. The terms of the indenture governing the notes set parameters for but do
not prohibit us from doing so. We also expect to enter into additional credit
facilities in the future. Any such borrowings would be senior to the notes. If
we borrow more money, the related risks that we now face could intensify. See
"Capitalization," "Selected Financial Data," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Description of
the Notes."

To service our indebtedness, we will require a significant amount of
cash. Our ability to generate cash depends on many factors beyond our control.

Our ability to repay or refinance our debt depends on our successful
financial and operating performance. We cannot assure you that our business
strategy will continue to succeed or that we will achieve our anticipated
financial results. Our financial and operational performance depends upon a
number of factors, many of which are beyond our control. These factors include:

o the current economic and competitive conditions in the
asset-backed securities market;

o the credit quality of our motor vehicle contracts;

o any operating difficulties or pricing pressures we may
experience;

-9-
<PAGE> 16

o our ability to obtain credit enhancement;

o the passage of laws or regulations that affect us adversely;
and

o any delays in implementing any strategic projects we may have.

We cannot assure you that we will generate sufficient cash flow from
operations or that we will be able to obtain sufficient funding to satisfy all
of our obligations, including the notes. If we are unable to pay our debts, we
will be required to pursue one or more alternative strategies, such as selling
assets, refinancing or restructuring our indebtedness or selling additional
equity capital. However, we cannot assure you that any alternative strategies
will be feasible at the time or prove adequate. Also, certain strategies would
require the consent of our senior secured and unsecured lenders before we could
take action.

Your right to receive payments on the notes is junior to almost all of
our existing indebtedness and possibly all of our future borrowings.

The notes will be subordinated to the prior payment in full of our
current and future senior indebtedness. As of September 30, 1999, after giving
effect to the sale of the notes, we would have had approximately $226 million of
senior indebtedness outstanding. In addition, we currently have an additional
$10 million of subordinated indebtedness which will rank equally with the notes.
Because of the subordination provisions of the notes, in the event of our
bankruptcy, liquidation or dissolution, our assets would be available to pay
obligations under the notes only after all payments had been made on our senior
indebtedness. We cannot assure you that sufficient assets will remain after all
such payments have been made to make any payments on the notes, including
payments of interest when due.

The terms of our credit facilities and the indenture for the notes
impose significant restrictions on our ability and that of our subsidiaries to
take certain actions, which may have an adverse impact on our business, results
of operations and financial condition.

The indenture and our credit facilities impose significant operating
and financial restrictions on us and our subsidiaries and require us to meet
certain financial tests. These restrictions may significantly limit or prohibit
us from engaging in certain transactions, including the following:

o incurring or guaranteeing additional indebtedness;

o paying dividends or other distributions to our stockholders or
redeeming, repurchasing or retiring our capital stock or
subordinated obligations;

o making investments;

o making capital expenditures;

o creating liens on our assets;

o issuing or selling capital stock of our subsidiaries;

o transferring or selling assets currently held by us;

o engaging in transactions with affiliates; and

o engaging in mergers or consolidations.

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<PAGE> 17
The failure to comply with any of these covenants or to maintain
certain indebtedness ratios would cause a default under the indenture and our
credit facilities and may cause a default under our other debt agreements which
may be outstanding from time to time. A default, if not waived, could result in
acceleration of our indebtedness, in which case the debt would become
immediately due and payable. If this occurs, we may not be able to repay our
debt or borrow sufficient funds to refinance it. Even if new financing is
available, it may not be on terms that are acceptable to us. Complying with
these covenants may cause us to take actions that are not favorable to holders
of the notes. See "Description of the Notes -- Restrictive Covenants."

We may not have the ability to raise the funds necessary to finance the
change of control offer required by the indenture.

If a "change of control," as described in "Description of the Notes --
Repurchase at Option of Holder," occurs, you have the right to require us to
repurchase any or all of the notes you own at a price equal to 101% of the
principal amount thereof, together with any interest we owe you. Upon a change
of control, we may be required immediately to repay the outstanding principal,
any accrued interest on the notes, any amounts owed by us under our credit
facilities and other indebtedness or preferred stock then outstanding. We cannot
assure you that we would be able to repay the amounts outstanding under our
credit facilities or the principal amount outstanding of our other indebtedness
or preferred stock, if applicable, or to obtain the necessary consents to
purchase the notes. Any requirement to offer to purchase any outstanding notes
may result in our having to refinance our outstanding indebtedness, which we may
not be able to do. In addition, even if we were able to refinance such
indebtedness, such financing may be on terms unfavorable to us. If we fail to
repurchase all of the notes tendered for purchase upon the occurrence of a
change of control, such failure would be an event of default under the indenture
and under our credit facilities.

An active trading market may not develop for the notes.

The notes will be new securities for which there is currently no
trading market. We do not intend to apply for listing of the notes on any
securities exchange or for quotation through the National Association of
Securities Dealers Automated Quotation system. Although the underwriters have
informed us that they intend to make a market in the notes, the underwriters are
not obligated to do so and may discontinue any such market making at any time
without notice. The liquidity of any market for the notes will depend upon the
number of holders of the notes, the interest of securities dealers in making a
market in the notes and other factors. Accordingly, we cannot assure you as to
the development or liquidity of any market for the notes.

RISK FACTORS RELATING TO ONYX

If we are unable to access the capital markets or obtain acceptable
financing, our results of operations, financial condition and cash flows would
be materially and adversely affected and we may be unable to make payments on
the notes.

We require a substantial amount of cash liquidity to operate our
business. Among other things, we use such cash liquidity to:

o acquire motor vehicle contracts;

o pay dealer participation;

o pay securitization costs and fund spread accounts;

o settle hedge transactions;

-11-
<PAGE> 18

o satisfy working capital requirements and pay operating
expenses; and

o pay interest expense.

When we securitize our motor vehicle contracts, we report a gain on the
sale of those contracts. This gain represents a substantial portion of our
revenues. However, although we report this gain at the time of sale, we receive
the monthly cash payments on these contracts which represent these revenues over
the life of the motor vehicle contracts, rather than at the time of sale.
Similarly, we recover the cash paid by us for dealer participation over the life
of the related motor vehicle contracts, rather than at the time of sale. As a
result, a substantial portion of our reported revenues do not represent
immediate cash liquidity.

Cash generated from our operations has been insufficient to fund our
operations due to our current growth. We expect this to continue so long as the
volume of our purchases of motor vehicle contracts continues to grow. We have
historically funded our operations principally through borrowings from financial
institutions, the sale of equity securities and sales of subordinated notes. We
cannot assure you, however, that:

o we will have access to the capital markets in the future for
equity or debt issuances or for securitizations; or

o financing through borrowings or other means will be available
on acceptable terms to satisfy our cash requirements.

See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Liquidity and Capital Resources" for additional
discussion of our liquidity needs.

If we are unable to arrange new warehousing credit facilities or extend
our existing credit facilities when they come due, our results of operations,
financial condition and cash flows could be materially and adversely affected
and we may be unable to make payments on the notes.

We depend on credit and warehouse facilities with financial
institutions to finance our purchases of motor vehicle contracts. Our business
strategy requires that these credit and warehouse financing sources continue to
be available to us from the time of purchase or origination of a motor vehicle
contract until its sale through a securitization. We describe our credit and
warehouse facilities in more detail under "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- Liquidity and Capital
Resources"

We depend substantially on warehouse lines of credit with each of
Triple-A One Funding Corporation, Merrill Lynch Mortgage Capital, Inc. and Park
Avenue Receivables Corporation. These warehouse facilities remain available to
us only if, among other things, we comply with certain financial covenants
contained in the documents governing these facilities. We cannot assure you that
our warehouse facilities will be available to us or that financing will be
available to us on favorable terms.

The reduction in availability or loss of access to our residual lines
of credit could materially and adversely affect our operations, financial
condition and cash flows and our ability to make payments on the notes.

When we sell our motor vehicle contracts in securitizations, we receive
cash and a residual interest in the securitized assets. This residual interest
represents the future cash flows to be generated by the motor vehicle contracts
in excess of the interest and principal paid on the securities issued in the
securitization and other costs of servicing the motor vehicle contracts and
completing the securitization.

We use the residual interest from each securitization as collateral to
borrow cash to finance our operations. The amount of cash advanced by our
lenders under our residual lines of credit depends on a collateral formula that

-12-
<PAGE> 19

is determined in large part by how well our securitized motor vehicle contracts
perform. If our portfolio of securitized motor vehicle contracts has higher
delinquency and loss ratios than expected, then the amount of money we could
borrow under the residual lines would be reduced. Our residual lines of credit
also require us to meet certain minimum net worth and operating loss tests and
contain covenants restricting delinquencies, losses, prepayments and net yields
of the motor vehicle contracts included in a securitization.

If we are unable to securitize profitably a sufficient number of our
motor vehicle contracts in a particular financial reporting period, then our
revenues for that period could decline and result in lower income or a loss for
that period and we may be unable to make payments on the notes.

We rely significantly upon securitizations to generate cash proceeds to
repay our warehouse credit facilities and to thereby allow us to finance the
purchase of additional motor vehicle contracts. Further, the gain on sale of
motor vehicle contracts generated by our securitizations represents a
significant portion of our revenues. Our ability to complete securitizations of
our motor vehicle contracts is affected by the following factors, among other
things:

o conditions in the securities markets generally;

o conditions in the asset-backed securities market specifically;

o the credit quality of our portfolio of motor vehicle
contracts; and

o our ability to obtain credit enhancement.

Unanticipated delays in closing a securitization could also increase
our interest rate risk by increasing the warehousing period for our motor
vehicle contracts. See "Management's Discussion and Analysis of Results of
Operations and Financial Condition -- Liquidity and Capital Resources" and
"-- Securitizations."

If we are unable to obtain new financial guarantee insurance policies
for our future securitizations or maintain our existing policies, we could be
subject to higher financing costs, which could have a material adverse effect on
our results of operations, financial condition and cash flows and our ability to
make payments on the notes.

In each of our securitizations, we utilize credit enhancement in the
form of a financial guarantee insurance policy issued by MBIA Insurance
Corporation, or its predecessor. Each of these policies unconditionally and
irrevocably guarantees certain interest and principal payments on the securities
issued in our securitizations. These guarantees enable these securities to
achieve the highest rating available. This form of credit enhancement reduces
the costs of our securitizations relative to alternative forms of credit
enhancements currently available to us. MBIA is not required to insure future
securitizations and we are not restricted in our ability to obtain credit
enhancement from providers other than MBIA or to use other forms of credit
enhancement. We cannot assure you that:

o we will be able to continue to obtain credit enhancement in
any form from MBIA;

o we will be able to obtain credit enhancement from any other
provider of credit enhancement on acceptable terms; or

o our future securitizations will be similarly rated.

We also rely on MBIA's financial guarantee insurance policy to reduce
our borrowing cost under our warehouse facilities with Triple-A One and Park
Avenue. If MBIA's credit rating is downgraded or if it withdraws our credit
enhancement for these warehouse facilities, we could be subject to higher
interest costs for our future securitizations and higher financing costs during
the warehousing period.

-13-
<PAGE> 20

Interest rate fluctuations may materially and adversely affect our
results of operations, financial condition and cash flows and our ability to
make payments on the notes.

Our profitability is largely determined by the difference, or "spread,"
between the effective interest rate received by us on the motor vehicle
contracts which we acquire or originate and the interest rates payable under our
credit facilities during the warehousing period and on the securities issued in
our securitizations.

Several factors affect our ability to manage interest rate risk. First,
we purchase or originate motor vehicle contracts at fixed interest rates, while
we borrow under our credit facilities at variable interest rates that are
subject to frequent adjustment to reflect prevailing rates for short-term
borrowings. If the interest rates applicable to our borrowings under our credit
facilities increase during a warehousing period, our policy is to increase the
interest rate that we quote to dealers at which we will purchase motor vehicle
contracts from those dealers or to increase the interest rates we use to solicit
borrowers for motor vehicle contracts originated by us. However, there is
generally a time lag before our increased borrowing costs can be offset by
increases in these buy rates. In certain instances, the rates charged by our
competitors may limit our ability to pass through all or most of our increased
costs of warehousing financing.

Second, our spread can be materially and adversely affected by
increases in the prevailing interest rates in the commercial paper markets after
a motor vehicle contract is purchased or originated and while it is held during
the warehousing period. While our warehouse facilities with Triple-A One and
Park Avenue permit us to select maturities of up to 270 days for commercial
paper issued under those facilities, under these circumstances, our spread would
be reduced if we selected a shorter maturity or experienced a delay in
completing a securitization.

Third, the interest rate demanded by investors in our securitizations
is a function of prevailing market rates for comparable transactions and the
general interest rate environment. Because the motor vehicle contracts that we
purchase or originate have fixed interest rates, we bear the risk of spreads
narrowing because of interest rate increases during the period from the date the
motor vehicle contracts are purchased or originated until the pricing of our
securitization of such motor vehicle contracts. We employ a hedging strategy
that is intended to minimize this risk and which historically has involved the
execution of forward interest rate swaps or the use of a pre-funding structure
for our securitizations. A pre-funding structure utilizes a portion of the
proceeds of the sale of securities in a securitization to purchase motor vehicle
contracts after the initial closing of the securitization. However, we cannot
assure you that this strategy will consistently or completely offset adverse
interest rate movements during the warehousing period or that we will not
sustain losses on hedging transactions. In order to execute our hedging strategy
we must estimate our monthly motor vehicle contract acquisition volume and the
timing of our securitizations. If such estimates are wrong, then our gains on
sales of motor vehicle contracts, results of operations, financial condition and
cash flows could be materially and adversely affected, including our ability to
make payments on the notes.

We also have exposure to interest rate fluctuations under our residual
lines of credit. The interest rates under these lines of credit are based on the
London Interbank Offered Rate, or LIBOR, and the prime rate. The applicable
interest rate under our lines of credit based on LIBOR reset on a monthly basis,
while the applicable interest rate under our lines of credit based on the prime
rate reset simultaneously with any change in the prime rate. In periods of
increasing interest rates, our cash flows, results of operations and financial
condition could be adversely affected, including our ability to fulfill our
obligations under the notes.

In addition, we have some interest rate exposure to falling interest
rates to the extent that the interest rates charged on motor vehicle contracts
sold in a securitization with a pre-funding structure decline below the rates
prevailing at the time of pricing of the securities to be issued in that
securitization. This rate decline would reduce the interest rate spread because
the interest rate on the securities issues in the securitization would remain
fixed, while the interest rates charged on the motor vehicle contracts which are
purchased during the pre-funding period

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<PAGE> 21

would be declining. In time, this would reduce our gain on sale of our motor
vehicle contracts and adversely affect our results of operations, financial
condition and cash flows and our ability to make payments on the notes.

If motor vehicle contracts that we purchase or service are prepaid or
experience defaults, this could materially and adversely affect our results of
operations, financial condition and cash flows and our ability to make payments
on the notes.

Our results of operations, financial condition, cash flows and
liquidity, and consequently our ability to make payments on the notes, depend,
to a material extent, on the performance of motor vehicle contracts which we
purchase, warehouse and securitize. A portion of the motor vehicle contracts
acquired by us may default or prepay during the warehousing period. We bear the
risk of losses resulting from payment defaults during the warehousing period. In
the event of payment default, the collateral value of the motor vehicle securing
a motor vehicle contract may not cover the outstanding principal balance on that
contract and the related costs of recovery. We maintain an allowance for credit
losses on motor vehicle contracts held during the warehousing period which
reflects our estimates of anticipated credit losses during that period. If the
allowance is inadequate, then we would recognize as an expense the losses in
excess of the allowance and our results of operations could be adversely
affected. In addition, under the terms of our warehouse facilities with Triple-A
One and Park Avenue, we are not able to borrow against defaulted motor vehicle
contracts.

Our servicing income can also be adversely affected by prepayment of,
or defaults under, motor vehicle contracts in our servicing portfolio. Our
contractual servicing revenue is based on a percentage of the outstanding
principal balance of the motor vehicle contracts in our servicing portfolio. If
motor vehicle contracts are prepaid or charged-off, then our servicing revenue
will decline while our servicing costs may not decline proportionately.

The gain on sale of motor vehicle contracts recognized by us in each
securitization and the value of our residual interest in the securitized assets
in each securitization reflects our estimate of future credit losses and
prepayments for the motor vehicle contracts included in such securitization. If
actual rates of credit loss or prepayments, or both, on such motor vehicle
contracts exceed our estimates, the value of our residual interest would be
impaired. We periodically review our credit loss and prepayment assumptions
relative to the performance of the securitized motor vehicle contracts and to
market conditions. Our results of operations and liquidity could be adversely
affected if credit loss or prepayment levels on securitized motor vehicle
contracts substantially exceed anticipated levels. If necessary, we would write
down the value of our residual interest through a reduction to servicing fee
income. Further, any write down of our residual interest would reduce the amount
available to us under our residual lines, thus requiring us to pay down amounts
outstanding under the facilities or provide additional collateral to cure the
borrowing base deficiency.

The loss of our servicing rights could materially and adversely affect
our results of operations, financial condition and cash flows and our ability to
make payments on the notes.

Our results of operations, financial condition and cash flows, and our
ability to make payments on the notes, would be materially and adversely
affected if any of the following were to occur:

o the loss of our servicing rights under the sale and servicing
agreement for either of our warehouse facilities with Triple-A
One or Park Avenue;

o the loss of our servicing rights under the applicable pooling
and servicing or sale and servicing agreement relating to
motor vehicle contracts which we have sold in our
securitizations;

o the occurrence of certain trigger events under the insurance
agreement between us and MBIA in each of our securitizations
that would block the release of future servicing cash flows
from the spread accounts in those securitizations; or

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<PAGE> 22

o the occurrence of certain trigger events under our Merrill
Line that would allow Merrill Lynch to proceed against any
assets they hold pursuant to any agreement with us or any of
our affiliates.

We are entitled to receive servicing income only while we act as
servicer under the applicable sales and servicing agreement or pooling and
servicing agreement for motor vehicle contracts which we have securitized and
sold. Under our warehouse facilities with Triple-A One and Park Avenue, MBIA can
terminate our right to act as servicer upon the occurrence of certain events,
including:

o our failure generally to observe and perform covenants and
agreements applicable to us;

o certain bankruptcy events involving us; or

o the occurrence of certain events of default under the
documents governing the facilities.

The success of our operations depends on certain key personnel.

Our future operating results depend in significant part upon the
continued service of our key senior management personnel, none of whom is bound
by an employment agreement. Our future operating results also depend in part
upon our ability to attract and retain qualified management, technical, and
sales and support personnel for our operations. Competition for such personnel
is intense. We cannot assure you that we will be successful in attracting or
retaining such personnel. The loss of any key employee, the failure of any key
employee to perform in his or her current position or our inability to attract
and retain skilled employees, as needed, could materially and adversely affect
our results of operations, financial condition and cash flows.

Increased competition could materially and adversely affect our
operations and profitability.

Competition in the field of financing retail motor vehicle sales is
intense. The automobile finance market is highly fragmented and historically has
been serviced by a variety of financial entities including the captive finance
affiliates of major automotive manufacturers, banks, savings associations,
independent finance companies, credit unions and leasing companies. Several of
these competitors have greater financial resources than we do. Many of these
competitors also have long-standing relationships with automobile dealerships
and offer dealerships or their customers other forms of financing or services
not provided by us. Our ability to compete successfully depends largely upon our
relationships with dealerships and the willingness of dealerships to offer to us
for purchase those motor vehicle contracts that meet our underwriting criteria.
We cannot assure you that we will be able to continue to compete successfully in
the markets we serve.

Adverse economic conditions could materially and adversely effect our
revenues and cash flows.

Our business is dependent upon the sale of motor vehicles. Our ability
to continue to acquire motor vehicle contracts in the markets in which we
operate and to expand into additional markets is dependent upon the overall
level of sales of new and used motor vehicles in those markets. A prolonged
downturn in the sale of new and used motor vehicles, whether nationwide or in
the states where our motor vehicle contracts are geographically concentrated,
could have a material adverse impact upon us, our results of operations and our
ability to implement our business strategy. Similarly, adverse economic
conditions or other factors particularly affecting the states in which our motor
vehicle contracts are geographically concentrated might adversely affect the
performance of those contracts, including the level of delinquencies, which
could materially and adversely affect our results of operation, financial
condition and cash flows and our ability to perform our obligations under the
notes.

The automobile industry generally is sensitive to adverse economic
conditions both nationwide and in California. Periods of rising interest rates,
reduced economic activity or higher rates of unemployment generally

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<PAGE> 23

result in a reduction in the rate of sales of motor vehicles and higher default
rates on motor vehicle loans. We cannot assure you that such economic conditions
will not occur, or that such conditions will not result in severe reductions in
our revenues or the cash flows available to us to permit us to remain current on
our credit facilities or materially and adversely affect our ability to make
payments on the notes.

We are subject to many regulations.

Our business is subject to numerous federal and state consumer
protection laws and regulations, which, among other things:

o require us to obtain and maintain certain licenses and
qualifications;

o limit the interest rates, fees and other charges we are
allowed to charge;

o limit or prescribe certain other terms of our motor vehicle
contracts;

o require specific disclosures; and

o define our rights to repossess and sell collateral.

We believe that we are in compliance in all material respects with all
such laws and regulations, and that such laws and regulations have had no
material adverse effect on our ability to operate our business. However, we will
be materially and adversely affected if we fail to comply with:

o applicable laws and regulations;

o changes in existing laws or regulations;

o changes in the interpretation of existing laws or regulations;
or

o any additional laws or regulations that may be enacted in the
future.

See "Business -- Government Regulation"

We are subject to litigation risks.

We are party to various legal proceedings, similar to actions brought
against other companies in the motor vehicle finance industry. Companies in the
motor vehicle finance industry have been named as defendants in an increasing
number of class action lawsuits brought by purchasers of motor vehicles claiming
violation of various federal and state consumer credit and similar laws and
regulations. We are defendants in two such class action lawsuits. While we
intend to vigorously defend ourselves against such proceedings there is a chance
that our results of operations, financial condition and cash flows could be
materially and adversely affected by unfavorable outcomes.

RISKS ASSOCIATED WITH THE YEAR 2000 PROBLEM

We are substantially dependent on our own and third party computer
systems, business applications and other information technology systems, due to
the nature of our consumer finance business and the increasing number of
electronic transactions in the industry. Historically, many information
technology systems were developed to recognize the year as a two-digit number,
with the digits "00" being recognized as the year 1900. The year 2000 presents a
number of potential problems for such systems, including potentially significant
processing

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<PAGE> 24

errors or failure. Given our reliance on our computer systems, our results of
operations, financial condition and cash flows could be materially adversely
affected by any significant errors or failures.

We developed a comprehensive plan designed to address the "Year 2000"
issue , which we have completed for our in-house and third party technology
applications. In 1999, we completed a detailed risk assessment of our various
in-house and third party computer systems, business applications and other
affected systems, formulated a plan for specific remediation efforts and
executed such remediation efforts. We assembled survey data from third party
vendors and certain other parties with which we communicate electronically to
determine the compliance efforts being undertaken by these parties and to assess
our potential exposure to any non-compliant systems operated by these parties.
We completed our remediation efforts and testing of our in-house and third
party systems and applications in 1999, and, as of this date, have experienced
no problems related to the Year 2000 problem.

We currently estimate that our costs related to Year 2000 compliance
remediation for our own information technology systems and applications were
approximately $450,000 in 1999. This amount represented approximately 9% of our
information technology budget.

There can be no assurance that all potential Year 2000 problems for our
in-house and third party technology applications have been resolved. If we
experience an unanticipated Year 2000 problem, we may be unable to perform our
key operating activities, such as the purchase of loans and the invoicing,
collecting and application of obligor repayments. We could be subject to
litigation for computer systems failure, such as improper application of
repayments and resulting incorrect credit reporting to credit bureaus. In
addition, disruptions in the economy generally resulting from Year 2000 issues
could also materially adversely affect us. The amount of potential liability and
lost revenue cannot reasonably be estimated at this time.

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<PAGE> 25

USE OF PROCEEDS

We expect to receive approximately $17.9 million of net proceeds from
this offering after deducting the underwriters' discounts and commissions and
estimated offering expenses payable by us. We intend to use the net proceeds to
prepay a portion of the amounts outstanding under our residual lines of credit
with Merrill Lynch Mortgage Capital Inc. and Salomon Smith Barney Realty Inc.
These lines bore interest at a weighted average rate of 7.91% as of September
30, 1999. We used amounts borrowed under the residual lines to fund our
operating requirements. We will continue to utilize these lines of credit as the
need arises.

CAPITALIZATION

The following table sets forth our capitalization, as of September 30,
1999, and as adjusted to give effect to the sale of $20 million principal amount
of the notes and the application of the estimated net proceeds. For a
description of the application of the net proceeds, see "Use of Proceeds." You
should read this information together with the historical consolidated financial
statements and notes thereto contained in this prospectus.

<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1999
------------------------------
ACTUAL AS ADJUSTED
------------- -------------
<S> <C> <C>
DEBT:
Warehouse Borrowings ...................................... $ 187,529,471 $ 187,529,471
Residual Facilities ....................................... 56,695,229 38,795,229
Subordinated Loan ......................................... 10,000,000 10,000,000
Other Debt ................................................ 846,683 846,683
___% Subordinated Notes due 2006 .......................... -- 20,000,000
------------- -------------
Total debt: ...................................... 255,071,383 257,171,383
------------- -------------

STOCKHOLDERS' EQUITY:
Series A Participating Preferred stock $.01 par value,
200,000 shares authorized; no shares issued and outstanding -- --
Preferred stock (undesignated), $.01 par value, 9,800,000
shares authorized; no shares issued and outstanding ..... -- --
Common stock, $.01 par value, 15,000,000 shares authorized;
6,177,804 shares issued and outstanding ................... 61,778 61,778
Additional paid-in capital ................................ 37,892,071 37,892,071
Retained earnings ......................................... 13,084,689 13,084,689
Accumulated other comprehensive loss ...................... (330,395) (330,395)
------------- -------------
Total stockholders' equity: ...................... 50,708,143 50,708,143
------------- -------------
Total capitalization: ............................ $ 305,779,526 $ 307,879,526
============= =============
</TABLE>

SELECTED FINANCIAL DATA

The following table sets forth our selected historical financial
information as of and for the nine months ended September 30, 1999 and 1998 and
each of the years in the five-year period ended December 31, 1998. The
information as of and for the years ended December 31, 1996, 1997 and 1998 is
derived from our audited consolidated financial statements and the related notes
thereto included in this prospectus. The financial data for the nine months
ended September 30, 1999 and 1998 is unaudited and reflects all adjustments
(consisting only of normal recurring adjustments) which are, in our opinion,
necessary for a fair presentation of our financial position and operating
results for such interim periods. The results of operations for the nine month
period ended September 30, 1999 are not necessarily indicative of results for
the full year. You should read the following

-19-
<PAGE> 26

information together with our historical consolidated financial statements and
the related notes thereto included in this prospectus, and "Management's
Discussion and Analysis of Financial Conditions and Results of Operations."

<TABLE>
<CAPTION>
FOR THE NINE MONTHS
FOR THE YEARS ENDED DECEMBER 31, ENDED SEPTEMBER 30,
------------------------------------------------------------- ------------------------
1994 1995 1996 1997 1998 1998 1999
-------- --------- -------- -------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net interest income ................ $ 1,311 $ 2,225 $ 4,140 $ 5,036 $ 7,312 $ 6,052 $ 5,589
Servicing fee income ............... 269 1,381 3,236 9,189 16,663 10,016 19,758
Gain on sale of contracts .......... 515 2,012 15,251 19,586 36,417 25,911 40,521
-------- --------- -------- -------- ---------- ---------- ----------
Total revenues ..................... 2,095 5,618 22,627 33,811 60,392 41,979 65,868
-------- --------- -------- -------- ---------- ---------- ----------
Provision for credit losses ........ 208 465 266 785 1,580 1,230 953
Operating expenses ................. 5,392 8,340 15,394 30,740 48,427 34,612 52,672
-------- --------- -------- -------- ---------- ---------- ----------
Total expenses ..................... 5,600 8,805 15,660 31,525 50,007 35,842 53,625
-------- --------- -------- -------- ---------- ---------- ----------
Income (loss) before income taxes .. (3,505) (3,187) 6,967 2,286 10,385 6,137 12,243
Income taxes ....................... 0 0 851 984 4,310 2,547 5,081
-------- --------- -------- -------- ---------- ---------- ----------
Net income (loss) .................. $ (3,505) $ (3,187) $ 6,116 $ 1,302 $ 6,075 $ 3,590 $ 7,162
======== ========= ======== ======== ========== ========== ==========
Net income (loss) available to
common shareholders ............... $ (4,081) $ (3,763) $ 6,116 $ 1,302 $ 6,075 $ 3,590 $ 7,162

OPERATING DATA:
Contracts purchased during the
period ............................ $ 85,723 $ 199,397 $319,840 $605,905 $1,038,535 $ 734,334 $1,130,634
Number of contracts purchased
during the period ................. 7,619 16,571 26,244 50,214 86,150 61,301 92,776
Contracts securitized and sold
during the period ................. $ 38,601 $ 105,000 $405,514 $527,276 $ 926,760 $ 646,760 $1,060,000
Number of active dealerships (at end
of period) ......................... 380 769 1,471 2,846 5,401 4,691 7,156
Operating expenses as a percentage
of the average servicing portfolio
during the period(1) ............... 19.1% 5.9% 4.9% 5.5% 4.7% 4.9% 4.3%

SELECTED PORTFOLIO DATA:
Servicing portfolio (at end of
period) ........................... $ 74,581 $ 218,207 $400,665 $757,277 $1,345,961 $1,176,153 $1,924,881
Average servicing portfolio during
the period(1) ..................... $ 28,291 $ 141,029 $311,340 $563,343 $1,023,237 $ 945,077 $1,629,779
Number of contracts in servicing
portfolio (at end of period) ...... 6,893 20,156 38,275 73,502 131,862 115,151 189,062
Weighted average annual percentage
rate (at end of period)(2) ........ 14.01% 15.00% 14.72% 14.66% 14.72% 14.71% 14.73%
Delinquencies as a percentage of the 0.07% 1.20% 2.03% 2.51% 2.83% 2.02% 2.68%
dollar amount of servicing
portfolio (at end of period)(3)
Net charge-offs as a percentage of
the average servicing portfolio
during the period(1) .............. 0.00% 0.37% 1.63% 2.03% 1.72% 1.77% 1.75%
</TABLE>

-20-
<PAGE> 27

<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF SEPTEMBER 30,
------------------------------------------------------ -------------------
1994 1995 1996 1997 1998 1998 1999
-------- --------- ------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents ............ $ 10,252 $ 1,623 $ 603 $ 991 $ 1,929 $ 5,772 $ 4,788
Contracts held for sale(4) ........... 40,313 116,893 12,238 63,380 151,952 124,582 195,255
Credit enhancement assets ............ 3,085 12,390 37,144 71,736 112,953 101,031 130,900
Total assets ......................... 57,095 136,077 54,083 141,836 275,422 238,624 342,294
Warehouse borrowings ................. 40,850 112,380 10,108 60,506 150,044 119,006 187,529
Revolving credit and residual lines .. 0 9,569 2,500 30,000 49,556 45,972 56,695
Subordinated debt .................... 10,000 10,000 0 0 10,000 10,000 10,000
Stockholders' equity (deficit) ....... (4,122) (7,896) 36,358 37,717 43,824 41,340 50,708
Redeemable Series A Preferred Stock .. 8,803 9,379 -- -- -- -- --

OTHER DATA:
Ratio of earnings to fixed charges(5) (0.83)x 0.48x 2.21x 1.29x 1.68x 1.55x 1.82x
EBITDA(6) ............................ $ (1,135) $ 3,507 $13,328 $ 10,742 $ 27,128 $ 18,096 $ 28,806
Ratio of EBITDA to cash interest
expenses(6) ......................... (0.65)x 0.74x 1.96x 1.53x 1.92x 1.73x 2.09x
</TABLE>

- ----------

(1) Averages are based on daily balances

(2) The weighted averages are based on Contracts outstanding at the end of
the period.

(3) Amounts for the quarters ended September 30, 1998 and 1999 are
annualized.

(4) Contracts held for sale excludes dealer participation and allowance
for credit losses.

-21-
<PAGE> 28

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

We are a specialized consumer finance company engaged principally in
the business of providing indirect automobile financing to franchised new car
dealerships and select used car dealerships throughout the United States. We
primarily purchase motor vehicle contracts from such dealerships. We focus our
efforts on acquiring motor vehicle contracts that are secured by late model used
motor vehicles and, to a lesser extent, new motor vehicles, that were entered
into with purchasers whom we believe have favorable credit profiles. Since we
started purchasing, originating and servicing motor vehicle contracts in
February 1994, we have purchased or originated more than $3.4 billion in motor
vehicle contracts from approximately 7,100 dealers, and we have expanded our
operations from a single office in Orange County, California to major markets
throughout the United States.

We generate revenues primarily through the purchase, warehousing,
subsequent securitization and ongoing servicing of motor vehicle contracts. We
earn net interest income on motor vehicle contracts held during the warehousing
period. Upon the securitization and sale of motor vehicle contracts, we:

o recognize a gain on sale of the motor vehicle contracts;

o receive future servicing cash flows; and

o earn fees from servicing the securitized motor vehicle
contracts.

As required by the Financial Accounting Standards Board's Special
report, "A Guide to Implementation of Statement 125 on Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities, second
edition," dated December 1998, and related guidance set forth in statements made
by the staff of the Securities and Exchange Commission on December 8, 1998, our
consolidated financial statements for 1996, 1997 and the first three quarters of
1998 have been restated to reflect the change in the method of measuring and
accounting for credit enhancement assets on our securitization transactions to
the cash-out method from the cash-in method.

The following table illustrates the changes in our motor vehicle
contract acquisition volume, total revenue, securitization activity and
servicing portfolio during the past three fiscal years and the nine month
periods ended September 30, 1998 and 1999.

<TABLE>
<CAPTION>
FOR THE YEARS ENDED FOR THE NINE MONTHS
DECEMBER 31, ENDED SEPTEMBER 30,
----------------------------------- -----------------------
1996 1997 1998 1998 1999
-------- -------- ---------- -------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Contracts purchased during the period.............. $319,840 $605,905 $1,038,535 $734,334 $1,130,634

Average monthly purchases during the period........ 26,653 50,492 86,544 81,592 125,626

Gain on sale of contracts.......................... 15,251 19,586 36,417 25,911 40,521

Total revenues(1).................................. 22,627 33,811 60,392 41,979 65,868

Contracts securitized and sold during the period... 405,514 527,276 926,760 646,760 1,060,000

Servicing portfolio at period end.................. 400,665 757,277 1,345,961 1,176,153 1,924,881
</TABLE>

- ----------
(1) Total revenues is comprised of net interest income, servicing fee
income and gain on sale of contracts.

-22-
<PAGE> 29

Motor Vehicle Contracts Purchased and Servicing Portfolio

Since our inception, our purchased volume of motor vehicle contracts
has grown significantly. Our acquisition volume for the year ended December 31,
1998 was $1.0 billion compared to $605.9 million in 1997 and $319.8 million in
1996, representing an increase of 89.0% from 1996 to 1997 and an increase of
65.0% from 1997 to 1998. Our acquisition volume for the nine months ended
September 30, 1999 was $1.1 billion compared to $734.3 million for the same
period in 1998. This growth in acquisition volume is attributable primarily to:

o the opening of four additional auto finance centers during
1998 and three additional auto finance centers during the
first nine months of 1999; and

o increased purchases from existing dealers.

Our increase in motor vehicle contract acquisition volume has resulted
in the growth in our servicing portfolio. Our servicing portfolio at December
31, 1998 was $1.3 billion, compared to $757.3 million at December 31, 1997 and
$400.7 million at December 31, 1996, an increase of 89.0% from 1996 to 1997 and
72.0% from 1997 to 1998. Our servicing portfolio at September 30, 1999 was $1.9
billion, compared to $1.2 billion at September 30, 1998.

Net Interest Income

Net interest income consists primarily of the difference between the
revenues earned on motor vehicle contracts held on our balance sheet during the
warehousing period and the interest costs associated with our borrowings to
finance the warehousing of those motor vehicle contracts. The following table
illustrates the interest rate earned on our motor vehicle contracts, the
interest rate paid on our borrowings and the corresponding net interest rate
spread for the periods shown.

NET INTEREST RATE SPREAD

<TABLE>
<CAPTION>
FOR THE YEARS ENDED FOR THE NINE MONTHS
DECEMBER 31, ENDED SEPTEMBER 30,
--------------------------------- --------------------
1996 1997 1998 1998 1999
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Yield on contracts (1) . 13.66% 13.85% 13.96% 13.71% 13.47%

Cost of borrowings ..... 7.14 7.03 7.45 7.14 7.72

Net interest rate spread 6.52 6.82 6.51 6.57 5.75
</TABLE>

- ----------
(1) The yield on contracts is net of dealer participation amortized
expenses.

Gain on Sale of Motor Vehicle Contracts

We compute a gain on sale on our motor vehicle contracts that we
securitize based on the present value of the estimated future excess cash flows
to be received from those contracts using the following assumptions:

o We assume an average prepayment speed on the underlying motor
vehicle contracts of 1.75% ABS. "ABS" refers to the "Absolute
Payment Model," which represents an assumed rate of
prepayment, including defaults, each month relative to the
original number of motor vehicle contracts underlying a
particular securitization. ABS further assumes that each motor
vehicle contract in each month of its life will either be paid
as scheduled or be prepaid in full. For

-23-
<PAGE> 30

example, in a pool of motor vehicle contracts originally
containing 10,000 contracts, a 1.75% ABS rate means that 175
motor vehicle contracts prepay or default each month;

o We use a discount rate equal to the weighted average interest
rate on the securities issued in the related securitization,
plus 3.5% to 4.5%; and

o We currently utilize a lifetime loss of 4.0% of the original
balance of the motor vehicle contracts.

We record gains on sale as a credit enhancement asset on our statement
of financial condition. We adjust the gain recorded in the statement of income
for prepaid dealer participation, issuance costs and the effect of hedging
activities. We periodically review the assumptions described above. To the
extent the assumptions used are materially different from actual results, the
amount of cash we receive over the remaining life of the securitization would be
significantly affected and we may be required to take a charge to servicing fee
income which could have a material adverse affect on our results of operations,
financial condition and cash flows.

The amount of motor vehicle contracts which we securitize and the net
interest rate spread on those contracts affects our gain on sale of those
contracts. The following table illustrates the net interest rate spread for each
of our outstanding securitizations:

<TABLE>
<CAPTION>
SECURITIZATION TRANSACTIONS
--------------------------------------------------------------------------
REMAINING WEIGHTED WEIGHTED
BALANCE AT AVERAGE AVERAGE
ORIGINAL SEPTEMBER 30, CONTRACT INVESTOR GROSS NET
SECURITIZATIONS BALANCE 1999 RATE(1) RATE(2) SPREAD(3) SPREAD(4)
- --------------- ---------- ------------ ---------- -------- --------- ---------
(DOLLARS IN THOUSANDS)

<S> <C> <C> <C> <C> <C> <C>
1994-1 Grantor Trust $ 38,601 Paid in Full 13.75% 6.90% 6.85% 1.94%

1995-1 Grantor Trust 105,000 Paid in Full 14.94 7.00 7.94 1.86

1996-1 Grantor Trust 100,500 $ 7,185 15.07 5.40 9.67 3.83

1996-2 Grantor Trust 85,013 10,161 14.84 6.40 8.44 3.61

1996-3 Grantor Trust 120,000 19,580 14.54 6.45 8.09 3.14

1996-4 Grantor Trust 100,000 21,021 14.80 6.20 8.60 3.28

1997-1 Grantor Trust 90,000 22,992 13.86 6.55 7.31 2.78

1997-2 Grantor Trust 121,676 36,754 14.85 6.35 8.50 3.11

1997-3 Grantor Trust 149,600 55,323 14.77 6.35 8.42 3.30

1997-4 Grantor Trust 166,000 70,169 14.69 6.30 8.39 3.27

1998-1 Grantor Trust 173,000 83,248 14.91 5.95 8.96 3.40

1998-A Owner Trust . 208,759 114,814 14.73 5.87 8.86 3.34

1998-B Owner Trust . 250,000 158,992 14.73 5.78 8.95 3.18

1998-C Owner Trust . 280,000 198,053 14.89 5.72 9.17 3.51

1999-A Owner Trust . 310,000 239,258 14.33 5.73 8.60 3.44

1999-B Owner Trust . 350,000 304,851 14.65 5.86 8.79 3.54

1999-C Owner Trust . 400,000 379,526 14.82 6.62 8.20 2.86
---------- ----------
TOTAL ........ $3,048,149 $1,721,927
========== ==========
</TABLE>

-24-
<PAGE> 31

- ----------

(1) As of issue date. This is the weighted average of the interest rate on
the securitized motor vehicle contracts.

(2) This is the weighted average interest rate on the securities issued in
connection with the related securitization.

(3) This is the difference between the weighted average contract rate and
weighted average investor rate as of the issue date.

(4) This is the difference between the weighted average contract rate and
weighted average investor rate, net of underwriting costs, other
issuance costs, servicing fees, estimated credit losses, ongoing
financial guarantee insurance policy premiums, and the hedging gain or
loss.

In October 1999, we completed a securitization in the amount of $390
million with a weighted average contract rate of 15.01%, a weighted average
investor rate of 6.90%, a gross spread of 8.11% and a net spread of 2.87%.

Servicing Fee Income

We earn contractual servicing at a rate of 1.0% per annum on the
outstanding principal balance of the motor vehicle contracts which we
securitize, consistent with industry standards. Our servicing fee income is
related to the number and amount of contracts we service and also includes
investment interest, extension fees, document fees and other fees charged to
customer accounts.

RESULTS OF OPERATIONS

Net Income

We had net income of $6.1 million for the year ended December 31, 1998,
compared to net income of $1.3 million for the year ended December 31, 1997 and
$6.1 million for the year ended December 31, 1996. The increase in net income
from 1997 to 1998 was due to several factors, including:

o a 73% increase in the dollar volume of motor vehicle contracts
which we securitized, resulting in an 86% increase in gains on
sale;

o higher excess servicing fee income due to improved performance
of the motor vehicle contracts that we have securitized and an
increase in the size of our serviced portfolio; and

o improvements in our cost structure which resulted in a decline
in operating expenses as a percentage of our average servicing
portfolio to 4.73% from 5.46% in 1997.

The reduction in net income from 1996 to 1997 was due to several factors, most
notably our commitment to build reserves in the face of increasing delinquency
and credit losses related to purchases of motor vehicle contracts in the second
half of 1995 and the first half of 1996 by one of our auto finance centers.
Additionally, the losses that we incurred during our start-up phase (calendar
years 1994 and 1995) generated net operating loss carryforwards which we used in
1996 to offset income taxes. The unavailability of these carryforwards in 1997
accounted for most of the difference in net income between 1997 and 1996. We had
net income of $7.2 million for the nine months ended September 30, 1999,
compared to net income of $3.6 million for the nine months ended September 30,
1998. The increase in net income from 1998 to 1999 was due principally to a 56%
increase in gains on sale resulting from a 64% increase in the dollar volume of
motor vehicle contracts which we securitized.

-25-
<PAGE> 32

Net Interest Income

Net interest income increased to $7.3 million for the year ended
December 31, 1998 from $5.0 million for the year ended December 31, 1997, and
from $4.1 million for the year ended December 31, 1996. The increase was due to
an increase in the average amount of motor vehicle contracts held for sale
during 1998 as compared to 1997 and 1996. This more than offset the effect of a
decline in net interest margin in 1998 compared to 1997. Net interest margin
declined to 6.51% in 1998 compared to 6.82% in 1997 and 6.52% in 1996, while the
average amount of motor vehicle contracts held for sale increased to $148.7
million in 1998 compared to $85.7 million in 1997 and $80.6 million in 1996. The
yield on motor vehicle contracts held for sale increased by 0.11% to 13.96% for
the year ended December 31, 1998, compared to 13.85% for the year ended December
31, 1997, and 13.66% for the year ended December 31, 1996. In addition, our cost
of borrowings increased to 7.45% at December 31, 1998 compared to 7.03% at
December 31, 1997, and 7.14% at December 31, 1996. In addition to the interest
paid on warehouse borrowings, we include the interest we pay on our residual
line borrowings, subordinated debt, and capitalized lease obligations as
components of our cost of funds. The increase in funding costs in 1998 was due
principally to a shift in our relative level of borrowing under each of these
lines rather than to an increase in borrowing interest rates.

Net interest income totaled $5.6 million for the nine months ended
September 30, 1999, compared to $6.1 million for the same period in 1998. This
decrease is primarily due to the lower average amount of motor vehicle contracts
held for sale during the warehouse period. The lower average warehouse balance
was the result of changes in the timing of the securitizations. In each of the
1999 securitizations, we elected to execute the securitization during the second
month of the quarter, rather than the third month of the quarter as we did in
each of the transactions in 1998.

Servicing Fee Income

Servicing fee income increased to $16.7 million for the year ended
December 31, 1998, from $9.2 million for the year ended December 31, 1997, and
from $3.2 million for the year ended December 31, 1996. The increase was
attributable to a significant increase in the size of our average servicing
portfolio in addition to the improved performance of securitized motor vehicle
contracts. For the year ended December 31, 1998, the size of our average
servicing portfolio increased to $1.02 billion from $563.3 million in 1997 and
from $311.3 million in 1996.

Servicing fee income increased to $19.8 million for the nine month
period ending September 30, 1999, compared to $10.0 million for the same period
in 1998. This increase is due primarily to higher amounts of contractual service
fees, late fees, and document fees as a result of the growth in our servicing
portfolio.

Gain on Sale of Motor Vehicle Contracts

We completed four securitizations totaling $911.8 million and a sale in
the amount of $15 million during the year ended December 31, 1998, resulting in
gains on sale of motor vehicle contracts of $36.4 million, compared to four
securitizations totaling $527.3 million during the year ended December 31, 1997,
resulting in gains on sale of motor vehicle contracts totaling $19.6 million.
For the year ended December 31, 1996, we completed four securitizations totaling
$405.5 million resulting in gains on sale of motor vehicle contracts of $15.2
million. The weighted average net spread on our securitizations in 1998 was
3.36%, compared to 3.16% in 1997 and 3.44% in 1996.

We recorded gains on sale of motor vehicle contracts of $40.5 million
for the nine months ended September 30, 1999, compared to $25.9 million for the
same period in 1998. The increase in the gains on sale was primarily the result
of an increase in the amount of motor vehicle contracts sold. Contracts
securitized during the nine months ended September 30, 1999 totaled $1.1
billion, compared to a combined sale and securitization of $646.8 million for
the nine months ended September 30, 1998. The net interest rate spread,
inclusive of all costs,

-26-
<PAGE> 33

declined to 2.86% for the third quarter 1999 securitization compared to 3.18%
for the securitization completed in the third quarter of 1998. The weighted
average net spread on our securitizations during the nine month period ended
September 30, 1999 was 3.25%, compared to 3.29% for the nine month period ended
September 30, 1998. Interest rate spread is affected by product mix, general
market conditions and overall market interest rates. The risks inherent in
interest rate fluctuations are reduced through our hedging activities. To
protect against changes in interest rates, we hedge our motor vehicle contracts
prior to their securitization with forward interest rate swap agreements. We
include the gains or losses on these forward interest rate swap agreements as
part of the basis of the underlying motor vehicle contracts, and we recognize
these gains or losses when the related motor vehicle contracts are securitized.

Provision for Credit Losses

We maintain an allowance for credit losses to cover anticipated losses
for motor vehicle contracts held for sale. We increase the allowance for credit
losses by adjusting the provision for credit losses to cover additional motor
vehicle contracts originated and increases in loss estimates, and we decrease
the allowance by actual losses on the motor vehicle contracts held for sale or
by the reduction of the amount of motor vehicle contracts held for sale. The
level of the allowance is based principally on the outstanding balance of motor
vehicle contracts held for sale and the historical loss trends for the period of
time the contracts are held before being sold in a securitization. When we sell
motor vehicle contracts in a securitization transaction, we reduce our allowance
for credit losses and we factor potential losses into our calculation of gain on
sale. We believe that the allowance for credit losses is currently adequate to
absorb potential losses. The increase in our provision for credit losses for the
year ended December 31, 1998 as compared to December 31, 1997 and 1996 is a
result of the increase in motor vehicle contracts held for sale at the end of
each year.

The provision for credit losses totaled $1.6 million during the year
ended December 31, 1998, compared to $785,446 for the same period in 1997. Net
credit losses incurred during 1998 were $844,556 and $529,735 during 1997.
Provisions for future credit losses during 1998 were $735,275 compared to
$255,711 for 1997. The increase from 1997 to 1998 was primarily due to the
larger balance of motor vehicle contracts held for sale at the end of 1998. As
of December 31, 1998, our motor vehicle contracts held for sale totaled $152.0
million, compared to $63.4 million for the same period in 1997.

The provision for credit losses totaled $952,560 for the nine month
period ending September 30, 1999, compared to $1.2 million for the same period
in 1998. Provision for credit losses consists of net credit losses incurred
during the warehousing period plus future provision for losses reserved against
the net changes in motor vehicle contracts held for sale during the period. Net
credit losses accounted for $728,616 during the nine month period ending
September 30, 1999, compared to $631,345 for the same period in 1998. Provisions
for future credit losses totaled $223,944 for the nine month period ending
September 30, 1999, compared to $598,419 for the same period in 1998. The
decrease in our provisions of credit losses for the nine month period ending
September 30, 1999, compared to the same period in 1998 is a result of the
decrease in motor vehicle contracts held for sale at the end of such period.

Salaries and Benefits Expense

We incurred salary and benefit expenses of $26.8 million during the
year ended December 31, 1998, compared to $17.4 million during the year ended
December 31, 1997, and $8.5 million for the year ended December 31, 1996. In
order to support the growth of our operations and our servicing portfolio, our
number of employees increased from 221 at December 31, 1996 to 319 at December
31, 1997 and to 526 at December 31, 1998.

Salary and benefit expenses for the nine month period ended September
30, 1999 were $29.6 million compared to $19.5 million for the nine month period
ended September 30, 1998. This increase is attributable to the

-27-
<PAGE> 34

incremental staffing requirements related to the expansion of operations and the
growth of our servicing portfolio. Our employees increased in number from 499 at
September 30, 1998 to 683 at September 30, 1999.

Other Operating Expenses

Other operating expenses, which include depreciation, occupancy and
general and administrative expenses, increased to $21.7 million at December 31,
1998, from $13.3 million at December 31, 1997, and from $6.8 million for the
year ended December 31, 1996. The majority of increases were due to the growth
of the average servicing portfolio from $311.3 million at December 31, 1996 to
$563.3 million at December 31, 1997 and to $1.02 billion at December 31, 1998.
Additionally, we opened additional auto finance centers during the years ended
December 31, 1998, December 31, 1997, and December 31, 1996. Total other
operating expenses for the nine month period ending September 30, 1999 were
$23.1 million compared to $15.1 million for the same period in 1998.

Depreciation expense increased to $2.5 million for the nine months
ended September 30, 1999 compared to $1.3 million for the same period of 1998,
as we continued to invest in technology and infrastructure. Continued expansion
into new markets resulted in an increase in occupancy costs to $2.5 million for
the nine months ended September 30, 1999 from $1.3 million for the nine month
period ended September 30, 1998. General and administrative expenses increased
to $18.1 million for the nine month period ended September 30, 1999, compared to
$12.5 million for the nine month period ended September 30, 1998. Higher
expenses are primarily due to an increase in the dollar amount of the servicing
portfolio.

Income Taxes

We file federal and certain state tax returns as part of a consolidated
group. Tax liabilities from the consolidated returns are allocated in accordance
with a tax sharing agreement based on the relative income or loss of each entity
on a stand-alone basis. Our effective tax rate was 41.5% for 1998 and 43.0% for
1997. The reduction in tax rates between 1998 and 1997 is due to lower tax rates
in the states where we have opened new auto finance centers. Our effective tax
rate in 1996 was 12.2% as we had net operating loss carry-forwards that were
utilized to reduce income tax expense.

FINANCIAL CONDITION

Contracts Held for Sale

Motor vehicle contracts held for sale, net of dealer participation and
allowance, totaled $152.8 million at December 31, 1998, compared to $64.3
million at December 31, 1997. The number and principal balance of motor vehicle
contracts held for sale is largely dependent upon the timing and size of our
securitizations. The increase in the amount of motor vehicle contracts held for
sale from year end 1997 to year end 1998 is primarily attributable to our higher
contract volume during the respective warehousing periods. We believe that the
allowance for credit losses is currently adequate to absorb potential losses in
the owned portfolio. The allowance for credit losses as of December 31, 1998 was
approximately $1.0 million and as of September 30, 1999 was approximately $1.3
million. See Note 2 to our unaudited financial statements and Note 5 to our
consolidated financial statements for a more detailed discussion of motor
vehicle contracts held for sale and allowance for credit losses.

Motor vehicle contracts held for sale, net of dealer participation and
allowance, totaled $195.5 million at September 30, 1999, compared to $152.8
million at December 31, 1998. The balance in our held-for-sale portfolio is
largely dependent upon the timing of the origination and securitization of our
motor vehicle contracts. We completed a securitization transaction of $400.0
million during the third quarter of 1999 compared to a securitization of $250.0
million during the third quarter of 1998. We plan to continue to securitize
motor vehicle contracts on a regular basis.

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<PAGE> 35

The following table illustrates the changes in the our motor vehicle
contract acquisition volume, securitization activity and servicing portfolio
during the past five fiscal quarters:

SELECTED QUARTERLY FINANCIAL INFORMATION

<TABLE>
<CAPTION>
SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30,
1998 1998 1999 1999 1999
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Contracts purchased or originated during
the period .............................. $ 286,470 $ 304,200 $ 357,757 $ 374,075 $ 398,802

Average monthly purchases during the period 95,490 101,400 119,252 124,691 132,934

Gain on sale of contracts ................. 9,677 10,506 12,328 14,470 13,723

Total revenues ............................ 16,472 18,414 19,568 22,673 23,626

Contracts securitized during the period ... 250,000 280,000 310,000 350,000 400,000

Servicing portfolio (at end of period) .... $1,176,153 $1,345,961 $1,542,612 $1,729,338 $1,924,881
</TABLE>

Credit Enhancement Assets

Our credit enhancement assets consisted of the following:

<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF SEPTEMBER 30,
-------------------- ---------------------
1997 1998 1998 1999
------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Trust receivable ....................... $ 7,378 $ 3,713 $ 7,237 $ 5,713

Retained interest in securitized assets 64,358 109,241 93,794 125,188
------- -------- -------- --------
TOTAL .............................. $71,736 $112,954 $101,031 $130,901
======= ======== ======== ========
</TABLE>

Trust receivables represent servicer advances and initial deposits in
spread accounts.

The retained interest in securitized assets, or RISA, consists of the
estimated present value of future servicing cash flows from our related
securitizations. We compute future servicing cash flows by taking into account
certain assumptions principally regarding prepayments, losses and servicing
costs. We then discount these cash flows at a market-based rate until the spread
account under the related securitization releases that cash to us. The following
table provides historical data regarding the RISA. Included in RISA is
restricted cash of $32.7 million and $23.5 million at December 31, 1998 and 1997
respectively and $31.3 million of restricted cash at September 30, 1999.

The balance of the RISA is amortized on a monthly basis over the
expected repayment life of the underlying motor vehicle contracts. RISA is
classified in a manner similar to available for sale securities and as such is
marked to market each quarter. Market value changes are calculated by
discounting the excess spread using a current market discount rate. Any changes
in the market value of the RISA is reported as a separate component of
stockholders' equity on our consolidated statements of financial condition as
accumulated other comprehensive income, or loss, net of applicable taxes.

-29-
<PAGE> 36

RETAINED INTEREST IN SECURITIZED ASSETS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED FOR THE NINE MONTHS
DECEMBER 31, ENDED SEPTEMBER 30,
----------------------- -----------------------
1997 1998 1998 1999
-------- --------- -------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Beginning balance ..................... $ 33,530 $ 64,358 $ 64,358 $ 109,241

Additions ............................. 41,603 80,633 55,746 73,012

Amortization .......................... (10,775) (35,750) (26,310) (56,504)

Change in unrealized loss on securities
available for sale .................. 0 0 0 (560)
-------- --------- -------- ---------
Ending balance ........................ $ 64,358 $ 109,241 $ 93,794 $ 125,189
======== ========= ======== =========
</TABLE>

Asset Quality

We monitor and attempt to minimize delinquencies and losses through
timely collections and the use of a predictive dialing system as described under
"Business - Collection Procedures." At December 31, 1998, delinquencies of
thirty days or more represented 2.83% of the amount of motor vehicle contracts
in our servicing portfolio, compared to 2.51% at December 31, 1997 and 2.03% at
December 31, 1996. At September 30, 1999, delinquencies represented 2.68% of the
amount of the motor vehicle contracts in our servicing portfolio. Our net
charge-offs, as a percentage of our average servicing portfolio, were 1.75% for
the nine months ended September 30, 1999 compared to 1.77% for the same period
in 1998. Net charge-offs were 1.72% for the year ended December 31, 1998,
compared to 2.03% and 1.63% for the years ended December 31, 1997 and 1996,
respectively. The levels of delinquencies at December 31, 1998 increased over
December 31, 1997 primarily due to the relocation of our collection and customer
service areas in conjunction with the relocation of our corporate headquarters
which began in December of 1998. We attribute the increase in delinquencies from
1996 to 1997 in part to an increase on a national basis in the level of
bankruptcies and consumer defaults generally, and to the tendency of
delinquencies and losses with respect to a pool of automobile contracts to
increase after a period of seasoning. Loan losses, however, have decreased from
1997 to 1998, and we believe that this is a result of the elimination of a
significant portion of the portfolio of high delinquency and high loss motor
vehicle contracts which were purchased through the third quarter of 1996 by our
North Hollywood auto finance center. Our North Hollywood auto finance center had
a higher concentration of used car dealerships than our other auto finance
centers, and this concentration of used car dealerships was principally
responsible for the poor performance of that portion of our portfolio. The
runoff of these contracts impacted losses through December 1997.

We have increased our off balance sheet reserves as a percentage of our
period end portfolio sold. Our reserves have increased from 2.73% at December
31, 1996 to 3.68% at December 31, 1997 to 4.31% at December 31, 1998 and to
4.45% at September 30, 1999. Off balance sheet reserves are those reserves
established upon the sale of motor vehicle contracts to the grantor and owner
trusts created in connection with our securitization of motor vehicle contracts.

-30-
<PAGE> 37

The following table sets forth the delinquency experience of the
servicing portfolio.

DELINQUENCY EXPERIENCE OF THE SERVICING PORTFOLIO

<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
-------------------------------------- --------------------------
1996 1997 1998 1998 1999
-------- -------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Servicing portfolio ............ $400,665 $757,277 $1,345,961 $1,176,153 $1,924,881

Delinquencies(1)(2)

31-59 days ............... $ 5,022 $ 11,902 $ 26,410 $ 15,565 $ 29,324

60-89 days ............... 1,816 3,370 6,876 4,114 11,219

90+ days ................. 1,279 3,743 4,790 4,103 10,992
-------- -------- ---------- ---------- ----------
Total .......................... $ 8,117 $ 19,015 $ 38,076 $ 23,782 $ 51,535
======== ======== ========== ========== ==========

Total delinquencies as a percent
of servicing portfolio ... 2.03% 2.51% 2.83% 2.02% 2.68%
</TABLE>

- ----------
(1) Delinquencies include principal amounts only, net of repossessed
inventory.

(2) The period of delinquency is based on the number of days payments are
contractually past due.

The following table sets forth the loan loss experience of our
servicing portfolio for the periods indicated.

LOAN LOSS EXPERIENCE OF THE SERVICING PORTFOLIO

<TABLE>
<CAPTION>
FOR THE YEARS ENDED FOR THE NINE MONTHS
DECEMBER 31, ENDED SEPTEMBER 30,
-------------------------------------- --------------------------
1996 1997 1998 1998 1999
-------- -------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Number of contracts ........... 38,275 73,502 131,862 115,151 189,062

Period end servicing portfolio $400,665 $757,277 $1,345,961 $1,176,153 $1,924,881

Average servicing portfolio(1) $311,340 $563,343 $1,023,237 $ 945,077 $1,629,779

Number of gross charge-offs ... 987 2,161 3,761 2,740 4,508

Gross charge-offs ............. $ 5,789 $ 13,076 $ 20,640 $ 14,827 $ 24,528

Net charge-offs(2) ............ $ 5,066 $ 11,434 $ 17,618 $ 12,576 $ 21,373

Net charge-offs as a percent of
average servicing portfolio(3) 1.63% 2.03% 1.72% 1.77% 1.75%

Off balance sheet reserves as
a percent of period end
serviced portfolio sold ...... 2.73% 3.68% 4.31% 4.12% 4.45%
</TABLE>

- ----------
(1) Average is based on daily balances.

(2) Net charge-offs are gross charge-offs minus recoveries on contracts
previously charged off.

(3) The net charge-off percentages for the nine months ended September 30,
1998 and 1999 are annualized.

-31-
<PAGE> 38

The following table illustrates the monthly cumulative net charge-offs
of each of our securitized pools outstanding for the period from the date of
securitization through September 30, 1999.

<TABLE>
<CAPTION>
MONTH 96-1 96-2 96-3 96-4 97-1 97-2 97-3 97-4 98-1 98-A 98-B 98-C 99-A 99-B 99-C
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 0.00% 0.01% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

2 0.03% 0.07% 0.02% 0.02% 0.00% 0.00% 0.00% 0.00% 0.01% 0.01% 0.00% 0.02% 0.00% 0.00% 0.01%

3 0.05% 0.20% 0.07% 0.05% 0.03% 0.02% 0.02% 0.01% 0.02% 0.03% 0.02% 0.02% 0.02% 0.03%

4 0.11% 0.33% 0.16% 0.14% 0.06% 0.07% 0.09% 0.04% 0.08% 0.07% 0.08% 0.04% 0.05% 0.07%

5 0.23% 0.46% 0.43% 0.24% 0.13% 0.22% 0.13% 0.11% 0.14% 0.14% 0.19% 0.15% 0.11% 0.14%

6 0.40% 0.78% 0.54% 0.38% 0.26% 0.32% 0.24% 0.20% 0.24% 0.23% 0.33% 0.27% 0.21%

7 0.69% 0.98% 0.74% 0.53% 0.37% 0.59% 0.36% 0.28% 0.40% 0.37% 0.45% 0.46% 0.35%

8 0.82% 1.15% 0.97% 0.81% 0.52% 0.80% 0.47% 0.43% 0.53% 0.42% 0.61% 0.57% 0.49%

9 0,93% 1.39% 1.13% 0.98% 0.60% 0.91% 0.62% 0.55% 0.68% 0.51% 0.82% 0.74%

10 1.15% 1.52% 1.32% 1.18% 0.76% 1.07% 0.73% 0.72% 0.85% 0.70% 0.95% 0.94%

11 1.25% 1.69% 1.47% 1.43% 0.92% 1.26% 0.81% 0.87% 1.04% 0.85% 1.10% 1.12%

12 1.47% 1.94% 1.60% 1.63% 1.02% 1.42% 0.94% 0.95% 1.20% 1.01% 1.20%

13 1.65% 2.08% 1.77% 1.73% 1.13% 1.58% 1.10% 1.08% 1.33% 1.17% 1.36%

14 1.79% 2.34% 1.94% 1.87% 1.23% 1.68% 1.23% 1.19% 1.46% 1.37%

15 2.02% 2.52% 2.09% 2.07% 1.40% 1.80% 1.38% 1.36% 1.61% 1.48%

16 2.25% 2.76% 2.27% 2.23% 1.56% 1.97% 1.58% 1.42% 1.71% 1.59%

17 2.43% 2.89% 2.42% 2.33% 1.68% 2.10% 1.68% 1.52% 1.88%

18 2.59% 3.10% 2.57% 2.49% 1.75% 2.23% 1.77% 1.64% 2.01%

19 2.77% 3.14% 2.70% 2.62% 1.85% 2.35% 1.91% 1.75% 2.17%

20 2.93% 3.30% 2.83% 2.73% 1.92% 2.48% 2.04% 1.85%

21 3.06% 3.47% 2.94% 2.84% 1.98% 2.59% 2.11% 1.97%

22 3.15% 3.60% 3.00% 2.93% 2.09% 2.72% 2.20% 2.08%

23 3.21% 3.70% 3.08% 3.02% 2.17% 2.81% 2.31%

24 3.28% 3.81% 3.17% 3.10% 2.22% 2.85% 2.41%

25 3.40% 3.93% 3.28% 3.22% 2.31% 2.93% 2.51%

26 3.43% 4.06% 3.38% 3.29% 2.38% 2.96%

27 3.55% 4.13% 3.43% 3.39% 2.44% 3.09%

28 3.60% 4.22% 3.54% 3.46% 2.50% 3.17%

29 3.73% 4.23% 3.59% 3.58% 2.55%

30 3.75% 4.29% 3.69% 3.61% 2.63%

31 3.79% 4.31% 3.77% 3.64% 2.67%

32 3.85% 4.33% 3.75% 3.72%

33 3.88% 4.37% 3.77% 3.74%

34 3.90% 4.39% 3.79% 3.77%

35 3.94% 4.39% 3.81%

36 3.94% 4.42% 3.83%

37 3.94% 4.42% 3.84%

38 3.97% 4.43%

39 3.99% 4.45%

40 3.99% 4.46%

41 3.96% 4.45%

42 3.95%

43 3.96%

44 3.94%

45 3.97%
</TABLE>

-32-
<PAGE> 39

In October 1999, we completed a securitization in the amount of $390 million,
with net charge-offs in the first month of 0% for the pool of contracts
securitized.

LIQUIDITY AND CAPITAL RESOURCES

We require substantial cash and capital resources to operate our
business. Our primary uses of cash include:

o acquisition of motor vehicle contracts;

o payment of dealer participation;

o securitization costs, including cash held in spread accounts;

o settlements of hedging transactions;

o maintenance of working capital requirements and payment of
operating expenses; and

o interest expense.

The capital resources available to us include:

o net interest income during the warehousing period;

o contractual servicing fees;

o excess servicing cash flows released from spread accounts;

o settlements of hedging transactions;

o sales of motor vehicle contracts in securitizations; and

o borrowings under our warehouse and credit facilities.

These sources can provide capital to fund expansion of our motor
vehicle contract purchasing and servicing capabilities.

The principal determinant of our cash usage in a particular year is the
difference between the dollar amount of motor vehicle contracts we purchase and
the proceeds realized from the motor vehicle contracts we sell. Our purchases of
motor vehicle contracts exceeded our proceeds from the sale of motor vehicle
contracts by $112 million in 1998 and by $79 million in 1997, resulting in net
cash used in operating activities in each of those years. In 1996, our proceeds
from the sale of motor vehicle contracts exceeded our purchases by $85 million,
resulting in net cash provided by operating activities. Our purchases of motor
vehicle contracts exceeded our proceeds from the sale of motor vehicle contracts
by $71.0 million for the nine months ended September 30, 1999 compared to $88.0
million for the nine months ended September 30, 1998, resulting in net cash used
in operating activities in each of these periods.

Cash used in investing activities increased to $3.8 million in the year
ended December 31, 1998, from $1.8 million in the year ended December 31, 1997
and $804,587 in the year ended December 31, 1996. The increases resulted from
higher capital expenditures by us, principally in the purchase of furniture and
equipment, in connection with our continued expansion. Cash used in investing
activities was $5.0 million for the nine months ended September 30, 1999,
compared to $2.4 million for the nine months ended September 30, 1998. A
reduction in the use of our capital lease lines coupled with the relocation of
the our corporate headquarters contributed to the increase in investing
activities.

Cash provided by financing activities was $45.2 million for the nine
months ended September 30, 1999, compared to $83.8 million for the nine months
ended September 30, 1998. Higher cash flows from securitizations combined with a
lower warehousing interest expense in 1999 compared to 1998 reduced the
requirements for financing sources. Cash provided by financing activities was
$118.4 million for the year ended December 31, 1998, compared to $77.2 million
provided for the year ended December 31, 1997 and $90.5 million used in the year
ended December 31, 1996. This increase over 1997 was primarily due to the
issuance in February 1998 of $10,000,000 of

-33-
<PAGE> 40

subordinated debt to BayView Capital Corporation, and additional borrowing under
our revolving credit facilities. In 1996, we used excess proceeds from the sale
of motor vehicle contracts to pay down our warehouse lines, resulting in net
cash used in financing activities.

Triple-A One Warehouse Facility

We are a party to a $375 million auto warehouse program with Triple-A
One Funding Corporation through our wholly owned subsidiary, Onyx Acceptance
Financial Corporation, or Finco. Triple-A One is a commercial paper asset-backed
conduit lender sponsored by MBIA and is currently rated A-1 by Standard & Poor's
Ratings Group, a division of The McGraw Hill Companies Inc., and P-1 by Moody's
Investors Service, Inc. This facility provides Finco with funds to purchase
motor vehicle contracts, which are then pledged to Triple-A One under the
facility. MBIA provides credit enhancement to Triple-A One by issuing surety
bonds covering all principal and interest obligations owed by us under a loan
agreement with Triple-A One. Triple-A One increased our advance rate during 1998
to 98% from 95% of the adjusted eligible principal balance of each motor vehicle
contract. The advance rate is subject to reduction by MBIA if the net yield on
the motor vehicle contract portfolio falls below a target net yield. The
remaining 2% of the purchase price of the motor vehicle contracts generally is
funded either from net interest income or by proceeds from the excess servicing
facility or our residual lines of credit described below. Since the Triple-A One
facility is based on commercial paper rates, we have the ability to manage our
interest rate exposure during the warehouse period between origination and
securitization by determining the maturities (one to 270 days) of commercial
paper borrowings. The outstanding principal amount under this facility as of
September 30, 1999 was $164.0 million.

Upon the occurrence of certain wind-down events, Finco will be
prohibited from borrowing any further amounts from Triple-A One and all
collections on the motor vehicle contracts included in the borrowing base will
be distributed in substantially the same manner as before the wind-down event
except that Finco must repay all outstanding Triple-A One advances before we can
pay any amounts to other borrowers or our affiliates. Unless earlier terminated
upon the occurrence of a wind-down event, the Triple-A One facility matures in
September 2001, subject to the requirement that the liquidity facility provided
by certain banks to Triple-A be extended annually. After maturity in September
2001, the Triple-A One facility is subject to annual renewals.

Park Avenue Warehouse Facility

We are a party to a $150 million commercial paper facility with Park
Avenue Receivables Corporation, or Parco. One of our special purpose
subsidiaries, Onyx Acceptance Receivables Corporation, or Recco, is the borrower
under the facility. The facility is used to fund the purchase or origination of
motor vehicle contracts. Parco is rated as a commercial paper asset-backed
conduit sponsored by Chase Securities, Inc. MBIA provides credit enhancement for
the facility by issuing financial guarantee insurance policy covering all
principal and interest obligation owed by Recco related to the borrowings under
the facility. Recco pledges its motor vehicle contracts held for sale to borrow
from Parco. The Parco facility was executed in August 1999, and has a one year
term. The outstanding principal amount under this facility as of September 30,
1999 was $23.5 million.

Merrill Lynch Line

Our wholly owned subsidiary, Onyx Acceptance Funding Corporation, has a
$100 million line of credit with Merrill Lynch Mortgage Capital, Inc. which
provides funding for the purchase or origination of motor vehicle contracts and
which is used in concert with the Triple-A One and Parco facilities that are
currently in place. The interest rate on the Merrill Lynch line of credit is
based on LIBOR. The Merrill Lynch line is currently scheduled to mature in
February 2000. There is no principal amount outstanding under this facility.

-34-
<PAGE> 41

Excess Servicing Facility

We have a collateralized revolving line of credit with a lending group,
comprised of State Street Bank and Trust Company, BankBoston and The Travelers
Insurance Company, for working capital and other expenditures for which funding
under the Triple-A One facility, the Parco Facility and the Merrill Lynch line
of credit is not available. Under this excess servicing facility, which
converted to a term loan in June 1999, we could borrow and repay up to $45
million during a two-year revolving period. The excess servicing facility is now
in the amortization period and all cash flows released from the spread accounts
in the underlying securitizations, which are collateral under this facility, are
being used to repay the outstanding principal balance. The outstanding principal
amount under this facility as of September 30, 1999 was $30.0 million.

We intend to obtain the written consent of State Street Bank and Trust
Company, BankBoston and The Travelers Insurance Company for this offering of
notes, and to amend the restrictive covenant limiting our ability to incur
additional subordinated debt.

Residual Lines

We have two residual facilities through our wholly-owned subsidiary,
Onyx Acceptance Funding Corporation. We have a $10 million committed residual
line of credit with Merrill Lynch Mortgage Capital, Inc., which is now a
stand-alone line not related to the Merrill Lynch line of credit described above
under the heading "Merrill Lynch Line." We also have a $50 million residual line
of credit with Salomon Smith Barney Realty Corporation. We use our residual
lines of credit with Merrill Lynch and Salomon to finance our operating
requirements. These residual lines utilize a collateral-based formula that sets
borrowing availability to a percentage of the value of excess cash flow to be
received from certain of our securitizations. The Merrill Lynch residual
facility has been renewed and currently matures in February 2000. Each loan
under the Salomon facility matures one year after the date of the loan. We
expect each loan to be renewed at term. The outstanding principal amounts under
the Merrill Lynch and Salomon residual lines as of September 30, 1999 were $10.0
million and $16.7 million, respectively.

BayView Term Loan

We have subordinated debt outstanding of $10 million. The subordinated
debt matures on February 24, 2000, with an option to extend the term by three
years during which the loan would fully amortize. The BayView subordinated debt
bears interest at a fixed rate of 92%. In connection with this debt, we issued
to the lender, Bayview Capital Corporation, a warrant to purchase 180,529 shares
of our common stock.

The facilities and lines of credit described above contain affirmative
and negative financial covenants typical of such credit facilities. We were in
compliance with these covenants as of October 31, 1999.

SECURITIZATIONS

Regular securitizations are an integral part of our business plan
because they allow us to increase our liquidity, provide for redeployment of our
capital and reduce risks associated with interest rate fluctuations. We have
developed a securitization program that involves selling interests in pools of
motor vehicle contracts to investors through the public issuance of asset-backed
securities rated in the highest applicable rating category. We completed four
AAA/Aaa rated publicly underwritten asset-backed securitizations in the amount
of $1.5 billion through Finco during 1999.

We use the net proceeds of our securitizations to pay down the
outstanding indebtedness incurred under our credit facilities used to purchase
motor vehicle contracts, thereby allowing us to purchase additional contracts.
Since 1994, we have securitized $3.4 billion of motor vehicle contracts in 18
separate transactions. In each of these

-35-
<PAGE> 42

securitizations, we sold motor vehicle contracts to a newly formed grantor or
owner trust which issued pass-through certificates or notes in an amount equal
to the aggregate principal balance of the motor vehicle contracts.

To improve the level of profitability from the sale of securitized
motor vehicle contracts, we arrange for credit enhancement to achieve an
improved credit rating on the asset-backed securities issued. This credit
enhancement has taken the form of a financial guaranty issued by MBIA or a
predecessor, which issued a financial guaranty insurance policy insuring the
ultimate payment of principal and the timely payment of interest due on the
asset-backed securities.

We receive servicing fees for our duties relating to the accounting for
and collection of the motor vehicle contracts. In addition, we are entitled to
receive future servicing cash flows from the securitized motor vehicle
contracts. Generally, we sell the motor vehicle contracts at face value and
without recourse, except that we provide certain representations and warranties
with respect to the contracts in our capacity as the servicer, and Onyx
Acceptance Financial Corporation provides certain representations and warranties
with respect to the contracts in its capacity as the seller to the trusts.

Gains on sale of motor vehicle contracts in our securitizations provide
a significant portion of our revenues. Several factors affect our ability to
complete securitizations of motor vehicle contracts, including conditions in the
securities markets generally, conditions in the asset-backed securities market
specifically, the credit quality of our portfolio of motor vehicle contracts and
our ability to obtain satisfactory credit enhancement.

INTEREST RATE EXPOSURE AND HEDGING

Through the use of varying maturities on advances from our facilities
with Triple-A One and Parco, we effectively lock in rates during the warehousing
period, when we think it is appropriate, to limit our interest rate exposure
during such warehousing period. See "Risk Factors - Risk Factors Relating to
Onyx - Interest rate fluctuations may materially and adversely affect our
results of operations, financial condition and cash flows and our ability to
make payments on the notes."

We have the ability to move interest rates on our motor vehicle
contracts upward in response to rising borrowing costs because we generally do
not purchase contracts near the maximum rates permitted by law. Further, we
employ a hedging strategy which primarily consists of the execution of forward
interest rate swaps. We enter into these hedges in numbers and amounts which
generally correspond to the anticipated principal amount of the related
securitization. We recognize gains and losses relative to these hedges in full
at the time of securitization as an adjustment to the gain on sale of the motor
vehicle contracts. We have only used counterparties with investment grade debt
ratings from national rating agencies for our hedging transactions.

We monitor our hedging activities on a frequent basis to ensure that
the value of hedges, their correlation to the motor vehicle contracts being
hedged and the amounts being hedged continue to provide us with effective
protection against interest rate risk. Our hedging strategy requires us to
estimate monthly motor vehicle contract acquisition volume and the timing of our
securitizations. If such estimates are materially inaccurate, then our gain on
sales of motor vehicle contracts and results of operations and cash flows could
be materially adversely affected. We estimate the amount and timing of hedging
transactions based upon the amount of motor vehicle contracts purchased and the
interest rate environment. We currently expect to hedge substantially all of our
motor vehicle contracts during the warehousing period.

DIVIDEND POLICY

We have never declared or paid dividends on our common stock. We
currently intend to retain any future earnings for our business and do not
anticipate declaring or paying any dividends on our common stock in the
foreseeable future. In addition, our ability to declare or pay dividends is
restricted by the terms of our credit and

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<PAGE> 43

warehouse facilities and by the restrictive covenants of the indenture governing
the notes.

NEW ACCOUNTING PRONOUNCEMENTS

In June 1998, the FASB issued Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS 133"). SFAS 133 establishes accounting and reporting
standards for derivative contracts and for hedging activities. The new standard
requires that all derivatives be recognized as either assets or liabilities in
the consolidated statements of financial condition and that those instruments be
measured at fair value. If certain conditions are met, a derivative may be
specifically designated as a hedging instrument. The accounting for changes in
the fair value of a derivative (that is, unrealized gains and losses) depends on
the intended use of the derivative and the resulting designation. The statement
is effective in the first quarter of year 2001. We are presently assessing the
effect of SFAS 133 on our consolidated financial statements.

YEAR 2000 COMPLIANCE

We developed a comprehensive plan designed to address the "Year 2000"
issue, which we have completed for our in-house and third party technology
applications. In 1999, we completed a detailed risk assessment of our various
in-house and third party computer systems, business applications and other
affected systems, formulated a plan for specific remediation efforts and
executed such remediation efforts. We assembled survey data from third party
vendors and certain other parties with which we communicate electronically to
determine the compliance efforts being undertaken by these parties and to assess
our potential exposure to any non-compliant systems operated by these parties.
We completed our remediation efforts and testing of our in-house and third
party systems and applications in 1999, and, as of this date, have experienced
no problems related to the Year 2000 problem.

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<PAGE> 44

BUSINESS

GENERAL

BACKGROUND

We were incorporated in California in 1993 and reincorporated in
Delaware in 1996 in connection with our initial public offering of common stock
in March 1996. We are headed by a management team with extensive experience in
the origination, acquisition, and servicing of indirect and direct automobile
contracts and loans, and who, from 1985 to present, have actively participated
in a number of public securitizations of motor vehicle contracts. Our principal
executive offices are located at 27051 Towne Centre Drive, Suite 100, Foothill
Ranch, California 92610.

MARKET AND COMPETITION

We operate in a highly competitive market. A variety of financial
entities, including the captive finance affiliates of major automotive
manufacturers, banks, savings associations, independent finance companies,
credit unions and leasing companies, have historically serviced the automobile
finance market. Several of our competitors have greater financial resources than
us. Many of our competitors also have long-standing relationships with
automobile dealerships and may offer dealerships or their customers other forms
of financing or services not provided by us.

We compete for the purchase of motor vehicle contracts which meet our
underwriting criteria on the basis of emphasizing strong relationships with our
dealership customer base through our local presence. We support our dealership
customer base with an operation that is open seven days a week and that has the
ability to finalize purchases of motor vehicle contracts on weekends. We believe
that our strong personal relationships with, and our level of service to, the
dealerships in our customer base provide us with a competitive advantage.

BUSINESS STRATEGY

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<PAGE> 45

to lower depreciation rates. Furthermore, motor vehicle
contracts secured by used motor vehicles generally bear
interest at rates that are higher than new motor vehicle
contracts. In addition, we believe that the late model used
motor vehicle finance market is growing at a faster rate than
is the finance market for new motor vehicles.

o Localized Dealership Service. We provide a high level of
service to our dealership base by marketing to and servicing
dealerships on a local level through our auto finance centers.
We strategically locate our auto finance centers in geographic
areas with many dealerships in order to facilitate personal
service in the local markets, including consistent buying
practices, operations open seven days a week, competitive
rates, fast turnaround time and systems designed to expedite
the processing of motor vehicle contract applications. This
personal service is provided by a team of experienced account
managers with an established reputation for responsiveness and
integrity who call on dealerships in a consistent and
professional manner. We believe that our local presence and
service provide the opportunity to build strong and lasting
relationships with dealerships.

o Expansion of Dealership Customer Base. We establish active
relationships with a substantial percentage of franchised
dealerships in the regions in which we do business through our
auto finance centers. We expect to establish additional dealer
relationships as we continue our expansion plans in the
future.

o Maintenance of Underwriting Standards and Portfolio
Performance. We have developed an underwriting process that is
designed to achieve attractive yields while minimizing
delinquencies and losses. Based on our belief that a credit
scoring system is a less effective means of assessing credit
risk, especially in the near-prime sector, we employ
experienced credit managers in the local auto finance centers
to purchase motor vehicle contracts satisfying our
underwriting criteria. Our credit managers and account
managers are compensated as a team and their compensation
relies, in part, upon the quality of underwriting of the motor
vehicle contracts they approve. We also audit most motor
vehicle contracts that we purchase within days of their
origination to further assure adherence to our underwriting
guidelines. To further monitor the integrity of the
underwriting process, we regularly track the delinquency and
loss rates of motor vehicle contracts purchased by each credit
manager and account manager team.

o Technology-Supported Operational Controls. We have developed
and instituted control and review systems that enable us to
monitor both our operations and the performance of the motor
vehicle contracts we service. These systems allow us to
monitor motor vehicle contract production, yields and
performance on a daily basis. We believe that our information
systems not only enhance our internal controls but also allow
us to significantly expand our servicing portfolio without a
corresponding increase in labor costs.

o Liquidity Through Warehousing and Securitizations. Our
strategy is to complete securitizations on a regular basis and
to use warehousing credit facilities to fund the acquisition
or origination of motor vehicle contracts prior to
securitization. To fund dealer participation and finance daily
operations, we rely to a significant extent on credit
facilities that are collateralized by our retained interest in
securitized assets. We also utilize both securitization and
hedging strategies to leverage our capital efficiently and
substantially reduce our interest rate risk.

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<PAGE> 46

OPERATIONS

Dealership Marketing and Service

We have auto finance centers located throughout the United States and,
as of September 30, 1999, had approximately 7,100 active dealerships in our
dealership customer base located in these regions. Of these dealerships,
approximately 89% are franchised and approximately 11% are independent
automobile dealerships. We believe that franchised and select independent
automobile dealerships are most likely to provide us with motor vehicle
contracts that meet our underwriting standards.

We have significantly expanded our customer base of automobile
dealerships, and have substantially increased our monthly motor vehicle contract
purchases and originations and the size of our servicing portfolio. The
following table sets forth information about our motor vehicle contracts and
auto finance centers as of the dates indicated:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED FOR THE NINE MONTHS ENDED
------------------------------------------------------------- ------------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1995 1996 1997 1998 1998 1999
------------ ------------ ------------ ------------ ------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Number of auto finance centers 5 9 10 14 13 17

Number of contracts purchased 16,571 26,244 50,214 86,150 61,301 92,776

Dollar volume of contracts
collateralized by new
vehicles .................... $ 39,706 $ 68,654 $129,178 $ 186,654 $ 130,810 $ 175,404

Dollar volume of contracts
collateralized by used
vehicles .................... $159,691 $251,186 $476,727 $ 851,881 $ 603,524 $ 955,230

Dollar volume of contracts ... $199,397 $319,840 $605,905 $1,038,535 $ 734,334 $1,130,634

Average dollar volume of
contracts per auto finance
center ...................... $ 39,879 $ 35,538 $ 60,591 $ 74,181 $ 56,487 $ 66,507

Number of active dealerships . 769 1,471 2,846 5,401 4,691 7,156

Servicing portfolio (at period
end) ........................ $218,207 $400,665 $757,277 $1,345,961 $1,176,153 $1,924,881
</TABLE>

Our growth objectives over the next 12 months are to open additional
auto finance centers in major markets within the United States and to further
develop relationships with existing dealerships in the markets where we are
currently doing business.

Our account managers work from our auto finance centers to solicit,
enroll and educate new dealerships as well as to maintain relationships with our
existing dealership customer base. Each account manager visits dealership
finance managers at each targeted dealership in his or her territory and
presents information about our dealership services. Our dealership services
include service hours seven days a week and the ability to rapidly respond to
credit applications. Our account managers educate the dealership finance
managers about our underwriting philosophy, including our preference for
near-prime quality motor vehicle contracts collateralized by late model used
motor vehicles and our practice of using experienced credit managers, rather
than sole reliance upon computerized scoring systems, to review applications.

Our account managers also advise the dealership finance managers
regarding our commitment to serve a broad scope of qualified borrowers through
our three near-prime auto lending programs: the "Premier," the

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<PAGE> 47

"Preferred,"and the "Standard" Programs. Our Premier Program allows us to market
lower interest rates in order to capture customers of superior credit quality.
Our Preferred Program allows us to offer motor vehicle contracts at higher
interest rates to borrowers with proven credit quality. Our Standard Program
allows us to assist qualified borrowers, who may have experienced previous
credit problems or have not yet established a significant credit history, at
interest rates higher than our other programs.

We enter into non-exclusive dealership agreements containing certain
representations and warranties by the dealership about the motor vehicle
contracts. After this relationship is established, our account managers continue
to actively monitor the relationship to meet our objectives with respect to the
volume of applications satisfying our underwriting standards. Due to the
non-exclusive nature of our relationships with dealerships, the dealerships
retain discretion to determine whether to solicit financing from us for a
customer seeking to finance a vehicle purchase. Our account managers regularly
telephone and visit finance managers to reinforce to them our objectives and to
answer any questions they may have. To increase the effectiveness of these
contacts, our account managers can obtain real-time information from our
management information systems listing, by dealership, the number of
applications submitted, our response and the reasons why a particular
application was rejected. We believe that the personal relationships our account
managers, credit managers and auto finance center managers establish with the
finance managers at the dealerships are a significant factor in creating and
maintaining productive relationships with our dealership customer base.

UNDERWRITING AND PURCHASING OF CONTRACTS

Our underwriting standards are applied by experienced credit managers
with a personal, hands-on analysis of the creditworthiness of each applicant,
rather than sole reliance upon credit scoring systems as used by several of our
competitors. We believe that credit-scoring systems may approve applicants who
are in fact not creditworthy while denying credit to others who may be an
acceptable credit risk for the interest rate being charged. In addition, we
believe that we can enhance the relationship with our dealership and consumer
customer base by having our credit managers utilize a rules and exception based
credit and audit system to personally review each application and communicate to
the submitting dealership the results of the review, including the reasons why a
particular application may have been declined. This practice encourages the
dealership finance managers to submit motor vehicle contracts meeting our
underwriting standards, thereby increasing our operating efficiency. In order to
ensure consistent application of our underwriting standards as our volume of
motor vehicle contract purchases increases, we have adopted a formal internal
training program for new and existing account managers and credit managers.

We primarily purchase motor vehicle contracts from obligors who have
near-prime credit. While we are typically classified by analysts in an industry
group known as "Automobile Specialty Finance," which includes prime lenders,
near-prime lenders and sub-prime lenders, we do not generally compete with
sub-prime lenders. Moody's Investors Service, Inc. defines these various credit
classifications as follows:

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<PAGE> 48

<TABLE>
<CAPTION>
IMPLIED STATIC POOL(1) BANKRUPTCY LENGTH OF CLEAN
CREDIT CATEGORY CREDIT GRADE LOSSES (%) DISCOUNTS (%) TOLERANCE CREDIT(2)
--------------- ------------ -------------- ------------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Prime A+ to B 3 none none > 5 years

Near-Prime B- to C+ 3 to 7 none > 2 years discharged 2 to 5 years

Subprime C to C- 7 to 15 < 10 1 to 2 years discharged 1 to 2 years

D+ to D- 15 to 25 10 to 30 < 1 year discharged < 1 year

"EZ" E to Z 25 to 50 30 to 50 irrelevant none
</TABLE>

- ----------

(1) Static pools reveal loss and delinquency characteristics for pools of
receivables from a common origination period such as monthly or
quarterly.

(2) "Clean" credit is a relative term, and its meaning changes depending on
the credit category.

Source: 1998 Year in Review and 1999 Outlook: Subprime and Near-Prime Auto
Credits, Moody's Investors Service, Inc.

The underwriting process begins when an application is telecopied by a
dealership or, in the case of motor vehicle contracts directly originated or
purchased, when the application is received from the obligor via the internet,
mail or telephone, to a central toll-free number, at the corporate headquarters
where it is input into our front-end application processing system. Each
application is evaluated by a credit manager in the local auto finance center,
or at our authorized processor's office in the case of motor vehicle contracts
directly originated or purchased, using uniform underwriting standards developed
by us. These underwriting standards are intended to assess the applicant's
ability to timely repay all amounts due under the motor vehicle contract and the
adequacy of the financed vehicle as collateral. Among the criteria considered by
our credit managers in evaluating each application are:

o the stability of the applicant with specific regard to his or
her occupation, length of employment and length of residency;

o the applicant's payment history based on information known
directly by us or as provided by various credit reporting
agencies with respect to present and past debt;

o a debt service-to-gross monthly income ratio test, which
generally is not to exceed 45%;

o a payment-to-income test, generally not to exceed 15%;

o the principal amount of the motor vehicle contract taking into
account the age, type and market value of the related financed
vehicle.

To evaluate credit applications, the credit manager reviews, among
other things, on-line information, including reports of credit reporting
agencies, nationally recognized vehicle valuation services, and ownership of
real estate listed on an application. Our wide area network permits a credit
manager in any auto finance center, or the corporate headquarters, to access an
application on a real-time basis. This computer network enables senior
management to efficiently review and approve motor vehicle contracts requiring
approval and permits us to seamlessly shift underwriting work among any of the
auto finance centers to increase operating efficiency. Finally, our computer
network permits daily review by senior management of operating results sorted by
any number of variables, including by credit manager, auto finance center, or
auto dealership.

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<PAGE> 49

The funds we advance to purchase a motor vehicle contract generally do
not exceed:

o for a new financed vehicle, the dealer's invoice plus taxes,
title and license fees, any extended warranty and credit and
any other insurance; or

o for a used financed vehicle, the wholesale value assigned by a
nationally-recognized used-car value guide, plus taxes, title
and license fees, any extended warranty and credit and any
other insurance.

However, the actual amount we advance for a motor vehicle contract is
often less than the maximum permissible amount depending on a number of factors,
including:

o the length of the motor vehicle contract term;

o the make, model and year of the financed vehicle; and

o the creditworthiness of the obligor.

We make these adjustments to insure that the financed vehicle
constitutes adequate collateral to secure the motor vehicle contract. Based upon
the dealer invoice for new cars and the wholesale value for used cars reported
in nationally recognized used car value guides, the motor vehicle contracts we
purchased or originated in 1998 and which we have purchased in 1999 had an
average loan to value ratio that we believe is one of the lowest in the
industry.

Once review of an application is completed, our credit manager, via an
electronic system, communicates his or her decision to the dealership, or in the
case of motor vehicle contracts directly originated or purchased by phone or
otherwise, to the consumer or our authorized loan processor, specifying
approval, conditional approval (such as an increase in the downpayment,
reduction in the term of the financing, or the addition of a co-signer to the
motor vehicle contract), or denial.

The dealership is required to deliver the necessary documentation for
each motor vehicle contract we approve for purchase to the originating auto
finance center, which consists of:

o a signed credit application;

o the only original and a copy of the executed motor vehicle
contract;

o an agreement by the obligor to provide insurance;

o a report of sale or guarantee of title;

o an application for registration;

o a co-signer notification, if applicable;

o a copy of any supplemental warranty purchased with respect to
the financed vehicle;

o acceptable vehicle valuation documentation; and

o any other required documentation.

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<PAGE> 50

Once this documentation is in hand for filing, the file is forwarded
for a pre-funding audit. We audit such documents for completeness and
consistency with the application, providing final approval for purchase of the
motor vehicle contract once these requirements have been satisfied. The
completed motor vehicle contract file is then promptly forwarded to our
corporate headquarters.

The auto finance center purchasing the motor vehicle contract funds the
purchase and pays dealer participation, if any. We compute the dealer
participation by calculating the interest rate differential between the interest
rate charged by the dealership to the purchaser and the buy rate that we offer
to the dealership for that motor vehicle contract. The dealership can receive
100% of the dealer participation at purchase or at month-end, and we are
entitled to recover from the dealership the unearned portion of the dealer
participation over the life of the motor vehicle contract in the event of a
prepayment of the purchased motor vehicle contract or charge-off of the motor
vehicle contract. We also offer three other participation methods in which we
pay less than 100% of the dealer participation but for which the dealership is
under no obligation to refund any unearned participation if the contract
defaults or pre-pays after the expiration of a set period of time after the
motor vehicle contract purchase date.

We conduct a post-funding credit review of the majority of our motor
vehicle contracts. In the review, the approved application is re-examined to be
certain it complies with our underwriting requirements. The results of these
reviews are then reviewed by our senior management to ensure consistent
application of our underwriting standards.

We employ a compensation system for our credit managers, account
managers and auto finance center managers designed to reward those employees
whose motor vehicle contract purchases meet our volume and yield objectives
while preserving credit quality. Generally, these bonuses, which are payable
monthly, may constitute up to 40% of an employee's compensation and are
initially calculated based on the volume of motor vehicle contracts we purchase
and the yield on such motor vehicle contracts. This bonus amount is reduced if
our post-funding credit review reveals that a portion of the purchased motor
vehicle contracts did not satisfy our underwriting standards. Under this system,
50% of the bonus payment is based on attainment of account manager or credit
manager team objectives, as applicable, and 50% is based on attainment of the
auto finance center objectives. We believe this incentive compensation system
motivates employees to purchase only those near-prime quality motor vehicle
contracts that meet our objectives of increasing volume at targeted yields while
preserving credit quality.

The following table sets forth information about our motor vehicle
contracts as of the dates indicated:

<TABLE>
<CAPTION>
FOR THE NINE
MONTHS ENDED
FOR THE YEARS ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------------------------- ----------------------
1995 1996 1997 1998 1998 1999
--------- -------- -------- ---------- -------- ----------
(DOLLARS IN THOUSAND)
<S> <C> <C> <C> <C> <C> <C>
Contracts purchased during the period .. $ 199,397 $319,840 $605,905 $1,038,535 $734,334 $1,130,634

Average contract amount ................ $ 12,033 $ 12,187 $ 12,066 $ 12,055 $ 11,980 $ 12,187

Weighted average initial term (months) 55.5 56.2 57.0 57.5 57.4 57.0

Weighted average annual percentage rate 15.00% 14.72% 14.66% 14.72% 14.71% 14.73%

Percentage of dollar amount of contracts
collateralized by new motor vehicles
purchased during the period ........... 19.91% 21.47% 21.32% 17.97% 17.81% 15.51%
</TABLE>

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<PAGE> 51
<TABLE>
<CAPTION>
FOR THE NINE
MONTHS ENDED
FOR THE YEARS ENDED DECEMBER 31, SEPTEMBER 30,
----------------------------------------------- ----------------------
1995 1996 1997 1998 1998 1999
--------- -------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Percentage of dollar amount of contracts
collateralized by used motor vehicles
purchased during the period ........... 80.09% 78.53% 78.68% 82.03% 82.19% 84.49%
</TABLE>

Periodically, we perform an analysis of our servicing portfolio to
evaluate the effectiveness of our underwriting guidelines. If external economic
factors, credit delinquencies or credit losses change, we may adjust our
underwriting guidelines to maintain the asset quality deemed acceptable by our
management.

SERVICING PROCEDURES

We service all motor vehicle contracts in our servicing portfolio. To
reduce the costs of our servicing operations, we have outsourced certain data
processing and billing functions related to our servicing. This includes a
three-year contract expiring in February 2000 with a service bureau to provide
certain loan accounting, reporting and servicing functions. Through these
service providers, we mail to each obligor a monthly billing statement 20 days
prior to the due date. We believe this method has proven to be more effective in
controlling delinquency, and therefore losses, than payment coupon books which
are delivered to the obligor at the time the motor vehicle contract is
purchased. We charge a late fee, where allowed by law, on any payment received
after the expiration of the statutory or contractual grace period. Most payments
from obligors are deposited directly into a lockbox account while the remainder
of payments are received directly by us and promptly deposited by us into the
lockbox account.

Under the terms of our credit facilities and securitization trusts, we
act as servicer with respect to all motor vehicle contracts purchased or
originated in our servicing portfolio. We receive servicing fees for servicing
securitized motor vehicle contracts equal to one percent per annum of the
outstanding principal balance of such motor vehicle contracts. We service the
securitized motor vehicle contracts by collecting payments due from obligors and
remitting such payments to the trustee in accordance with the terms of the
servicing agreements. We maintain computerized records with respect to each
motor vehicle contract to record receipts and disbursements and to prepare
related servicing reports.

COLLECTION PROCEDURES

We perform collection activities with respect to delinquent motor
vehicle contracts at our collection center located in Foothill Ranch,
California. Collection activities include prompt investigation and evaluation of
the causes of any delinquency. An obligor is considered delinquent when he or
she has failed to make at least 90% of a scheduled payment under the motor
vehicle contract within 30 days of the related due date.

To automate our collection procedures, we use features of the computer
system of our third party service bureau, Online Computer Systems, Inc., to
provide tracking and notification of delinquencies. The collection system
provides relevant obligor information, including current addresses, phone
numbers and loan information, and records of all motor vehicle contracts. The
system also maintains a record of an obligor's promise to pay and affords
supervisors the ability to review collection personnel activity and to modify
collection priorities with respect to motor vehicle contracts. We are currently
evaluating the feasibility of bringing these operations in-house.

We utilize a predictive dialing system located at our Foothill Ranch
Collection Center to make phone calls to obligors whose payments are past due by
more than eight days but less than 30 days. The predictive dialer is a
computer-controlled telephone dialing system which dials phone numbers of
obligors from a file of records extracted from the motor vehicle contract
database. By eliminating time wasted on attempting to reach obligors, the system
gives a single collector, on average, the ability to speak with and work 200 to
250 accounts per day. Once a

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<PAGE> 52

live voice responds to the automated dialer's call, the system automatically
transfers the call to a collector and the relevant account information to the
collector's computer screen. The system also tracks and notifies collections
management of phone numbers that the system has been unable to reach within a
specified number of days, thereby promptly identifying for management all
obligors who cannot be reached by telephone.

Once an obligor is 20 days or more delinquent, his or her account is
assigned to a specific collector at our collection center in Foothill Ranch who
has primary responsibility for such delinquent account until it is resolved. To
expedite collections from late paying obligors, we use Western Union "Quick
Collect", which allows an obligor to pay, at numerous locations, any late
payments which are in turn wired daily to our lockbox account by Western Union.
We also use a Western Union payment system that allows an obligor to authorize
us to present a draft directly to the obligor's bank for payment to us.

Generally, after a scheduled payment under a motor vehicle contract
continues to be past due for between 45 and 60 days, we will initiate
repossession of the financed vehicle. However, if a motor vehicle contract is
deemed uncollectible, if the financed vehicle is deemed by collection personnel
to be in danger of being damaged, destroyed or made unavailable for
repossession, or if the obligor voluntarily surrenders the financed vehicle, we
may repossess it without regard to the length or existence of payment
delinquency. Repossessions are conducted by third parties that are engaged in
the business of repossessing vehicles for secured parties. Under the laws of
most states, after repossession, the obligor generally has an additional period
of time to redeem the financed vehicle before we may resell the financed vehicle
in an effort to recover the balance due under the motor vehicle contract.

Losses may occur in connection with delinquent motor vehicle contracts
and can arise in several ways, including the inability to locate the financed
vehicle or the obligor, or because of a discharge of the obligor indebtedness in
a bankruptcy proceeding. Our current policy is to recognize losses at the time a
motor vehicle contract is deemed uncollectible or during the month a scheduled
payment under a motor vehicle contract becomes 120 days or more past due,
whichever occurs first.

Upon repossession and sale of the financed vehicle, any deficiency
remaining is pursued against the obligor to the extent deemed practical by us
and to the extent permitted by law. Our loss recognition and collection policies
and practices may change over time in accordance with our business judgment.

MODIFICATIONS AND EXTENSIONS

We offer certain credit-related extensions to obligors. Generally, we
offer these extensions only when all of the following conditions are met and
there has been no more than one credit-related extension not exceeding two
months granted on the motor vehicle contract in the immediately preceding twelve
months:

o we believe that the obligor's financial difficulty has been
resolved or will no longer impair the obligor's ability to
make future payments;

o the extension will result in the obligor's payments being
brought current;

o the total number of credit-related extensions granted on the
motor vehicle contract will not exceed three and the total
credit-related extensions granted on the motor vehicle
contract will not exceed three months in the aggregate; and

o we, or our assignee, have held the motor vehicle contract for
at least six months.

Any deviation from this policy requires the concurrence of a collection
supervisor, our collection manager and our Executive Vice President,
Collections. The total number of annual deferments was less than 3% of the

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<PAGE> 53

number of motor vehicle contracts in our servicing portfolio for the years
ending December 31, 1997 and December 31, 1998 and for the nine months ending
September 30, 1999.

INSURANCE

Each motor vehicle contract requires the obligor to obtain
comprehensive and collision insurance with respect to the related financed
vehicle with us named as a loss payee. In the event that the obligor fails to
maintain the required insurance, however, we have purchased limited
comprehensive and collision insurance, referred to as our "blanket insurance
policy" coverage. Our blanket insurance policy provides us with protection on
each uninsured or underinsured financed vehicle against total loss, damage or
theft. We have obtained our blanket insurance policy from Interstate Indemnity
Company. For our blanket insurance policy, we are assessed a premium based on
the size of our servicing portfolio. In 1998, we created an insurance tracking
department at our corporate headquarters. This function has helped reduce our
exposure to uninsured motorists, through our prompt follow-up on non-compliant
obligors.

FINANCING AND SALE OF CONTRACTS

We finance our acquisition and origination of motor vehicle contracts
primarily through our credit facilities and through securitizations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" and "-- Securitizations."

GOVERNMENT REGULATION

Our operations are subject to regulation, supervision, and licensing
under various federal, state and local statutes, ordinances and regulations. We
are required to comply with the laws of those states where we conduct
operations. We believe that we are in compliance with these laws and
regulations.

Consumer Protection Laws

Federal and state consumer protection laws and related regulations
impose substantial requirements upon lenders and servicers involved in consumer
finance. These laws include the Truth-in-Lending Act, the Equal Credit
Opportunity Act, the Federal Trade Commission Act, the Fair Credit Reporting
Act, the Fair Debt Collection Practices Act, the Magnuson-Moss Warranty Act, the
Federal Reserve Board's Regulations B and Z, states' adaptations of the Uniform
Consumer Credit Code and of the Uniform Commercial Code, or UCC, and state motor
vehicle retail installment sales acts and other similar laws. These laws, among
other things, require us to provide certain disclosures to applicants, prohibit
misleading advertising and protect against discriminatory financing or unfair
credit practices. The Truth in Lending Act and Regulation Z promulgated
thereunder require disclosure of, among other things, the payment schedule, the
finance charge, the amount financed, the total of payments and the annual
percentage rate charged on each retail installment contract. The Equal Credit
Opportunity Act prohibits creditors from discriminating against applicants
(including retail installment contract obligors) on the basis of race, color,
sex, age (provided the applicant has the capacity to contract), marital status,
religion, national origin, the fact that all or part of the applicant's income
derives from a public assistance program, or the fact that the applicant has in
good faith exercised any right under the Consumer Credit Protection Act. Under
the Equal Credit Opportunity Act, creditors are required to make certain
disclosures regarding consumer rights and advise consumers whose credit
applications are not approved of the reasons for the rejection. The rules of the
Federal Trade Commission, or FTC, limit the types of property a creditor may
accept as collateral to secure a consumer contract and the holder in due course
rule provides for the preservation of the consumer's claims and defenses when a
consumer obligation is assigned to a subject holder. With respect to used
vehicles specifically, the FTC requires that all sellers of used vehicles
prepare, complete and display a buyer's guide which explains any applicable
warranty coverage for such vehicles. Also, some state laws impose finance charge
ceilings and other restrictions on consumer transactions and require contract
disclosures in addition to those required under federal law. These requirements
impose specific

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<PAGE> 54

statutory liabilities upon creditors who fail to comply with their provisions.
In some cases, these provisions could affect our ability to enforce motor
vehicle contracts we purchase or originate.

Certain laws enacted by the federal government and various states
including "lemon laws" provide certain rights to purchasers with respect to
motor vehicles that fail to satisfy express warranties. The application of such
lemon laws or violation of such other federal and state laws may give rise to a
claim or defense of an obligor against a dealership and its assignees, including
us and purchasers of motor vehicle contracts from us. The dealer agreements
contain representations and warranties by the dealership that, as of the date of
the assignment of motor vehicle contracts, no such claims or defenses have been
asserted or threatened with respect to such motor vehicle contracts and that all
requirements of such federal and state laws have been complied with in all
material respects. Although a dealership would be obligated to repurchase motor
vehicle contracts that breached such representations and warranties, there can
be no assurance that the dealership will have the financial resources to satisfy
its repurchase obligations to motor vehicle contracts.

Soldiers' and Sailors' Civil Relief Act

The Soldiers' and Sailors' Civil Relief Act of 1940, as amended imposes
certain limitations upon the actions of creditors with respect to persons
serving in the armed forces of the United States and, to a more limited extent,
their dependents and guarantors and sureties of debt incurred by such persons.
This act is designed to allow relief to obligor servicemen and servicewomen
whose ability to meet their loan obligations is materially affected by their
being called to active duty in the armed forces. With respect to obligors who
are in the armed forces when a loan obligation is incurred, this act provides
protection when the military service, in fact, has prevented or is preventing
those obligors who are members of the armed forces from meeting their loan
obligations. Among other things, this act can, with respect to obligors falling
within its scope, limit the interest rate of an obligor's motor vehicle contract
to 6% per annum and restrict our ability to repossess the motor vehicle securing
an obligor's motor vehicle contract following a default.

Security Interest in Vehicles

Installment sales contracts such as those purchased by us evidence the
credit sale of automobiles, light duty trucks and vans by dealerships to
obligors. The motor vehicle contracts also constitute personal property security
agreements and include grants of security interests in the motor vehicles under
the UCC. Perfection of security interests in the motor vehicles is generally
governed by the motor vehicle registration laws of the state in which the motor
vehicle is located. In California, a security interest in a motor vehicle is
perfected by notation of the secured party's lien on the motor vehicle's
certificate of title. The motor vehicle contracts prohibit the sale or transfer
of the financed vehicle without our consent.

As servicer for motor vehicle contracts sold in securitizations, we are
obligated to take appropriate steps, at our own expense, to maintain perfection
of security interests in the financed vehicles. In securitization transactions,
we assign our security interest in the financed vehicles to the trustee for the
securitization trust. Because of administrative inconvenience and expense,
amended certificates of title are not obtained reflecting the trustee's
interest. It is possible that failure to obtain amended certificates of title
could in certain circumstances adversely affect our ability as servicer to
recover the collateral value of the financed vehicle on behalf of the
securitization trust. Future servicing cash flows from the securitization trusts
to us could be adversely affected to that extent. We have not, however,
experienced any significant problems enforcing liens on financed vehicles
securing motor vehicle contracts we have securitized.

Under the laws of most states, including California, the perfected
security interest in a motor vehicle continues for four months after the motor
vehicle is moved to a new state. Most states require surrender of a certificate
of title to re-register a motor vehicle. Since we will have our lien noted on
the certificates of title, in most

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<PAGE> 55

cases it, as lienholder, will have the opportunity to re-perfect its security
interest in the state of relocation. In statesthat do not require a certificate
of title for registration of a motor vehicle, re-registration could defeat
protection.

Under the laws of most states, including California, liens for vehicle
repairs and unpaid taxes take priority over a perfected security interest. Liens
for repairs or taxes could arise at any time during the term of a motor vehicle
contract without notice to us.

Secured Party Rights and Obligations

In the event of a default by an obligor, we have all of the remedies of
a secured party under the UCC, except where specifically limited by other state
laws. The remedies of a secured party under the UCC generally include the right
to repossession by self-help, unless such self-help would constitute a breach of
the peace. The UCC requires a secured party who has repossessed collateral to
provide an obligor with reasonable notice of the date, time and place of any
public sale and/or the date after which any private sale of the collateral may
be held. Under such laws, the obligor has the right to redeem the collateral
prior to actual sale.

The proceeds from the resale of a financed vehicle generally will be
applied first to the expenses of repossession and resale and then to the
satisfaction of the obligation evidenced by the applicable motor vehicle
contract. A deficiency judgment can be sought in most states subject to the
requirement that the sale be commercially reasonable and to the satisfaction of
any statutory procedural requirements by the secured party. Generally, any
surplus must be remitted to any holder of a junior lien with respect to the
financed vehicle and if no such lienholder exists, the secured party must remit
the surplus to the former owner of the financed vehicle.

In addition, numerous other statutory provisions, including the federal
bankruptcy law and related laws, may interfere with or affect our ability to
realize upon collateral or enforce a deficiency judgment. The repossession
process and the costs associated therewith generally result in losses on the
underlying motor vehicle contracts, and such losses generally reduce the amount
available for distribution from the related spread accounts of securitizations.

Although we believe that we are currently in compliance with applicable
statutes and regulations, there can be no assurance that we will be able to
maintain such compliance. The failure to comply with such statutes and
regulations could have a material adverse effect upon us. Furthermore, the
adoption of additional statutes and regulations, changes in the interpretation
and enforcement of current statutes and regulations or the expansion of our
business into jurisdictions that have adopted more stringent regulatory
requirements could have a material adverse effect upon us.

LITIGATION

We are a party to various legal proceedings, similar to actions brought
against other companies in the motor vehicle finance industry. Companies in the
motor vehicle finance market have been named as defendants in an increasing
number of class action lawsuits brought by customers claiming violations of
various federal and state consumer credit and similar laws and regulations. We
are defendants in two such class action lawsuits. While we intend to vigorously
defend ourselves against such proceedings, there is a chance that our results of
operations and cash flows could be materially adversely affected by unfavorable
outcomes.

EMPLOYEES

We employ personnel experienced in all areas of loan origination,
documentation, collection and administration. We employ and train specialists in
loan processing and servicing with minimal crossover of duties. At September 30,
1999, we had 683 full-time employees, none of whom were covered by collective
bargaining agreements. We believe we have good relationships with our employees.

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<PAGE> 56

PROPERTIES

Our headquarters are located in Foothill Ranch, California. We lease
approximately 82,000 square feet pursuant to a lease expiring in January 2009.
We also lease office space for our auto finance centers located throughout the
United States. We believe our facilities are both suitable and adequate for the
current business activities conducted at our corporate headquarters and at our
existing auto finance centers.

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<PAGE> 57

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth information concerning our directors and
executive officers:

<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Thomas C. Stickel 50 Chairman of the Board
John W. Hall 38 President, Chief Executive Officer and Director
Don P. Duffy 45 Executive Vice President, Chief Financial Officer
and Director
Frank Marraccino 43 Executive Vice President
Eugene J. Warner, Jr. 56 Executive Vice President
Bruce R. Hallet 43 Director
G. Bradford Jones 44 Director
C. Thomas Meyers 61 Director
</TABLE>

- ------------------
Officers are elected by, and serve at the discretion of, our board of
directors. A brief biography of each director and executive officer follows:

THOMAS C. STICKEL has served as a director since April 1995 and as our
Chairman of the Board since May, 1996. Mr. Stickel is the chairman and founder
of University Ventures Network, a company providing business and capital
interface between major universities. Mr. Stickel is also the chairman and
founder of American Partners Capital Group, a corporation specializing in
pension fund investment, design and development. As chairman of American
Partners Capital Group, Mr. Stickel is responsible for overseeing its core
operations as well as the activities of its board of directors. In 1992, Mr.
Stickel founded American Partners, Inc., a corporation specializing in Latin
American business development, and served as its Chairman until 1994. From 1983
to 1992, Mr. Stickel served as the chairman and chief executive officer of TCS
Enterprises, Inc., a financial services holding company. Mr. Stickel served on
the board of directors of Catellus Development Corporation from 1993 to 1996.
Mr. Stickel also serves as a director of San Diego Gas and Electric Company and
several privately held companies.

JOHN W. HALL has served as our president, and as a director, since
August 1993, and as our chief executive officer since September 1996. From 1988
to 1993, Mr. Hall was the M.I.S. director of Western financial bank, developing
and implementing operational technology with an emphasis on its auto finance
division. From 1985 to 1988, Mr. Hall was a founder and president of Micro
Advantage, a developer and seller of software products for the business
education industry. From 1983 to 1985, Mr. Hall was assistant director of data
processing in Southern California.

DON P. DUFFY has served as an executive vice president and as our chief
financial officer since October 1993 and as a director since January, 1997. From
1988 to October 1993, Mr. Duffy was a senior manager for Ernst & Young,
specializing in the financial services industry. As senior manager as Ernst &
Young, Mr. Duffy was responsible for managing engagements to banks, savings
institutions and finance companies with assets ranging from $100 million to $3
billion. Mr. Duffy was responsible for the public offering of over $2 billion of
automobile collateralized bonds and pass-through certificates. From 1981 through
1988, Mr. Duffy held other positions with Ernst & Young and its predecessor.

FRANK MARRACCINO has served as an executive vice president since 1996
and was senior vice president from 1993 to 1996. Mr. Marraccino is responsible
for the operations of all of our auto finance centers and the purchase of motor
vehicle contracts nationwide. From 1981 to 1993, Mr. Marraccino worked for
Western Financial

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<PAGE> 58

Bank and served in various capacities, including dealer center manager and
collection manager. In 1992 and 1993, Mr. Marraccino was responsible for
production and servicing of the auto receivables portfolio of Western Financial
Bank.

EUGENE J. WARNER, JR. joined us in December 1996 as executive vice
president of collections. Mr. Warner has over 29 years experience in the
financial services industry in both lending and collections. He has helped to
design and implement a number of collection and operations systems. He also has
extensive experience in automobile financing in both direct and indirect
financing which brings added depth to his position and enables him to be
involved in helping to improve credit risk standards and pricing as well as
dealing with other related issues. Mr. Warner's prior experience includes 62
years as a senior vice president of collections for Consumer Portfolio Services,
32 years with Far Western Bank where he served as vice president of collection
administration, 14 years in the thrift and loan industry serving as regional
vice president and 5 years in consumer finance with Household Finance.

BRUCE R. HALLETT has served as a director since November 1993. Since
February 1993, Mr. Hallett has been a partner in the law firm of Brobeck,
Phleger & Harrison, LLP and Managing Partner at the firm's Orange County office
since 1995. From January 1989 until February 1993, Mr. Hallett was a partner in
the law firm of Morrison & Foerster LLP.

G. BRADFORD JONES has been a director since November 1993. Mr. Jones is
currently a general partner in the venture capital firm of Brentwood Associates,
which he joined in 1981 and where he is responsible for making capital
investments into emerging companies and, thereafter, conducting oversight of
such investments through consulting and service on boards of directors. Mr.
Jones also currently serves as director of Interpore International, a
manufacturer of synthetic bone graft materials for orthopedic use, Plasma &
Materials Technologies, Inc., a manufacturer of advanced etching and deposition
equipment for the semiconductor industry, and ISOCOR, a vendor of electronic
information exchange software. Mr. Jones is also a director of several privately
held companies.

C. THOMAS MEYERS has served as a director since his appointment in June
1998 to fill a vacancy on our board. Mr. Meyers retired from Capital Markets
Assurance Corporation ("CapMAC") where he was Managing Director, Credit
Enhancement. A 1960 graduate of Notre Dame University, Mr. Meyers has been in
the financial services business most of his career including 13 years at General
Electric Company where he held various positions. Mr. Meyers was the chief
financial officer for the consumer division of GE Capital prior to joining
CapMAC in 1987. In 1992, Mr. Meyers and 7 others participated in the acquisition
of CapMAC, in a leveraged buy-out, from Citicorp. CapMAC went public on the New
York Stock Exchange in 1995 and was acquired in 1998 by MBIA.

EXECUTIVE COMPENSATION

The following table provides certain summary information concerning the
compensation earned by our Chief Executive Officer and each of the four
additional most highly compensated executive officers for the years ended
December 31, 1998, December 31, 1997 and December 31, 1996, whose compensation
was in excess of $100,000.

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<PAGE> 59

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
Annual compensation
-------------------- Securities underlying
Name and Principal Position Year Salary($) Bonus($) options/SARs(#)(1)
--------------------------- ---- --------- -------- ---------------------
<S> <C> <C> <C> <C>
John W. Hall 1998 $318,000 $165,100 262,313
President, Chief 1997 $318,000 -- 75,000
Executive Officer and 1996 $318,000 -- 51,021
Director

Don P. Duffy 1998 $194,565 $101,120 119,374
Chief Financial Officer, 1997 $178,600 -- 25,000
Executive Vice President 1996 $161,083 -- 4,373
and Director

Frank Marraccino 1998 $169,500 $ 78,750 139,374
Executive Vice president 1997 $179,301 $ 15,000 20,000
1996 $152,000 $ 29,775 29,373

Eugene J. Warner, Jr.(2) 1998 $144,200 $ 57,680 60,000
Executive Vice President 1997 $140,000 --
1996 $ 11,667 -- 50,000

Regan E. Kelly 1998 $137,197 $ 31,299 25,000
Former Executive Vice 1997 $133,550 -- 5,000
President and General 1996 $127,762 $ 5,788 --
Counsel
</TABLE>

- -----------------

(1) Stock options for shares of Onyx common stock were awarded in the year
indicated. Figures for 1998 include options granted in 1998 at a new
exercise price in cancellation of preexisting options originally granted
from 1995 to 1998 but with a higher exercise price as follows:

John W. Hall......................... 197,313

Don P. Duffy......................... 74,374

Frank L. Marraccino.................. 94,374

Eugene J. Warner, Jr................. 60,000

Regan E. Kelly....................... 15,000

(2) Mr. Warner joined us in December, 1996.

The following table contains information concerning the stock option
grants made to each of the executive officers named above for the year ended
December 31, 1998. No stock appreciation rights were granted to these
individuals during such year.

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<PAGE> 60

OPTION GRANTS IN FISCAL YEAR 1998

<TABLE>
<CAPTION>
Individual Grant Potential Realization
----------------------------------------------------------- Value at
Number of Percent of Assumed Annual Rates of
Securities Total Options Stock Price Appreciation
Underlying Granted to Per Share for Option Term(11)
Options Employees in Exercise Expiration --------------------------
Name Granted(1) Fiscal Year(8) Price(9) Date(10) 5% 10%
---- ---------- -------------- --------- ----------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
John W. Hall.......... 6,291(2) 0.5% $5.75 05/11/05 $ 58,922 $ 93,824
51,021(3) 3.9% $5.75 03/17/06 $477,870 $ 760,928
75,001(4) 5.8% $5.75 01/01/07 $702,470 $1,118,566
65,000(5) 5.0% $5.75 01/01/08 $608,799 $ 969,411

Don P. Duffy.......... 4,373(3) 0.3% $5.75 03/17/06 $ 40,958 $ 65,219
25,000(4) 1.9% $5.75 01/01/07 $234,153 $ 372,850
45,001(5) 3.5% $5.75 01/01/08 $421,485 $ 671,145

Frank L. Marraccino.. 4,373(3) 0.3% $5.75 03/17/06 $ 40,958 $ 65,219
25,000(6) 1.9% $5.75 07/28/06 $234,153 $ 372,851
20,000(4) 1.5% $5.75 01/01/07 $187,323 $ 298,280
45,001(5) 3.5% $5.75 01/01/08 $421,486 $ 671,146

Eugene J. Warner, Jr. 50,000(7) 3.9% $5.75 10/31/06 $468,307 $ 745,701
10,000(5) 0.8% $5.75 01/01/08 $ 93,662 $ 149,140

Regan E. Kelly....... 5,000(4) 0.4% $5.75 01/01/07 $ 46,831 $ 74,570
10,000(5) 0.8% $5.75 01/01/08 $ 93,661 $ 149,490
</TABLE>

- ----------
(1) All options listed in the column were regranted on October 27, 1998 in
cancellation of higher-priced options, as discussed in "Option
Repricing" below. A one-year "blackout" period for the regranted
options was established, according to which none of the options could
be exercised unless the optionee remained in our service on October 27,
1999. If the optionee remained in our service through October 27, 1999,
his options became exercisable at that time for the number of shares
for which the option would have been exercisable on October 27, 1999
absent the regrant, and any options not then exercisable became
exercisable in installments at the same rate the option would have
become exercisable absent the regrant. The footnotes for each option
indicate the option's original exercise schedule. Mr. Kelly's options,
however, remain exercisable at the regrant price, notwithstanding the
fact that Mr. Kelly resigned from his position with Onyx prior to
October 27, 1999.

(2) Option granted on May 12, 1995 and was immediately exercisable in full.

(3) Option granted on March 18, 1996, of which 25% was immediately
exercisable, with the remainder becoming exercisable thereafter in 48
equal monthly installments from the grant date upon the optionee's
completion of each month of service, subject to the "blackout" period
described in footnote 1.

(4) Option granted January 2, 1997, of which 25% became exercisable one
year from the grant date and the balance exercisable thereafter in 36
equal monthly installments upon the optionee's completion of each month
of service, subject to the "blackout" period described in footnote 1.

(5) Option granted January 2, 1998, of which 25% became exercisable one
year from the grant date and the balance exercisable thereafter in 36
equal monthly installments upon the optionee's completion of each month
of service, subject to the "blackout" period described in footnote 1.

(6) Option granted July 29, 1996 which became exercisable in 48 equal
monthly installments beginning one year from the grant date upon the
optionee's completion of each month of service, subject to the
"blackout" period described in footnote 1.

(7) Option granted November 1, 1996, of which 50% was immediately
exercisable and the balance exercisable thereafter in 24 equal monthly
installments upon the optionee's completion of each month of service,
subject to the "blackout" period described in footnote 1.

(8) Based on options granted for a total of 1,296,878 shares, including
regrants of approximately 914,318 shares granted to employees during
1998.

(9) The exercise price of these options initially ranged from $7.25 to
$11.49 per share. As a result of repricing options on October 27, 1998,
the option exercise price was reduced to $5.75. The exercise price may
be paid in cash, in shares of common stock valued at fair market value
on the date of exercise or pursuant to a cashless exercise procedure
involving a same-day sale of the purchased shares.

(10) Options were granted from 1995 through 1998 and expired ten years from
their grant date. The options were canceled and reissued pursuant to
repricing on October 27, 1998, but the expiration date remained the
same as when the options were originally granted.

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<PAGE> 61

(11) The 5% and 10% assumed annual rates of compounded stock price
appreciation are permitted by rules of the Securities and Exchange
Commission. There can be no assurance provided to any executive officer
or any other holder of our securities that the actual stock price
appreciation over the 10-year option term will be at the assumed 5% and
10% levels or at any other defined level. Unless the market price of
the common stock appreciates over the option term, no value will be
realized from the option grants made to the executive officers.

The following table sets forth information concerning the value of
unexercised options held by each of our executive officers named above for the
year ended December 31, 1998. No options or stock appreciation rights were
exercised during such year and no stock appreciation rights were outstanding at
the end of that year.

AGGREGATE OPTION EXERCISES AND 1998 FISCAL YEAR-END VALUES

<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised Options at 1998 In-The-Money Options at 1998
Fiscal Year End Fiscal Year End(1)
--------------------------- -------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
John W. Hall 137,719 116,023 $295,693 N/A

Don P. Duffy 32,215 59,048 $ 88,503 N/A

Frank L. Marraccino 21,782 72,591 N/A N/A

Eugene J. Warner, Jr. 38,542 21,458 N/A N/A

Regan E. Kelly 8,518 12,605 $ 32,084 N/A
</TABLE>

- ----------
(1) Based on the fair market value of the option shares at fiscal year-end
($5.75 per share) less the average exercise price ($0.51 per share)
payable for such in the money shares.

DIRECTORS' COMPENSATION

Our directors, with the exception of our Chairman of the Board, who
receives $2,500 per month, do not receive compensation for services on our board
of directors or any committee thereof but are reimbursed for their out-of-pocket
expenses in serving on our board of directors. Certain non-employee members of
our board of directors have been granted options to purchase shares of our
common stock from time to time in connection with their appointment to and
performance on the board of directors. Additionally, each of the non-employee
members of our board of directors is eligible to receive options to purchase
common stock under our amended and restated 1996 stock option stock issuance
plan's automatic option grant program.

Under our automatic option grant program, at each annual stockholders
meeting, each individual with at least six months of service on our board who is
to continue to serve as a non-employee member of our board after the meeting
will receive an option grant to purchase 7,000 shares of common stock, whether
or not such individual has been in our prior employ or joined our board prior to
the offering.

Each automatic grant will have a term of ten years. This term is
conditioned upon the optionee's continuing service on our board. The initial
automatic option grants under our automatic option grant program will vest in a
series of twenty-four (24) successive equal monthly installments upon the
optionee's completion of each month of board service over this twenty-four (24)
month period measured from the grant date. The annual automatic option grants
will vest in a series of twelve (12) equal monthly installments upon the
optionee's completion of each month of board service over this twelve (12) month
period measured from the grant date. However, each outstanding option will
immediately vest upon (i) certain changes in our ownership or control or (ii)
the death or disability of the optionee while serving as a board member.

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<PAGE> 62

EMPLOYMENT AGREEMENTS

None of our executive officers have employment agreements with us, and
their employment may be terminated at any time at the discretion of our board of
directors. Stock options granted under our 1996 stock option stock issuance plan
may be accelerated at the discretion of our board in the event of a change of
control or in the event of an involuntary termination following a change of
control.

STOCK OPTION GRANTS

We use stock options as long-term incentives and expect that we will
continue to issue this compensation alternative in the future. In 1996, we
adopted our 1996 stock option stock issuance plan that made 600,000 shares of
our common stock available for such purposes. Our compensation committee grants
incentive stock options and, in certain circumstances, non-qualified stock
options to our employees and views such grants less as compensation and more as
an incentive mechanism. Grants were made in 1998 to some executives as shown in
the Summary Compensation Table above.

Our 1996 stock option stock issuance plan is the successor to our 1994
stock option plan and 1994 special performance option grant plan. Our 1996 stock
option stock issuance plan became effective upon its adoption by our board of
directors on February 28, 1996 and was approved by our stockholders on February
28, 1996. Our board of directors adopted certain amendments to the 1996 Plan on
January 2, 1998, and our stockholders approved such amendments at the annual
shareholders meeting on May 20, 1998.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The members of the compensation committee of our board of directors as
of December 31, 1998 were Messrs. Hoff and Jones. Neither of these individuals
was at any time during the year ended December 31, 1998, or at any other time an
officer or employee of the Company.

None of our executive officers served as a member of the board of
directors or compensation committee of any entity which has one or more
executive officers serving as a member of our board of directors or compensation
committee during the last completed fiscal year.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

CERTAIN BUSINESS RELATIONSHIPS

Bruce R. Hallett, one of our directors, is a partner in the law firm of
Brobeck, Phleger & Harrison LLP, or Brobeck. As of November 30, 1999, members of
Brobeck beneficially owned 31,899 shares of our common stock. Brobeck has served
as our counsel since our inception.

INDEBTEDNESS OF MANAGEMENT

In December 1994, we loaned $175,000 to John Hall, who is our chief
executive officer, president and a director. This loan is evidenced by a
promissory note bearing interest at 6.66% per annum. All principal and accrued
interest under this note is due on December 20, 2000 pursuant to an extension
granted by our Board of Directors. In connection with this loan, Mr. Hall
granted us an option to repurchase, at a price per share of $18.87, up to 9,277
shares of our common stock owned by Mr. Hall.

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<PAGE> 63

PRINCIPAL STOCKHOLDERS

The following table sets forth information with respect to the
beneficial ownership of our common stock by:

o all persons known to Onyx to be the beneficial owner of 5% or
more thereof;

o each director and nominee for director;

o each executive officer; and

o all officers and directors as a group.

All persons listed have sole voting and investment power with respect
to their shares unless otherwise indicated.

Name and address of Amount and nature of
beneficial owner(1) beneficial ownership Percent of Class(2)
- ------------------- -------------------- -------------------
<S> <C> <C>
The Bass Group(3) 668,275 10.8%
G. Bradford Jones(4) 663,902 10.7%
Wellington Management
Company, LLP(5) 609,700 9.9%
John W. Hall(6) 426,656 6.9%
Regan E. Kelly(7) 119,579 1.9%
Don P. Duffy(8) 68,531 1.1%
Thomas C. Stickel(9) 55,349 *
Eugene J. Warner(11) 50,415 *
Frank Marraccino(10) 42,084 *
Bruce R. Hallett(12) 24,456 *
C. Thomas Meyers(13) 8,999 *
All executive officers and *
directors as a group
(10 persons)(14) 1,459,971 23.6%
</TABLE>

- -----------------
* Less than one percent.

(1) Unless otherwise indicated, the persons named in the table have sole
voting and sole investment power with respect to all shares
beneficially owned, subject to community property laws where
applicable.

(2) Percentage of ownership is based on 6,177,804 shares of common stock
outstanding as of September 30, 1999.

(3) The Bass Group as used herein consists of The Bass Management Trust
(163,855 shares; 2.7%), Sid R. Bass Management Trust (252,210 shares;
4.1%), Lee M. Bass (252,210; 4.1%). The above persons are collectively
referred to as the "Reporting Persons" pursuant to Amendment No. 1 to
Schedule 13G Statement filed January 4, 1998 and made a single joint
filing because they may be deemed to constitute a "group" within the
meaning of Section 13(d)(3) of the Act, although neither the fact of
that filing nor anything therein should be deemed to be an admission by
the Reporting Persons that a group exists.

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<PAGE> 64

(4) Includes, as of September 30, 1999, 17,333 shares of common stock
issuable upon the exercise of immediately exercisable shares by Mr.
Jones. Mr. Jones, as general partner of Brentwood Associates VI, L.P.,
2730 Sand Hill Road, Suite 250, Menlo Park, California 94025 may be
deemed to share voting and dispositive power with respect to these
shares. Mr. Jones disclaims beneficial ownership of these shares except
for his proportional interest therein.

(5) Wellington Management Company, LLP ("WMC"), 75 State Street, Boston,
Massachusetts 02109 in its capacity as investment advisor, may be
deemed to beneficially own 609,700 shares of Onyx which are held of
record by clients at WMC.

(6) Includes, as of September 30, 1999, 175,206 shares of common stock
issuable upon the exercise of immediately exercisable options. Mr. Hall
is our president and chief executive officer, 27051 Towne Centre Drive,
Foothill Ranch, California 92610.

(7) Includes, as of September 30, 1999, (i) 13,622 shares of common stock
issuable upon the exercise of immediately exercisable options. Mr.
Kelly is our former executive vice president and general counsel, 27051
Towne Centre Drive, Foothill Ranch, California 92610.

(8) Includes, as of September 30, 1999, (i) 56,265 shares of common stock
issuable upon the exercise of immediately exercisable options. Mr.
Duffy is our chief financial officer, 27051 Towne Centre Drive,
Foothill Ranch, California 92610.

(9) Includes, as of September 30, 1999, 55,349 shares of common stock
issuable upon the exercise of immediately exercisable options. Mr.
Stickel is our executive vice president, 27051 Towne Centre Drive,
Foothill Ranch, California 92610.

(10) Includes, as of September 30, 1999, 42,084 shares of common stock
issuable upon the exercise of immediately exercisable options. Mr.
Marraccino is our executive vice president, 27051 Towne Centre Drive,
Foothill Ranch, California 92610.

(11) Includes, as of September 30, 1999, 50,415 shares of common stock,
issuable upon the exercise of immediately exercisable options. Mr.
Warner is our executive vice president, 27051 Towne Centre Drive,
Foothill Ranch, California 92610.

(12) Includes, as of September 30, 1999, 24,456 shares of common stock
issuable upon the exercise of immediately exercisable options. Mr.
Hallett is one of our directors, 27051 Towne Centre Drive, Foothill
Ranch, California 92610.

(13) Includes, as of September 30, 1999, 8,999 shares of common stock
issuable upon the exercise of immediately exercisable options. 81
Fulling Mill Cir., Fairfiled, Connecticut 06430.

(14) Includes, as of September 30, 1999: (i) 663,902 shares of common stock
held by Brentwood Associates VI, l.P., and (ii) an aggregate of 796,069
shares issuable to our executive officers and directors upon the
exercise of immediately exercisable options some of which may be
subject to repurchase by us under certain circumstances, and (iii) does
not include shares owned by the Bass Group or Wellington Management
Company.

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<PAGE> 65

DESCRIPTION OF THE NOTES

We will issue the notes under an Indenture dated as of ____________,
2000 between us and Bankers Trust Company, as trustee. Many of the terms and
conditions applicable to the notes will be contained in the Indenture. The
following summarizes some, but not all, of the provisions of the notes and the
indenture. You should refer to the actual terms of the notes and the Indenture
for the definitive terms and conditions. Copies of the proposed forms of
indenture and notes are filed as exhibits to the Registration Statement of which
this prospectus is a part. As used in this description of notes, the words "we,"
"us," or "our" do not include any of our subsidiaries unless expressly stated.

GENERAL

The total principal amount of the notes will be limited to $23,000,000.
The notes represent our general unsecured obligations and are subordinate in
right of payment to our Senior Debt and rank equally with our Parity Debt as
described below under the subheading "Subordination." We will issue the notes in
fully registered form only, without coupons, in denominations of $1,000 each and
any integral multiple of $1,000. The notes will mature on _________, 2006 unless
redeemed or repurchased before the maturity date. See below under the subheading
"Optional Redemption by Us."

The indenture restricts our ability to enter into certain transactions,
unless we first satisfy conditions described in the indenture. If the
transaction involves a Change of Control, you will have the right to require us
to repurchase your notes, as described below under the subheading "Repurchase at
Option of Holder."

The notes will have no sinking fund. A sinking fund is a custodial or
similar account into which regularly scheduled deposits are made for purposes of
funding the redemption or repurchase of the principal amount of the notes.

As long as we are a reporting company under the Securities Exchange Act
of 1934, as amended, we must furnish to the trustee all reports required to be
filed with the Commission under the Exchange Act and to the noteholders all
annual reports required to be filed with the Commission under the Exchange Act.

The holder of any note may present such note for registration, transfer
or exchange at an office of Bankers Trust Company, as trustee, located in the
continental United States. The trustee will maintain a registry for the notes.
We will not charge any fee for registration, transfer or exchange of any notes.
We may request reimbursement for taxes incurred by us in connection with any
registration, transfer or exchange of notes. We are not required to register the
transfer or exchange of any note that has been previously surrendered for
repurchase or redemption.

INTEREST

The notes will accrue interest at an annual rate of ___%. We will pay
the first interest payment on __________, 2000, and quarterly after that date on
the 15th day of __________, __________, __________ and __________. We will also
pay all accrued interest upon maturity, redemption or repurchase of the notes.
Interest will be payable to the person in whose name the note is registered at
the close of business on the first day of the calendar month in which such
interest payment is due. If any date on which an interest payment is due falls
on a day that is not a business day, we will make the payment on the next
business day and we will not pay any additional interest. We will generally make
all interest payments on the notes by check mailed to the holders entitled to
the interest. Whenever interest is paid, the payment will include interest
accrued to, but excluding, the interest payment date or the date of redemption,
conversion, repurchase or maturity. We will compute interest on the notes on the
basis of a 360-day year comprised of twelve 30-day months.

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<PAGE> 66

OPTIONAL REDEMPTION BY US

On or after __________15, 2002, we may elect to redeem the notes. If we
elect to redeem the notes, we must redeem a minimum principal amount of
$100,000. We will not be allowed to redeem the notes before _____15, 2002. We
will provide the holders of the notes at least 30 but not more than 60 days
notice of our intent to redeem the notes.

The redemption price for the notes, expressed as a percentage of the
principal amount of each note thereof, will be as follows for notes redeemed in
the 12-month periods beginning on _____ 15 of each of the following years:

<TABLE>
<CAPTION>
2002 2003 2004 2005 and thereafter
---- ---- ---- -------------------
<S> <C> <C> <C> <C>
Redemption Price: 105% 103% 101% 100%
</TABLE>

We will also pay accrued interest through the date fixed for
redemption. If an interest payment is due before the date fixed for redemption,
the interest payable on such date will be paid to the holder of record as of the
first day of the calendar month in which such interest payment is due. Interest
not so paid will be paid to the party to whom the redemption price is paid.

We have no right to redeem the notes during any period when an event of
default under the indenture, or an event which, with notice or lapse of time or
both, would constitute an event of default under the indenture, has occurred and
is continuing. Events constituting a default under the indenture are described
below under the subheading "Events of Default and Remedies."

REPURCHASE AT OPTION OF HOLDER

If we experience a Change of Control, as defined below, you will have
the right, at your option, to require us to repurchase all or part of your notes
on the 45th calendar day after the date that we mail a notice to you of the
occurrence of a Change of Control. If you exercise this option, we will pay 101%
of the principal amount of the notes, together with accrued interest up to the
date of repurchase. If an interest payment date is due on or before the date
fixed for such repurchase, we will pay the interest payable to the holder of
record as of the first day of the calendar month in which such interest payment
is due. Interest not so paid will be paid to the party to whom the repurchase
price in respect of the principal amount of the note is paid.

You may exercise your repurchase rights by delivering to the trustee,
on or before the close of business on the 30th calendar day after the date of
our repurchase notice, written notice indicating, among other things, that you
have elected to exercise your repurchase rights. The notice is to be accompanied
by the certificate or certificates representing your notes, endorsed for
transfer to us.

A "Change of Control" occurs at such time as any person is or becomes
the beneficial owner, as defined in Rule 13d-3 under the Exchange Act, of shares
of our capital stock entitling such person to exercise 50% or more of the total
voting power of all shares of our capital stock entitled to vote in elections of
directors (or the capital stock of our successor in the case of a merger or
transfer of substantially all of our assets).

In the event that we are required to repurchase the notes, there can be
no assurances that we will have sufficient funds to pay the repurchase price. A
Change of Control may result in a default (directly or by way of a cross-default
provision) under one or more agreements governing our Senior Debt or Parity
Debt. In such a circumstance, the subordination provisions contained in the
Indenture may prevent us from making any payment on the notes, including a
payment of the repurchase price, unless we first obtain the consent of the
holders of defaulted Senior Debt or Parity Debt or repay the Senior Debt or
Parity Debt in full.

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<PAGE> 67

Your right to require us to repurchase the notes as a result of a
Change of Control may have the effect of delaying, deferring or preventing a
Change of Control or other attempt to acquire control of us. Consequently, the
right may increase the difficulty of a merger, consolidation or tender offer, or
an assumption of control by a holder of a large block of our shares and the
removal of incumbent management. The Change of Control repurchase feature is a
result of negotiations between us, Miller & Schroeder and Peacock, Hislop,
Staley & Given, Inc. and is not the result of our knowledge of any specific
effort to accumulate shares of common stock or to obtain control of us by means
of a merger, tender offer, solicitation or otherwise, or part of a plan by us to
adopt a series of anti-takeover provisions. We have no present intention to
engage in a transaction involving a Change of Control, although it is possible
that we would decide to do so in the future.

Rule 13e-4 under the Securities Exchange Act of 1934 requires the
distribution of certain information to security holders in the event of certain
issuer tender offers and may apply in the event of a repurchase. We will comply
with this rule to the extent applicable.

SUBORDINATION

All payments under the notes are, to the extent provided in the
indenture, subordinate and junior to the prior payment in full of all Senior
Debt. The subordination provisions apply to existing Senior Debt as well as
Senior Debt incurred after the date of this prospectus. The notes will be senior
in right of payment to any debt subordinated to the notes and to any debt (other
than the notes) held by an affiliate of ours, whether outstanding at the closing
of this offering or created thereafter. The notes rank equally in right of
payment with the Parity Debt. The Parity Debt is described under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources -- BayView Term Loan."

Upon any distribution of our assets or our dissolution, winding up,
liquidation or reorganization, the payments on the notes will be subordinated in
right of payment to the prior payment in full of all Senior Debt. Moreover, if
the notes are accelerated following an event of default under the indenture, the
holders of any Senior Debt then outstanding will be entitled to payment in full
before the holders of the notes are entitled to receive any payment on the
notes. However, our obligations to make payments with respect to the notes will
not otherwise be affected. We are the sole obligor on the notes.

Upon any distribution of our assets or our dissolution, winding up,
liquidation or reorganization, the payments on the notes will be made equally
with the payments on the Parity Debt. If the notes are accelerated following an
event of default under the indenture, after payment to the holders of any Senior
Debt then outstanding, any remaining amounts will be paid to the holders of the
notes and the holders of the Parity Debt pro rata in accordance with the
relative principal amount of such Indebtedness then outstanding.

In addition, the subordination provisions will prevent us from making
any payments on the notes if:

o we fail to pay any payment of principal, interest, premium, or
other obligation, if any, due on any Senior Debt beyond the
applicable grace period; or

o any other default occurs and is continuing under any Senior
Debt that permits holders of the Senior Debt to accelerate the
maturity of any Senior Debt

We may resume making payments on the notes once the default on the
Senior Debt is cured or waived or otherwise ceases to exist.

"Senior Debt" means the principal of any premium and all interest on
(i) any and all our indebtedness (other than the notes, Parity Debt and
Subordinated Debt) in respect of borrowed money, which in accordance with
generally accepted accounting principles, would be included in determining the
total liabilities side of our balance

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<PAGE> 68

sheet, and (ii) all new financings renewals, extensions and refundings thereof;
provided that any indebtedness shall not be Senior Debt if the instrument
creating or evidencing any such indebtedness or pursuant to which such
indebtedness is outstanding, provides that such indebtedness, or such renewal,
extension or refunding thereof, is junior or is not superior in right of payment
to or ranks pari passu with the notes.

"Parity Debt" means our indebtedness incurred under the BayView Loan
Agreement and any and all of our other indebtedness which had an original
maturity date in excess of one year and contains covenants, conditions and
restrictions on us which are not inconsistent with or violate the covenants,
conditions and restrictions imposed by the Indenture, and is neither Senior Debt
nor Subordinated Debt.

"Subordinated Debt" means all of our indebtedness created, incurred,
assumed or guaranteed by us which, by the terms of the instrument creating such
indebtedness it is provided that such indebtedness and any renewal thereof is
expressly subordinate and junior in right of payment to the notes.

The Indenture permits us to incur additional Senior Debt provided
certain financial tests are met as described below under the subheading
"Restrictive Covenants". As of September 30, 1999, we had approximately $226
million of outstanding indebtedness which is expected to be Senior Debt, and
approximately $10 million of outstanding indebtedness which is Parity Debt.

The subordination provisions of the indenture and the notes will not
prevent the occurrence of any event of default under the indenture or limit the
rights of any holder of notes to pursue any other rights or remedies with
respect to the notes.

As a result of the subordination provisions, in the event of our
liquidation, bankruptcy, reorganization, insolvency, receivership or similar
proceeding, holders of the notes may receive less than other creditors on a
ratable basis.

EVENTS OF DEFAULT AND REMEDIES

The following events constitute events of default under the indenture:

o our failure to pay interest on the notes when due if the
failure continues for 15 days;

o our failure to pay the principal of, or premium, if any, on
any of the notes when due;

o our breach of any financial covenant and continuance of such
breach for a period of 30 days after the date of our report to
the trustee;

o our failure to perform any other covenant or warranty in the
indenture if the failure continues for 60 days after
appropriate notice is given to us, the trustee and the
noteholders, as applicable;

o a default by us on any indebtedness that results in the
acceleration of indebtedness in an amount in excess of
$5,000,000 and the indebtedness or the acceleration has not
been discharged or waived for 60 days after notice is given in
accordance with the indenture;

o we are replaced as servicer in any transaction which affects
more than 25% of the principal amount of outstanding
securities of our or any of our subsidiaries' securitizations
and such event is not cured within 30 days;

o certain events involving our bankruptcy, insolvency or
reorganization; and

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<PAGE> 69

o a final judgment by a court against us for the payment of
money in an amount in excess of $5,000,000, net of insurance
proceeds, that remains unsatisfied or unbonded for 30 days
after the right to appeal such judgment has expired or
terminated.

The trustee will generally be required, within 60 days after its
becoming aware of a default, to provide the registered holders of the notes
written notice of the default. Except in the case of a payment default, the
trustee will not be required to deliver a notice of default if it determines in
good faith that withholding the notice is in the best interest of the holders of
the notes.

If an event of default under the indenture has occurred and is
continuing, the trustee, or the holders of not less than 25% of the aggregate
principal amount of the notes, may declare all amounts outstanding on the notes
to be immediately due and payable.

The indenture will generally provide that the holders of a majority in
principal amount of the outstanding notes may direct the time, method and place
of conducting any proceeding for any remedy available to the trustee or
exercising any trust or power conferred on the trustee, subject to certain
limitations. Before proceeding to exercise any right or power under the
Indenture at the direction of the holders, the trustee will be entitled to
receive from the holders reasonable security or indemnity against any costs,
expenses and liabilities that it might incur as a result. Following an event of
default for nonpayment, each holder to which the default pertains will have the
absolute right to institute suit to enforce payment of any notes held by it.

Generally, the holders of at least a majority in aggregate principal
amount of the outstanding notes may on behalf of the holders of all notes waive
any default or event of default. The consent of all note holders will be
required to waive any Events of Default relating to a failure to make payment on
any note, or to comply with any of the provisions of the Indenture that would
require the consent of affected holders to modify.

Within 120 days of the end of each fiscal year, we will be required to
send the trustee a statement of certain of our officers stating:

o that such officer has analyzed our activities during such year
and supervised the performance under the Indenture; and

o whether, to the best of such officer's knowledge based on such
analysis, we are in compliance with our obligations under the
Indenture or if we have defaulted on such obligations.

We are also required, if certain of our officers obtain knowledge that
we are not in compliance with the terms of the Indenture or the notes, to
deliver to the trustee a statement specifying the nature of the default and the
action we have taken, are taking or propose to take to cure the default.

RESTRICTIVE COVENANTS

Limitation on Additional Indebtedness

The Indenture prohibits us and our subsidiaries from creating,
incurring, assuming or issuing, directly or indirectly, or guaranteeing or in
any manner becoming, directly or indirectly, liable for any indebtedness except
for:

o the notes;

o indebtedness outstanding on the date the notes are issued by
us;

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<PAGE> 70

o indebtedness which does not cause our Consolidated Leverage
Ratio described below to exceed 3:1;

o deferrals, renewals, extensions, replacements, refinancing or
refundings of indebtedness listed above;

o indebtedness between us and any of our Restricted
Subsidiaries;

o indebtedness incurred in connection with the purchase of notes
required in connection with the Change of Control provided
that the aggregate principal amount of such indebtedness does
not exceed 101% of the aggregate principal amount of the notes
purchased in connection with such Change of Control and that
such indebtedness does not mature prior to the stated maturity
of the notes and ranks pari passu with the notes;

o indebtedness under certain currency and interest rate swap
agreements;

o indebtedness incurred by us to finance the purchase or
origination of motor vehicle contracts for the purpose of
pooling such contracts prior to securitization, subject to
certain limitations set forth in the Indenture;

o non-recourse indebtedness; and

o indebtedness of up to $8 million incurred in connection with
the purchase or lease of property.

"Consolidated Leveraged Ratio" means the ratio of the aggregate amount
of all of our indebtedness, excluding the indebtedness permitted as described
immediately above, to our consolidated tangible stockholders' equity, as
determined in accordance with generally accepted accounting principles.

"Restricted Subsidiary" means all of our subsidiaries with assets
greater than $1,000 if our Consolidated Leveraged Ratio exceeds 3:1.

Limitations on Transactions With Affiliates

Any indebtedness between us and any of our affiliates will be
subordinate and junior in right of payment to the notes. We cannot permit any of
our Restricted Subsidiaries to engage in any transaction of any kind or nature
with any of our affiliates, other than a Restricted Subsidiary, unless

o the terms of the transaction are no less beneficial to us or
our subsidiary, as the case may be, than a similar transaction
with an unrelated person under the same circumstances and, in
the case of a transaction with a value of over $1,000,000, a
majority of our board's independent members determine that the
transaction terms are fair to us or our subsidiary, as the
case may be; or

o if the transaction or series of transactions has a value over
$5,000,000, a person experienced in the nature of the
transaction certifies the transaction to our board of
directors as fair to us or our subsidiary, as the case may be,
and the terms are those that would be found in similar
transactions with unrelated persons under the same
circumstances.

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<PAGE> 71

The foregoing limitation is subject to certain exceptions, including

o loans or advances to our employees in the ordinary course of
business

o customary directors' fees and indemnities

o ordinary course commercial agreements or renewals thereof on
such terms as are in effect as of the date the notes are
issued and which terms are no less favorable to us or such
Restricted Subsidiary than those that could be obtained at the
time of such transaction in arm's-length dealings with an
unaffiliated person

o any issuance of securities, or other payments, compensation,
benefits, awards or grants in cash, securities or otherwise
pursuant to, or the funding of, employment arrangements, stock
options and stock ownership plans approved by our Board of
Directors

o the grant of stock options or similar rights to our employees
and directors or the employees or directors of a Restricted
Subsidiary

o transactions effected as part of a Qualified Securitization
Transaction and warehouse financings.

Restricted Payments

Neither we nor any of our Restricted Subsidiaries are permitted to make
any Restricted Payment:

o if an event of default under the indenture shall have occurred
and is continuing at such time;

o if at such time our Consolidated Leveraged Ratio exceeds 3:1;
or

o The total amount of restricted payments would exceed an amount
determined pursuant to a formula set forth in the indenture.

The following actions each constitute a "Restricted Payment" under the
indenture:

o the declaration or payment of any dividend or any other
distribution on our capital stock or on the capital stock of
our subsidiaries or any payment made to the direct or indirect
holders (in their capacities as such) of our or our
subsidiaries' capital stock, other than

o dividends or distributions payable solely in capital
stock or in options, warrants or other rights to
purchase capital stock; and

o in the case of any subsidiary of ours, dividends or
distributions payable to us or to any of our
subsidiaries;

o the purchase, redemption or other acquisition or retirement
for value of our or our subsidiaries' capital stock other than
purchases of our capital stock which is contributed to a
employee stock ownership plan maintained by us for our
employees; or

o investments in any person, other than certain permitted
investments.

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<PAGE> 72

For purposes of this definition, "Restricted Payment" does not include:

o payments made in the form of our common stock;

o mandatory repurchase obligations by us with respect to shares
issued by any employee stock ownership plan of ours;

o purchases of common stock of, or investments in, a
wholly-owned subsidiary of ours that is not a "Restricted
Subsidiary"; or

o repurchases of our common stock on the open market made in
compliance with Rule 10b-18 of the Exchange Act so long as
there is no default and we will be in compliance with certain
financial covenants after giving pro forma effect to such
repurchases.

Minimum Net Worth

We are obligated to maintain a minimum Consolidated Tangible Net Worth
of $35,000,000 as adjusted by a formula in the indenture. The minimum net worth
will be adjusted upward, on a cumulative basis from January 1, 1999, by 50% of
positive consolidated net income, and downward (but never below $35,000,000), on
a cumulative basis from January 1, 1999, up to $3,000,000 in respect of "FASB
Net Worth Adjustments."

o "FASB Net Worth Adjustments" means adjustments in net worth
required by Financial Accounting Standard No. 125 or 133
issued by the Financial Accounting Standards Board.

o "Consolidated Tangible Net Worth" means our consolidated
tangible stockholders equity, as determined in accordance with
generally accepted accounting principles.

MODIFICATIONS OF THE INDENTURE

The indenture generally allows the trustee and us, with the consent of
the holders of not less than a majority of the aggregate principal amount of the
outstanding notes, to modify the indenture, any supplemental indenture or the
notes. The following modifications require the consent of each affected
noteholder:

o a change of the maturity of any note or any interest or
premium payment;

o a reduction in the rate or an extension of the time or payment
of interest on any note;

o a reduction in the principal amount of any note;

o a reduction in any amount payable upon redemption or
repurchase of any note;

o any modification to our obligation to repurchase any note upon
a Change of Control if adverse to any holder of notes;

o any modification that impairs or adversely affects the right
of any holder to institute suit for the payment of any note;

o any change in currency in which any note is payable; and

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<PAGE> 73

o any modification of the subordination provisions that
adversely affects the holders of the notes.

SATISFACTION AND DISCHARGE

We may discharge our obligations under the indenture while the notes
remain outstanding if:

o all notes are within one year of their scheduled maturity or
the date on which they are scheduled for redemption; and

o we have deposited with the trustee an amount sufficient to pay
all outstanding notes on their scheduled maturity or the date
scheduled for redemption.

LEGAL DEFEASANCE AND COVENANT DEFEASANCE

The indenture provides that we may elect either

o to defease and be discharged from any and all of our
obligations with respect to the notes, except for the
obligations to register the transfer or exchange of such
notes, to replace temporary or mutilated, destroyed, lost or
stolen notes, to maintain an office or agency in respect of
the notes and to hold monies for payment in trust ("legal
defeasance"), or

o to be released from our obligations with respect to the notes
under certain covenants contained in the indenture ("covenant
defeasance") upon the deposit with the trustee or other
qualifying trustee, in trust for such purpose, of money and/or
non-callable U.S. government obligations which, through the
payment of principal and interest in accordance with their
terms, will provide money, in an amount sufficient to pay the
principal of, premium, if any, and interest on the notes, on
the scheduled due dates therefor or on a selected date of
redemption in accordance with the terms of the indenture. Such
a trust may only be established if, among other things,

o we have delivered to the trustee an opinion of counsel as
specified in the indenture

o to the effect that neither the trust nor the trustee
will be required to register as an investment company
under the Investment Company Act of 1940, as amended,
and

o in the case of a legal defeasance, stating that (i)
we have received from or there has been published by
the Internal Revenue Service a ruling to the effect
that or (ii) there has been a change in any
applicable federal income tax law with the effect
that the holders of the outstanding notes or persons
in their positions will not recognize income, gain or
loss for federal income tax purposes solely as a
result of such defeasance and will be subject to
federal income tax on the same amounts, in the same
manner, including as a result of prepayment, and at
the same times as would have been the case of such
defeasance had not occurred;

o in the case of a covenant defeasance, confirming that
the holders of the outstanding notes will not
recognize income, gain or loss for federal income tax
purposes as a result of such covenant defeasance and
will be subject to federal income tax on the same
amounts, and the same manner and at the same times as
would have been the case if such covenant defeasance
had not occurred;

o no default or event of default has occurred and be continuing
on the date of such deposit or insofar as events of default
from bankruptcy, insolvency or reorganization events are
concerned, at any

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<PAGE> 74

time in the period ending on the 91st day after the date of
deposit or, if longer, ending on the day following the
expiration of the longest preference period under any
bankruptcy law applicable to us in respect of such deposit;

o such legal defeasance or covenant defeasance has not resulted
in a breach or violation of, or constitute a default under the
indenture or any other material agreement or instrument to
which we or any of our subsidiaries is a party or by which we
or any of our subsidiaries is bound;

o we have delivered to the trustee an officers' certificate and
an opinion of counsel, each stating that all conditions
precedent provided for or relating to the legal defeasance or
the covenant defeasance have been complied with;

o we have delivered to the trustee an opinion of counsel to the
effect that certain other customary conditions precedent are
satisfied.

GOVERNING LAW

The indenture and the notes will be governed by the laws of the State
of New York.

CONCERNING THE TRUSTEE

Bankers Trust Company will serve as trustee under the indenture and is
also the note registrar.

The trustee under the indenture has been appointed by us as the initial
paying agent, conversion agent, registrar and custodian with regard to the
notes. We may maintain deposit accounts and conduct other banking transactions
with the trustee or its affiliates in the ordinary course of business.

UNDERWRITING

Under the terms and subject to the conditions contained in the
underwriting agreement, the underwriters named below have agreed to purchase
from us, and we have agreed to sell to the underwriters, notes in the principal
amounts listed opposite the underwriter's name below, less the underwriting
discounts and commissions shown on the cover page of this prospectus.

<TABLE>
<CAPTION>
NAME OF UNDERWRITER PRINCIPAL AMOUNT OF NOTES
- ------------------- -------------------------
<S> <C>
Miller & Schroeder Financial, Inc. .................. $
Peacock, Hislop, Staley & Given, Inc. ...............
-----------
Total ...................................... $20,000,000
===========
</TABLE>

We have agreed to reimburse the underwriters for their out-of-pocket
expenses incurred in connection with the offering, including the fees and
expenses of the underwriters' counsel.

The underwriting agreement provides that the underwriters will be
obligated to purchase, subject to the terms and conditions set forth therein,
all of the notes being sold pursuant to the underwriting agreement (other than
the notes covered by the over-allotment option) if any of the notes being sold
pursuant to the underwriting agreement are purchased.

The underwriting agreement provides for reciprocal indemnification
between us, the several underwriters and their respective officers, directors
and controlling persons against civil liabilities in connection with this

-68-
<PAGE> 75
offering, including certain liabilities under the Securities Act of 1933, as
amended. Insofar as indemnification for liabilities arising under the Securities
Act may be permitted pursuant to such indemnification provisions, we have been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.

The underwriters propose to offer the notes to the public at the price
to public set forth on the cover page of this prospectus and to certain selected
dealers at such price less a concession of not more than $___ per note. After
the initial public offering, the price to public and concessions to dealers may
be changed by the underwriters.

We have granted to the underwriters an option, exercisable by the
underwriters from time to time within 45 days after the date of this prospectus,
to purchase up to an additional $3,000,000 of notes at the price to public, less
the underwriting discounts and commissions shown on the cover page of this
prospectus. This option may be exercised in whole or in part, but only for the
purpose of covering any over-allotments in the sale of the $20,000,000 in notes
offered hereby. To the extent that the underwriters exercise the option, each
underwriter will be obligated to purchase its pro rata share of the additional
principal amount of the notes based on the underwriter's percentage underwriting
commitment in the offering, which is indicated in the preceding table.

In order to facilitate the offering of the notes, the underwriters may
engage in transactions that stabilize, maintain or otherwise affect the price of
the notes of the underwriters. Specifically, the underwriters may over-allot the
notes in connection with the offering, creating a short position in the notes
for its own account. In addition, to cover over-allotments or to stabilize the
price of the notes, the underwriters may bid for, and purchase, notes in the
open market. The underwriters may also reclaim selling concessions allowed to a
dealer for distributing notes in the offering, if the underwriters repurchase
previously distributed notes in transactions to cover their short positions, in
stabilization transactions or otherwise. Finally, the underwriters may bid for,
and purchase, notes in market making transactions and impose penalty bids. These
activities may stabilize or maintain the market price of the notes above the
market level that may otherwise prevail. The underwriters are not required to
engage in these activities and may end any of these activities at any time. Any
such activities will be undertaken in accordance with Regulation M under the
Securities Exchange Act of 1934, as amended, if at all.

In general, purchases of a security for the purpose of stabilization or
to reduce a short position could cause the price of the security to be higher
than it might be in the absence of such purchases. Neither we nor the
underwriters make any representation or prediction as to the direction or
magnitude of any effect that the transactions described above might have on the
price of the notes. In addition, neither we nor the underwriters make any
representations that the underwriters will engage in such transactions or that
such transactions, once commenced, will not be discounted without notice.

Prior to the offering, there has been no public market for the notes.
We do not intend to list the notes on any securities exchange or include them
for quotation on the Nasdaq system. The underwriters have advised us that they
intend initially to make a market in the notes, but the underwriters are not
obligated to do so and may discontinue market making at any time without notice.

The following table summarizes the compensation we will pay the
underwriters:

<TABLE>
<CAPTION>
Assuming no Assuming full
exercise of exercise of
Form of Compensation over-allotment option over-allotment option
- -------------------- --------------------- ---------------------
<S> <C> <C>
Total underwriting discounts and commissions ____________ ____________
Reimbursement of underwriters' expenses ____________ ____________
</TABLE>

We estimate that the total expenses of the offering, excluding
underwriting discounts and commissions, will be approximately $400,000. The
following table itemizes all of the expenses we expect to incur in connection

-69-
<PAGE> 76

with this offering other than underwriting discounts, fees and commissions which
are set forth in the table above. All expenses, other than the SEC and NASD
fees, set forth below are estimates only.

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee.. $ 6,072
NASD filing fee ..................................... 2,800
Accounting fees and expenses ........................ 55,000
Blue Sky fees and expenses .......................... 1,000
Legal fees and expenses ............................. 125,000
Printing expenses ................................... 25,000
Trustee's fees and expenses ......................... 15,000
Underwriters' counsel fees and expenses ............. 81,000
Miscellaneous ....................................... 89,128
--------
TOTAL ....................................... $400,000
========
</TABLE>

The foregoing is a summary of the material provisions of the
underwriting agreement. The underwriting agreement has been filed as an exhibit
to the registration statement of which this prospectus is a part.

LEGAL MATTERS

Certain legal matters in connection with the notes will be passed upon
for us by Andrews & Kurth L.L.P., Dallas, Texas, and for the underwriters by
Leonard, Street and Deinard Professional Association.

EXPERTS

The financial statements as of December 31, 1998 and 1997 and for each
of the three years in the period ended December 31, 1998 included in this
Prospectus have been included in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the Securities and Exchange Commission a
registration statement on Form S-1 under the Securities Act with respect to the
notes offered by this prospectus. This prospectus does not contain all of the
information set forth in the registration statement and the exhibits and
schedules thereto, certain parts of which are omitted as permitted by the rules
and regulations of the Commission. For further information with respect to us
and the notes offered in this prospectus, reference is made to the registration
statement and the exhibits and schedules filed therewith. Although all material
terms and provisions of any material contract or other document filed are
referred to in this prospectus and described herein, these descriptions are not
necessarily complete, and in each instance reference is made to the copy of the
contract or other document filed as an exhibit to the registration statement,
each such statement being qualified in all respects by the reference.

We are subject to the periodic reporting and other informational
requirements of the Securities Exchange Act of 1934, as amended, pursuant to
Section 15(d) thereof and, in accordance therewith, file reports, proxy
statements and other information with the Commission. For further information
with respect to us, reference is hereby made to such reports and other
information which, together with the registration statement and the exhibits and
schedules thereto, can be inspected, without charge, at the public reference
facilities maintained by the Commission at the Public Reference Room of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's regional offices at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661, and 7 World Trade Center, Suite 1500, New York, New York 10048.
Copies of all or any part of the registration

-70-
<PAGE> 77

statement can also be obtained from the Public Reference Room of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. You may
obtain information on the operation of the Commission's Public Reference Room by
calling the Commission at 1-800-SEC-0330. The Commission also maintains a
website at http://www.sec.gov, that contains reports, proxy and information
statements, and other information that has been or will be filed by us.

Our website address is http://www.onyxco.com. The information included
in our website is not made a part of this prospectus.

-71-
<PAGE> 78
GLOSSARY

ASSET-BACKED SECURITIES -- Securities that are backed by financial assets, such
as automobile contracts and loans.

AUTO FINANCE CENTERS -- Regional offices we establish to purchase contracts and
to market to and support relationships with motor vehicle dealerships.

BUY RATE -- An interest rate we quote to dealers at which we will purchase
contracts. The buy rate is equal to the positive difference between the annual
percentage rate borne by the contract and the annual percentage rate equivalent
of the dealer participation we pay.

CONTRACT B -- Retail installment sales contract and installment loan agreements
secured by new or used automobiles, light-duty trucks or vans.

CREDIT ENHANCEMENT -- Credit enhancement refers to a mechanism that is intended
to protect the holders of the asset backed securities against losses due to
defaults by the obligors under the contracts.

DEALER PARTICIPATION -- The amount we pay to the dealership to purchase a
contract above the principal amount financed. The dealer participation is based
upon the finance charge that would be paid on the contract if it earned interest
at a rate equal to the positive difference between the contract rate and our
published buy rate. Depending on the option selected by the dealership, we may
pay all or a portion of the dealer participation in advance at the time we
acquire the contract.

EXCESS SERVICING INCOME -- The future servicing cash flows less the amortization
of the excess servicing receivable.

EXCESS SERVICING RECEIVABLE -- The present value of future servicing cash flows
to be distributed to us as determined in accordance with Statement of Financial
Accounting Standards No. 65 ("SFAS 65"). To determine excess servicing
receivable, the future servicing cash flows are first estimated using an assumed
rate of prepayment that is intended to be conservative relative to historical
experience and then discounted at an interest rate commensurate with the risk
associated with this type of investment. Excess servicing receivable is then
reduced by a credit loss provision based upon historical experience and deemed
adequate to cover net losses over the life of the trust. The loss provision is
calculated using a discount rate commensurate with a risk-free investment of
similar maturity in accordance with Emerging Issues Task Force Announcement
92-2. Excess servicing receivable is subsequently amortized against servicing
income on level-yield basis. Periodically we review the assumptions utilized in
determining excess servicing receivable. If the present value of future
servicing cash flows proves to be insufficient to recover the capitalized
amount, we would make a charge to servicing income in accordance with SFAS 65.
To date we have not recorded any such charges.

FUTURE SERVICING CASH FLOWS -- The difference between the cash collected from
contracts in a securitization trust in any period, and the sum of (i) principal
and interest paid in respect of such period on the asset backed securities
issued to investors in the securitized pool of such contracts, (ii) a servicing
fee at the rate of one percent per annum and (iii) other expenses of the trust.

GAIN ON SALE OF CONTRACTS -- The gain on sale of contracts is equal to the
excess servicing receivable less (i) the difference between the aggregate
principal balance of the contracts sold and the proceeds from the
securitization; (ii) prepaid dealer participation; and (iii) net hedging gains
or losses. The excess servicing receivable represents the estimated present
value of future servicing cash flows earned on each trust. The securitizations
are usually sold at or close to the principal balance of the contracts included
therein. The costs of securitization consist of issuance expenses including
surety bond premiums and the securitization underwriter's discounts.

NET INTEREST INCOME -- The difference between the revenue we earn on contracts
held on our balance sheet prior to securitization and the interest costs
associated with our borrowings to finance the warehousing of such contracts.

-72-

<PAGE> 79

POOLING -- The accumulation of a group of contracts to create a package of
receivables for sale through a trust to investors in a securitization.

PRE-FUNDING STRUCTURE -- A way of structuring securitizations involving a
pre-funding account into which a portion of the proceeds received by the trust
upon issuance of the asset-backed securities are deposited and used to purchase
contracts during a set period after the initial closing of the securitization.

SECURITIZATION OR SECURITIZED -- The process through which contracts and other
receivables are pooled and sold to a trust which issues certificates
representing interests in the trust to investors.

SERVICING PORTFOLIO -- All of the contracts that we own and that we have sold in
securitizations and continue to service.

SPREAD ACCOUNT -- An account required by the credit enhancer of a securitization
trust in order to protect the credit enhancer against credit losses. Generally,
excess interest received by the securitization trust from the pool of contracts
is credited to the account and retained until the account balance reaches a
particular maximum balance. If the maximum balance set forth under the terms of
a particular securitization is attained, the future servicing cash flows and any
surplus in the spread account are returned to us or our lenders, as the case may
be. The maximum balance in a particular securitization may increase or decrease
over time, and may never be attained in any particular securitization. Any
remaining spread account balance is released to us or our lenders, as the case
may be, upon termination of the securitization.

WAREHOUSING -- A method in which contracts are financed by financial
institutions on a short-term basis. In a warehousing arrangement, loans are
accumulated or pooled on a daily or less frequent basis and assigned or pledged
as collateral for short-term borrowings until they are sold in a securitization.

-73-

<PAGE> 80

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Unaudited Condensed Consolidated Financial Statements

Condensed Consolidated Statements of Financial Condition
at September 30, 1999 and December 31, 1998...................................F-1
Condensed Consolidated Statements of Income for the nine
months ended September 30, 1999 and September 30, 1998.......................F-2
Consolidated Statements of Stockholders' Equity
at September 30, 1999, December 31, 1998 and December 31, 1997................F-3
Condensed Consolidated Statements of Cash Flows for the nine months
ended September 30, 1999 and September 30, 1998...............................F-4
Notes to Unaudited Condensed Consolidated Financial Statements.........................F-5

Audited Financial Statements

Report of Independent Accountants......................................................F-8
Consolidated Statements of Financial Condition as of
December 31, 1998 and 1997...................................................F-9
Consolidated Statements of Income for the years ended
December 31, 1998, 1997 and 1996.............................................F-10
Consolidated Statements of Redeemable Preferred Stock and
Stockholders' Equity for the years ended
December 31, 1998, 1997 and 1996.............................................F-11
Consolidated Statements of Cash Flows for the years ended
December 31, 1998, 1997 and 1996.............................................F-12
Notes to Consolidated Financial Statements............................................F-13
</TABLE>

-74-

<PAGE> 81

ONYX ACCEPTANCE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- -------------
(UNAUDITED)
<S> <C> <C>
ASSETS

Cash and cash equivalents ......................................... $ 4,787,831 $ 1,928,991
Credit enhancement assets ......................................... 130,900,443 112,953,193
Contracts held for sale (net of allowance) ........................ 195,535,962 152,760,781
Other assets ...................................................... 11,070,086 7,778,759
------------- -------------
Total assets ............................................. $ 342,294,322 $ 275,421,724
============= =============

LIABILITIES

Accounts payable .................................................. $ 16,911,952 $ 10,959,913
Debt .............................................................. 255,071,383 209,600,061
Other liabilities ................................................. 19,602,844 11,038,029
------------- -------------

Total liabilities ........................................ 291,586,179 231,598,003

EQUITY

Common stock
Par value $.01 per share; authorized 15,000,000 shares;
issued and outstanding 6,177,804 as of September 30, 1999
and 6,171,034 as of December 31, 1998 ....................... 61,778 61,710
Paid in capital ................................................... 37,892,071 37,839,151
Retained earnings ................................................. 13,084,689 5,922,860
Accumulated other comprehensive loss, net of tax .................. (330,395) --
Total equity ............................................. 50,708,143 43,823,721
------------- -------------
Total liabilities and equity ............................. $ 342,294,322 $ 275,421,724
============= =============
</TABLE>

See the accompanying notes to the condensed consolidated financial statements.

F-1

<PAGE> 82

ONYX ACCEPTANCE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------------------
1999 1998
----------- -----------
(UNAUDITED)
<S> <C> <C>
REVENUES:
Interest income ........................... $19,642,344 $16,703,145
Interest expense .......................... 14,053,421 10,651,700
----------- -----------
Net interest income ....................... 5,588,923 6,051,445

Gain on sale of contracts ................. 40,520,626 25,911,096
Service fee income ........................ 19,757,636 10,015,975

Total Revenues ............................ 65,867,185 41,978,516

EXPENSES:
Provision for credit losses ........... 952,560 1,229,764
Salaries and benefits ................. 29,567,166 19,492,705
Depreciation .......................... 2,510,463 1,307,918
Occupancy ............................. 2,484,771 1,315,224
General and administrative expenses.... 18,109,783 12,496,254
----------- -----------
Total Expenses ............................ 53,624,743 35,841,865
----------- -----------
Net Income before Taxes ................... 12,242,442 6,136,651
Income Taxes .......................... 5,080,613 2,546,709
----------- -----------
Net Income after Taxes .................... $ 7,161,829 $ 3,589,942
=========== ===========
Net Income per share B Basic .............. $ 1.16 $ 0.59
Net Income per share B Diluted ............ $ 1.10 $ 0.56
Basic Shares Outstanding .................. 6,172,628 6,093,198
Diluted Shares Outstanding ................ 6,527,643 6,445,412
</TABLE>

See the accompanying notes to the condensed consolidated financial statements.

F-2

<PAGE> 83

ONYX ACCEPTANCE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK ADDITIONAL COMPREHENSIVE RETAINED
--------------------- PAID-IN LOSS NET EARNINGS
SHARES AMOUNT CAPITAL OF TAX (DEFICIT) TOTAL
--------- ------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1997 6,017,635 $60,176 $37,810,158 $ (152,924) $37,717,410
Issuance of Common Stock 153,399 1,534 28,993 30,527
Net Income 6,075,784 6,075,784
--------- ------- ----------- --------- ----------- -----------
BALANCE, DECEMBER 31, 1998 6,171,034 61,710 37,839,151 5,922,860 43,823,721
Issuance of Common Stock 6,770 68 52,920 52,988
Comprehensive income:

Unrealized losses in securitized $(330,395) (330,395)
assets, net of tax of $229,597
Net Income 7,161,829 7,161,829
--------- ------- ----------- --------- ----------- -----------
Total comprehensive income (330,395) 7,161,829 6,831,434
--------- ------- ----------- --------- ----------- -----------
BALANCE, SEPTEMBER 30, 1999 6,177,804 $61,778 $37,892,071 $(330,395) $13,084,689 $50,708,143
========= ======= =========== ========= =========== ===========
</TABLE>

See accompanying notes to the condensed financial statements.

F-3

<PAGE> 84

ONYX ACCEPTANCE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------------
1999 1998
--------------- ---------------
(UNAUDITED)
<S> <C> <C>
OPERATING ACTIVITIES:
Net cash used in operating activities .................. $ (37,386,541) $ (76,587,801)

INVESTING ACTIVITIES:
Purchases of property and equipment ................ (5,002,155) (2,411,692)
--------------- ---------------
(5,002,155) (2,411,692)
--------------- ---------------
FINANCING ACTIVITIES:
Proceeds from exercise of options/warrants ......... 52,989 32,981
Payments on capital lease obligations .............. (276,775) (473,577)
Payments on excess servicing line of credit ........ (27,117,539) (10,027,900)
Proceeds from drawdown on excess servicing
line of credit ................................... 34,257,170 26,000,000
Paydown of warehouse lines related to
securitization and sale (1,026,000,000) (624,456,000)
Proceeds from warehouse lines ...................... 1,063,485,007 682,956,181
Proceeds from subordinated debt .................... 0 10,000,000
Proceeds from other loans ..........................
Proceeds from (Payments on) other loans ............ 846,684 (251,321)
--------------- ---------------
Net cash provided by financing activities .............. 45,247,536 83,780,364
--------------- ---------------
Increase in cash and cash equivalent .......... 2,858,840 4,780,871

Cash and cash equivalents at beginning of period ....... 1,928,991 991,010
--------------- ---------------
Cash and cash equivalents at end of period ............. $ 4,787,831 $ 5,771,881
=============== ===============
</TABLE>

See the accompanying notes to the condensed consolidated financial statements.

F-4

<PAGE> 85

ONYX ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 -- BASIS OF PRESENTATION

The condensed consolidated financial statements included herein are
unaudited and have been prepared by the Company in accordance with generally
accepted accounting principles for interim financial reporting and Securities
and Exchange Commission regulations. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to the regulations. In the opinion of management, the financial
statements reflect all adjustments (of a normal and recurring nature) which are
necessary to present fairly the financial position, results of operations and
cash flows for the interim periods. Operating results for the nine months ended
September 30, 1999 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1999. The condensed consolidated
financial statements should be read in conjunction with the audited financial
statements and footnotes thereto for the year ended December 31, 1998 included
in the Company's 1998 Annual Report on Form 10-K as amended on Form 10K/A, and
Forms 10-Q for the quarters ended March 31, 1999 and June 30, 1999.

USE OF ESTIMATES

In conformity with generally accepted accounting principles, management
utilizes assumptions and estimates that affect the reported value of credit
enhancement assets and the gain on sale of Contracts. Such assumptions include,
but are not limited to, estimates of loan prepayments, defaults, recovery rates
and present value discount rates. The Company uses a combination of its own
historical experience, industry statistics and expectation of future performance
to determine such estimates. Actual results may differ from the Company's
estimates due to numerous factors both within and beyond the control of the
Company management. Changes in these factors could require the Company to revise
its assumptions concerning the amount of voluntary prepayments, the frequency
and/or severity of defaults and the recovery rates associated with the
disposition of repossessed vehicles.

NOTE 2 -- CONTRACTS HELD FOR SALE

Contracts held for sale consisted of the following:

SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- -------------
Contracts held for sale ....... $ 202,240,294 $ 160,386,439
Less unearned interest ........ (6,985,060) (8,434,206)
------------- -------------
195,255,234 151,952,233
Allowance for credit losses.... (1,276,276) (1,052,178)
Dealer participation .......... 1,557,004 1,860,726
------------- -------------
Total ......................... $ 195,535,962 $ 152,760,781
============= =============

F-5

<PAGE> 86

NOTE 3 -- CREDIT ENHANCEMENT ASSETS

SFAS 125 requires that following a transfer of financial assets, an
entity is to recognize the assets it controls and the liabilities it has
incurred, and derecognize assets for which control has been surrendered and
liabilities that have been extinguished.

Credit enhancement assets consisted of the following:

SEPTEMBER 30, DECEMBER 31,
1999 1998
------------ ------------
Trust receivable....... $ 5,712,501 $ 3,712,501
RISA .................. 125,187,942 109,240,692
------------ ------------
Total ........ $130,900,443 $112,953,193
============ ============

Trust receivable represents servicer advances and initial deposits to
the spread accounts.

Retained interest in securitized assets ("RISA") is capitalized upon
securitization of contracts and represents the present value of the estimated
future earnings to be received by the Company from the excess spread created in
securitization transactions. Excess spread is calculated by taking the
difference between the coupon rate of the contracts sold and the certificate
rate paid to the investors less contractually specified servicing and financial
guarantee insurance premiums fees and projected credit losses, after giving
effect to estimated prepayments. During 1999 and 1998, the Company utilized
prepayment rates of 1.5% ABS in computing RISA. Original cumulative net credit
loss assumptions utilized for 1999 and 1998 securitization transactions ranged
from 3.5% to 4.0%. The Company used a discount rate during 1999 and 1998 of 350
to 450 points over the certificate rates paid to investors at the time of
securitization in discounting future earnings.

RISA is classified in a manner similar to available for sale securities
and as such is marked to market each quarter. The Company is not aware of an
active market for the purchase or sale of RISA, and accordingly, the Company
determines the estimated fair value of the RISA by discounting the expected cash
flows released from the trust (the "Cash-Out Method") using a discount rate
which the Company believes is commensurate with the risks involved. Any changes
in the market value of RISA is reported as a separate component of shareholders'
equity as an unrealized gain or loss, net of deferred taxes.

The following table presents the balances and activity of RISA for the
nine and twelve month period ended September 1999 and December 1998
respectively:

<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- -------------
<S> <C> <C>
Beginning Balance .......................... $ 109,240,692 $ 64,357,850
Additions .................................. 73,011,652 80,632,733
Amortization ............................... (56,504,410) (35,749,891)
Change in unrealized gain/loss on
securities available for sale............. (559,992) --
------------- -------------
Ending Balance ............................. $ 125,187,942 $ 109,240,692
============= =============
</TABLE>

In initially valuing the RISA, the Company establishes an off balance
sheet allowance for expected future credit losses. The allowance is based upon
historical experience and management's estimate of future performance regarding
credit losses. The amount is reviewed periodically and adjustments are made if
actual experience or other factors indicate that future performance may differ
from management's prior estimates.

The following table presents the estimated future undiscounted retained
interest earnings to be received from securitizations. Estimated future
undiscounted RISA earnings are calculated by taking the difference between the
coupon rate of the contracts sold and the rates paid to the investors, less the
contractually specified servicing fee of 1.0% and financial guarantee insurance
premiums, after giving effect to estimated prepayments and assuming no

F-6

<PAGE> 87

losses. To arrive at the RISA, this amount is reduced by the off balance sheet
allowance established for potential future losses and by discounting to present
value.

<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
-------------- --------------
<S> <C> <C>
Estimated net undiscounted RISA earnings.......... $ 224,025,166 $ 176,600,869
Off balance sheet allowance for losses............ (76,601,346) (51,009,542)
Discount to present value......................... (22,235,878) (16,350,635)
-------------- --------------
Retained interest in securitized assets........... $ 125,187,942 $ 109,240,692
============== ==============
Outstanding balance of contracts sold
through securitizations......................... $1,721,926,813 $1,183,157,096
============== ==============
</TABLE>

NOTE 4 -- NET INCOME PER SHARE

The following table sets forth the computation of basic and diluted net
income per share ("EPS"):

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------------
1999 1998
---------- ----------
<S> <C> <C>
Net income..................................... $7,161,829 $3,589,942

Weighted average shares outstanding............ 6,172,628 6,093,198
Net effect of dilutive stock options/warrants.. 355,015 352,214
Diluted weighted average shares outstanding.... 6,527,643 6,445,412

Net income per share:

Basic EPS...................................... 1.16 0.59
Diluted EPS.................................... 1.10 0.56
</TABLE>

NOTE 5 -- NEW PRONOUNCEMENTS

In June 1998, the FASB issued Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS 133"). SFAS 133 establishes accounting and reporting
standards for derivative contracts, and for hedging activities. The new standard
requires that all derivatives be recognized as either assets or liabilities in
the consolidated statements of financial condition and that those instruments be
measured at fair value. If certain conditions are met, a derivative may be
specifically designated as a hedging instrument. The accounting for changes in
the fair value of a derivative (that is, unrealized gains and losses) depends on
the intended use of the derivative and the resulting designation. The statement
is effective in the first quarter of year 2001. The Company is presently
assessing the effect of SFAS 133 on the consolidated financial statements of the
Company.

NOTE 6 -- CONTINGENCIES

The Company is party to various legal proceedings similar to actions
brought against other companies in the motor vehicle finance industry, which are
or may or may not be covered under insurance policies it holds. The Company
vigorously defends such proceedings; however, there is no assurance as to the
results. Based upon information presently available, the Company believes that
the final outcome of all such proceedings should not have a material adverse
effect upon the Company's results of operations, cash flows or financial
condition.

F-7

<PAGE> 88

REPORT OF INDEPENDENT ACCOUNTANTS

Board of Directors and Stockholders
Onyx Acceptance Corporation

In our opinion, the accompanying consolidated statements of financial
condition and the related consolidated statements of income, redeemable
preferred stock and stockholders' equity and cash flows present fairly, in all
material respects, the consolidated financial position of Onyx Acceptance
Corporation and its subsidiaries (the "Company") as of December 31, 1998 and
1997, and the consolidated results of its operations and its cash flows for each
of the three years in the period ended December 31, 1998, in conformity with
generally accepted accounting principles. These consolidated financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these consolidated financial
statements based on our audits. We conducted our audits of these consolidated
financial statements in accordance with generally accepted auditing standards,
which require that we plan and perform the audit to obtain reasonable assurance
about whether the consolidated financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the consolidated financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall consolidated financial statement presentation. We believe
that our audits provide a reasonable basis for the opinion expressed above.

As discussed in Note 2, the 1997 and 1996 consolidated financial
statements have been restated to reflect a change in the method of measuring and
accounting for credit enhancement assets.

/s/ PricewaterhouseCoopers LLP
- ------------------------------
PricewaterhouseCoopers LLP
Newport Beach, California

January 22, 1999

F-8

<PAGE> 89

ONYX ACCEPTANCE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------
1998 1997
------------- -------------
(Restated)
<S> <C> <C>
Cash and cash equivalents .................................. $ 1,928,991 $ 991,010
Contracts held for sale (net of allowance) ................. 152,760,781 64,342,309
Credit enhancement assets (net of amortization) ............ 112,953,193 71,735,651
Furniture and equipment (net of accumulated depreciation)... 4,734,857 2,842,520
Other assets ............................................... 3,043,902 1,924,970
------------- -------------
Total Assets ...................................... $ 275,421,724 $ 141,836,460
============= =============

LIABILITIES

Accounts payable ........................................... $ 10,959,913 $ 6,564,446
Warehouse borrowings ....................................... 150,044,464 60,505,902
Revolving credit and residual lines ........................ 49,555,597 30,000,000
Subordinated debt .......................................... 10,000,000 0
Capital lease obligations .................................. 696,995 1,002,307
Accrued interest payable ................................... 790,055 302,238
Other liabilities .......................................... 9,550,979 5,744,157
------------- -------------
Total Liabilities ................................. 231,598,003 104,119,050

Commitments and Contingencies

STOCKHOLDERS' EQUITY

Common Stock
Par value $0.01 per share; authorized 15,000,000
shares; issued and outstanding 6,171,034
as of December 31, 1998 and issued and
outstanding 6,017,635 shares as of December 31,
1997 .............................................. 61,710 60,176
Additional paid in capital ........................... 37,839,151 37,810,158
Retained earnings (deficit) .......................... 5,922,860 (152,924)
------------- -------------
Total Equity ...................................... 43,823,721 37,717,410
------------- -------------
Total Liabilities and Stockholders' Equity $ 275,421,724 $ 141,836,460
============= =============
</TABLE>

See accompanying notes to consolidated financial statements.

F-9

<PAGE> 90

ONYX ACCEPTANCE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------------
1998 1997 1996
----------- ----------- -----------
(RESTATED) (RESTATED)
<S> <C> <C> <C>
REVENUES:
Finance income .................... $20,753,734 $11,866,957 $ 9,354,271
Investment income ................. 1,194,477 431,373 325,885
----------- ----------- -----------
Interest Income - Total ................. 21,948,211 12,298,330 9,680,156
Interest expense .................. 14,636,534 7,261,645 5,539,850
----------- ----------- -----------
Net Interest Income ..................... 7,311,677 5,036,685 4,140,306
Servicing fee income .............. 16,663,450 9,189,108 3,235,512
Gain on sale of contracts ......... 36,417,216 19,586,291 15,251,117
----------- ----------- -----------
Total Revenues .......................... 60,392,343 33,812,084 22,626,935
----------- ----------- -----------
EXPENSES:
Provision for credit losses ....... 1,579,831 785,445 265,802
Salaries and benefits ............. 26,754,000 17,424,729 8,547,815
Occupancy ......................... 1,823,290 1,478,349 662,634
Depreciation ...................... 2,105,743 1,194,186 821,354
General and administrative expenses 17,743,525 10,643,087 5,362,382
----------- ----------- -----------
Total Expenses .......................... 50,006,389 31,525,796 15,659,987
----------- ----------- -----------
Net Income Before Income Taxes .......... 10,385,954 2,286,288 6,966,948
Income taxes ...................... 4,310,170 984,017 851,360
----------- ----------- -----------
Net Income .............................. $ 6,075,784 $ 1,302,271 $ 6,115,588
=========== =========== ===========
Net Income per Share of Common Stock
Basic ............................. $ 0.99 $ 0.22 $ 1.19
Diluted ........................... $ 0.95 $ 0.21 $ 1.09
----------- ----------- -----------
Basic shares outstanding ................ 6,112,370 6,000,431 5,159,182
=========== =========== ===========
Diluted shares outstanding .............. 6,424,959 6,294,071 5,585,647
=========== =========== ===========
</TABLE>

See accompanying notes to consolidated financial statements.

F-10

<PAGE> 91

ONYX ACCEPTANCE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF
REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
MANDATORILY
REDEEMABLE SERIES A SERIES B PREFERRED
PREFERRED STOCK COMMON STOCK STOCK ADDITIONAL
------------------------ ------------------- ------------------ PAID IN
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL
---------- ----------- --------- ------- -------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1995................. 8,227,349 $ 9,379 177 2,241,454 $22,415 136,365 $1,364 $ 803,109
Issuance of Common Stock..................... 2,908,135 29,081 32,307,821
Conversion of Preferred Stock Series......... (8,227,349) (9,379,177) 715,422 7,154 8,220,195
Conversion of Preferred Stock Series B....... 39,757 398 (136,365 (1,364) 966
Issuance costs............................... (3,578,366)
Net income...................................
---------- ----------- --------- ------- -------- ------- ------------
BALANCE AT DECEMBER 31, 1996 (RESTATED)...... 0 0 5,904,768 59,048 0 0 37,753,725
Issuance of Common Stock..................... 112,867 1,128 56,433
Net income...................................
---------- ----------- --------- ------- -------- ------- ------------
BALANCE AT DECEMBER 31, 1997 (RESTATED)...... 0 0 6,017,635 60,176 0 0 37,810,158
Issuance of Common Stock..................... 153,399 1,534 28,993
Net Income...................................
---------- ----------- --------- ------- -------- ------- ------------
BALANCE AT DECEMBER 31, 1998................. 0 $ 0 6,171,034 $61,710 0 $ 0 $ 37,839,151
========== =========== ========= ======= ======== ======= ============

</TABLE>

TOTAL
RETAINED STOCKHOLDERS'
EARNINGS EQUITY
(DEFICIT) (DEFICIT)
----------- -------------
<S> <C> <C>
BALANCE AT DECEMBER 31, 1995................. $(8,722,613) $ (7,895,725)
Issuance of Common Stock..................... 32,336,902
Conversion of Preferred Stock Series......... 1,151,830 9,379,179
Conversion of Preferred Stock Series B.......
Issuance costs............................... (3,578,366)
Net income................................... 6,115,588 6,115,588
----------- ------------
BALANCE AT DECEMBER 31, 1996 (RESTATED)...... (1,455,195) 36,357,578
Issuance of Common Stock..................... 57,561
Net income................................... 1,302,271 1,302,271
----------- ------------
BALANCE AT DECEMBER 31, 1997 (RESTATED)...... (152,924) 37,717,410
Issuance of Common Stock..................... 30,527
Net Income................................... 6,075,784 6,075,784
----------- ------------
BALANCE AT DECEMBER 31, 1998................. $ 5,922,860 $ 43,823,721
=========== ============
</TABLE>

See accompanying notes to consolidated financial statements.

F-11

<PAGE> 92

ONYX ACCEPTANCE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------------------------------
1998 1997 1996
--------------- --------------- ---------------
(RESTATED) (RESTATED)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net Income ............................................... $ 6,075,784 $ 1,302,271 $ 6,115,588
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Amortization of retained interest in
securitized assets .............................. 35,749,891 10,775,171 7,110,583
Write-off unamortized participation on sold loans . 27,467,086 15,523,390 12,582,515
Provision for credit losses ....................... 1,579,831 785,446 265,802
Depreciation and amortization ..................... 2,105,743 1,194,186 821,354
Decrease (increase) in trust receivable ........... 3,665,300 (3,763,661) 2,594,477
Increase in retained interest in securitized assets (80,632,733) (41,603,001) (34,459,085)
(Increase) decrease in other assets ............... (1,118,928) 521,949 (1,471,078)
Increase in accounts payable ...................... 4,395,467 4,896,659 1,380,268
Increase (decrease) in accrued interest payable ... 487,817 229,077 (1,244,356)
Increase in other liabilities ..................... 4,057,894 3,245,629 1,766,591
Proceeds from the sale of contracts held for sale . 926,759,606 527,276,091 405,513,000
Purchase of contracts held for sale ............... (1,038,534,757) (605,905,410) (319,840,214)
Exercise of trust purchase option ................. (12,387,783) 0 0
Principal payments received on contracts held
for sale ........................................ 39,182,459 26,957,179 21,582,236
Payments of participation to dealers (net of
chargeback collections and amortized expense) ... (32,484,915) (16,416,931) (12,449,984)
--------------- --------------- ---------------
Cash provided by (used in) operating activities .......... (113,632,238) (74,981,955) 90,267,697
--------------- --------------- ---------------
INVESTING ACTIVITIES
Purchase of furniture and equipment .................. (3,835,335) (1,824,853) (804,587)
--------------- --------------- ---------------
Cash used in investing activities ........................ (3,835,335) (1,824,853) (804,587)
--------------- --------------- ---------------
FINANCING ACTIVITIES
Payments on capital leases ........................... (468,060) (425,189) (486,369)
Proceeds from warehouse line ......................... 985,997,562 538,897,511 273,228,073
Payments on warehouse line ........................... (896,459,000) (488,500,000) (375,500,000)
Proceeds from drawdown on revolving credit borrowings 32,000,000 27,500,000 16,348,568
Payments to paydown revolving credit borrowings ...... (12,444,403) 0 (23,417,776)
Proceeds (payments) of subordinated debt ............. 10,000,000 0 (10,000,000)
Payments of stock issuance costs ..................... 0 0 (1,595,837)
Proceeds from exercise of options/warrants ........... 30,527 57,561 17,250
Proceeds from sale of preferred and common stock ..... 0 0 30,337,128
(Payments) receipts in other loans ................... (251,072) (335,093) 586,168
--------------- --------------- ---------------
Cash provided by (used in) financing activities .......... 118,405,554 77,194,790 (90,482,795)
--------------- --------------- ---------------
Increase (decrease) in cash and cash equivalents ......... 937,981 387,982 (1,019,685)
Cash and cash equivalents at beginning of period ......... 991,010 603,028 1,622,713
--------------- --------------- ---------------
Cash and cash equivalents at end of period ............... $ 1,928,991 $ 991,010 $ 603,028
=============== =============== ===============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Noncash activities:
Additions to capital leases ....................... $ 162,744 $ 884,654 $ 471,256
Conversion of preferred stock ..................... 0 0 9,379,177
Cash paid:
Interest .......................................... 14,148,717 7,032,567 6,784,204
Income taxes ...................................... 1,377,644 602,913 570,676
</TABLE>

See accompanying notes to consolidated financial statements.

F-12

<PAGE> 93

ONYX ACCEPTANCE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 -- NATURE OF OPERATIONS

Onyx Acceptance Corporation ("Onyx") was incorporated on August 17,
1993, and commenced operations in February 1994. Onyx and its wholly owned
special purpose finance subsidiaries, Onyx Acceptance Financial Corporation
("OAFC") and Onyx Acceptance Funding Corporation ("OFC") (collectively, the
"Company"), specialize in the purchase, origination, sale and servicing of
retail automobile installment loans ("Loans" or "Contracts") originated by
automobile dealers. The Company provides an independent source to automobile
dealers to finance their customers' purchases of new and used vehicles. The
Company attempts to meet the needs of dealers through consistent buying
practices, competitive rates, a dedicated customer service staff, fast
turnaround time and systems designed to expedite the processing of loan
applications.

NOTE 2 -- RESTATEMENT

As required by the Financial Accounting Standards Board's ("FASB")
Special Report, "A Guide to Implementation of Statement 125 on Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,
Second Edition," dated December 1998, and related guidance set forth in
statements made by the staff of the Securities and Exchange Commission ("SEC")
on December 8, 1998, the Company's 1997 and 1996 consolidated financial
statements have been restated to reflect a change in the method of measuring and
accounting for credit enhancement assets on its securitization transactions to
the cash-out method from the cash-in method.

Initial deposits to restricted cash accounts, if any, and subsequent
cash flows received by securitization trusts sponsored by the Company accumulate
as credit enhancement assets until certain targeted levels are achieved, after
which cash is distributed to the Company on an unrestricted basis. Under the
cash-in method previously used by the Company, (i) the assumed discount period
for measuring the present value of credit enhancement assets ended when cash
flows were received by the securitization trusts and (ii) initial deposits to
restricted cash accounts were recorded at face value. Under the cash-out method
now required by the FASB and SEC, the assumed discount period for measuring the
present value of credit enhancement assets ends when cash, including return of
the initial deposits, if any, is distributed to the Company on an unrestricted
basis.

The change to the cash-out method results only in a difference in the
timing of revenue recognition from a securitization and has no effect on the
total cash flow of such transactions. While the total amount of revenue
recognized over the term of a securitization transaction is the same under
either method, the cash-out method results in (i) lower initial gain on the sale
of receivables due to the longer discount period and (ii) higher subsequent
servicing fee income from accretion of the additional cash-out discount.
Accordingly, the reductions in previously reported earnings resulting from
retroactive application of the change will generally be recognized in subsequent
period earnings and servicing fee income.

F-13

<PAGE> 94

The restatement resulted in the following changes to prior period
financial statements:

<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
---------------------
1997 1996
------- -------
(IN THOUSANDS, EXCEPT
FOR PER SHARE DATA)
<S> <C> <C>
Total Revenue:
Previous................................. $35,950 $25,221
As restated.............................. $33,812 $22,627

Net Income:
Previous................................. $ 2,584 $ 7,672
As restated.............................. $ 1,302 $ 6,116
Net Income per Share:

Basic:
Previous................................. $ 0.43 $ 1.49
As restated.............................. $ 0.22 $ 1.19

Diluted:
Previous................................. $ 0.40 $ 1.35
As restated.............................. $ 0.21 $ 1.09

Credit Enhancement Assets:
Previous................................. $76,467 $39,738
As restated.............................. $71,736 $37,144

Stockholders' Equity:
Previous................................. $40,555 $37,914
As restated.............................. $37,717 $36,358
</TABLE>

NOTE 3 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation: The accompanying consolidated financial
statements include the accounts of Onyx, OAFC and OFC. All significant
intercompany accounts and transactions have been eliminated upon consolidation.

Cash and Cash Equivalents: The Company considers all significant
investments with maturity at acquisition of three months or less to be cash
equivalents.

Contracts Held for Sale: Contracts held for sale are stated at the
lower of aggregate amortized cost or market. Market is determined based on the
estimated value of the Contracts if securitized and sold..

The Company defers certain Contract origination fees and participation
paid to dealers. The net amount is amortized as an adjustment to the related
Contract's yield, on the same basis as that used to record income on the
Contracts, over the contractual life of the related Loans. At the time of sale
any remaining amounts are included as part of the computation of the gain on
sale of Contracts.

The Company continues to accrue interest on Contracts until the
Contract is charged off, which occurs at the earlier of the end of the month in
which (i) the underlying vehicle is repossessed and sold or (ii) the Contract
becomes past due 120 days. At the time that the Contract is charged off, all
accrued interest is also charged off.

Allowance for Credit Losses: The allowance for credit losses is
maintained at a level believed adequate by management to absorb potential losses
in the Contracts held for sale. The provision rate is established by management
using the following criteria: past Loan loss experience, current economic
conditions, volume, growth and other relevant factors, and is re-evaluated on a
quarterly basis. The allowance is increased by provisions for Loan losses
charged against income. All recoveries on finance receivables previously charged
off are credited to the allowance, while charge-off's of finance receivables are
deducted from the allowance.

F-14

<PAGE> 95

Sales of Contracts: The Company purchases contracts to be sold to
investors with servicing rights retained by the Company. The Company sells a
majority of its contracts and does not retain any residual interest in
securitized or sold Contracts. Contracts are sold at or near par value with the
Company retaining a participation in the future cash flows released by Trusts in
Contracts securitized but on cash sales no participation is retained in the
future cash flows. As of December 31, 1998 the Company is servicing all the
Contracts sold to the Trusts.

Furniture and Equipment: Furniture and equipment are stated at cost
less accumulated depreciation and are depreciated for financial reporting
purposes on a straight-line basis over a three year estimated life. Capitalized
leased assets are amortized over the lease term. Leasehold improvements are
amortized over a period not exceeding the term of the lease.

Interest and Fee Income: Interest and fee income on Contracts held for
sale is determined on a monthly basis using either the simple interest (level
yield) method or the sum-of-the-months digits method which approximates the
effective yield method.

Income Taxes: The Company utilizes Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes," which requires the recognition
of deferred tax liabilities and assets for the expected future tax consequences
of events that have been included in the financial statements or tax returns.
Under this method, deferred tax liabilities and assets are determined based on
the difference between the financial statements and the tax basis of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse. Valuation allowances are established, when
necessary, to reduce deferred tax assets to the amount expected to be realized.
The provision for income taxes represents the tax payable for the period and the
change during the year in deferred tax assets and liabilities. The Company files
consolidated federal and state tax returns.

Net Income Per Share: Net income per share is presented in a dual
format, computed both including and excluding the impact of potential common
stock.

Derivative Financial Instruments: The Company employs hedging
strategies to manage its gross interest rate risk. The hedging strategies
include the use of forward swap agreements to manage the interest rate on
securitization of the Contracts held for sale.

The forward swap agreements are entered into by the Company in numbers
and amounts which generally correspond to the principal amount of future
securitization transactions. The market value of these forward agreements
responds inversely to the market value change of the underlying Contracts.
Because of this inverse relationship, the Company can effectively lock in its
gross interest rate spread at the time the hedge transaction is entered into.
Gains and losses relative to these agreements are deferred and recognized in
full at the time of securitization as an adjustment to the gain on sale of
contracts. The Company is not required to maintain any collateral with respect
to its hedging strategies. The Company only uses highly rated counterparties.
Credit exposure is limited to those transactions with a positive fair value.

Pervasiveness of Estimates: The preparation of the consolidated
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.

Stock-Based Compensation: Accounting for Stock-Based Compensation
("SFAS 123"), was issued by the Financial Accounting Standards Board in October
1995 and is effective for fiscal years beginning after December 15, 1995. SFAS
123 encourages, but does not require companies to recognize compensation
expenses associated with stock based compensation plans over the anticipated
service period based on the fair value of the award on the date of grant. As
allowed by SFAS 123, however, the Company has elected to continue to measure
compensation costs as prescribed by APB Opinion No. 25 "Accounting for Stock
Issued to Employees." See footnote 12 for Pro Forma disclosures of net income
and net income per share, as if SFAS 123 had been adopted.

Reclassification: Certain amounts in the prior year consolidated
financial statements have been reclassified to conform to 1998 presentation.

F-15

<PAGE> 96

NOTE 4 -- RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the FASB issued Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS 133"). SFAS 133 establishes accounting and reporting
standards for derivative contracts, and for hedging activities. The new standard
requires that all derivatives be recognized as either assets or liabilities in
the consolidated statements of financial condition and that those instruments be
measured at fair value. If certain conditions are met, a derivative may be
specifically designated as a hedging instrument. The accounting for changes in
the fair value of a derivative (that is, unrealized gains and losses) depends on
the intended use of the derivative and the resulting designation. The statement
is effective in the first quarter of year 2001. The Company is presently
assessing the effect of SFAS 133 on the consolidated financial statements of the
Company.

NOTE 5 -- CONTRACTS HELD FOR SALE

Contracts held for sale consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1998 1997
------------ -----------
<S> <C> <C>
Contracts held for sale................ $160,386,439 $71,216,278
Less unearned interest................. 8,434,206 7,835,794
------------ -----------
151,952,233 63,380,484
Allowance for credit losses............ (1,052,178) (316,902)
------------ -----------
150,900,055 63,063,582
Dealer participation................... 1,860,726 1,278,727
------------ -----------
Total............................. $152,760,781 $64,342,309
============ ===========
</TABLE>

At December 31, 1998, contractual maturities of Contracts held for sale
were as follows:

1999..................................... $ 3,065,436
2000..................................... 8,772,016
2001..................................... 8,024,190
2002..................................... 18,462,195
2003 and thereafter...................... 113,628,396
------------
$151,952,233
============

Changes in the allowance for credit losses were as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------------
1998 1997 1996
----------- --------- ---------
<S> <C> <C> <C>
Balance at beginning of period.......... $ 316,902 $ 61,190 $ 591,765
Provision for credit losses............. 1,579,831 785,446 265,802
Charged-off loans....................... (1,100,158) (620,781) (953,582)
Recoveries.............................. 255,603 91,047 157,205
----------- --------- ---------
Balance at end of period................ $ 1,052,178 $ 316,902 $ 61,190
=========== ========= =========
</TABLE>

The fair value of Contracts held for sale was $163.5 million and $64.3
million at December 31, 1998 and 1997, respectively.

At December 31, 1998, the Company had entered into four year amortizing
forward swap agreements with a national face amount outstanding of $150.0
million with maturities matching the average life of the Contracts being hedged.
At December 31, 1998, these contracts had a fair value of $93,000. In addition,
at December 31, 1998, the Company had offsetting swap agreements of $81.0
million in notional face amount outstanding with a fair value of $(1.0) million.
At December 31, 1997, the Company had similar agreements with a notional face
amount outstanding of $105.9 million with deferred losses of $232,000.

F-16

<PAGE> 97

Included in the Gain on Sale of Contracts for the years ended December
31,, 1998, 1997 and 1996 are losses of $4.8 million, $1.3 million, and $2.3
million respectively, arising from hedging activities.

Contracts serviced by the Company for the benefit of others totaled
approximately $1.2 million at December 31, 1998 and $693.9 million at December
31, 1997. These amounts are not reflected in the accompanying consolidated
financial statements.

NOTE 6 -- CREDIT ENHANCEMENT ASSETS

Credit enhancement assets consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1998 1997
------------ -----------
<S> <C> <C>
Trust Receivable........................ $ 3,712,501 $ 7,377,801
RISA.................................... 109,240,692 64,357,850
------------ -----------
Total.............................. $112,953,193 $71,735,651
============ ===========
</TABLE>

Retained interest in securitized assets ("RISA") capitalized upon
securitization of contracts represent the present value of the estimated future
earnings to be received by the Company from the excess spread created in
securitization transactions. Excess spread is calculated by taking the
difference between the coupon rate of the contracts sold and the certificate
rate paid to the investors less contractually specified servicing and guarantor
fees and projected credit losses, after giving effect to estimated prepayments.

Prepayment and credit loss assumptions are utilized to project future
earnings and are based on historical experience. Credit losses are estimated
using cumulative loss frequency and severity estimates by management. All
assumptions are evaluated each quarter and adjusted, if appropriate, to reflect
the actual performance of the contracts.

Future earnings are discounted at a rate management believes to be
representative of market at the time of securitization. The balance of RISA is
amortized against actual excess spread income earned on a monthly basis over the
expected repayment life of the underlying contracts. RISA is classified in a
manner similar to available for sale securities and as such is marked to market
each quarter. Market value changes are calculated by discounting the remaining
projected excess spread using a current market discount rate. Any changes in the
market value of the RISA is reported as a separate component of shareholders'
equity as an unrealized gain or loss, net of deferred taxes. As of December 31,
1998 the market value of RISA approximated cost. The Company retains the rights
to service all contracts it securitizes.

The following table presents the balances and activity for RISA:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------
1998 1997
------------ ------------
<S> <C> <C>
Beginning Balance.................... $ 64,357,850 $ 33,530,020
Additions............................ 80,632,733 41,603,001
Amortization......................... (35,749,891) (10,775,171)
------------ ------------
Ending Balance.................. $109,240,692 $ 64,357,850
============ ============
</TABLE>

The following table presents the estimated future undiscounted retained
interest earnings to be received from

F-17

<PAGE> 98

securitizations. Estimated future undiscounted RISA earnings are calculated by
taking the difference between the coupon rate of the contracts sold and the
certificate rate paid to the investors, less the contractually specified
servicing fee of 1.0% and guarantor fees, after giving effect to estimated
prepayments and assuming no losses. To arrive at the RISA, this amount is
reduced by the off balance sheet allowance established for potential future
losses and by discounting to present value.

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
1998 1997
-------------- ------------
<S> <C> <C>
Estimated net undiscounted RISA earnings...... $ 176,600,869 $ 99,613,524
Off balance sheet allowance for losses........ 51,009,542 25,546,412
Discount to present value..................... 16,350,635 9,709,262
-------------- ------------
Retained interest in securitized assets....... $ 109,240,692 $ 64,357,850
============== ============
Outstanding balance of contracts sold through
securitizations.......................... $1,183,157,096 $693,896,100
</TABLE>

NOTE 7 -- FURNITURE AND EQUIPMENT

Furniture and equipment consisted of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1998 1997
----------- ----------
<S> <C> <C>
Owned:
Office furniture......................... $ 2,031,561 $1,469,004
Computer equipment....................... 5,869,612 2,397,728
Leasehold improvements................... 748,292 713,382
----------- ----------
Total................................ 8,649,465 4,580,114
----------- ----------

Capitalized Leases:
Office furniture......................... 40,750
Computer equipment....................... 1,441,073 1,471,594
----------- ----------
Total................................ 1,441,073 1,512,344
----------- ----------

Total furniture and equipment................. 10,090,538 6,092,458
Less: accumulated depreciation and amortization 5,355,681 3,249,938
----------- ----------
Furniture and equipment, net.................. $ 4,734,857 $2,842,520
=========== ==========
</TABLE>

NOTE 8 -- WAREHOUSE BORROWING

The Company has a commercial paper facility (the "CP Facility") with a
financial institution with borrowings outstanding at December 31, 1998 of
$150,044,464 and at December 31, 1997 of $60,505,902. Under terms of the
agreements the Company is able to borrower 98% of the principal amount of loans
purchased. Borrowings under this commercial paper arrangement become due as the
principal payments are received or the related automobile loans are sold. The
amount of credit available to the Company for the purchase of automobile loans
under the facility is $375 million. The amount of commercial paper outstanding
at any time is collateralized by the Contracts held for sale. These credit
arrangements mature on September 3, 2001 and are subject to annual renewal on
each anniversary date. The Company is in compliance with certain ratios and
other borrowing covenants under the commercial paper arrangements. The fair
value of commercial paper was $150.0 million and $60.5 million at December 31,
1998 and 1997 respectively. The commercial paper facility had an average
interest rate of 6.47% for the year ended December 31, 1998, and 6.63% for the
year ended December 31, 1997.

Additionally, during 1998 the Company entered into a repurchase
facility with Merrill Lynch (the "Merrill Line") providing $100 million of
borrowing capacity for the purchase or origination of Contracts. Outstanding
debt is collateralized by Contracts held for sale. As of December 31, 1998,
there was no debt outstanding under this line. This facility matures on February
4, 2000.

F-18
<PAGE> 99

NOTE 9 -- REVOLVING CREDIT AND RESIDUAL LINES

The Company has three credit lines collateralized by credit enhancement
assets. Total borrowings outstanding under all three lines at December 31, 1998
was $49.6 million and $30.0 million at December 31, 1997.

The Company is party to a collateralized revolving line of credit with
a lending group for up to $45 million ("the Revolving Facility"). The Revolving
Facility is used for working capital and other expenditures for which the
Company's warehouse lines are otherwise unavailable. The Company may borrow and
repay the loan during the two year revolving period with the loan amount
determined by a borrowing base formula. The formula is a percentage of the
Company's credit enhancement asset balance. The Revolving Facility converts from
revolving loan to a fully amortizing two year term loans on June 30, 1999.
Advances bear interest at 0.25% over the lender's Prime Rate. The Revolving
Facility had an average interest rate of 8.76% for the year ended December 31,
1998 and 8.91% for 1997. The fair value of the Revolving Facility was $38.5
million at December 31, 1998 and $30.0 million at December 31, 1997. The Company
is in compliance with certain ratios and other borrowing covenants under the
Revolving Facility.

Additionally, in the first quarter of 1998, the Company negotiated two
new credit lines with investment banks (the "Residual Lines") to expand and
diversify its lending relationships. The Residual Lines consist of two separate
$50 million funding facilities collateralized by credit enhancement assets, with
one facility provided by Merrill Lynch Mortgage Capital ("MLMCI") and the second
facility provided by Salomon Brothers Realty Company ("SBRC"). The lines utilize
a collateral based formula that equates borrowing availability to a percentage
of the value of the excess cash flow to be received from securitizations
lead-managed by the respective investment bank. The facility provided by MLMCI
matures in February 2000; the facility provided by SBRC matures in September
1999. Interest paid under each line is tied to the 30 day Libor Rate. The
average interest rates for year ending 1998 were 8.19% for the MLMCI facility
and 8.06% for the SBRC facility. The Residual Lines had a combined fair value of
$11.1 million at December 31, 1998, with debt outstanding under the MLMCI line
of $5.1 million and debt outstanding under the SBRC line of $6.0 million.

NOTE 10 -- SUBORDINATED DEBT

The Company has $10.0 million of subordinated debt outstanding. The
term of the subordinated debt is for two years ending February 24, 2000 with an
option by the Company to extend the term by three years during which the loan
would fully amortize, and bears a fixed interest rate of 9 2%. The Company also
issued to the lender a warrant for Common Stock in the amount of 180,529 shares
of the Common Stock of the Company.

NOTE 11 -- COMMITMENTS AND CONTINGENCIES

The Company leases furniture, fixtures and equipment under capital
leases with terms in excess of one year. The Company leases its office space
under operating leases with options to renew. Certain operating lease agreements
provide for escalations based on contractual provisions.

Future minimum lease payments required under capital leases and
noncancelable operating leases are as follows as of December 31, 1998:

<TABLE>
<CAPTION>
Capital Leases Operating Leases
-------------- ----------------
<S> <C> <C>
1999........................................... $ 417,480 $ 2,218,267
2000........................................... 210,447 2,617,143
2001........................................... 120,703 2,474,213
2002........................................... 102,739 2,265,161
2003 and thereafter............................ 15,608 12,100,769
---------
Total..................................... 866,977 21,675,553
Less amounts representing interest............. (169,982)
---------
Present value of net minimum lease payments.... $ 696,995
=========
</TABLE>

Rental expenses for premises and equipment amounted to approximately
$1.7 million, $1.4 million and $651,898 for the

F-19

<PAGE> 100

year ended December 31, 1998, 1997, and 1996 respectively.

NOTE 12 -- STOCK OPTIONS

The Company has reserved 1,545,303 shares for future issuance to
certain employees under its incentive stock option plan. The options may be
exercised at prices ranging from $0.51 per share of $11.50 per share at any
time, in whole or part, within ten years after the date of grant. Reserved,
unoptioned shares totaled 240,566 at December 31, 1998, 185,176 at December 31,
1997, and 502,764 at December 31, 1996.

A summary of the status of the Company's stock option plan as of
December 31, 1998, 1997 and 1996, and changes during the years ending on those
dates is presented below:

<TABLE>
<CAPTION>
1998 1997 1996
------------------------ --------------------- ----------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
OPTIONS SHARES PRICE SHARES PRICE SHARES PRICE
------- --------- -------- -------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year... 802,200 $7.51 597,480 $6.10 373,811 $ 2.30
Granted............................ 1,296,878 6.32 402,700 7.89 394,593 11.14
Exercised.......................... (38,118) 0.80 (112,867) 0.51 (33,056) 0.51
Forfeited.......................... (940,263) 8.39 (85,113) 8.66 (137,868) 11.56
--------- ----- -------- ----- --------- ------
Outstanding at end of year......... 1,120,697 $5.59 802,200 $7.51 597,480 $ 6.10
========= ===== ======== ===== ========= ======
Options exercisable at year end.... 502,624 321,564 342,866
========= ======== =========
Weighted-average fair value of
options granted during the year.. $6.32 $7.89 $11.14
===== ===== ======
</TABLE>

The following table summarizes information about stock options
outstanding at December 31, 1998:

<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
-------------------------------------------------------- ---------------------------------
Number Weighted Average Number
Outstanding Remaining Weighted Average Exercisable at Weighted Average
Range of Exercise Prices at 12/31/98 Contractual Life Exercise Price 12/31/98 Exercise Price
- ------------------------ ----------- ---------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C> <C>
$ 0.51 114,399 5.26 years $ .51 114,399 $ .51
$ 5.75 - 6.86 933,748 7.17 5.77 336,297 5.80
$ 7.25 - 8.50 2,550 7.97 8.25 680 8.37
$11.25 - 11.50 70,000 8.40 11.36 51,248 11.41
$ 0.51 - 11.50 1,120,697 7.06 $ 5.59 502,624 $ 5.17
</TABLE>

Substantially all of the options granted by the Company vest over a
four year period, 25% after one year and the remaining 75% ratably over the
following 36 month period. All of the options are granted at the closing price
on the date of the grant.

SFAS 123 provides for companies to recognize compensation expense
associated with stock based compensation plans over the anticipated service
period based on the fair value of the award on the date of grant. However, SFAS
period based on the fair value of the award on the date of grant. However, SFAS
123 allows companies to continue to measure compensation costs prescribed by APB
Opinion No. 25 "Accounting for Stock Issued to Employees" ("APB 25"). Companies
electing to continue accounting for stock based compensation plans under APB 25
must make pro forma disclosures of net income and net income per share, as if
SFAS 123 had been adopted. The Company has continued to account for stock-based
compensation plans under APB 25. The fair value of the options was estimated at
date of grant using a Black-Scholes single option pricing model using the
following assumptions:

F-20

<PAGE> 101

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Risk free interest rate........... 5.1% 5.5% 6.0%
Expected stock price volatility... 63.9% 52.0% 80.0%
Expected life of options four years four years four years
Expected dividends none none none
</TABLE>

The following table presents the pro forma disclosures required for
SFAS 123 for the years ended December 31:

<TABLE>
<CAPTION>
1998 1997 1996
------ ----- ------
<S> <C> <C> <C>
Pro forma net income (dollars in
thousands)............................ $5,322 $ 895 $5,337
Pro forma net income per share-basic.. $ 0.87 $0.15 $ 1.03
Pro forma net income per share-diluted $ 0.83 $0.14 $ 0.96
</TABLE>

NOTE 13 -- EMPLOYEE 401K DEFERRED SAVINGS PLAN

The Company has established a salary deferral savings program pursuant
to IRS Code Section 401(k) (the "401(k) Plan") for qualified employees. Under
this plan, employees may contribute a percentage of their pre-tax earnings to
the 401(k) Plan. Effective July 1, 1998, the Company amended the 401(k) Plan to
permit matching contributions. Employee contributions up to the lesser of
$10,000 or 5% of pre-tax earnings made after one year of service are matched by
a Company contribution equal to 50% of the employee's contribution. Matching
contributions are made in the Company's common stock and begin vesting 20% per
year following the completion of three years of service. Company expenses
related to the 401(k) Plan totaled $87,000 in 1998.

NOTE 14 -- REDEEMABLE PREFERRED STOCK

The Company has reserved 10 million shares of preferred stock and had
designated 9 million shares as Series A Preferred Stock. The shares were subject
to a $.06 per share dividend, payable quarterly when and if declared by the
Board of Directors. The dividends were not cumulative. The Series A Preferred
Stock was subject to holder redemption to be paid out of future earnings in
three annual installments beginning January 1, 1999 and each subsequent January
until January 1, 2001. The shares were subject to a 7% per year increase from
the issue date. The increase accrued at December 31 of each year. The Series A
Preferred Stock was converted to Common Stock at the time of the initial public
offering.

NOTE 15 -- STOCKHOLDERS' EQUITY

The Company had designated 136,000 shares of preferred stock as Series
B Preferred Stock. The shares were subject to a $0.05 per share dividend payable
annually when, as and if declared by the Board of Directors. The dividends were
not cumulative. The Series B Preferred Stock was converted into Common Stock
upon the initial public offering.

The Company's ability to pay or declare dividends is restricted by the
terms of the credit facilities.

F-21

<PAGE> 102

NOTE 16 -- INCOME TAXES

The following table presents the current and deferred provision
(benefit) for federal and state income taxes for the years ended December 31,
1998, 1997 and 1996:

<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Current:
Federal ..................... $ 698,132 $ 252,897 $ 591,278
State ....................... 17,744 69,332 (20,602)
---------- ---------- ----------
Total .................. 715,876 322,229 570,676
---------- ---------- ----------
Deferred:
Federal ..................... 3,070,600 460,648 (538,218)
State ....................... 523,694 201,140 818,902
---------- ---------- ----------
Total .................. 3,594,294 661,788 280,68
---------- ---------- ----------
Combined Total.......... $4,310,170 $ 984,017 $ 851,360
========== ========== ==========
</TABLE>

The provision (benefit) for income taxes differs from the amount that
would result from applying the federal statutory rate as follows for the years
ended December 31, 1998, 1997 and 1996:

<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Statutory regular federal income tax rate 34% 34% 34%
(benefit).................................
State taxes (net of federal benefit)........ 7% 8% 8%
Other....................................... 0% 1% 8%
Change in valuation allowance............... 0% 0% (38)%
-- -- ---
41% 43% 12%
== == ===
</TABLE>

The components of the deferred income tax asset or (liability) as of
December 31, 1998 and 1997 are as follows:

<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
Property and equipment........... $ 855,656 $ 696,006
Accrued liabilities.............. 408,438 380,900
Capitalized costs................ (675,204) (559,986)
Allowance for credit losses...... 441,880 143,557
Gain on sale of Contracts........ (20,164,719) (13,550,790)
Net operating losses............. 14,055,868 11,584,583
Credit carryover................. 18,211 18,211
State taxes...................... 525,415 347,358
------------ ------------
$ (4,534,455) $ (940,161)
============ ============
</TABLE>

At December 31, 1998, the Company had net operating loss carryforwards
for federal and state purposes of $35.2 million and $26.3 million, respectively.
The net operating loss carryforwards begin to expire after 2009 and 1999,
respectively.

F-22

<PAGE> 103

NOTE 17 -- WARRANTS

At December 31, 1998, the Company had the following warrants
outstanding to purchase shares of common stock:

<TABLE>
<CAPTION>
BALANCE NET BALANCE NET BALANCE
OUTSTANDING REDUCTIONS OUTSTANDING REDUCTIONS OUTSTANDING
AT TO AT TO AT
EXERCISE DECEMBER 31, OUTSTANDING DECEMBER 31, OUTSTANDING DECEMBER 31,
PRICE 1996 WARRANTS 1997 WARRANTS 1998
-------- ------------ ----------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Warrants....... $ 0.03 116,922 0 116,922 115,286 1,636
Warrants....... $ 0.51 84,311 0 84,311 0 84,311
Warrants....... $11.50 16,332 0 16,332 0 16,332
Warrants....... $17.15 3,791 0 3,791 0 3,791
Warrants....... $ 8.88 0 0 0 0 180,529
------ ------- -- ------- ------- -------
Total.......... 221,356 0 221,356 115,286 286,599
======= == ======= ======= =======
</TABLE>

At December 31, 1998, all the Company's warrants outstanding to
purchase shares of common stock were exercisable.

During the year ended December 31, 1998 warrants of 115,286 were
exercised at a price of $0.03. No warrants were exercised during 1997.

NOTE 18 -- NET INCOME PER SHARE

In accordance with Statement of Financial Accounting Standards No. 128,
the following is an illustration of the dilutive effect of the Company's
potential common stock on net income per share.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
1998 1997 1996
------ ------ ------
(In Thousands, Except
Net Income per Share)
<S> <C> <C> <C>
Net income........................................ $6,076 $1,302 $6,116
Weighted average shares outstanding............... 6,112 6,000 5,159
Net effect of dilutive stock options/warrants..... 231 294 426
------ ------ ------
Fully diluted weighted average shares outstanding. 6,425 6,294 5,585
====== ===== =====
Net income Per Share.............................. $ 0.99 $0.22 $1.19
====== ===== =====
Net income Per Share Assuming Full Dilution....... $ 0.95 $0.21 $1.09
====== ===== =====
</TABLE>

NOTE 19 -- FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair value of financial instruments have been determined
by the Company, using available market information and appropriate valuation
methodologies. However, considerable judgment is necessarily required in
interpreting market data to develop the estimates of fair value. Accordingly,
the estimates presented herein are not necessarily indicative of the amounts
that the Company could realize in a current market exchange. The use of
different market assumptions and/or estimation methodologies may have a material
effect on the estimated fair value amounts.

The following methods and assumptions were used to estimate the fair
value of each class of financial instruments for which it is practicable to
estimate that value:

Cash and cash equivalents: The carrying amount approximates fair
value because of the short maturity of those investments.

F-23

<PAGE> 104

Warehouse borrowings and revolving credit lines: The fair value of
the Company's debt is estimated based upon the quoted market prices for
the same or similar issues or on the current rates offered to the
Company for debt of the same remaining maturities and characteristics.

Contracts held for sale: The fair value of Contracts held for sale
is based on the estimated proceeds expected on securitization of the
Contracts held for sale.

Credit enhancement assets: The carrying amount is accounted for at
an estimated fair value which is calculated by discounting the excess
spread using a current market discount rate.

Hedging: The fair value of the Company's outstanding forward
agreements are estimated based on current rates offered to the Company
for forward agreements with similar terms and conditions.

The estimated fair values of the Company's financial instruments are as
follows at December 31:

<TABLE>
<CAPTION>
1998 1997
--------------------- -------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
--------- -------- -------- -------
(In Millions)
<S> <C> <C> <C> <C>
Cash and cash equivalents ........... $ 1.9 $ 1.9 $ 0.9 $ 0.9
Contracts held for sale ............. $ 152.8 $ 163.5 $ 64.3 $ 68.4
Credit enhancement assets ........... $ 112.9 $ 112.9 $ 71.7 $ 71.7
Warehouse borrowings ................ $ (150.0) $ (150.0) $ (60.5) $ (60.5)
Revolving credit and residual lines . $ (49.6) $ (49.6) $ (30.0) $ (30.0)

Hedging
Forward agreements .................. $ (1.2) $ (0.9) N/A $ (1.1)
</TABLE>

NOTE 20 -- RELATED PARTIES

The Company has a note receivable from a certain shareholder in the
amount of $175,000. The note bears interest at 6.66% per annum. Principal and
accrued interest are due on December 20, 1999.

F-24

<PAGE> 105

NOTE 21 -- QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------------------------------------
MARCH 31, (1) JUNE 30, (1) SEPT. 30, (1) DEC. 31,
------------- ------------ ------------- --------
(In Thousands, except per share data)
<S> <C> <C> <C> <C>
1998

Interest income................................. $4,481 $5,222 $7,001 $5,245
Interest expense................................ 2,821 3,617 4,214 3,985
Net interest income............................. 1,660 1,605 2,787 1,260
Provision for credit losses..................... 307 325 598 350
Income before income taxes...................... 1,269 1,872 2,996 4,249
Income taxes.................................... 527 777 1,243 1,763
Net income...................................... 742 1,095 1,753 2,486
Net income per common share (Basic)............. $0.12 $0.18 $0.28 $0.40
Net income per common share (Diluted)........... $0.12 $0.17 $0.27 $0.39

1997 (1)

Interest income................................. $1,882 $3,266 $3,660 $3,491
Interest expense................................ 1,055 1,830 2,096 2,280
Net interest income............................. 827 1,435 1,564 1,211
Provision for credit losses..................... 293 211 100 181
Income (Loss) before income taxes............... 348 1,510 899 (470)
Income taxes.................................... 150 650 387 (202)
Net income (Loss)............................... 198 860 512 (268)
Net income (Loss) per common share (Basic)...... $0.03 $0.14 $0.09 $(0.04)
Net income (Loss) per common share (Diluted).... $0.03 $0.13 $0.08 $(0.04)
</TABLE>

- --------------------
(1) As discussed in Note 2, all quarters in 1997 and the first three quarters
in 1998 have been restated to reflect the change in method of measuring in
accounting for credit enhancement assets. The amounts of net income and
diluted net income per common share previously reported are discussed
within the Company's Form 10-Q/As for the three months ending March 31,
1998, June 30, 1998 and September 30, 1998.

NOTE 22 -- SUBSEQUENT EVENTS (UNAUDITED)

In the first quarter of 1999, the Company securitized contracts
totaling $310.0 million.

F-25
<PAGE> 106

[MAP OF THE UNITED STATES SHOWING THE LOCATION OF ONYX'S AUTO FINANCE CENTERS.]
<PAGE> 107

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH ADDITIONAL OR DIFFERENT
INFORMATION FROM THAT CONTAINED IN THIS PROSPECTUS. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR THE SALE OF NOTES MEANS THAT INFORMATION CONTAINED IN THIS
PROSPECTUS IS CORRECT AFTER THE DATE OF THIS PROSPECTUS. THIS PROSPECTUS IS NOT
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THESE NOTES IN ANY
CIRCUMSTANCES UNDER WHICH THE OFFER OR SOLICITATION IS UNLAWFUL.

-------------------------

$20,000,000

[ONYX LOGO]

ONYX ACCEPTANCE CORPORATION

% SUBORDINATED NOTES DUE , 2006

------------------------------------

P R O S P E C T U S
------------------------------------

[MILLER & SCHROEDER FINANCIAL, INC.]
PEACOCK, HISLOP, STALEY & GIVEN, INC.

, 2000

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 108
PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

Set forth below are expenses (other than underwriting discounts and
commissions) expected to be incurred in connection with the issuance and
distribution of the securities registered hereby. With the exception of the
Securities and Exchange Commission registration fee and the NASD filing fee, the
amounts set forth below are estimates:

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee........ $ 6,072

NASD filing fee ........................................... 2,800

Accounting fees and expenses............................... 55,000

Blue Sky fees and expenses................................. 1,000

Legal fees and expenses.................................... 125,000

Printing expenses.......................................... 25,000

Trustee's fees and expenses................................ 15,000

Underwriters' counsel fees and expenses.................... 81,000

Miscellaneous.............................................. 89,128
--------
TOTAL...................................................... $400,000
========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Subsection (a) of section 145 of the General Corporation Law of the State
of Delaware empowers a corporation to indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.

Subsection (b) of Section 145 empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation, except that no indemnification may be made in
respect of any claim, issue or matter as to which such person shall have been
made to be liable to the corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.

Section 145 further provides that to the extent a director or officer of a
corporation has been successful on the merits or otherwise in the defense of any
action, suit or proceeding referred to in subsections (a) and (b) of Section 145
in the defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection therewith; that indemnification provided for by Section 145
shall not be deemed exclusive of any other rights to which the indemnified party
may be entitled; that indemnification provided for by Section 145 shall, unless
otherwise provided when authorized or ratified, continue as to a person who has
ceased to be a director, officer, employee or agent and shall inure to the
benefit of such person=s heirs, executors and administrators; and empowers the
corporation to purchase and maintain insurance on behalf of a director or
officer of the corporation against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such
whether or not the corporation would have the power to indemnify him against
such liabilities under Section 145.

II-1
<PAGE> 109

Section 102(b)(7) of the General Corporation Law of the State of Delaware
provides that a certificate of incorporation may contain a provision eliminating
or limiting the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director
provided that such provision shall not eliminate or limit the liability of a
director (i) for any breach of the director's duty of loyalty to the corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit.

Our Articles limit the liability of our directors to the fullest extent
permitted by law. Specifically, our directors will not be personally liable to
the corporation or its stockholders for monetary damages for breach of their
fiduciary duty as directors, except for liability (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Delaware General
Corporations Law, or (iv) for any transaction from which the director derived
any improper personal benefit.

Article 8 of our Bylaws provides that we shall indemnify, to the fullest
extent permitted by law, any director, officer, employee or agent of the
corporation against expenses (including attorneys' fees), judgements, fines,
amounts paid in settlement and/or other matters referred to in or covered by
Section 145 of the Delaware General Corporation Law, by reason of the fact that
he is or was a director, officer, employee or agent of the corporation or is or
was serving at the request of the corporation as director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise.

Under Section 6 of the Underwriting Agreement filed as Exhibit 1.1 to this
Registration Statement, the Underwriters have agreed to indemnify, under certain
conditions, Onyx, its officers and directors, and persons who control Onyx
within the meaning of the Securities Act of 1933, as amended, against certain
liabilities.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

On February 24, 1998, we entered into a Term Loan Agreement with BayView
Capital Corporation in which we borrowed $10 million at a fixed rate of 9-1/2%.
In connection with this Term Loan Agreement, we issued a warrant to purchase
180,529 shares of our common stock to BayView. We believe that this transaction
is exempt from registration pursuant to Section 4(2) under the Securities Act of
1933, as amended.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

EXHIBIT
NUMBER DESCRIPTION
-------- -----------

1.1 Form of Underwriting Agreement***

3.1 Certificate of Incorporation of the Company (1)

3.2 Bylaws of the Company (1)

4.1 Rights Agreement dated as of July 8, 1997, between the Company and
American Stock Transfer and Trust Company, as Rights Agent (which
includes the form of Certificate of Designation for the Series A
Participating Preferred Stock and the form of Rights Certificate of
the Company (3)

4.2 Form of Indenture between Onyx Acceptance Corporation and Bankers
Trust Company.***

4.3 Form of Notes (included in Article Two of the Form of Indenture
previously filed Exhibit 4.2).

5.1 Opinion of Andrews & Kurth L.L.P.**

10.1 Form of Indemnification Agreement of the Company. (1)

10.2 Second Amended and Restated 1994 Stock Option Plan. (1)

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<PAGE> 110

EXHIBIT
NUMBER DESCRIPTION
------- -----------

10.3 Form of Notice of Grant of Stock Option under Second Amended and
Restated 1994 Stock Option Plan. (1)

10.4 Form of Stock Option Agreement under Second Amended and Restated
1994 Option Plan. (1)

10.5 Form of Stock Purchase Agreement under Second Amended and Restated
1994 Stock Option Plan. (1)

10.6 1994 Special Performance Option Grant Plan. (1)

10.7 Form of Notice of Grant of Stock Option under 1994 Special
Performance Option Grant Plan. (1)

10.8 Form of Stock Option Agreement under 1994 Special Performance Option
Grant Plan. (1)

10.9 Form of Stock Purchase Agreement under 1994 Special Performance
Option Grant Plan. (1)

10.10 Third Amendment to Amended and Restated Investors' Rights Agreement
between and among Onyx Acceptance Corporation and the Investors
identified therein dated as of November 27, 1995. (1)

10.11 Senior Subordinated Note and Warrant Purchase Agreement between and
among Onyx Acceptance Corporation, Capital Resource Lenders II, L.P.
and Dominion Fund III, L.P., dated as of November 17, 1994. (1)

10.12 Warrant to purchase Common Stock in favor of Capital Resource
Lenders II, L.P. from Onyx Acceptance Corporation dated as of
November 17, 1994. (1)

10.13 Warrant to purchase Common Stock in favor of Dominion Fund III, L.P.
from Onyx Acceptance Corporation dated as of November 17, 1994. (1)

10.14 Amended and Restated Co-Sale and First Refusal Agreement between and
among Onyx Acceptance Corporation and the Shareholders identified
therein dated as of November 17, 1994. (1)

10.15 Amended and Restated Investors' Rights Agreement between and among
Onyx Acceptance Corporation, the Investors and the Management
Holders identified therein dated as of November 17, 1994. (1)

10.16 Amended and Restated Voting Agreement between and among Onyx
Acceptance Corporation and the Shareholders identified therein dated
as of November 17, 1994. (1)

10.17 Triple-A One Funding Corporation Note in favor of Onyx Acceptance
Financial Corporation from Triple-A One Funding Corporation dated as
of September 12, 1994. (1)

10.18 Seller Note in favor of Onyx Acceptance Corporation from Onyx
Acceptance Financial Corporation dated September 12, 1994. (1)

10.19 Subordinated Note in favor of Onyx Acceptance Corporation from Onyx
Acceptance Financial Corporation dated September 12, 1994. (1)

10.20 Sublease and Administrative Services Agreement between Onyx
Acceptance Corporation and Onyx Acceptance Financial Corporation
dated as of September 8, 1994. (1)

10.21 Tax Allocation Agreement between Onyx Acceptance Corporation and
Onyx Acceptance Financial Corporation dated as of September 1, 1994.
(1)

10.22 Corporate Separateness Agreement between Onyx Acceptance Corporation
and Onyx Acceptance Financial Corporation dated September 8, 1994.
(1)

10.23 Amendment Number One to Security Agreement, Subordinated Security
Agreement, Sale and Servicing Agreement and Definitions List between
and among Onyx Acceptance Financial Corporation, Onyx Acceptance
Corporation, Triple-A One Funding Corporation and Capital Markets
Assurance Corporation dated March 1, 1995. (1)

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<PAGE> 111

EXHIBIT
NUMBER DESCRIPTION
------- -----------

10.24 First Amendment to Amended and Restated Investors' Rights Agreement
between and among Onyx Acceptance Corporation and certain Investors
identified therein dated as of December 15, 1994.(1)

10.25 Master Lease Agreement between Onyx Acceptance Corporation and
Comdisco, Inc. dated January 7, 1994. (1)

10.26 Warrant to purchase Series A Preferred Stock in favor of Comdisco,
Inc. from Onyx Acceptance Corporation dated as of January 7, 1994.
(1)

10.27 Warrant to purchase Common Stock in favor of Lighthouse Capital
Partners from Onyx Acceptance Corporation dated November 3, 1995.
(1)

10.28 Master Lease Agreement between Lighthouse Capital Partners and Onyx
Acceptance Corporation dated November 3, 1995. (1)

10.29 Second Amendment to Amended and Restated Investors' Rights Agreement
between and among Onyx Acceptance Corporation and the Investors
identified therein dated as of November 3, 1995. (1)

10.30 Agreement for On-Line Services between On-Line Computer Systems,
Inc. and Onyx Acceptance Corporation dated as of November 19, 1993.
(1)

10.31 Agreement for On-Line Service between On-Line Computer Systems, Inc.
and Onyx Acceptance Financial Corporation dated as of September 7,
1994. (1)

10.32 Option Agreement between Onyx Acceptance Corporation and John W.
Hall dated as of December 20, 1994. (1)

10.33 Promissory Note in favor of Onyx Acceptance Corporation from John
Hall dated as of December 20, 1994. (1)

10.34 Option Agreement between Onyx Acceptance Corporation and Brian
MacInnis dated as of December 20, 1994. (1)

10.35 Promissory Note in favor of Onyx Acceptance Corporation from Brian
MacInnis dated as of December 20, 1994. (1)

10.36 Stock Purchase Agreement between and among Brian MacInnis and
certain Investors identified therein dated as of June 7, 1995. (1)

10.37 Stock Purchase Agreement between and among John W. Hall and certain
Investors identified therein dated as of June 7, 1995. (1)

10.38 Sublease Agreement between Onyx Acceptance Corporation and AT&T
Resource Management Corporation dated as of August 31, 1993. (1)

10.39 Office Space Lease (Master Lease) between and among The Irvine
Company and American Telephone and Telegraph Company dated as of
April 29, 1987. (1)

10.40 First Amendment to Sublease between and among AT&T Resource
Management Corporation and Onyx Acceptance Corporation dated as of
September 1, 1993. (1)

10.41 Onyx Acceptance Corporation 401(k) Plan dated January 1, 1994. (1)

10.42 Pooling and Servicing Agreement between Onyx Acceptance Financial
Corporation, Onyx Acceptance Corporation and Bankers Trust Company
dated as of January 1, 1996. (1)

10.43 Underwriting Agreement between Onyx Acceptance Financial Corporation
and Merrill Lynch, Pierce, Fenner & Smith Incorporated dated January
31, 1996. (1)

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<PAGE> 112

EXHIBIT
NUMBER DESCRIPTION
------- -----------

10.44 Indemnification Agreement by and among Capital Markets Assurance
Corporation, Onyx Acceptance Corporation, Onyx Acceptance Financial
Corporation and Merrill Lynch, Pierce, Fenner & Smith Incorporated
dated January 31, 1996. (1)

10.45 Indemnification Agreement by and between Onyx Acceptance Corporation
and Merrill Lynch, Pierce, Fenner & Smith Incorporated dated as of
January 31, 1996(1).

10.46 Subordination and Intercreditor Agreement by and among State Street
Bank and Trust Company, The First National Bank of Boston, Capital
Resource Lenders II, L.P., Dominion Fund III and Onyx Acceptance
Corporation dated as of January 31, 1996. (1)

10.47 1996-1 Spread Account Trust Agreement between Onyx Acceptance
Financial Corporation and Bankers Trust (Delaware) dated as of
February 6, 1996. (1)

10.48 Form of Dealer Agreement Non-Recourse (U) between Dealership and
Onyx Acceptance Corporation. (1)

10.49 Form of Dealer Agreement Non-Recourse (N) between Dealership and
Onyx Acceptance Corporation. (1)

10.50 1996 Stock Option/Stock Issuance Plan. (1)

10.51 1996-2 Pooling and Servicing Agreement between Onyx Acceptance
Financial Corporation, Onyx Acceptance Corporation and Bankers Trust
Company of New York dated May 17, 1996. (1)

10.52 1996-2 Spread Account Trust Agreement between Onyx Acceptance
Financial Corporation and Bankers Trust (Delaware) dated as of May
17, 1996. (1)

10.53 Underwriting Agreement between Onyx Acceptance Financial Corporation
and Merrill Lynch, Pierce, Fenner & Smith Incorporated, dated May
10, 1996. (1)

10.54 1996-3 Pooling and Servicing Agreement between Onyx Acceptance
Financial Corporation, Onyx Acceptance Corporation and Bankers Trust
Company of New York dated September 17, 1996. (1)

10.55 1996-3 Spread Account Trust Agreement between Onyx Acceptance
Financial Corporation and Bankers Trust (Delaware) dated as of
September 17, 1996. (1)

10.56 Underwriting Agreement between Onyx Acceptance Financial Corporation
and Merrill Lynch, Pierce, Fenner & Smith Incorporated, dated
September 13, 1996. (1)

10.57 Form of Pooling and Servicing Agreement between Onyx Acceptance
Financial Corporation, Onyx Acceptance Corporation and Bankers Trust
Company in connection with 1997-1 Grantor Trust. (2)

10.58 Form of Underwriting Agreement between Onyx Acceptance Financial
Corporation and Merrill Lynch, Pierce, Fenner and Smith Incorporated
in connection with 1997-1 Grantor Trust. (2)

10.59 Form of Pooling and Servicing Agreement between Onyx Acceptance
Financial Corporation, Onyx Acceptance Corporation, and Bankers
Trust Company in connection with 1997-2 Grantor Trust. (4)

10.60 Form of Underwriting Agreement between Onyx Acceptance Financial
Corporation, Merrill Lynch, Pierce, Fenner and Smith Incorporated in
connection with 1997-2 Grantor Trust. (4)

10.61 Form of Pooling and Servicing Agreement between Onyx Acceptance
Financial Corporation, Onyx Acceptance Corporation and Bankers Trust
Company in connection with 1997-3 Grantor Trust. (5)

10.62 Form of Underwriting Agreement between Onyx Acceptance Financial
Corporation and Merrill Lynch, Pierce, Fenner and Smith Incorporated
in connection with 1997-3 Grantor Trust. (5)

10.63 1997-4 Spread Account Trust Agreement between Onyx Acceptance
Financial Corporation and Bankers Trust (Delaware) dated as of
December 12, 1997. (6)

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<PAGE> 113

EXHIBIT
NUMBER DESCRIPTION
------- -----------

10.64 Form of Pooling and Servicing Agreement between Onyx Acceptance
Financial Corporation, Onyx Acceptance Corporation and Bankers Trust
Company in connection with 1997-4 Onyx Acceptance Grantor Trust. (6)

10.65 Form of Underwriting Agreement between Onyx Acceptance Financial
Corporation, Onyx Acceptance Corporation and Merrill Lynch & Co. in
connection with 1997-4 Onyx Acceptance Grantor Trust. (6)

10.66 Term Loan Agreement by and between Bay View Capital Corporation and
Onyx Acceptance Corporation dated 6 February 24, 1998. (7)

10.67 Master Repurchase Agreement Annex by and between Merrill Lynch
Mortgage Capital Inc. and Onyx Acceptance Financial Corporation
dated February 4, 1998. (7)

10.68 Master Assignment Agreement by and between Merrill Lynch Mortgage
Capital Inc. and Onyx Acceptance Financial Corporation dated
February 4, 1998. (7)

10.69 Second Amendment to Master Assignment Agreement between Onyx
Acceptance funding Corporation and Merrill Lynch Mortgage Capital
Inc. dated July 7, 1999. (15)

10.70 Amended and Restated Residual Interest in Securitized Assets
Revolving Credit Agreement dated June 12, 1998 by and among Onyx
Acceptance Corporation, State Street Bank and Trust Company,
BankBoston and The Travelers Insurance Company. (8)

10.71 Second Amendment to Loan Agreement and Pledge and Security Agreement
by and among Onyx Acceptance Corporation, State Street Bank and
Trust Company, BankBoston and The Travelers Insurance Company dated
August 9, 1999. (15)

10.72 Amended and Restated Pledge and Security Agreement dated June 12,
1998 by and among Onyx Acceptance Corporation, State Street Bank and
Trust Company, Bank Boston and The Travelers Insurance Company. (8)

10.73 First Amendment to Loan Agreement and Confirmation of Pledge and
Security Agreement dated June 29, 1999. (14)

10.74 Amended and Restated Sale and Servicing Agreement between Onyx
Acceptance Corporation and Onyx Acceptance Financial Corporation
dated as of September 4, 1998. (9)

10.75 Amended and Restated Triple-A One Funding Corporation Credit
Agreement between and among Onyx Acceptance Financial Corporation,
Triple-A One Funding Corporation, CapMAC Financial Services, Inc.
and Capital Markets Assurance Corporation dates as of September 4,
1998. (9)

10.76 Amended and Restated Triple-A One Funding Corporation Security
Agreement between and among Onyx Acceptance Financial Corporation,
Triple-A One Funding Corporation and Capital Markets Assurance
Corporation dates as of September 4, 1998. (9)

10.77 Amended and Restated Subordinated Security Agreement between Onyx
Acceptance Corporation and Onyx Acceptance Financial Corporation
dated as of September 4, 1998. (9)

10.78 Amended and Restated Insurance and Indemnity Agreement between and
among Onyx Acceptance Corporation, Capital Markets Assurance
Corporation, Onyx Acceptance Financial Corporation and Triple-A One
Funding Corporation dated as of September 4, 1998. (9)

10.79 Master Loan Agreement between Onyx Acceptance Financial Corporation
and Salomon Brothers Realty Corp. dated September 3, 1998. (9)

10.80 Form of Pooling and Servicing Agreement between Onyx Acceptance
Corporation, Onyx Acceptance Financial Corporation, and Bankers
Trust Company in connection with the 1998-1 Onyx Acceptance Grantor
Trust. (10)

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<PAGE> 114

EXHIBIT
NUMBER DESCRIPTION
------- -----------

10.81 Form of Underwriting Agreement between Onyx Acceptance Financial
Corporation, Onyx Acceptance Corporation and Merrill Lynch & Co. in
connection with the 1998-1 Onyx Acceptance Grantor Trust. (10)

10.82 Form of Sale and Servicing Agreement between Onyx Acceptance
Corporation, Onyx Acceptance Financial Corporation, and Chase
Manhattan Bank in connection with the Onyx Acceptance Owners Trust
1998-A. (11)

10.83 Form of Sale and Servicing Agreement between Onyx Acceptance
Corporation, Onyx Acceptance Financial Corporation, and Chase
Manhattan Bank in connection with the Onyx Acceptance Owners Trust
1998-B. (11)

10.84 Form of Sale and Servicing Agreement between Onyx Acceptance
Corporation, Onyx Acceptance Financial Corporation and Chase
Manhattan Bank in connection with the Onyx Acceptance Owners Trust
1998-C. (11)

10.85 Amendment Number One dated December 22, 1998 to Amended and Restated
Onyx Warehouse Facility and Assignment and Assumption Agreement.
(12)

10.86 Amendment No. 2 to the Amended and Restated Onyx Warehouse Facility
effective as of March 30, 1999 by and among Onyx Acceptance
Corporation, Onyx Acceptance Financial Corporation, Triple-A One
Funding Corporation, Capital Markets Assurance Corporation, CapMAC
Financial Services, Inc. and MBIA Insurance Corporation. (13)

10.87 Sale and Servicing Agreement between Onyx Acceptance Corporation as
Seller and Servicer and Onyx Acceptance Receivables Corporation, as
Purchaser, dated August 9, 1999. (15)

10.88 Security Agreement between Onyx Acceptance Receivables Corporation
and The Chase Manhattan Bank as Funding Agent, dated August 9, 1999.
(15)

10.89 Subordinated Security Agreement between Onyx Acceptance Receivables
Corporation, and Onyx Acceptance Corporation, dated August 9, 1999.
(15)

10.90 Asset Purchase Agreement between Park Avenue Receivables Corporation
and The Chase Manhattan Bank and Onyx Acceptance Receivables
Corporation, dated August 9, 1999. (15)

10.91 Funding Agreement between Onyx Acceptance Receivables Corporation
and Park Avenue Receivables Corporation and The Chase Manhattan
Bank, dated August 9, 1999. (15)

10.92 Form of Sale and Servicing Agreement between Onyx Acceptance
Corporation, Onyx Acceptance Financial Corporation and Chase
Manhattan Bank in connection with the Onyx Acceptance Owners Trust
1999-A. (16)

10.93 Form of Sale and Servicing Agreement between Onyx Acceptance
Corporation, Onyx Acceptance Financial Corporation and Chase
Manhattan Bank in connection with the Onyx Acceptance Owners Trust
1999-B. (17)

10.94 Form of Sale and Servicing Agreement between Onyx Acceptance
Corporation, Onyx Acceptance Financial Corporation and Chase
Manhattan Bank in connection with the Onyx Acceptance Owners Trust
1999-C. (18)

10.95 Form of Sale and Servicing Agreement between Onyx Acceptance
Corporation, Onyx Acceptance Financial Corporation and Chase
Manhattan Bank in connection with the Onyx Acceptance Owners Trust
1999-D. (19)

10.96 Consent and Amendment Agreement between and among Onyx Acceptance
Corporation and State Street Bank and Trust Company, BankBoston and
the Travelers Insurance Company. #

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EXHIBIT
NUMBER DESCRIPTION
------- -----------

12.1 Computation of ratio of earnings to fixed charges.***

12.2 Computation of ratio of EBITDA to cash interest expenses.*

21.1 Subsidiaries of the Registrant (15)

23.1 Consent of Independent Accountants**

23.2 Consent of Independent Accountants*

24.1 Power of Attorney**

25.1 Statement of eligibility of Trustee**

27.1 Financial Data Schedule**

---------------
* Filed herewith

** Previously filed with the Commission as an exhibit to the Registrant's
Registration Statement No. 333-92573 on December 10, 1999 and incorporated
herein by reference.

*** Previously filed with the Commission as an exhibit to Amendment No. 1 to
the Registrant's Registration Statement No. 333-92573 on January 19, 2000
and incorporated herein by reference.

# To be filed by amendment.

(1) Incorporated by reference from the Company's Registration Statement on Form
S-1 (Registration No. 333-00680).

(2) Incorporated by reference from Onyx Acceptance Financial Corporation's
Registration Statement on Form S-1 (Registration No. 333-22301).

(3) Incorporated by reference from the Company's Current Report on Form 8-K
dated July 8, 1997. (File No. 000-28050)

(4) Incorporated by reference from Onyx Acceptance Financial Corporation's
registration Statement on Form S-1 (Registration No. 333-28893).

(5) Incorporated by reference from Onyx Acceptance Financial Corporation's
Registration Statement on Form S-1 (Registration No. 333-33471).

(6) Incorporated by reference from Onyx Acceptance Financial Corporation's
Registration Statement on Form S-1 (Registration No. 333-40089 ).

(7) Incorporated by reference from the Company's Form 10-Q for quarterly period
ended March 31, 1998. (File No. 000-28050).

(8) Incorporated by reference from the Company's Form 10-Q for quarterly period
ended June 30, 1998. (File No. 000-28050).

(9) Incorporated by reference from the Company's Form 10-Q for quarterly period
ended September 30, 1998. (File No. 000-28050).

(10) Incorporated by reference from Onyx Acceptance Financial Corporation's
Registration Statement on Form S-3 (Registration No. 333-46359).

(11) Incorporated by reference from Onyx Acceptance Financial Corporation's
Registration Statement on Form S-3 (Registration No. 333-51239).

(12) Incorporated by reference from the Company's Form 10-K for the year ended
December 31, 1998. (File No. 000-28050).

(13) Incorporated by reference from the Company's Form 10-Q for quarterly period
ended March 31, 1999. (File No. 000-28050).

II-8
<PAGE> 116

(14) Incorporated by reference from the Company's Form 10-Q quarterly period
ended June 30, 1999. (File No. 000-28050).

(15) Incorporated by reference from the Company's Form 10-Q quarterly period
ended September 30, 1999. (File No. 000-28050).

(16) Incorporated by reference from Onyx Acceptance Financial Corporation's
Current Report on Form 8-K dated March 11, 1999. (File No. 333-28893).

(17) Incorporated by reference from Onyx Acceptance Financial Corporation's
Current Report on Form 8-K dated May 28, 1999. (File No. 333-28893).

(18) Incorporated by reference from Onyx Acceptance Financial Corporation's
Current Report on Form 8-K dated September 14, 1999. (File No. 333-28893).

(19) Incorporated by reference from Onyx Acceptance Financial Corporation's
Current Report on Form 8-K dated November 12, 1999. (File No. 333-28893).

ITEM 17. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Securities Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act, and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-9
<PAGE> 117

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this Amendment No. 2 to Registration Statement
No. 333-92573 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Foothill Ranch, State of California, on February 8,
2000.

ONYX ACCEPTANCE CORPORATION

By: John W. Hall*
------------------------------
John W. Hall
Director, President and
Chief Executive Officer

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS AMENDMENT NO. 2 TO REGISTRATION STATEMENT NO. 333-92573 HAS BEEN SIGNED BY
THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES INDICATED BELOW.

SIGNATURE TITLE DATE
--------- ----- ----

<S> <C> <C>
John W. Hall* President, Chief Executive Officer and February 8, 2000
- ---------------------- Director (Principal Executive Officer)
John W. Hall

/s/ Don P. Duffy Executive Vice President, Chief Financial February 8, 2000
- ---------------------- Officer and Director (Principal Financial
Don P. Duffy and Accounting Officer)

Thomas C. Stickel* Chairman of the Board February 8, 2000
- ----------------------
Thomas C. Stickel

Bruce R. Hallett* Director February 8, 2000
- ----------------------
Bruce R. Hallett

G. Bradford Jones* Director February 8, 2000
- -----------------------
G. Bradford Jones

C. Thomas Meyers* Director February 8, 2000
- -----------------------
C. Thomas Meyers

*By: /s/ DON P. DUFFY
- -----------------------
Don P. Duffy
Attorney-in-Fact
</TABLE>

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<PAGE> 118

INDEX TO EXHIBITS

EXHIBIT
NUMBER DESCRIPTION
------- -----------

1.1 Form of Underwriting Agreement***

3.1 Certificate of Incorporation of the Company (1)

3.2 Bylaws of the Company (1)

4.2 Form of Indenture between Onyx Acceptance Corporation and Bankers
Trust Company.***

4.3 Form of Notes (included in Article Two of the Form of Indenture
attached as Exhibit 4.2).