FIRST MERCHANTS ACCEPTANCE CORP, S-3, 1996-08-02

FIRST MERCHANTS ACCEPTANCE CORP
S-3, 1996-08-02
PERSONAL CREDIT INSTITUTIONS

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As filed with the Securities and Exchange Commission on August 2, 1996
Registration No. 333-_________

SECURITIES AND EXCHANGE COMMISSION
Washington , D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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

FIRST MERCHANTS AUTO TRUSTS
(Issuer with respect to the Securities)

FIRST MERCHANTS ACCEPTANCE
CORPORATION
(Sponsor of the Trusts described herein)
(Exact name of Registrant as specified in its charter)
Delaware 36-3759045
(State or other jurisdiction of
incorporation or organization) (I.R.S. Employer Identification No.)

570 Lake Cook Road, Suite 126
Deerfield, IL 60015
(847) 948-9300

(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)

Mitchell C. Kahn
President and Chief Executive Officer
First Merchants Acceptance Corporation
570 Lake Cook Road, Suite 126
Deerfield, IL 60015
(847) 948-9300

(Name, address, including zip code, and telephone number, including
area code, of agent for service)

Copies to:
Mitchell L. Hollins, Esq. Jack M. Costello, Esq.
Sonnenschein Nath & Rosenthal Brown & Wood LLP
8000 Sears Tower One World Trade Center
Chicago, Illinois 60606 New York, New York 10048
(312) 876-8000 (212) 839-5300

-------------------------------------
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement as
determined by market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. / /
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, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. /x/
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 delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
<S> <C> <C> <C>
Title of Securities Amount to Be Proposed Maximum Proposed Maximum Amount of
Registered Offering Aggregate Registration Fee
to Be Registered Price Per Unit (1) Offering Price(1)
Asset Backed $1,000,000 100% $1,000,000 $344.83
Securities

</TABLE>

(1) Estimated pursuant to Rule 457 solely for the purpose of calculating the
registration fee.

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 THAT SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

INTRODUCTORY NOTE

This Registration Statement contains a form of Prospectus relating to
the offering of series of Asset Backed Notes and/or Asset Backed Certificates
by various First Merchants Auto Trusts created from time to time by First
Merchants Acceptance Corporation and two forms of Prospectus Supplement
relating to the offering by First Merchants Auto Trust 199 - of the
particular series of Asset Backed Certificates or of Asset Backed Notes and
Asset Backed Certificates described therein. Each form of Prospectus
Supplement relates only to the securities described therein and is a form
that may be used, among others, by First Merchants Acceptance Corporation to
offer Asset Backed Notes and/or Asset Backed Certificates under this
Registration Statement. (In addition, First Merchants Acceptance Corporation
intends to make an offering of a portion of the securities registered under
this Registration Statement upon the effectiveness of this Registration
Statement, as permitted by Rule 430A under the Securities Act of 1933, as
amended (the "Securities Act"), and therefore has also included in this
Registration Statement a prospectus supplement relating specifically to such
offering. The prospectus supplement for First Merchants Auto Trust 1996-(
) included herein relates to such offering only and will, when completed, be
filed pursuant to Rule 424(b) under the Securities Act.)

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus supplement and the accompanying
prospectus shall not constitute an offer to sell or the solicitation of an
offer to buy, nor shall there be any sale of these securities in any State
in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such State.

Subject to Completion
Prospectus Supplement to Prospectus Dated , 1996

FIRST MERCHANTS AUTO TRUST 199 -
$ (Floating Rate)(%) Asset Backed Certificates, Class A
$ (Floating Rate)(%) Asset Backed Certificates, Class B
FIRST MERCHANTS ACCEPTANCE CORPORATION , Depositor and Servicer

First Merchants Auto Trust 199 - (the "Trust") will be formed
pursuant to a Pooling and Servicing Agreement dated as of , 199
, among First Merchants Acceptance Corporation, a Delaware corporation, as
seller and servicer, ("First Merchants", the "Depositor" or in its capacity
as Servicer, the "Servicer"), , a
corporation, as backup servicer (the "Backup Servicer") and
, a banking
corporation, as trustee (the "Trustee"), and will issue $
aggregate principal amount of (Floating Rate)(%) Asset Backed Certificates,
Class A (the "Class A Certificates") and $ aggregate
principal amount of (Floating Rate)(%) Asset Backed Certificates, Class B
(the "Class B Certificates" and, with the Class A Certificates, the
"Certificates").

The assets of the Trust will include an initial pool of motor vehicle
retail installment sale contracts (the "Initial Receivables" and, with the
Subsequent Receivables referred to below, the "Receivables") secured by new
or used automobiles, light trucks, vans and minivans financed thereby,
certain monies due or received thereunder on and after , 199
, and certain other property, as described herein. The assets of the Trust
also will include security interests in the vehicles financed through the
Receivables; proceeds from certain insurance policies relating to the
Receivables; a Transfer Agreement dated as of , 199 from the
Depositor in favor of the Trust (the "Transfer Agreement") pursuant to which
the Depositor will undertake to transfer additional motor vehicle retail
installment contracts (the "Subsequent Receivables") to the Trust; rights
under a Security Agreement dated as of , 199 , in favor of the Trust
securing the Depositor's obligation to purchase Subsequent Receivables and
transfer and assign such Subsequent Receivables to the Trust through the
pledge of monies on deposit in a collateral account (the "Pre-Funding
Account") established thereunder; and certain other property as more fully
described herein. The Certificates also will have the benefit of a financial
guaranty insurance policy issued by (the "Security
Insurer"). The Initial Receivables and the Subsequent Receivables were or
will be originated by motor vehicle dealers, from whom they were acquired by
First Merchants. The Depositor will sell and assign the Receivables to the
Trust pursuant to the Pooling and Servicing Agreement and the Transfer
Agreement. The Trust may also draw on funds on deposit in a Reserve Account,
to the extent described herein, to meet shortfalls in amounts due to
Certificateholders on any Distribution Date. The Reserve Account will not
be part of the Trust.
(Continued on following page)

The full and timely payment of interest on and principal of the Class
A Certificates is unconditionally and irrevocably guaranteed pursuant to a
Security Insurance Policy issued by

(Security Insurer)

PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER "RISK
FACTORS" ON PAGE S-14 OF THIS PROSPECTUS SUPPLEMENT AND ON PAGE 12 OF THE
ACCOMPANYING PROSPECTUS.

THE CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN THE TRUST ONLY AND
DO NOT REPRESENT OBLIGATIONS OF OR INTERESTS IN FIRST MERCHANTS ACCEPTANCE
CORPORATION OR ANY OF THEIR AFFILIATES. NEITHER THE CERTIFICATES NOR THE
RECEIVABLES ARE INSURED OR GUARANTEED BY ANY GOVERNMENT AGENCY.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

Price to the Underwriting Proceeds to the
Public(1) Discount Depositor (1)(2)
------------ ------------ -----------------

Per Class A
Certificate. . . . % % %
Per Class B
Certificate. . . . % % %
Total $ $ $

(1) Plus accrued interest, if any, from , 199 .
(2) Before deducting expenses, estimated to be $ .
___________________

The Certificates are offered subject to prior sale and subject to the
Underwriter's right to reject orders in whole or in part. It is expected
that delivery of the Certificates will be made through the Same Day Funds
System of the Depository Trust Company on or about , 199

- --------------------
SALOMON BROTHERS INC
________________________________________________________________________
The date of this Prospectus Supplement is , 199 .

The Class A Certificates will evidence in the aggregate an undivided
ownership interest in approximately % of the Trust. The Class B
Certificates will evidence in the aggregate an undivided ownership interest
in approximately % of the Trust. Principal and interest at the
applicable Pass-Through Rate generally will be distributed to
Certificateholders on the day of each month, commencing
, 199 . The rights of the Class B Certificateholders to receive
distributions are subordinated to the rights of the Class A
Certificateholders to the extent described herein. The outstanding principal
amount, if any, of the Certificates will be due and payable on
, 199 .

THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION ABOUT
THE OFFERING OF THE CERTIFICATES. ADDITIONAL INFORMATION IS CONTAINED IN
THE PROSPECTUS, AND PROSPECTIVE INVESTORS ARE URGED TO READ BOTH THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE CERTIFICATES
MAY NOT BE CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS. THIS PROSPECTUS SUPPLEMENT
CONTAINS INFORMATION THAT IS SPECIFIC TO THE TRUST AND THE SECURITIES OFFERED
HEREBY AND, TO THAT EXTENT, SUPPLEMENTS AND REPLACES THE MORE GENERAL
INFORMATION PROVIDED IN THE PROSPECTUS. INFORMATION CONTAINED IN THIS
PROSPECTUS SUPPLEMENT MAY ALSO REFLECT LEGAL, ECONOMIC AND OTHER
DEVELOPMENTS SINCE THE DATE OF THE PROSPECTUS. TO THE EXTENT INFORMATION IN
THIS PROSPECTUS SUPPLEMENT CONFLICTS WITH THAT CONTAINED IN THE PROSPECTUS,
THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT SHALL CONTROL.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR
EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
CERTIFICATES AT LEVELS ABOVE THOSE THAT MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

REPORTS TO CERTIFICATEHOLDERS

Unless and until Definitive Certificates are issued, monthly and annual
unaudited reports containing information concerning the Receivables will be
prepared by the Servicer and sent on behalf of the Trust only to Cede & Co.,
as nominee of The Depository Trust Company and registered holder of the
Certificates. See "Certain Information Regarding the Securities --
Book-Entry Registration" and "-- Reports to Securityholders" in the
accompanying Prospectus (the "Prospectus"). Such reports will not constitute
financial statements prepared in accordance with generally accepted
accounting principles. The Servicer will file with the Securities and
Exchange Commission (the "Commission") such periodic reports as are required
under the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission thereunder.

SUMMARY OF TERMS

The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere herein and in the Prospectus.
Certain capitalized terms used herein are defined elsewhere in this
Prospectus Supplement on the pages indicated in the "Index of Terms" or, to
the extent not defined herein, have the meanings assigned to such terms in
the Prospectus.

Issuer . . . . . . . . . . . . . First Merchants Auto Trust 199
-
, a trust to be formed pursuant
to a Pooling and Servicing
Agreement
to be dated as of

, 199 (the "Pooling
and Servicing Agreement"), among
the
Depositor, the Servicer, the
Backup
Servicer and the Trustee.

Depositor . . . . . . . . . . . . First Merchants Acceptance
Corporation, a Delaware
corporation
("First Merchants" or the
"Depositor").

Servicer . . . . . . . . . . . . First Merchants, as servicer under
the Pooling and Servicing
Agreement
(the "Servicer").

Trustee . . . . . . . . . . . .
,
a banking
corporation, as trustee under the
Pooling and Servicing Agreement
(the

"Trustee").

Backup Servicer . . . . . . . . ,
a
corporation,
as backup servicer under the
Pooling
and Servicing Agreement (the
"Backup
Servicer").

Security Insurer . . . . . . . . ,
a
financial
guaranty insurance company (the
"Security Insurer"). See
"Security
Insurer."

The Certificates . . . . . . . . The Certificates will be issued on

(the
"Closing Date") pursuant to the
Pooling and Servicing Agreement
and
will represent fractional
undivided
interests in the Trust. The Class
A Certificates will be issued in
an
initial aggregate principal amount
of $ (the
"Initial
Class A Certificate Balance") and
will evidence in the aggregate an
undivided ownership interest in
% of the Trust (the "Class A
Percentage"). The "Class A
Certificate Balance" on any date
of
determination will equal the
Initial
Class A Certificate Balance
reduced
by all distributions made to the
Class A Certificateholders and
allocable to principal.

The Class B Certificates will be
issued in an initial aggregate
principal amount of $
(the "Initial Class
B
Certificate Balance") and will
evidence in the aggregate an
undivided ownership interest in
approximately % of the
Trust (the "Class B Percentage").
The "Class B Certificate Balance"
on
any date of determination will
equal
the Initial Class B Certificate
Balance reduced by all
distributions
made to the Class B
Certificateholders and allocable
to principal.

The Class B Certificates will be
subordinated to the Class A
Certificates to the extent
described
herein.

See "Description of the
Certificates" herein.

Each class of Certificates will be
represented initially by one or
more
certificates registered in the
name
of Cede & Co., as the nominee of
DTC. No person acquiring a
beneficial interest in a Class A
Certificate or a Class B
Certificate
will be entitled to receive a
definitive certificate
representing
such person's interest in the
Trust
except in the limited
circumstances
described in the Prospectus.
Under
the terms of the Pooling and
Servicing Agreement, unless and
until the Certificates are issued
in
definitive form, the beneficial
owners thereof will not be
recognized as Certificateholders
and
will be permitted to exercise the
rights of Certificateholders only
indirectly through DTC. See
"Certain Information Regarding the
Securities -- Book-Entry
Registration" and "-- Definitive
Securities" in the Prospectus.

The Receivables . . . . . . . . On the Closing Date, the Depositor
will sell or transfer Receivables
(the "Initial Receivables") to the
Trust having an aggregate
principal
balance of approximately $

as of

, 199 (the "Initial Cutoff
Date"). The Trust, in turn, will
purchase the Initial Receivables
on
the Closing Date from the
Depositor,
and the Servicer will agree to
service the Receivables, pursuant
to
the Pooling and Servicing
Agreement.
In addition, the Depositor will be
obligated to sell (subject only to
the availability thereof), and the
Trust will be obligated to
purchase
(subject only to the satisfaction
of
certain conditions set forth
therein), additional Receivables
(the "Subsequent Receivables")
having an aggregate principal
balance of approximately $
, which is the amount
to
be deposited to the Pre-Funding
Account on the Closing Date (the
"Pre-Funded Amount"). The
Depositor
will designate as a cutoff date
(each, a "Subsequent Cutoff Date")
each date as of which particular
Subsequent Receivables are
conveyed
by the Depositor to the Trust.
Each
date during the Funding Period on
which Subsequent Receivables will
be
conveyed to the Trust is referred
to herein as a "Subsequent Transfer
Date". See "The Receivables Pool"
herein and "Description of the
Transfer and Servicing Agreements
--
Sale and Assignment of
Receivables"
and "The Receivables Pools" in the
Prospectus.

The Obligors on the Contracts are
primarily consumers with limited
access to traditional sources of
credit ("sub-prime" borrowers),
who
are generally relatively higher
credit risks due to various
factors,
including their past credit
experience and the absence or
limited extent of their credit
history. See "Risk Factors --
Nature of Obligors and Financed
Vehicles; Servicing" in the
Prospectus.

The Initial Receivables have been
selected, and the Subsequent
Receivables will be selected, from
the Contracts owned by the
Depositor
based on the criteria specified in
the Pooling and Servicing
Agreement
and described herein under "The
Receivables Pool" and in the
Prospectus under "The Receivables
Pools". As of the Initial Cutoff
Date, the weighted average APR of
the Initial Receivables was
approximately %, the
weighted average remaining term to
maturity of the Initial
Receivables
was approximately months
and the weighted average original
term to maturity of the Initial
Receivables was approximately
months. No Initial Receivable
has,
and no Subsequent Receivable will
have, a scheduled maturity later
than (the
"Final Scheduled Maturity Date").

Subsequent Receivables may be
originated or acquired from
Dealers
by First Merchants, and
subsequently
by the Depositor, at a later date
using credit criteria that differ
from those that were applied to
the
Initial Receivables and may be of
a
different credit quality and
seasoning. In addition, following
the transfer of Subsequent
Receivables to the Trust, the
characteristics of the entire pool
of Receivables included in the
Trust
may vary significantly from those
of
the Initial Receivables. See
"Risk
Factors -- The Pre-Funding
Account",
"-- Conveyance of Subsequent
Receivables to the Trust" and "The
Receivables Pool" herein and
"Description of the Transfer and
Servicing Agreements -- Sale and
Assignment of Receivables" in the
Prospectus.

The Depositor will make certain
representations and warranties
with
respect to the Receivables in the
Pooling and Servicing Agreement
and
will undertake to repurchase any
Receivable with respect to which
an
uncured breach of any such
representation or warranty exists
if
such breach materially and
adversely
affects the rights therein of the
Trustee and the
Certificateholders,
if such breach is not cured by the
Depositor in a timely manner. See
"Description of the Transfer and
Servicing Agreements -- Sale and
Assignment of Receivables" in the
Prospectus.

Terms of the Certificates

A. Distribution Dates . . . . Distributions of interest and
principal on the Certificates will
be made on the day of each
month or, if any such day is not a
Business Day, on the next
succeeding Business Day (each, a
"Distribution
Date"), commencing , 199 .
Distributions will be made
to holders of record
of the Certificates (the
"Certificateholders") as of the
day immediately preceding such
Distribution Date (each, a "Record
Date"). A "Business Day" is a day
other than a Saturday, a Sunday or
day on which banking institutions
or trust companies in the City of New
York or the city in which the
corporate trust office of the
Trustee is located are authorized
by law, regulation or executive order
to be closed.

B. Pass-Through Rates . . . . Interest will accrue on the Class
A
Certificates at the rate of
(Floating Rate)(%) per annum (the
"Class A Pass-Through Rate") and
on
the Class B Certificates at the
rate
of (Floating Rate)(%) per annum
(the
"Class B Pass-Through Rate"),
calculated on the basis of a 360-
day
year consisting of twelve 30-day
months.

C. Distributions . . . . . . Interest. On each Distribution
Date, the Trustee will distribute
interest (i) to holders of record
of
the Class A Certificates (the
"Class
A Certificateholders"), pro rata,
in
a maximum amount equal to the
Class
A Interest Distributable Amount
and
(ii) to holders of record of the
Class B Certificates (the "Class B
Certificateholders"), pro rata, in
a maximum amount equal to the
Class
B Interest Distributable Amount.

The "Class A Interest
Distributable
Amount" for each Distribution Date
will equal the sum of (A) 30 days'
interest at theClass A Pass-Through
Rate on the Class A Certificate
Balance on the previous
Distribution
Date (or, in the case of the first
Distribution Date, on the Closing
Date) after giving effect to all
distributions to
Certificateholders
on such date and (B) any accrued
and
unpaid interest due to Class A
Certificateholders from previous
Distribution Dates. The Class A
Interest Distributable Amount
generally will be payable to the
Class A Certificateholders on each
Distribution Date to the extent of
funds available therefor from, in
the following order of priority,
(i)
the Class A Percentage of the
Interest Distribution Amount (as
reduced by Servicing Fees paid to
the Servicer on such date), (ii)
funds, if any, available in the
Reserve Account and (iii) that
portion of the Total Distribution
Amount otherwise distributable on
such date to Class B
Certificateholders.

The "Class B Interest
Distributable
Amount" for each Distribution Date
will equal the sum of (A) 30 days'
interest at the Class B Pass-
Through
Rate on the Class B Certificate
Balance on the previous
Distribution
Date (or, in the case of the first
Distribution Date, on the Closing
Date) after giving effect to all
distributions to
Certificateholders
on such date and (B) any accrued
and
unpaid interest due to Class B
Certificateholders from previous
Distribution Dates. The Class B
Interest Distributable Amount
generally will be payable to the
Class B Certificateholders on each
Distribution Date to the extent of
funds available therefor from, in
the following order of priority,
(i)
the Class B Percentage of the
Interest Distribution Amount (as
reduced by Servicing Fees paid to
the Servicer and amounts
distributed
as interest to the Class A
Certificateholders on such date)
and
(ii) funds, if any, available in
the
Reserve Account on such date after
distribution to the Class A
Certificateholders of the Class A
Interest Distributable Amount.

The rights of the Class B
Certificateholders to receive
distributions of interest will be
subordinated to the rights of the
Class A Certificateholders to
receive interest to the extent
described herein. See
"Description
of the Certificates --
Distributions" and "--
Subordination
of the Class B Certificates;
Reserve
Account".

Principal. Principal of the Class
A Certificates will be payable on
each Distribution Date, pro rata to
the Class A Certificateholders, in
a maximum amount equal to the
Class
A Principal Distributable Amount for
such date. The "Class A Principal
Distributable Amount" for any
Distribution Date will equal the
sum of (i) the Class A Percentage of
the Principal Distribution Amount
for the related Collection Period
and (ii) any outstanding principal
amounts due but not distributed to
Class A Certificateholders on
previous Distribution Dates. The
Class A Principal Distributable
Amount generally will be payable to
Class A Certificateholders to the
extent of funds available therefor
from (i) the Class A Percentage of
the Principal Distribution Amount
(exclusive of the portion thereof
attributable to Realized Losses),
(ii) funds, if any, available in the
Reserve Account on such date after
payment of the Class A Interest
Distributable Amount and the Class
B Interest Distributable Amount
and (iii) the Total Distribution
Amount remaining after the payment
on such
date of the Class A Interest
Distributable Amount and Class B
Interest Distributable Amount.

Principal of the Class B
Certificates will be payable on
each
Distribution Date, pro rata to the
Class B Certificateholders, in a
maximum amount equal to the Class
B
Principal Distributable Amount for
such date. The "Class B Principal
Distributable Amount" for any
Distribution Date will equal the
sum
of (i) the Class B Percentage of
the
Principal Distribution Amount for
the related Collection Period and
(ii) any outstanding principal
amounts due but not distributed to
Class B Certificateholders on
previous Distribution Dates. The
Class B Principal Distributable
Amount generally will be payable
to
Class B Certificateholders on each
Distribution Date to the extent of
funds available therefor from, in
the following order of priority
(i)
any remaining portion of the Total
Distribution Amount and (ii)
funds,
if any, remaining in the Reserve
Account on such date after payment
of the Class A Interest
Distributable Amount, the Class A
Principal Distributable Amount and
the Class B Interest Distributable
Amount.

The "Collection Period" with
respect
to each Distribution Date will be
the calendar month immediately
preceding the month in which such
Distribution Date occurs (or, in
the
case of the first Distribution
Date,
the period from and including the
Initial Cutoff Date through and
including ,
199
).

The outstanding principal amount
of
the Class A Certificates and the
Class B Certificates, if any, will
be payable in full on the Final
Scheduled Distribution Date.

See "Description of the
Certificates
-- Distributions".

Credit Enhancement

A. The Security
Insurance Policy . . . . . Concurrently with the issuance of
the Class A Certificates, the
Security Insurer will issue the
Security Insurance Policy to the
Trustee pursuant to an insurance
agreement to be dated as of ,
199 (the "Insurance Agreement"),
among the Security Insurer, First
Merchants and the Depositor.
Under
the Security Insurance Policy, the
Security Insurer will
unconditionally and irrevocably
guarantee (i) the full, complete
and
timely payment to the Class A
Certificateholders of the Class A
Interest Distributable Amount and
the Class A Principal
Distributable
Amount due on each Distribution
Date
(the aggregate of such amounts
with
respect to each Distribution Date,
the "Guaranteed Distribution") and
(ii) the full and complete payment
of any portion of a Class A
Interest
Distributable Amount or Class A
Principal Distributable Amount
that
is distributed to Class A
Certificateholders and
subsequently
recovered from any such holder
pursuant to a final, nonappealable
order of a court of competent
jurisdiction under applicable
bankruptcy or insolvency laws.
See
"Security Insurance Policy"
herein.

B. Subordination of
the Class B
Certificates . . . . . . The rights of the Class B
Certificateholders to receive
distributions with respect to the
Receivables will be subordinated
to
the rights of the Class A
Certificateholders to the extent
described herein. This
subordination is intended to
enhance
the likelihood of timely receipt
by
the Class A Certificateholders of
the full amount of interest and
principal payable to them and to
afford the Class A
Certificateholders limited
protection against losses in
respect
of the Receivables.

No distribution of interest will
be
made to the Class B
Certificateholders on any
Distribution Date until the full
amount of interest payable on the
Class A Certificates on such
Distribution Date has been
distributed to the Class A
Certificateholders, and no
distribution of principal will be
made to the Class B
Certificateholders on any
Distribution Date until the full
amount of interest on and
principal
of the Class A Certificates
payable
on such Distribution Date has been
distributed to the Class A
Certificateholders. Distributions
of interest on the Class B
Certificates, to the extent of
collections on or in respect of
the
Receivables allocable to interest
and amounts, if any, available in
the Reserve Account, will not be
subordinated to distributions of
principal of the Class A
Certificates.

The protection afforded to the
Class
A Certificateholders by the
subordination feature described
above will be effected both by the
preferential right of the Class A
Certificateholders to receive, to
the extent described herein,
current
distributions from collections on
or
in respect of the Receivables and
by
the establishment on the Closing
Date of a segregated collateral
account held by and pledged to the
Trustee, as collateral agent, for
the benefit of the
Certificateholders (the "Reserve
Account"). The Reserve Account
will
not be a part of the Trust.

C. Reserve Account . . . . . . The Reserve Account will be funded
by the Depositor (i) on the
Closing
Date with a deposit of cash and/or
Eligible Investments having a
value
of approximately $
and (ii) on each
Subsequent Transfer Date by a
deposit of cash and/or Eligible
Investments having a value equal
to
% of the outstanding
principal amount of the Subsequent
Receivables conveyed to the Trust
on
such date (collectively, the
"Reserve Account Initial
Deposit").
In addition, any portion of the
Total Distribution Amount
remaining
in the Collection Account on each
Distribution Date after payment of
the Servicing Fee, Trustee Fee,
the
Class A Distributable Amount,
Security Insurer Fee and the Class
B Distributable Amount will be
transferred to the Reserve
Account.

On each Distribution Date, funds
will be withdrawn from the Reserve
Account for distribution, first,
to
Class A Certificateholders to the
extent of any shortfalls in the
Class A Interest Distributable
Amount, second, to Class B
Certificateholders to the extent
of
any shortfalls in the Class B
Interest Distributable Amount,
third, to Class A
Certificateholders
to the extent of any shortfalls in
the Class A Principal
Distributable
Amount and, fourth, to Class B
Certificateholders to the extent
of
any shortfalls in the Class B
Principal Distributable Amount.
On
each Distribution Date, after
giving
effect to all withdrawals from and
deposits to the Reserve Account on
such date, any amounts remaining
in
the Reserve Account in excess of
the
greater of (i) % of the
Pool Balance as of the close of
business on the last day of the
related Collection Period and (ii)
$ (the
"Specified Reserve Account
Balance")
will be distributed to the
Depositor, and upon such
distribution the
Certificateholders
will have no further rights in, or
claims to, such amounts.

See "Description of the
Certificates
-- Subordination of the Class B
Certificates; Reserve Account".

Optional Prepayment . . . . . . . If the Servicer exercises its
option
to purchase the Receivables, which
it may do after the aggregate
principal balance of the
Receivables
(the "Pool Balance") declines to
10%
or less of the Initial Pool
Balance,
the Class A Certificateholders
will
receive an amount equal to the
Class
A Certificate Balance together
with
accrued interest at the Class A
Pass-Through Rate, the Class B
Certificateholders will receive an
amount equal to the Class B
Certificate Balance together with
accrued interest at the Class B
Pass-Through Rate, and the
Certificates will be retired. The
"Initial Pool Balance" will equal
the sum of (i) the aggregate
principal amount of the Initial
Receivables as of the Initial
Cutoff
Date plus (ii) the aggregate
principal balances of all
Subsequent
Receivables added to the Trust as
of
their respective Subsequent Cutoff
Dates. See "Description of the
Certificates -- Optional
Prepayment"
herein.

Mandatory Prepayment . . . . . . The Certificates will be prepaid,
in
part, pro rata on the basis of
their
initial principal amounts, on the
Distribution Date on or
immediately
following the last day of the
Funding Period in the event that
any
amount remains on deposit in the
Pre-Funding Account after giving
effect to the purchase of all
Subsequent Receivables, including
any such purchase on such date.
The
aggregate principal amount of
Certificates to be prepaid will be
an amount equal to the amount
remaining on deposit in the
Pre-Funding Account. See "-- Pre-
Funding Account" in this Summary
of
Terms and "Risk Factors -- The
Pre-Funding Account" and "--
Conveyance
of Subsequent Receivables to the
Trust" herein and "Description of
the Transfer and Servicing
Agreements -- Sale and Assignment
of
Receivables" in the Prospectus.

Trust Accounts . . . . . . . . . The property of the Trust will
include all amounts on deposit
from
time to time in the Collection
Account and a security interest in
the Pre-Funding Account. See
"Description of the Transfer and
Servicing Agreements -- Accounts"
in the Prospectus.

The Depositor will maintain the
Reserve Account with the Trustee
as
a segregated trust account;
however,
the Reserve Account will not be
property of the Trust. See
"Description of the Certificates -
-
Subordination of the Class B
Certificates; Reserve Account" in
this Prospectus Supplement.

Pre-Funding Account . . . . . . During the period (the "Funding
Period") from and including the
Closing Date until the earliest to
occur of (a) the date on which the
amount on deposit in the Pre-
Funding
Account is equal to $100,000 or
less, (b) an Event of Default
under
the Pooling and Servicing
Agreement,
(c) certain events of insolvency
with respect to First Merchants or
(d) the
Distribution Date, the Pre-Funded
Amount will be maintained in a
separate collateral account (the
"Pre-Funding Account"), which will
be established by the Depositor on
the Closing Date pursuant to a
Security Agreement dated as of
, 199 (the "Security
Agreement"), between the Depositor
and the Trustee, as collateral
agent. Amounts on deposit in the
Pre-Funding Account will be
pledged
to the Trustee for the benefit of
the Certificateholders and will be
used to purchase Subsequent
Receivables from time to time
during
the Funding Period in accordance
with the Pooling and Servicing
Agreement and the Purchase
Agreement. See "Description of
the
Transfer and Servicing Agreements
--
Accounts" and "- Sale and
Assignment
of Receivables" in the Prospectus.

Funds on deposit in the Pre-
Funding
Account will be invested by the
Trustee, as collateral agent,
during
the Funding Period in Eligible
Investments, and any Investment
Income with respect to such

Eligible
Investments will be treated as
interest collections on the
Receivables and distributed on the
following Distribution Date. The
Certificates will be prepaid, in
part, pro rata on the basis of
their
initial principal amounts, on the
Distribution Date on or
immediately
following the last day of the
Funding Period in the event that
any
amount remains on deposit in the
Pre-Funding Account after giving
effect to the purchase of all
Subsequent Receivables, including
any such purchase on such date.
The aggregate principal amount of
Certificates to be prepaid will be
an amount equal to the amount then
on deposit in the Pre-Funding
Account. See "Risk Factors -- The
Pre-Funding Account" herein and
"Description of the Transfer and
Servicing Agreements -- Accounts"
and "- Sale and Assignment of
Receivables" in the Prospectus.

Backup Servicer . . . . . . . . . If a Servicer Termination Event
occurs under the Pooling and
Servicing Agreement, the rights
and
obligations of the Servicer may be
terminated by the Trustee or the
holders of Certificates evidencing
a majority of the aggregate
outstanding principal amount of
the
Certificates. If the rights and
obligations of the Servicer are so
terminated while First Merchants
is
the Servicer, or if First
Merchants
resigns as Servicer,
has agreed to act as successor
Servicer. The Backup Servicer
will
receive a portion of the Servicing
Fee for each Collection Period as
compensation for agreeing to stand
by as successor Servicer and for
performing certain other
functions.

Tax Status . . . . . . . . . . . In the opinion of Brown & Wood
LLP,
the Trust will be treated as a
grantor trust for federal income
tax
purposes and will not be subject
to federal income tax. Owners of
beneficial interests in the
Certificates will report their pro
rata share of all income earned on
the Receivables (other than
amounts, if any, treated as "stripped
coupons") and, subject to certain
limitations in the case of such
owners who are individuals, trusts
or estates, may deduct their pro
rata share of reasonable servicing
and other fees.

See "Certain Federal Income Tax
Consequences" in the Prospectus
for
additional information concerning
the application of federal income
tax laws to the Trust and the
Certificates. Persons considering
a purchase of Class B Certificates
should also consider and discuss
with their tax advisors the
information set forth in the
Prospectus under "Certain Federal
Income Tax Consequences -- Grantor
Trusts -- Subordinated
Certificates".

ERISA Considerations . . . . . . During the Funding Period, not
more
than 24.9% of the Class A
Certificates may be held by
"employee benefit plans" as
defined
in Section 3 of the Employee
Retirement Income Security Act of
1974, as amended ("ERISA"). After
the termination of the Funding
Period and subject to the
considerations discussed under
"ERISA Considerations" herein and
in the Prospectus, the Class A
Certificates will be eligible for
purchase by employee benefit plans
subject to ERISA.

Because the Class B Certificates
are subordinated to the Class A
Certificates, employee benefit
plans
subject to ERISA will not be
eligible to purchase Class B
Certificates.

Any benefit plan fiduciary
considering a purchase of
Certificates should, among other
things, consult with experienced
legal counsel in determining
whether
all required conditions for such
purchase have been satisfied. See
"ERISA Considerations" herein and
in the Prospectus.

Ratings of the Certificates . . It is a condition to the issuance
of
the Certificates that the Class A
Certificates be rated at least
by (the
"Rating Agencies") and that the
Class B Certificates be rated at
least by .

The ratings of the Class A
Certificates will be based
primarily
on the issuance of the policy by
the
Security Insurer, the credit
quality
of the Receivables, the
subordination of the Class B
Certificates and the availability
of
the Reserve Account. The ratings
of
the Class B Certificates will be
based primarily on the credit
quality of the Receivables and the
availability of the Reserve
Account.

A rating is not a recommendation
to
purchase, hold or sell the
Certificates, inasmuch as such
rating does not comment as to
market
price or suitability for a
particular investor. The ratings
address the likelihood that
principal of and interest on the
Certificates will be paid pursuant
to their terms. There can be no
assurance that a rating will not
be
lowered or withdrawn by a rating
agency if circumstances so
warrant.
See "Risk Factors -- Ratings of
the
Certificates" herein.

RISK FACTORS

In addition to the other information contained in this Prospectus
Supplement and the Prospectus, prospective investors should carefully
consider the following risk factors before investing in the Certificates.

Limited Liquidity. There is currently no secondary market for the Class
A Certificates or the Class B Certificates. The Underwriter currently
intends to make a market in the Class A Certificates and the Class B
Certificates, but is under no obligation to do so. There can be no assurance
that a secondary market will develop or, if a secondary market does develop,
that it will provide Certificateholders with liquidity of investment or that
it will continue for the life of the Certificates.

The Pre-Funding Account. On the Closing Date, the Trustee will deposit
the Pre-Funded Amount into the Pre-Funding Account. The Pre-Funding Account
will be established in the name of the Trustee as collateral agent and all
amounts deposited thereto will be pledged to the Trustee for the benefit of
the Certificateholders. The Pre-Funded Amount will be used only to purchase
Subsequent Receivables, and prior to withdrawal from the Pre-Funding Account
as payment for the Subsequent Receivables, funds on deposit in the Pre-
Funding Account will be invested in Eligible Investments. Any Investment
Income from the investment of the Pre-Funded Amount in Eligible Investments
will be included in the Interest Distribution Amount and distributed on the
following Distribution Date pursuant to payment priorities described in this
Prospectus Supplement.

To the extent that amounts on deposit in the Pre-Funding Account have
not been fully applied to the purchase of Subsequent Receivables by the end
of the Funding Period, the Certificateholders will receive, on the
Distribution Date on or immediately following the last day of the Funding
Period, a prepayment of principal in an amount equal to the Pre-Funded Amount
remaining in the Pre-Funding Account following the purchase of any Subsequent
Receivables on such Distribution Date. It is anticipated that the principal
amount of the Subsequent Receivables sold to the Trust will not be exactly
equal to the amount on deposit in the Pre-Funding Account and, therefore,
that there will be at least a nominal amount of principal prepaid to the
Certificateholders. See "Description of the Certificates -- Mandatory
Prepayment".

Conveyance of Subsequent Receivables to the Trust. On the Closing Date,
the Depositor will transfer Initial Receivables to the Trust having an
aggregate principal balance of $ , which Initial
Receivables the Trust will purchase from the Depositor in exchange for the
Certificates. The Depositor will pledge $
, i.e., the Certificate proceeds in excess of the aggregate principal
balance of the Initial Receivables (representing the Pre-Funded Amount)
pursuant to the Security Agreement in favor of the Trust, and such amount
will be deposited into the Pre-Funding Account. The Pre-Funded Amount will
be used during the Funding Period to purchase Subsequent Receivables from
First Merchants. If the principal amount of eligible Receivables originated
or acquired by First Merchants prior to the termination of the Funding Period
is less than the Pre-Funded Amount, First Merchants will have insufficient
Receivables to sell to the Trust, thereby resulting in a prepayment of
principal to the Certificateholders as described above. In addition, any
conveyance of Subsequent Receivables by First Merchants to the Trust will be
subject to the satisfaction, on or before the applicable Subsequent
Transfer Date, of the following conditions, among others: (i) each such
Subsequent Receivable must satisfy the eligibility criteria specified in the
Pooling and Servicing Agreement; (ii) First Merchants shall not have selected
such Subsequent Receivable in a manner that it believes is adverse to the
interests of the Certificateholders; (iii) as of the related Subsequent
Cutoff Date, the Receivables in the Trust, including the Subsequent
Receivables to be conveyed to the Trust on such date, must satisfy the
parameters described under "The Receivables Pool" herein and under "The
Receivables Pools" in the Prospectus; (iv) the applicable Reserve Account
Initial Deposit for such Subsequent Transfer Date shall have been made; (v)
First Merchants shall have executed and delivered to the Trustee, a written
assignment conveying such Subsequent Receivables to the Trust, respectively
(including a schedule identifying such Subsequent Receivables); (vi) the
Depositor shall have delivered certain opinions of counsel to the Trustee and
the Rating Agencies with respect to the validity of the conveyance of the
Subsequent Receivables to the Trust; (vii) the Trustee shall have received
written confirmation from a firm of certified public accountants that the
Receivables, including such Subsequent Receivables, meet the criteria
described herein under "The Receivables Pool" and in the Prospectus under
"The Receivables Pools"; and (viii) the Rating Agencies shall have notified
the Depositor in writing that, following the conveyance of all the Subsequent
Receivables to the Trust, the Certificates will continue to be rated by the
Rating Agencies in the same rating categories in which they were rated on the
Closing Date. Such confirmation of the ratings of the Certificates may
depend on factors other than the characteristics of the Subsequent
Receivables, including the delinquency, repossession and net loss experience
on the automobile, van and light duty truck receivables in the portfolio
serviced by the Servicer.

First Merchants is obligated under the Pooling and Servicing Agreement
to repurchase any Subsequent Receivable that fails to satisfy the conditions
listed in the preceding paragraph at a purchase price equal to the Repurchase
Amount therefor.

Each Subsequent Receivable, at the time it is conveyed to the Trust,
must satisfy the eligibility criteria specified in the Pooling and Servicing
Agreement. However, Subsequent Receivables may have been originated or
acquired by First Merchants after the Closing Date using credit criteria
different from those that were applied to the Initial Receivables and may be
of a different credit quality and seasoning. Therefore, following the
transfer of Subsequent Receivables to the Trust, the characteristics of the
entire Receivables Pool included in the Trust may vary significantly from
those of the Initial Receivables. See "The Receivables Pool" herein and
"Description of the Transfer and Servicing Agreements -- Sale and Assignment
of Receivables" and "The Receivables Pools" in the Prospectus.

Subordination. On each Distribution Date, distributions of interest on
the Class B Certificates will be subordinated to distributions of interest
on the Class A Certificates, and distributions of principal of the Class B
Certificates will be subordinated to distributions of interest and principal
due on the Class A Certificates. Consequently, the Class B
Certificateholders will not receive any distributions of interest on a
Distribution Date until the full amount of interest payable on the Class A
Certificates on such Distribution Date has been distributed to the Class A
Certificateholders, and Class B Certificateholders will not receive any
distributions of principal on a Distribution Date until the
full amount of interest on and principal of the Class A Certificates payable
on such Distribution Date has been distributed to the Class A
Certificateholders.

Limited Assets of the Trust. The Trust will not have, nor is it
permitted or expected to have, any significant assets or sources of funds
other than the Receivables, its security interest in the Pre-Funding Account
and certain rights with respect to the Reserve Account, and
Certificateholders generally must rely on payments on the Receivables for
distributions of interest and principal on the Certificates. The Pre-Funding
Account will be available only during the Funding Period and is designed
solely to cover obligations of the Trust relating to funds not invested in
Receivables on the Closing Date and is not designed to cover losses on the
Receivables. Similarly, although funds in the Reserve Account will be
available on each Distribution Date to cover shortfalls in distributions of
interest and principal on the Certificates, amounts to be deposited in the
Reserve Account are limited in amount. If the Reserve Account is exhausted,
the Trust will depend solely on current distributions on the Receivables to
make distributions on the Certificates.

Limited Obligations of the Depositor. The Certificates are obligations
of the Trust only, and the Depositor is not obligated to make any payments
on the Certificates.

Ratings of the Certificates. It is a condition to the issuance of the
Certificates that the Class A Certificates be rated at least or its
equivalent by , and the Class B Certificates be rated
at least or its equivalent by . A
rating is not a recommendation to purchase, hold or sell the Certificates,
inasmuch as a rating does not comment as to market price or suitability for
a particular investor. The ratings of the Certificates address the
likelihood that principal of and interest on the Certificates will be paid
pursuant to their terms. There can be no assurance that a rating will remain
for any given period of time or that a rating will not be lowered or
withdrawn entirely by a Rating Agency if in its judgment circumstances in the
future so warrant. In the event that a rating is subsequently lowered or
withdrawn, no person or entity will be required to provide any additional
credit enhancement.

The ratings of the Class A Certificates will be based primarily on the
issuance of the Security Insurance Policy and the rating of the Security
Insurer. If a Security Insurer Default should occur, the ratings on the
Class A Certificates might be lowered or withdrawn entirely. If any rating
initially assigned to the Class A Certificates is subsequently lowered or
withdrawn for any reason, including by reason of a downgrading of the
Security Insurer's claims-paying ability, no person or entity will be
obligated to provide any additional credit enhancement with respect to the
Class A Certificates. Any reduction or withdrawal of a rating might have an
adverse effect on the liquidity and market price of the Class A Certificates.

FIRST MERCHANTS' AUTOMOBILE FINANCING PROGRAM

GENERAL

First Merchants is a specialty finance company primarily engaged in
financing the purchase of used automobiles by acquiring dealer-originated
finance contracts. Since First Merchants' incorporation in March 1991, it
has targeted its marketing efforts on dealers that sell automobiles to
consumers who have limited access to traditional sources of credit ("non-
prime" borrowers). First Merchants serves two customers, the dealer and,
indirectly, the dealer's customer, the "non-prime" borrower. As of June 30,
1996, First Merchants operated dealer service centers ("Dealer Service
Centers") servicing Dealers in 35 states. First Merchants' total finance
contract portfolio (net finance receivables, including receivables sold or
held-for-sale, before deducting the allowance for credit losses and reserves
attributable to Contracts sold or held for sale) increased to $479 million
at June 30, 1996 from $284 million at December 31, 1995 and $94 million at
December 31, 1994, while maintaining net charge-offs as a percentage of
average net finance receivables of under 6.0%.

The automobile dealer business is highly fragmented and includes
businesses selling principally new automobiles, but also operating a used
automobile business, that are franchised by an automobile manufacturer
("franchised dealers") and businesses selling exclusively used automobiles
that are not affiliated with an automobile manufacturer ("independent
dealers"). During 1996, approximately 80% (by aggregate principal balance)
of the finance contracts purchased by First Merchants are originated by
franchised dealers and the remainder are originated by independent dealers.

THE INDUSTRY

At December 31, 1995 there were approximately 22,750 franchised dealers
and approximately 63,750 independent dealers. According to industry data,
the used automobile finance market grew from approximately $141 billion in
1987 to approximately $281 billion in 1995. The automobile finance market
that provides financing to "non-prime" borrowers is highly fragmented and
primarily served by small and locally oriented companies. Many large
financial service entities, such as commercial banks, credit unions, savings
and loans and financing arms of automobile manufacturers do not solicit
business in this segment of the market. First Merchants also believes that
increased regulatory oversight and capital requirements imposed by
governmental agencies have limited the activities of many commercial banks
and savings and loans in the automobile finance market. In many cases, those
organizations electing to remain in the automobile finance business have
migrated toward higher credit quality customers to allow reductions in their
overhead cost structures and to maintain higher levels of credit quality.

First Merchants believes that demographic and economic trends favor
increased growth in the non-prime segment of the automobile finance industry.
Currently, the average American family must spend a significantly higher
percentage of its income to purchase an automobile than it did several years
ago. According to industry data, the average price of a new automobile in
1994 represented approximately 59.3% of the U.S. median family income for
that year, an increase from approximately 51.5% in 1986. This increase,
combined with increases in the average useful life of automobiles and the
number of late-model used automobiles available for sale (including rental
car and cars that were formerly leased), have led industry analysts to
believe that the market for retail sales of used automobiles will continue
to expand.

BUSINESS STRATEGY

First Merchants' business strategy is to focus its resources on dealers
that sell automobiles to "non-prime" borrowers. The key elements of First
Merchants' business strategy are as follows:

Providing Superior Service to Quality Dealers. By providing prompt,
flexible service and a reliable source of financing for "non-prime"
borrowers, First Merchants helps to expand the dealers' customer base,
thereby increasing the efficiency and effectiveness of their used car sales
operations. First Merchants believes that its guidelines and procedures
allow it to respond quickly to the dealers. First Merchants typically
responds to credit applications on the date received, in many cases within
2 to 3 hours, and generally pays the dealer within 24 hours after First
Merchants has received required documentation from the dealer. Management
believes that because of its prompt and reliable response time and geographic
proximity to dealers, many dealers conduct business with First Merchants.
As of June 30, 1996, First Merchants serviced approximately 3,000 dealers,
with no single dealer accounting for more than 2% of First Merchants' finance
contract portfolio. Using a hub and spoke strategy, First Merchants solicits
business from automobile dealers through the business development efforts of
its sales force and Dealer Service Centers. First Merchants evaluates each
dealer with which it establishes a financing relationship to endeavor to
ensure that First Merchants purchases finance contracts from only reputable
automobile dealers carrying an inventory of high quality used automobiles.
First Merchants evaluates historical financial information on prospective
dealers to determine the financial viability of each dealer and assesses the
length of service and reputation of prospective dealers through the local
Better Business Bureau and state regulatory authorities. Each dealer with
which First Merchants establishes a financing relationship enters into a non-
exclusive written dealer agreement (a "Dealer Agreement") with First
Merchants governing First Merchants' finance contract purchases from the
dealer. First Merchants periodically reviews each dealer's financial
information and inspects its physical premises and automobile inventory to
determine whether such dealer appears to be operating its business
satisfactorily and maintaining consistently high quality inventory. First
Merchants' management information systems track the monthly performance of
borrowers' accounts by dealer, allowing First Merchants to review and
evaluate the quality of finance contracts purchased from each dealer.

Attracting and Retaining Experienced Management Personnel. First
Merchants actively recruits experienced management personnel at the
executive, supervisory and managerial levels. First Merchants believes that
the hiring and retention of such experienced management personnel is
important in maintaining credit quality, supervising its operations and
formulating and implementing its growth strategy. The executive officers of
First Merchants have an average of over 15 years of experience in the
financial services industry. In addition, First Merchants' Directors of
Operations and Directors of Account Services, and the managers of its Dealer
Service Centers and Account Service Centers have an average of over 15 years
of experience in the consumer or automobile finance industries. In addition
to recruiting experienced management personnel, First Merchants places an
emphasis on retaining such personnel through professional development
programs, competitive compensation and equity incentives.

Efficient Operational Structure. First Merchants' operational
structure is designed to maximize dealer service and finance contract
originations, thereby directly contributing to the growth of First Merchants'
finance contract portfolio. First Merchants' sales, credit and collection
functions are organized as follows: (i) a national sales force dedicated to
developing new dealer relationships and expanding the geographic scope of
Dealer Service Centers; (ii) local Dealer Service Centers, which coordinate
with the sales force to build and nurture dealer relationships through a
local market presence, underwrite and process credit applications and
disburse funds to dealers; (iii) "Account Service Centers", which perform all
account servicing functions such as finance contract verification, payment
processing, delinquency follow-ups and cost-effective recovery of charged-off
account balances; and (iv) the Asset Disposition Group ("ADG"), which
arranges the disposition of repossessed collateral.

First Merchants establishes Dealer Service Centers in locations that
allow First Merchants personnel to provide personalized service to dealers,
while covering a wide geographical area. By utilizing a hub and spoke
strategy, First Merchants through either its Dealer Service Center managers
or its sales professionals meet individually with local dealers to negotiate
dealer agreements, quickly resolve problems as they develop and respond to
the competitive conditions of a particular market. Management believes that
this structure significantly enhances First Merchants' operations and
competitive advantage.

Each Dealer Service Center functions independently of the other centers
and is operated by a full-time Dealer Service Center manager who reports to
a Director of Operations. The Account Service Centers are primarily
responsible for collections, including recoveries of charged-off account
balances, and payment processing. Each Account Service Center is operated
by a Director of Account Services. The ADG arranges the disposition of
repossessed collateral and is under the responsibility of a Director of Asset
Disposition. First Merchants' nine Directors of Operations are responsible
for reviewing compliance with First Merchants' guidelines and procedures and
conducting periodic on-site reviews of First Merchants' Dealer Service
Centers. In addition, Directors of Operations provide day-to-day guidance
to Dealer Service Center managers in making credit decisions. The Directors
of Operations report directly to the Vice-President -- Operations. The
Directors of Account Services and the Director of Asset Disposition report
to the Vice-President -- Account Services.

Utilizing Uniform Guidelines and Procedures for Credit Evaluation. To
mitigate the higher risks often associated with "non-prime" borrowers, First
Merchants has developed uniform guidelines and procedures for evaluating
credit applications in connection with the purchase of automobile finance
contracts from dealers. First Merchants' guidelines and procedures relate
to such matters as the borrower's stability of residence, employment history,
credit history, capacity to pay, income, discretionary income, debt ratio,
and credit bureau score, as well as the value of the collateral. First
Merchants has also developed a credit scoring system with a leading credit
evaluating company that is used as an additional objective guideline for
evaluating a "non-prime" borrower's creditworthiness. In addition, First
Merchants has assigned each Dealer Service Center manager a maximum credit
authority per finance contract based on various factors, including such
manager's experience level. Within the guidelines and procedures established
by First Merchants, each Dealer Service Center manager is authorized to
approve or reject credit applications and to
supplement objective credit criteria with subjective judgment and knowledge
of local conditions in making credit decisions. If the proposed financing
amount exceeds the Dealer Service Center manager's maximum credit authority
or does not meet First Merchants' guidelines, the Dealer Service Center
manager must obtain the approval of a Director of Operations.

First Merchants has a risk based pricing system of interest rates
representing the varying degrees of risk assigned to different ranges of
credit risks.

Proactive Collection Management. First Merchants pursues a policy of
proactive collection management through its Account Service Centers with
respect to both current and delinquent accounts, including activities related
to monthly billing and collections, borrower inquiries and repossessions.
Previously these responsibilities were performed solely at the Dealer Service
Centers. In order to allow Dealer Service Centers to operate more
efficiently, First Merchants operates two Account Service Centers to perform
these tasks. These Account Service Centers service the Dealer Service
Centers. Shortly after First Merchants purchases a finance contract,
personnel at an Account Service Center typically contact the borrower by
telephone to verify the terms of the sale. First Merchants also sends the
borrower a letter which describes the procedures and schedules for repaying
the finance contract and explains First Merchants' delinquency and
repossession policies. The Company utilizes predictive dialing technology
to complement its calling efforts. Any finance contract for which a payment
is one day overdue is treated as a past due account for collection purposes,
and First Merchants typically contacts a borrower within two days after such
borrower's account becomes past due. First Merchants typically commences
repossession procedures before an account is more than two payments past due.

Management believes that proactive collection management is critical in
maintaining a low level of delinquencies and charge-offs.

Monitoring and Supervising the Operational Structure. First Merchants
has instituted the following three independent control functions that monitor
and review the operations of First Merchants and report their findings to
senior management: (i) Risk Management, which analyzes trends in the finance
contract portfolio and performs daily analyses of new finance contracts
purchased by First Merchants to ensure that such finance contracts meet First
Merchants' credit guidelines and were purchased in compliance with First
Merchants' operational procedures; (ii) Internal Audit, which performs on-
site audits of each Dealer Service Center and Account Service Center at least
annually to ensure compliance with First Merchants' guidelines and procedures
and maintenance of First Merchants' credit quality standards; and
(iii) Directors of Operations, who typically visit and review the operations
of each Dealer Service Center throughout the year in order to evaluate
compliance with First Merchants' policies and procedures, measure the
effectiveness of business development efforts, and review general portfolio
credit and performance quality and office profitability. Each control
function actively utilizes First Merchants' management information system,
which provides real time, on-line reports on a daily basis and which contains
operational information from each of First Merchants' Dealer Service Centers,
Account Service Centers and the ADG. These functions complement the daily
reviews of the volume of finance contracts purchased, aging of accounts,
repossession activities, and other operating data conducted by all levels of
management. See "First Merchants' Automobile Financing Program -- Management
Information Systems".

CREDIT LOSS EXPERIENCE

The following table summarizes data relating to First Merchants' charge-
off experience and includes Receivables sold or held for sale. The charge-
off experience includes estimated losses to be incurred upon the sale of
repossessed collateral. An account is charged-off at the earliest of the
time the account's collateral is repossessed, the account is 91 days or more
past due or the account is otherwise deemed to be uncollectible.

<TABLE>
<CAPTION>
Six Months Ended
June 30, Year Ended December 31,
---------------- ------------------------------
1996 1995 1995 1994 1993
------ ----- ------- ------- -------
(Dollars in thousands)
<s) <C> <C> <C> <C> <C>
Average finance
receivables serviced.....$384,497 $128,000 $171,737 $62,898 $22,005
Net charge-offs
serviced............... 11,204 3,051 8,969 2,820 1,016
Net charge-offs as a
percentage of average
net finance receivables
serviced - twelve
months preceding the
date set forth above 5.7% 4.7% 5.2% 4.5% 4.6%
</TABLE>
___________________

DELINQUENCY EXPERIENCE

A payment is considered past due if the borrower fails to make any full
payment on or before the due date as specified by the terms of the finance
contract. First Merchants typically contacts borrowers whose payments are not
received by the due date within two days after such due date.
For a discussion of First Merchants' delinquency control and collection
strategy, see "First Merchants' Automobile Financing Program -- Delinquency
Control and Collection".

The following table summarizes First Merchants' delinquency
experience for accounts with payments 31 days or more past due on
both a number and dollar basis for its finance contract portfolio
and includes Receivables sold or held for sale as of June 30, 1996
and December 31, 1995, 1994 and 1993. The delinquency experience data
excludes contracts where the collateral has been repossessed.

<TABLE>
<CAPTION> As of June 30, As of December 31,
1996 1995 1994 1993
------------------ ------------------ ------------------- -------------------
Number of Number of Number of Number of
DOLLARS Contracts Dollars Contracts Dollars Contracts Dollars Contracts
------- --------- ------- --------- ------- --------- ------- ---------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net finance receivables
serviced . . . . . . . . $479,243 49,287 $284,173 31,082 $94,090 12,670 $33,563 6,194
Past due accounts:
31 - 60 days . . . . . . 11,171 1,253 5,163 595 446 85 178 42
61 days or more . . . . . 4,323 494 2,021 251 177 29 24 7
------- ------ ------- ----- ------ ------ ------- -----
Total . . . . . $15,494 1,747 $7,184 846 $623 144 $ 202 49
======= ====== ======= ===== ====== ====== ======= =====

Accounts with payments 31
days or more past due as
a percentage of net
finance receivables and
number of contracts 3.2% 3.5% 2.5% 2.7% 0.7% 0.9% 0.6% 0.8%
====== ====== ======= ====== ====== ======= ======= =====

</TABLE>
________________________

REPOSSESSED COLLATERAL

First Merchants commences repossession procedures against the underlying
collateral when it determines that collection efforts are likely to be
unsuccessful. Repossession generally occurs before a borrower has missed
more than two consecutive monthly payments. In such cases, the net amount
due under the finance contract is reduced to the estimated fair value of the
collateral, less the cost of disposition. Repossessed collateral included
786, 505, 150 and 69 automobiles at June 30, 1996, December 31, 1995,
December 31, 1994 and December 31, 1993, respectively.

CONTRACT ACQUISITION PROCESS

The following is a summary of the process that First Merchants typically
follows in connection with its acquisition of an automobile finance contract.

Dealer Relations. Each dealer with which First Merchants establishes
a financing relationship enters into a non-exclusive written Dealer Agreement
with First Merchants, which governs First Merchants' finance contract
purchases from the dealer. A Dealer Agreement generally provides that the
dealer shall indemnify First Merchants against any damages or liabilities,
including reasonable attorneys' fees, arising out of (i) any breach of a
representation or warranty of the dealer set forth in the Dealer Agreement
or (ii) any claim or defense that a borrower may have against a dealer
relating to a finance contract. Representations and warranties in a Dealer
Agreement generally relate to such
matters as whether (i) the financed automobile is free of all liens, claims
and encumbrances except First Merchants' lien, (ii) the down payment
specified in the finance contract has been paid in full and no part of the
down payment was loaned to the borrower by the dealer and (iii) the dealer
has complied with applicable law. If the dealer violates the terms of the
Dealer Agreement with respect to any finance contract, the dealer must
repurchase such contract on demand for the unpaid balance and all other
indebtedness due to First Merchants from the borrower.

Credit Evaluation Procedures. If a "non-prime" borrower elects to
finance the purchase of an automobile through a dealer, the dealer will
submit the borrower's credit application to First Merchants for review of the
borrower's creditworthiness and the proposed transaction terms. Dealer
Service Center personnel conduct such review in accordance with First
Merchants' guidelines and procedures, which generally take into account,
among other things, the individual's stability of residence, employment
history, credit history, ability to pay, income, discretionary income, debt
ratio, and credit bureau score, as well as the value of the collateral. In
addition, Dealer Service Center personnel evaluate a credit bureau report in
order to determine if (i) the individual's credit quality is deteriorating,
(ii) the individual's credit history suggests a high probability of default
or (iii) the individual's credit experience is too limited for First
Merchants to assess the probability of performance. First Merchants has also
developed a credit scoring system with a leading credit evaluation company
that is used as an additional objective guideline for evaluating a "non-
prime" borrower's creditworthiness. Dealer Service Center personnel may also
require verification of certain applicant or dealer provided information
prior to making the credit decision. Such verification typically requires
submission of supporting documentation, such as a paycheck stub or other
substantiation of income, and is performed solely by First Merchants'
personnel. First Merchants has assigned each Dealer Service Center manager
a maximum credit authority per finance contract based on various factors,
including such manager's experience level. Within the guidelines and
procedures established by First Merchants, each Dealer Service Center manager
is authorized to approve or reject credit applications within such manager's
maximum credit authority and to supplement objective credit criteria with
subjective judgment and knowledge of local conditions in making credit
decisions. If the proposed financing exceeds the Dealer Service Center
manager's maximum credit authority or does not meet First Merchants'
guidelines, the Dealer Service Center manager must also obtain the approval
of a Director of Operations.

After reviewing the credit application and the terms of the sale, the
Dealer Service Center notifies the dealer whether or not First Merchants
would be willing to purchase the finance contract upon sale of the automobile
to the applicant. First Merchants typically responds to submitted dealer
applications on the date received, in many cases within 2 to 3 hours. First
Merchants is selective in its approval process. First Merchants historically
has approved approximately 25% of all submitted credit applications, and
approximately 52% of those approved finance contracts have been purchased by
First Merchants. The difference between the number of applications approved
and the number of finance contracts entered into is due primarily to industry
practice whereby the dealer typically submits the credit application to more
than one finance company and then selects the finance company that is willing
to provide the most favorable terms. In cases where First Merchants is
unwilling to purchase a finance contract from a dealer under the proposed
terms but believes the applicant has
the capacity to meet other repayment obligations, the Dealer Service Center
personnel will work with the dealer to restructure the terms of the financing
or suggest the sale of an alternative automobile with a price more suited to
the applicant's financial means.

Approval Process. When First Merchants approves the purchase of a
finance contract, the Dealer Service Center notifies the dealer by facsimile
or telephone. Such notice specifies all pertinent information relating to
the terms of the approval, including the interest rate, the term, information
about the automobile to be sold, a list of ancillary products purchased by
the borrower and the amount of discount that First Merchants will take from
the principal amount of the finance contract. Generally, a borrower is
required to make a down payment of at least 10% of the purchase price. First
Merchants' guidelines and procedures require that the advance to the dealers
on the underlying collateral cannot exceed 110% of the wholesale value.
Generally, advances to dealers have not exceeded 100% of the automobile's
wholesale value.

Contract Purchase. Upon final confirmation of the terms by the
borrower, the dealer completes the sale of the automobile to the borrower.
After the dealer delivers all required documentation to First Merchants,
First Merchants remits funds to the dealer, generally within 24 hours. Upon
purchase of the finance contract, First Merchants acquires a perfected
security interest in the financed automobile. Each finance contract requires
that the automobile be properly insured and that First Merchants be named as
a loss payee, and compliance with these requirements is verified prior to the
remittance of funds to the dealer. Additionally, First Merchants maintains
a blanket insurance policy covering physical property damages in the event
that the borrower does not maintain insurance.

CONTRACT SERVICING AND ADMINISTRATION

First Merchants' contract servicing and administration activities have
been specifically tailored to the unique challenges of servicing finance
contracts of the "non-prime" borrower. Each Account Service Center
(i) collects payments, (ii) accounts for and posts all payments received,
(iii) responds to borrower inquiries, (iv) takes all necessary action to
maintain the security interest granted in the financed automobile,
(v) investigates delinquencies and communicates with the borrower to obtain
timely payments and (vi) monitors the finance contract and its related
collateral. When necessary, the ADG contracts with third parties to
repossess and dispose of the financed automobile.

First Merchants' activities incorporate proactive procedures and
systems. For example, First Merchants has established a process through
which it attempts to educate borrowers, both in writing and by telephone,
upon First Merchants' purchase of their finance contracts. This process is
designed to ensure that borrowers clearly understand their obligations and
includes a review of the terms of the finance contract with particular
emphasis on the amount and due date of each payment obligation, First
Merchants' expectations as to the timely receipt of payments and maintenance
of insurance coverage and First Merchants' delinquency and repossession
policies.

First Merchants utilizes a monthly billing statement system (rather than
payment coupon books) to remind borrowers of their monthly payment
obligations. This system also serves as an early warning mechanism in the
event that a
borrower has failed to notify First Merchants of an address change. First
Merchants typically contacts borrowers whose payments are not received by the
due date earlier than it believes is customary in the industry, commencing
within one to two days after a borrower's due date and continuing until
payment has been received. First Merchants believes that early and frequent
contact with the borrower reinforces the borrower's recognition of his or her
obligation and First Merchants' expectation of timely payment.

DELINQUENCY CONTROL AND COLLECTION

Personnel at each Account Service Center review accounts that are past
due to assess collection efforts to date and to define the appropriate
collection strategy, if appropriate. Each Account Service Center designs a
collection strategy that includes a specific deadline before which each
delinquent obligation should be collected. Accounts that have not been
collected during such period are again reviewed and, unless there are
specific circumstances which warrant further collection efforts, such
accounts are assigned to an outside agency for repossession. Repossessed
automobiles are generally resold through wholesale auctions. The elapsed
time between repossession and resale is generally 30 to 45 days, including
passage of the period during which the law of the applicable jurisdiction
permits the borrower to redeem the automobile. Since its inception, First
Merchants has, on average, recovered approximately 52% of the principal
amount of the finance contracts relating to its repossessed automobiles.
Typically, after repossession, the borrower will be pursued by recovery
specialists based in the Account Service Centers for any deficiency, subject
to applicable legal limitations.

MANAGEMENT INFORMATION SYSTEMS

Management believes that a high level of information flow and analysis
is essential to control First Merchants' decentralized organizational
structure and to maintain First Merchants' competitive position. First
Merchants has contracted with a third party, Norwest Financial Information
Services Group ("Norwest"), to provide data processing for First Merchants'
portfolio of finance contracts. Norwest provides on-line, real-time
information processing services with terminals located in each of First
Merchants' offices that are connected to Norwest's main computer center in
Des Moines, Iowa. This system allows for the complete processing of First
Merchants' finance contracts, including application processing, the retrieval
of credit bureau reports and the processing of finance contract purchases,
payments to dealers, payment posting and all other credit and collection
monitoring activity. In addition, each Dealer Service Center and Account
Service Center has the ability to create its own specialized daily
informational reports, such as automatic retrieval of delinquency and
collection work lists.

By utilizing third party processing, management believes that it can
focus on the performance of First Merchants' Dealer Service Centers, Account
Service Centers and ADG. Management uses the Norwest system to track and
monitor Dealer Service Center activity on a real-time basis, allowing senior
management, Directors of Operations, Directors of Account Services, Directors
of the ADG and Dealer Service Center managers to retrieve information for
tracking and analysis. In addition, management uses customized reports,
along with a download of information to databases maintained on personal
computers, to analyze First Merchants' portfolio on a monthly basis.

WEIGHTED AVERAGE LIFE OF THE SECURITIES

Information regarding certain maturity and prepayment considerations
with respect to the Securities is set forth under "Weighted Average Life of
the Securities" in the Prospectus. As the rate of payment of principal of
each class of Certificates depends on the rate of payment (including
prepayments) of the principal balance of the Receivables, final payment of
the Class A Certificates or the Class B Certificates could occur
significantly earlier than the Class A Final Scheduled Distribution Date or
the Class B Final Scheduled Distribution Date, as applicable.
Securityholders will bear the risk of being able to reinvest principal
payments on the Securities at yields at least equal to the yield on their
respective Securities.

THE TRUST

GENERAL

The Depositor will establish the Trust by selling and assigning the
Trust property, as described below, to the Trustee in exchange for the
Certificates. The Servicer will service the Receivables pursuant to the
Pooling and Servicing Agreement and will be compensated for acting as the
Servicer. See "Description of the Transfer and Servicing Agreements --
Servicing Compensation and Payment of Expenses" in the Prospectus. To
facilitate servicing and to minimize administrative burden and expense, the
Servicer will be appointed custodian of the Receivables and the related
documents by the Trustee, but will not stamp the Receivables or amend the
certificates of title of the Financed Vehicles to reflect the sale and
assignment of the Receivables by First Merchants to the Depositor or by the
Depositor to the Trust. In the absence of amendments to the certificates of
title, the Trustee may not have perfected security interests in the Financed
Vehicles securing the Receivables in some states. See "Certain Legal Aspects
of the Receivables" in the Prospectus.

If the protection provided to Certificateholders by the Reserve Account
and, in the case of the Class A Certificateholders, the subordination of the
Class B Certificates is insufficient, if a security Insurer Default exists,
the Trust will look only to the Obligors on the Receivables and the proceeds
from the repossession and sale of Financed Vehicles that secure defaulted
Receivables to fund distributions of principal and interest on the
Certificates. In such event, certain factors, such as the Trust's not having
first priority perfected security interests in some of the Financed Vehicles,
may affect the Trust's ability to realize on the collateral securing the
Receivables and thus may reduce the proceeds to be distributed to
Certificateholders with respect to the Certificates. See "Description of the
Certificates -- Distributions" and "-- Subordination of the Class B
Certificates; Reserve Account" herein and "Certain Legal Aspects of the
Receivables" in the Prospectus.

Each Certificate represents a fractional undivided ownership interest
in the Trust. The Trust property includes the Receivables (including any
Subsequent Receivables) transferred by First Merchants to the Depositor and
by the Depositor to the Trust and all payments due thereunder, in the case
of Precomputed Receivables, or received thereunder, in the case of Simple
Interest Receivables,
on or after the Initial Cutoff Date or related Subsequent Cutoff Date, as
applicable. The Trust property also includes (i) such amounts as from time
to time may be held in the Collection Account; (ii) security interests in the
Financed Vehicles and any accessions thereto; (iii) the rights to proceeds
with respect to the Receivables from claims on physical damage, credit life
and disability insurance policies covering the Financed Vehicles or the
Obligors, as the case may be; (iv) any property that shall have secured a
Receivable and that shall have been acquired by the Trustee; (v) a security
interest in all amounts on deposit in the Pre-Funding Account; (vi) a
Security Insurance Policy issued by Security Insurer; and (vii) any and all
proceeds of the foregoing. The Reserve Account will be maintained by the
Trustee for the benefit of the Certificateholders, but will not be part of
the Trust.

THE TRUSTEE

is Trustee under the Pooling and Servicing Agreement.
is a banking corporation, and its principal
offices are located at . The Depositor and its affiliates
may maintain normal commercial banking relations with the Trustee and its
affiliates.

THE RECEIVABLES POOL

The pool of Receivables conveyed to the Trust (the "Receivables Pool")
will include the Initial Receivables purchased as of the Initial Cutoff Date
and any Subsequent Receivables purchased as of the applicable Subsequent
Cutoff Dates (the Initial Cutoff Date or any Subsequent Cutoff Date being
individually referred to herein as a "Cutoff Date").

The Initial Receivables were, and the Subsequent Receivables were or
will be, originated or acquired from Dealers by First Merchants in the
ordinary course of business, and were or will be selected from First
Merchants' portfolio for inclusion in the Receivables Pool based on several
criteria, including the following: (i) as of the applicable Cutoff Date each
Receivable had, or will have, an outstanding gross balance of at least $
; (ii) as of the applicable Cutoff Date, none of the
Receivables shall be more than days past due; and (iii) as of the
applicable Cutoff Date, no Obligor on any Receivable was noted in the records
of First Merchants as being the subject of a bankruptcy proceeding. Certain
additional criteria that each Receivable must meet are set forth in the
Prospectus under "The Receivables Pools". No selection procedures believed
by either First Merchants or the Depositor to be adverse to
Certificateholders were or will be used in selecting the Receivables.

The obligation of the Trust to purchase Subsequent Receivables on a
Subsequent Transfer Date will be subject to the Receivables in the Trust,
including the Subsequent Receivables to be conveyed to the Trust on such
Subsequent Transfer Date, meeting the following criteria: (i) the weighted
average APR of the Receivables shall not be less than %; and (ii)
the weighted average remaining term of the Receivables shall not be greater
than months. Such criteria will be based on the characteristics of
the Initial Receivables on the Initial Cutoff Date and any Subsequent
Receivables on the related Subsequent Cutoff Dates.

The Initial Receivables will represent approximately % of the
aggregate initial principal balance of the Certificates. However, except for
the criteria described in the preceding paragraphs, the Subsequent
Receivables are not required to have any specific characteristics; therefore,
following the transfer of Subsequent Receivables to the Trust, the aggregate
characteristics of the entire Receivables Pool, including the composition of
the Receivables, the distribution by APR and the geographic distribution, may
vary significantly from those of the Initial Receivables. The composition,
distribution by APR and geographic distribution of the Initial Receivables
as of the Initial Cutoff Date are as set forth in the following tables.

<TABLE>

COMPOSITION OF THE INITIAL RECEIVABLES AS OF THE INITIAL CUTOFF DATE
<CAPTION>

Weighted Aggregate Number of Weighted Average Weighted Average Average
Average APR Principal Balance Receivables Remaining Term Original Term Principal Balance
- ------------- ------------------- ------------- ------------------ ----------------- ------------------
<S> <C> <C> <C> <C> <C>
% $ months months $

</TABLE>

<TABLE>

DISTRIBUTION OF INITIAL RECEIVABLES BY APR AS OF THE INITIAL CUTOFF DATE
<CAPTION>
Percentage of
Number of Aggregate Aggregate
APR Range Receivables Principal Balance Principal Balance/(1)/
- ------------------ ------------- ------------------- ---------------------
<S> <C> <C> <C>
$ %

---------------- ------------------ -------------------
$ 100.00%
Total ================ ================== ===================

</TABLE>
- ---------------------
/(1)/ Percentages may not add to 100.00% because of rounding.

DISTRIBUTION BY REMAINING PRINCIPAL OF THE INITIAL RECEIVABLES AS OF THE
INITIAL CUTOFF DATE

Percentage of
Remaining Principal Number of Aggregate Aggregate
Range of balance Receivables Principal Balance Principal Balance/(1)/
- ------------------ ------------- ------------------- ---------------------

$ %

---------------- ------------------ -------------------
$ 100.00%
Total ================ ================== ===================

_____________
/(1)/ Percentages may not add to 100.00% because of rounding.

DISTRIBUTION BY REMAINING TERM OF THE INITIAL RECEIVABLES AS OF THE
INITIAL CUTOFF DATE

Percentage of
Range of Number of Aggregate Aggregate
Remaining Terms Receivables Principal Balance Principal Balance/(1)/
- ------------------ ------------- ------------------- ---------------------

$ %

---------------- ------------------ -------------------
$ 100.00%
Total ================ ================== ===================

- ------------------------
/(1)/ Percentages may not add to 100.00% because of rounding.

GEOGRAPHIC DISTRIBUTION OF THE INITIAL RECEIVABLES AS OF THE
INITIAL CUTOFF DATE

Percentage of
Number of Aggregate Aggregate
State(1) Receivables Principal Balance Principal Balance/(1)/
- ------------------ ------------- ------------------- ----------------------

$ %

---------------- ------------------ -------------------
$ 100.00%
Total ================ ================== ===================

_____________
(/(1)/ Based on billing addresses of the Obligors.)
/(2)/ Percentages may not add to 100.00% because of rounding.

As of the Initial Cutoff Date, approximately % of the Initial
Receivables, by aggregate principal balance, constitute Precomputed
Receivables and approximately % of the Initial Receivables
constitute Simple Interest Receivables. See "The Receivables Pools" in the
Prospectus for a description of the characteristics of Precomputed
Receivables and Simple Interest Receivables. As of the Initial Cutoff Date,
approximately % of the Initial Receivables by aggregate principal
balance, constituting approximately % of the number of Initial
Receivables, represent used vehicles.

THE DEPOSITOR

Information regarding the Depositor is set forth under "The Seller" in
the Prospectus.

BACKUP SERVICER

If a Servicer Termination Event occurs under the Pooling and Servicing
Agreement while First Merchants is Servicer, or if First Merchants is
terminated as Servicer by the Security Insurer or resigns as Servicer, the
Backup Servicer will serve as successor Servicer. The Backup Servicer will
receive a fee on each Distribution Date for agreeing to stand by as successor
Servicer and for performing certain other functions. Such fee will be
payable to the Backup Servicer from the Servicing Fee payable to First
Merchants.

DESCRIPTION OF THE CERTIFICATES

GENERAL

The Certificates will be issued pursuant to the terms of the Pooling and
Servicing Agreement, a form of which has been filed as an exhibit to the
Registration Statement. A copy of the Pooling and Servicing Agreement will
be filed with the Commission following the issuance of the Certificates. The
following summary describes certain terms of the Certificates and the Pooling
and Servicing Agreement. The summary does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, all the
provisions of the Certificates and the Pooling and Servicing Agreement. The
following summary supplements the description of the general terms and
provisions of the Certificates of any given Series and the related Pooling
and Servicing Agreement set forth in the Prospectus, to which description
reference is hereby made.

The Class A Certificate Balance initially will equal $
and, as of any date of determination thereafter, will equal the Initial
Class A Certificate Balance less all amounts previously distributed to Class
A Certificateholders and allocable to principal. The Class B Certificate
Balance initially will equal $ and, as of any date of
determination thereafter, will equal the Initial Class B Certificate Balance
less the sum of all amounts previously distributed to Class B
Certificateholders and allocable to principal and any Realized Losses
allocable to the Class B Certificates. The Class A Certificates will
evidence in the aggregate an undivided ownership interest in approximately
% of the Trust, and the Class B Certificates will evidence in the
aggregate an undivided ownership interest in approximately % of the
Trust.

DISTRIBUTIONS

Collection of Receivables and Calculation of Distributable Amounts. On
or about the day of each month, the Servicer will provide the
Trustee and Backup Servicer with certain information with respect to the
immediately preceding Collection Period, including the aggregate amount of
collections on the Receivables, Advances and Repurchase Amounts, the Total
Distribution Amount, the Interest Distribution Amount, the Principal
Distribution Amount, the Class A Interest Distributable Amount, the Class A
Principal Distributable Amount, the Class B Interest Distributable Amount and
the Class B Principal Distributable Amount.

On or before each Distribution Date, the Servicer will cause the Total
Distribution Amount to be deposited into the Collection Account. The "Total
Distribution Amount" for any Distribution Date will equal the sum of the
Interest Distribution Amount plus the Principal Distribution Amount for such
date (other than the portion thereof attributable to Realized Losses).
"Realized Losses" means the excess of the principal balance of a Liquidated
Receivable over Liquidation Proceeds with respect thereto, to the extent
allocable to principal.

The "Interest Distribution Amount" for a Distribution Date generally
will equal the sum of the following amounts with respect to the preceding
Collection Period: (i) that portion of all collections on the Receivables
allocable to interest in accordance with the Servicer's customary servicing
procedures; (ii) all proceeds of the liquidation of defaulted Receivables
("Liquidated Receivables"), net of expenses incurred by the Servicer in
connection with such liquidation and any amounts required by law to be
remitted to the Obligors on such Liquidated Receivables ("Liquidation
Proceeds"), to the extent attributable to interest due thereon in accordance
with the Servicer's customary servicing procedures; (iii) all recoveries in
respect of Liquidated Receivables that were written off in prior Collection
Periods; (iv) all Advances made by the Servicer of amounts allocable to
interest; (v) the Purchase Amount of each Receivable that was repurchased by
the Depositor during the related Collection Period, to the extent
attributable to accrued interest thereon; and (vi) Investment Earnings, if
any, on amounts on deposit in the Collection Account and the Pre-Funding
Account.

The "Principal Distribution Amount" for a Distribution Date generally
will equal the sum of the following amounts with respect to the preceding
Collection Period: (i) that portion of all collections on the Receivables
allocable to principal in accordance with the Servicer's customary servicing
procedures; (ii) all Liquidation Proceeds attributable to the principal
amount of Receivables that became Liquidated Receivables during such
Collection Period in accordance with the Servicer's customary servicing
procedures, plus the amount of Realized Losses with respect to such
Liquidated Receivables; (iii) all Advances made by the Servicer on
Precomputed Receivables that are allocable to principal and (iv) the
Repurchase Amount of each Receivable that was repurchased by the Depositor
or purchased by the Servicer during the related Collection Period, to the
extent attributable to principal.

On each Distribution Date the Trustee will distribute, pro rata, to the
Class A Certificateholders (i) interest on the Class A Certificates in a
maximum amount equal to the Class A Interest Distributable Amount and (ii)
principal in a maximum amount equal to the Class A Principal Distributable
Amount. In addition, on each Distribution Date the Trustee will distribute,
pro rata, to the Class B Certificateholders (i) interest on the Class B
Certificateholders in a maximum amount equal to the Class B Interest
Distributable Amount and (ii) principal in a maximum amount equal to the
Class B Principal Distributable Amount.

The "Class A Interest Distributable Amount" for each Distribution Date
will equal the sum of the Class A Monthly Interest Distributable Amount for
such date plus any Class A Interest Carryover Shortfall on such date. The
"Class A Monthly Interest Distributable Amount" on each Distribution Date
will equal the product of (i) one-twelfth, (ii) the Class A Pass-Through Rate
and (iii) the Class A Certificate Balance on the previous Distribution Date
(or, in the case of the first Distribution Date, on the Closing Date) after
giving effect to all distributions to Certificateholders on such date. The
"Class A Interest Carryover Shortfall" on each Distribution Date will equal
the excess, if any, of the sum of the Class A Monthly Interest Distributable
Amount for the preceding Distribution Date and any outstanding Class A
Interest Carryover Shortfall on such preceding Distribution Date over the
amount of interest actually distributed to Class A Certificateholders on such
preceding Distribution Date.

The "Class A Principal Distributable Amount" on each Distribution Date
will equal the Class A Monthly Principal Distributable Amount plus any Class
A Principal Carryover Shortfall on such Distribution Date. The "Class A
Monthly
Principal Distributable Amount" on each Distribution Date will be the Class
A Percentage of the Principal Distribution Amount. The "Class A Principal
Carryover Shortfall" on each Distribution Date will equal the amount, if any,
by which the Class A Monthly Principal Distributable Amount for the preceding
Distribution Date, plus any Class A Principal Carryover Shortfall on such
preceding Distribution Date, exceeded the amount of principal actually
distributed to Class A Certificateholders on such date. In addition, on the
Final Scheduled Distribution Date, the Class A Principal Distributable Amount
will include the lesser of (a) the Class A Percentage of the outstanding
principal amount, if any, of the Receivables remaining in the Trust as of the
Final Scheduled Maturity Date and (b) the amount that is necessary (after
giving effect to the other amounts to be distributed to Class A
Certificateholders on such Distribution Date and allocable to principal) to
reduce the Class A Certificate Balance to zero.

The "Class B Interest Distributable Amount" for each Distribution Date
will equal the sum of the Class B Monthly Interest Distributable Amount for
such date plus any Class B Interest Carryover Shortfall on such date. The
"Class B Monthly Interest Distributable Amount" on each Distribution Date
will equal the product of (i) one-twelfth, (ii) the Class B Pass-Through Rate
and (iii) the Class B Certificate Balance on the previous Distribution Date
(or, in the case of the first Distribution Date, on the Closing Date) after
giving effect to all distributions to Certificateholders on such date. The
"Class B Interest Carryover Shortfall" on each Distribution Date will equal
the excess, if any, of the sum of the Class B Monthly Interest Distributable
Amount for the preceding Distribution Date and any outstanding Class B
Interest Carryover Shortfall on such preceding Distribution Date over the
amount of interest actually distributed to Class B Certificateholders on such
preceding Distribution Date.

The "Class B Principal Distributable Amount" on each Distribution Date
will equal the Class B Monthly Principal Distributable Amount plus any Class
B Principal Carryover Shortfall on such Distribution Date. The "Class B
Monthly Principal Distributable Amount" on each Distribution Date will equal
the Class B Percentage of the Principal Distribution Amount. The "Class B
Principal Carryover Shortfall" on each Distribution Date will equal the
amount, if any, by which the Class B Monthly Principal Distributable Amount
for the preceding Distribution Date, plus any Class B Principal Carryover
Shortfall on such preceding Distribution Date, exceeded the amount of
principal actually distributed to Class B Certificateholders on such date.
In addition, on the Final Scheduled Distribution Date, the Class B Principal
Distributable Amount will include the lesser of (a) the Class B Percentage
of the outstanding principal amount, if any, of the Receivables remaining in
the Trust as of the Final Scheduled Maturity Date and (b) the amount that is
necessary (after giving effect to the other amounts to be distributed to
Class B Certificateholders on such Distribution Date and allocable to
principal) to reduce the Class B Certificate Balance to zero.

Distributions to Certificateholders. On each Distribution Date, the
Trustee will make the following distributions, in the priority indicated,
from the Total Distribution Amount and, if necessary and to the extent
provided below, from amounts on deposit in the Reserve Account:

(i) to the Servicer, from the Interest Distribution Amount, the
Servicing Fee and all unpaid Servicing Fees from prior Collection Periods;

(ii) to the Class A Certificateholders, from the Class A Percentage
of the Interest Distribution Amount (after payment therefrom of amounts due
to the Servicer pursuant to clause (i) above), the Class A Interest
Distributable Amount; provided, that, if the Class A Percentage of the
Interest Distribution Amount is less than the Class A Interest Distributable
Amount for such date, such deficiency shall be paid, to the extent of
available funds, first from the Reserve Account, then from that portion of
the Total Distribution Amount otherwise distributable to Class B
Certificateholders;

(iii) to the Class A Certificateholders, from the Class A
Percentage of the Principal Distribution Amount (exclusive of the portion
thereof attributable to Realized Losses), an amount equal to the Class A
Principal Distributable Amount; provided, that, if the Class A Percentage of
such Principal Distribution Amount is less than the Class A Principal
Distributable Amount for such date, such deficiency shall be paid, to the
extent of available funds, first from amounts available in the Reserve
Account on such date after payment of the Class A Interest Distributable
Amount and then from the Total Distribution Amount remaining after payment
therefrom of amounts due to the Servicer and the Class A Interest
Distributable Amount;

(iv) to the Class B Certificateholders, from the Class B Percentage
of the Interest Distribution Amount (after payment therefrom of amounts due
to the Servicer and to the Class A Certificateholders pursuant to clauses (i)
and (iii) above), the Class B Interest Distributable Amount; provided, that,
if the Class B Percentage of the Interest Distribution Amount is less than
the Class B Interest Distributable Amount for such date, such deficiency
shall be paid, to the extent of available funds (after payment of the Class
A Interest Distributable Amount and the Class A Principal Distributable
Amount), from the Reserve Account;

(v) to the Security Insurer, the premium and certain other amounts
owing to the Security Insurer; and

(vi) to the Class B Certificateholders, from any remaining portion
of the Total Distribution Amount, an amount equal to the Class B Principal
Distributable Amount; provided, that, if such remaining portion of the Total
Distribution Amount is less than the Class B Principal Distributable Amount
for such date, such deficiency shall be paid from amounts, if any, available
in the Reserve Account after payment of the Class A Distributable Amount and
the Class B Interest Distributable Amount on such date;

(vii) after the payment of the amounts described in clauses (i)
through (vi) above, any portion of the Total Distribution Amount remaining
in the Collection Account on any Distribution Date shall be deposited into
the Reserve Account.

SUBORDINATION OF THE CLASS B CERTIFICATES; RESERVE ACCOUNT

The rights of the Class B Certificateholders to receive distributions
with respect to the Receivables will be subordinated to such rights of the
Class A Certificateholders to the extent described herein. This subordi-
nation is intended to enhance the likelihood of timely receipt by the Class
A Certificateholders of the full amount of interest and principal
distributable to them on each Distribution Date, and to afford the Class A
Certificateholders limited protection against losses in respect of the
Receivables.

No distribution of interest will be made to the Class B
Certificateholders on any Distribution Date until the full amount of
principal and interest payable on the Class A Certificates on such
Distribution Date has been distributed to the Class A Certificateholders.
Because the rights of the Class B Certificateholders to receive distributions
of interest and principal will be subordinated to the rights of the Class A
Certificateholders to receive distributions of interest and principal, the
Class B Certificates will be more sensitive than the Class A Certificates to
losses on the Receivables. If the aggregate amount of losses on the
Receivables exceeds the amount on deposit in the Reserve Account, Class B
Certificateholders may not recover their initial investment in the Class B
Certificates.

In the event of delinquencies or losses on the Receivables, the
protection afforded to the Class A Certificateholders will be effected both
by the preferential right of the Class A Certificateholders to receive
distributions on the Receivables in the manner and to the extent described
above and by the establishment of the Reserve Account.

The Reserve Account will be established on the Closing Date by the
Depositor and will be held by the Trustee, as collateral agent for the
Depositor, but will not be a part of or otherwise includible in the Trust.
On the Closing Date, the Depositor will deposit the Reserve Account Initial
Deposit into the Reserve Account, which shall consist of cash and/or Eligible
Investments having a value of approximately $ . On
each Subsequent Transfer Date, the Depositor will direct the Trustee to
transfer an amount equal to % of the aggregate principal amount of
the Subsequent Receivables to be transferred to the Trust on such date from
the Pre-Funding Account to the Reserve Account. In addition, on each
Distribution Date thereafter, the Reserve Account Initial Deposit will be
augmented by the deposit thereto of any funds remaining in the Distribution
Account on such date after the payment of the Servicing Fee, the Class A
Distributable Amount and the Class B Distributable Amount. The Specified
Reserve Account Balance with respect to any Distribution Date will equal the
greater of (i) % of the Pool Balance as of the close of business
on the last day of the related Collection Period and (ii) $
. In no event will the Specified Reserve Account Balance
exceed the sum of the Class A Certificate Balance and the Class B Certificate
Balance.

On each Distribution Date, funds available in the Reserve Account will
be withdrawn for distribution, first, to Class A Certificateholders to the
extent of shortfalls in the amounts available to make required distributions
of interest on the Class A Certificates, second, to Class A
Certificateholders to the extent of shortfalls in the amounts available to
make required distributions of principal of the Class A Certificates, third,
to Class B Certificateholders to
the extent of shortfalls in the amounts available to make required
distributions of interest on the Class B Certificates and, fourth, to Class
B Certificateholders to the extent of shortfalls in the amounts available to
make required distributions of principal of the Class B Certificates.

If the amount on deposit in the Reserve Account on any Distribution Date
(after giving effect to all deposits thereto or withdrawals therefrom on such
date) is greater than the Specified Reserve Account Balance, the Trustee will
release and distribute such excess to the Depositor. Upon the release to the
Depositor on any Distribution Date of amounts from the Reserve Account in
excess of the Specified Reserve Account Balance, the Certificateholders will
have no further rights in, or claims to, such amounts.

OPTIONAL PREPAYMENT

On any Distribution Date following the Determination Date on which the
Pool Balance is determined to be 10% or less of the Initial Pool Balance, the
Servicer may elect to exercise its option to purchase all of the Receivables
for a purchase price equal to the aggregate Purchase Amounts of all the
outstanding Receivables. Any such exercise of its option by the Servicer
will result in the prepayment of the Certificates and the early termination
of the Trust. See "Description of the Transfer and Servicing Agreements --
Termination" in the Prospectus.

MANDATORY PREPAYMENT

Principal distributions to Certificateholders will be made, on a pro
rata basis, on the Distribution Date on or immediately following the last day
of the Funding Period in the event that any amount remains on deposit in the
Pre-Funding Account after giving effect to the purchase of all Subsequent
Receivables, including any such purchase on such date. The aggregate
principal amount of the Certificates to be repurchased will be the amount
then on deposit in the Pre-Funding Account.

SECURITY INSURANCE POLICY
( )

SECURITY INSURER
( )

ERISA CONSIDERATIONS

During the Funding Period, not more than 24.9% of the Class A
Certificates may be held by "employee benefit plans" as defined in Section
3 of ERISA. After the termination of the Funding Period and subject to the
considerations set forth under "ERISA Considerations -- Senior Certificates
Issued By Grantor Trusts" in the Prospectus, the Class A Certificates may be
purchased by employee benefit plans or individual retirement accounts (each,
a "Plan") subject to ERISA or Section 4975 of the Internal Revenue Code of
1986, as amended (the "Code"). A fiduciary of a Plan must determine that the
purchase of a Class A Certificate is consistent with its fiduciary duties
under ERISA and will not result in a
nonexempt prohibited transaction as defined in Section 406 of ERISA or
Section 4975 of the Code. For additional information regarding treatment of
the Class A Certificates under ERISA, see "ERISA Considerations" in the
Prospectus.

Because the Class B Certificates are subordinated to the Class A
Certificates, the Class B Certificates may not be purchased by Plans.

UNDERWRITING

Subject to the terms and conditions set forth in an underwriting
agreement relating to the Certificates (the "Underwriting Agreement") between
the Depositor and Salomon Brothers Inc (the "Underwriter"), the Depositor has
agreed to cause the Trust to sell to the Underwriter, and the Underwriter has
agreed to purchase, the Certificates:

The Depositor has been advised by the Underwriter that the Underwriter
proposes to offer the Class A Certificates and the Class B Certificates to
the public initially at the public offering prices set forth on the cover
page of this Prospectus Supplement, and to certain dealers at such price less
a concession of % per Class A Certificate and % per Class
B Certificate; that the Underwriter and such dealers may allow a discount of
% per Class A Certificate and % per Class B Certificate on
sales to certain other dealers; and that after the initial public offering
of the Certificates, the public offering price and the concessions and
discounts to dealers may be changed by the Underwriter.

The Underwriting Agreement provides that the Depositor will indemnify
the Underwriter against certain liabilities under applicable securities laws,
or contribute to payments the Underwriter may be required to make in respect
thereof.

The Trust may, from time to time, invest the funds in the Collection
Account in Eligible Investments acquired from the Underwriter.

Upon receipt of a request by an investor who has received an electronic
Prospectus Supplement and Prospectus from the Underwriter or a request by
such investor's representative within the period during which there is an
obligation to deliver a Prospectus Supplement and Prospectus, the Depositor
or the Underwriter will promptly deliver, or cause to be delivered, without
charge, a paper copy of the Prospectus Supplement and Prospectus.

LEGAL MATTERS

Certain legal matters will be passed upon for the Depositor and First
Merchants by Richard P. Vogelman, General Counsel of First Merchants.
Certain legal matters relating to the Securities will be passed upon for the
Trust and the Depositor by Sonnenschein Nath & Rosenthal, Chicago, Illinois.
Certain legal matters with respect to the federal income tax matters
discussed under "Certain Federal Income Tax Consequences" herein will be
passed upon by Brown & Wood LLP, New York, New York, special tax counsel to
the Trust, and certain matters with respect to the validity of the Class A
Certificates will be passed upon for the Depositor by Sonnenschein Nath &
Rosenthal, New York, New York. Certain legal
matters will be passed upon for the Underwriter by Brown & Wood LLP. It is
anticipated that Sonnenschein Nath & Rosenthal will from time to time render
legal services to the Seller, the Servicer and their affiliates.

INDEX OF TERMS

ADG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-18
Backup Servicer . . . . . . . . . . . . . . . . . . . . . . . . . Cover, S-4
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover
Class A Certificate Balance . . . . . . . . . . . . . . . . . . . . . . . S-4
Class A Certificateholders . . . . . . . . . . . . . . . . . . . . . . . S-7
Class A Certificates . . . . . . . . . . . . . . . . . . . . . . . . . Cover
Class A Interest Carryover Shortfall . . . . . . . . . . . . . . . . . S-29
Class A Interest Distributable Amount . . . . . . . . . . . . . . . S-7, S-29
Class A Monthly Interest Distributable Amount . . . . . . . . . . . . . S-29
Class A Monthly Principal Distributable Amount . . . . . . . . . . . . S-29
Class A Pass-Through Rate . . . . . . . . . . . . . . . . . . . . . . . . S-7
Class A Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Class A Principal Carryover Shortfall . . . . . . . . . . . . . . . . . S-29
Class A Principal Distributable Amount . . . . . . . . . . . . . . S-8, S-29
Class B Certificate Balance . . . . . . . . . . . . . . . . . . . . . . . S-4
Class B Certificateholders . . . . . . . . . . . . . . . . . . . . . . . S-7
Class B Certificates . . . . . . . . . . . . . . . . . . . . . . . . . Cover
Class B Interest Carryover Shortfall . . . . . . . . . . . . . . . . . S-29
Class B Interest Distributable Amount . . . . . . . . . . . . . . . S-7, S-29
Class B Monthly Interest Distributable Amount . . . . . . . . . . . . . S-29
Class B Monthly Principal Distributable Amount . . . . . . . . . . . . S-29
Class B Pass-Through Rate . . . . . . . . . . . . . . . . . . . . . . . . S-7
Class B Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Class B Principal Carryover Shortfall . . . . . . . . . . . . . . . . . S-29
Class B Principal Distributable Amount . . . . . . . . . . . . . . S-8, S-29
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-32
Collection Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-8
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Cutoff Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-25
Dealer Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . S-17
Dealer Service Centers . . . . . . . . . . . . . . . . . . . . . . . . S-16
Dealers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover, S-4
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-12
Final Scheduled Maturity Date . . . . . . . . . . . . . . . . . . . . . . S-6
Financed Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
First Merchants . . . . . . . . . . . . . . . . . . . . . . . . Cover, S-4
franchised dealers . . . . . . . . . . . . . . . . . . . . . . . . . . S-16
Funding Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-11
Guaranteed Distribution . . . . . . . . . . . . . . . . . . . . . . . . . S-9
independent dealers . . . . . . . . . . . . . . . . . . . . . . . . . . S-16
Initial Class A Certificate Balance . . . . . . . . . . . . . . . . . . . S-4
Initial Class B Certificate Balance . . . . . . . . . . . . . . . . . . . S-4
Initial Cutoff Date . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Initial Pool Balance . . . . . . . . . . . . . . . . . . . . . . . . . S-10
Initial Receivables . . . . . . . . . . . . . . . . . . . . . . . Cover, S-5
Insurance Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . S-9
Interest Distribution Amount . . . . . . . . . . . . . . . . . . . . . S-28
Liquidated Receivables . . . . . . . . . . . . . . . . . . . . . . . . S-28
Liquidation Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . S-28
non-prime borrowers . . . . . . . . . . . . . . . . . . . . . . . . . . S-16
Norwest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-23
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-32
Pool Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-10
Pooling and Servicing Agreement . . . . . . . . . . . . . . . . . . . . . S-4
Pre-Funded Amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Pre-Funding Account . . . . . . . . . . . . . . . . . . . . . . . Cover, S-11
Principal Distribution Amount . . . . . . . . . . . . . . . . . . . . . S-28
Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Rating Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-13
Realized Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-28
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover
Receivables Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . S-25
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
Reserve Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-10
Reserve Account Initial Deposit . . . . . . . . . . . . . . . . . . . . S-10
Security Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . S-11
Security Insurer . . . . . . . . . . . . . . . . . . . . . . . . Cover, S-4
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover, S-4
Specified Reserve Account Balance . . . . . . . . . . . . . . . . . . . S-10
stripped coupons . . . . . . . . . . . . . . . . . . . . . . . . . . . S-12
sub-prime borrowers . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Subsequent Cutoff Date . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Subsequent Receivables . . . . . . . . . . . . . . . . . . . . . Cover, S-5
Subsequent Transfer Date . . . . . . . . . . . . . . . . . . . . . . . . S-5
Total Distribution Amount . . . . . . . . . . . . . . . . . . . . . . . S-28
Transfer Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . Cover
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover, S-4
Underwriter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-32
Underwriting Agreement . . . . . . . . . . . . . . . . . . . . . . . . S-32

============================================================================
No dealer, salesperson or other
person has been authorized to give
any information or to make any
representations other than those
contained or incorporated by
reference in this Prospectus
Supplement and the Prospectus in FIRST MERCHANTS AUTO TRUST
connection with the offer made by 199 -
this Prospectus Supplement and the
Prospectus and, if given or made, Issuer
such information or representations
must not be relied upon as having $
been authorized. This Prospectus
Supplement and the Prospectus do not
constitute an offer or solicitation (FLOATING RATE) (%) ASSET BACKED
by anyone in any state in which such CERTIFICATES, CLASS A
offer or solicitation is unauthorized
or in which the person making such $
offer or solicitation is not
qualified to do so or to anyone to (FLOATING RATE) (%) ASSET
whom it is unlawful to make such BACKED CERTIFICATES, CLASS B
offer or solicitation. Neither the
delivery of this Prospectus
Supplement and the Prospectus nor any
sale made hereunder shall, under any FIRST MERCHANTS ACCEPTANCE
circumstances, create any implication CORPORATION,
that the information contained herein
or therein is correct as of any time Depositor and Servicer
subsequent to the date of this
Prospectus Supplement or Prospectus.

TABLE OF CONTENTS Page

PROSPECTUS SUPPLEMENT
Reports to Certificateholders . S-3
Summary of Terms . . . . . . . S-4
Risk Factors . . . . . . . . . S-14
First Merchants'
Automobile Financing Program . . S-16 PROSPECTUS SUPPLEMENT
Weighted Average Life of
the Certificates . . . . . . . . S-23
The Trust . . . . . . . . . . . . S-24
The Receivables Pool . . . . . S-25
The Depositor . . . . . . . . . S-27
Backup Servicer . . . . . . . S-27
Description of the Certificates S-27
_________________________________
Security Insurance Policy . . . S-32
______________________
Security Insurer . . . . . . . S-32
ERISA Considerations . . . . . S-32 SALOMON BROTHERS INC
________________________
Underwriting . . . . . . . . . S-32

Legal Matters . . . . . . . . . S-33
Index of Terms . . . . . . . . S-34
PROSPECTUS
Available Information . . . . . . 2
Incorporation of Certain Documents by
Reference . . . . . . . . . . . . 2
Summary of Terms . . . . . . . . 3
Risk Factors . . . . . . . . . . 12
The Trusts . . . . . . . . . . . 18
The Receivables Pools . . . . . 20
Weighted Average Life of the
Securities . . . . . . . . . . . 22
Pool Factors and Trading Information
22
Use of Proceeds . . . . . . . . . 23
The Company and the Seller . . . . 23
Description of the Notes . . . . 24
Description of the Certificates . 28
Certain Information Regarding the
Securities . . . . . . . . . . . 29
Description of the Transfer
and Servicing Agreements. . . . 36
Certain Legal Aspects of
the Receivalbes . . . . . . . . 46
Certain Federal Income Tax
Consequences. . . . . . . . . . 50
Certain State Tax Consequences
with respect to Owner Trusts . . . 61
ERISA Considerations. . . . . . . 62
Plan of Distribution. . . . . . . 64
Legal Matters . . . . . . . . . . 65
Index of Terms. . . . . . . . . . 66
-----------------
Until 90 days after the date of this
Prospectus Supplement, all dealers
effecting transactions in the Certificates
described in this Prospectus Supplement,
whether or not participating in this
distribution, may be required to deliver this
Prospectus Supplement and the Prospectus.
This is in addition to the obligation of dealers
to deliver this Prospectus Supplement and the
Prospectus when acting as underwriters and with
respect to their unsold allotments of
subscriptions.

Information contained herein is subject to completion or
amendment. A registration statement relating to these securities
has been filed with the Securities and Exchange Commission.
These securities may not be sold nor may offers to buy be
accepted prior to the time the registration statement becomes
effective. This prospectus supplement and the accompanying
prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of
these securities in any State in which such offer, solicitation
or sale would be unlawful prior to registration or qualification
under the securities laws of any such State.

Subject to Completion
Prospectus Supplement to Prospectus dated , 1996
FIRST MERCHANTS AUTO TRUST 199 -
$ (Floating Rate)( %) Asset Backed Notes, Class A-1
$ (Floating Rate)( %) Asset Backed Notes, Class A-2
$ (Floating Rate)( %) Asset Backed Certificates

( ), Seller

FIRST MERCHANTS ACCEPTANCE CORPORATION, Servicer

First Merchants Auto Trust 199 - (the "Trust") will be formed
pursuant to a Trust Agreement, to be dated as of
, 199 (the "Closing Date") between ( ),
a Delaware corporation (the "Seller"), as depositor, and
, a banking
corporation, as Owner Trustee. The Trust will issue $
aggregate principal amount of (Floating Rate)( %) Asset Backed
Notes, Class A-1 (the "Class A-1 Notes") and $ aggregate
principal amount of (Floating Rate)( %) Asset Backed Notes, Class A-2 (the
"Class A-2 Notes" and, with the Class A-1 Notes, the "Notes") pursuant to
an Indenture, to be dated as of the Closing Date, between the Trust and
, a banking corporation, as
Indenture Trustee. The Trust also will issue $
aggregate principal amount of (Floating Rate)( %) Asset Backed
Certificates (the "Certificates"). The assets of the Trust will include a
pool of motor vehicle retail installment sale contracts (the
"Receivables") secured by the motor vehicles financed thereby and certain
monies due or received thereunder on or after , 199 .
The Receivables will be transferred to the Trust by the Seller as
described herein. The Notes will be secured by the assets of the Trust
pursuant to the Indenture.
(Continued on following page)

THE NOTES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES REPRESENT
BENEFICIAL INTERESTS IN, THE TRUST ONLY AND DO NOT REPRESENT OBLIGATIONS
OF, OR INTERESTS IN, ( ), FIRST MERCHANTS
ACCEPTANCE CORPORATION OR ANY OF THEIR RESPECTIVE AFFILIATES. NONE OF THE
NOTES, THE CERTIFICATES OR THE RECEIVABLES ARE INSURED OR GUARANTEED BY
ANY GOVERNMENTAL AGENCY.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER
"RISK FACTORS" ON PAGE S-9 OF THIS PROSPECTUS SUPPLEMENT AND PAGE 12 OF
THE ACCOMPANYING PROSPECTUS.

Price to the Underwriting Proceeds to the
Public(1) Discount Seller(1)(2)
------------ ------------ ---------------

Per Class A-1 Note . . . . . % % %
Per Class A-2 Note . . . . . % % %
Per Certificate . . . . . . % % %
Total . . . . . . . . . . . $ $ $

(1) Plus accrued interest, if any, from , 199 .
(2) Before deducting expenses, estimated to be $ .
__________________________________

The Notes and the Certificates are offered subject to prior sale,
and subject to the Underwriter's right to reject orders in whole or in
part. It is expected that delivery of the Notes and the Certificates will
be made through the Same Day Funds System of The Depository Trust Company
on or about , 199 .

Salomon Brothers Inc

The date of this Prospectus Supplement is , 199 .

Interest on the classes of Notes will accrue at the respective (fixed
per annum ((floating) rates specified above and generally will be payable
on the day of each month, commencing , 199
(each, a "Distribution Date"). Principal of the Notes will be payable on
each Distribution Date to the extent described herein; however, no
principal will be paid on the Class A-2 Notes until the Class A-1 Notes
have been paid in full. The Certificates represent fractional undivided
interests in the Trust. Interest, at the Pass-Through Rate of % per
annum, will be distributed to Certificateholders on each Distribution
Date. No distributions of principal will be made on the Certificates
until all of the Notes have been paid in full.

To the extent not previously paid, the Class A-1 Notes will be
payable in full on , the Class A-2 Notes will be payable
in full on , and the Certificates will be payable
in full on ; however, one or both classes of Notes
or the Certificates may be paid in full prior to the final scheduled
Distribution Date therefor, as described herein and in the Prospectus. In
addition, the Class A-2 Notes will be subject to early redemption, and the
Certificates will be subject to prepayment, in whole but not in part, on
any Distribution Date on which the Servicer exercises its option to
purchase the Receivables. The Servicer may purchase the Receivables when
the aggregate principal balance thereof is reduced to 10% or less of the
initial aggregate principal balance thereof.

THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION
ABOUT THE OFFERING OF THE NOTES AND THE CERTIFICATES. ADDITIONAL
INFORMATION IS CONTAINED IN THE PROSPECTUS, AND PROSPECTIVE INVESTORS ARE
URGED TO READ BOTH THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS IN FULL.
SALES OF THE NOTES OR CERTIFICATES MAY NOT BE CONSUMMATED UNLESS THE
PURCHASER HAS RECEIVED BOTH THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.
THIS PROSPECTUS SUPPLEMENT CONTAINS INFORMATION THAT IS SPECIFIC TO THE
TRUST AND THE SECURITIES OFFERED HEREBY AND, TO THAT EXTENT, SUPPLEMENTS
THE MORE GENERAL INFORMATION PROVIDED IN THE PROSPECTUS. INFORMATION
CONTAINED IN THIS PROSPECTUS SUPPLEMENT MAY ALSO REFLECT LEGAL, ECONOMIC
AND OTHER DEVELOPMENTS SINCE THE DATE OF THE PROSPECTUS.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR
EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
NOTES AND THE CERTIFICATES AT LEVELS ABOVE THOSE THAT MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

REPORTS TO SECURITYHOLDERS

Unless and until Definitive Notes or Definitive Certificates are
issued, monthly and annual unaudited reports containing information
concerning the Receivables will be prepared by the Servicer and sent on
behalf of the Trust only to Cede & Co., as nominee of The Depository Trust
Company and registered holder of the Notes and the Certificates. See
"Certain Information Regarding the Securities -- Book-Entry Registration"
and "-- Reports to Securityholders" in the accompanying Prospectus (the
"Prospectus"). Such reports will not constitute financial statements
prepared in accordance with generally accepted accounting principles. The
Seller, as originator of the Trust, will file with the Securities and
Exchange Commission (the "Commission") such periodic reports as are
required under the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission thereunder.

SUMMARY OF TERMS

The following summary is qualified in its entirety by reference
to the detailed information appearing elsewhere herein and in the
Prospectus. Certain capitalized terms used herein are defined elsewhere
in this Prospectus Supplement on the pages indicated in the "Index of
Terms" or, to the extent not defined herein, have the meanings assigned to
such terms in the Prospectus.

Issuer . . . . . . . . . . . . . First Merchants Auto Trust 199
- (the "Trust"), a Delaware
business trust to be formed
pursuant to a Trust Agreement to
be dated as of ,
supplemented from time to time,
the "Trust Agreement"), between
the Seller, as depositor, and the
Owner Trustee.

Seller . . . . . . . . . . . . . ( ),
a Delaware corporation (the
"Seller").

Servicer . . . . . . . . . . . . First Merchants Acceptance
Corporation, a Delaware
corporation ("First Merchants" or,
in its capacity as servicer of the
Receivables, the "Servicer"). The
Servicer is referred to in the
Prospectus as the Master Servicer.

Indenture Trustee . . . . . . . . , a
banking corporation, as trustee
under the Indenture (the
"Indenture Trustee").

Owner Trustee . . . . . . . . . . , a
banking corporation, as
trustee under the Trust Agreement
(the "Owner Trustee").

The Notes . . . . . . . . . . . . The Trust will issue the (Floating
Rate)( %) Asset Backed Notes,
Class A-1 in an aggregate
principal amount of $
(the "Class A-1 Notes") and the
(Floating Rate)( %) Asset Backed
Notes, Class A-2 in an aggregate
principal amount of $
(the "Class A-2 Notes" and,
with the Class A-1 Notes, the
"Notes") pursuant to an Indenture
to be dated as of ,
199 (as amended and
supplemented from time to time,
the "Indenture"), between the
Trust and the Indenture Trustee.

Under the terms of the Indenture,
the Notes will be secured by the
assets of the Trust.

The Certificates . . . . . . . . The Trust will issue (Floating
Rate)( %) Asset-Backed
Certificates (the "Certificates"
and, together with the Notes, the
"Securities") with an aggregate
initial Certificate Balance of
$ . The
Certificates represent fractional
undivided interests in the Trust
and will be issued pursuant to the
Trust Agreement.

The Receivables . . . . . . . . . On , 199
(the "Closing Date"), the Seller
will purchase from First Merchants
pursuant to a Receivables Purchase
Agreement dated as of ,
199 (the "Receivables
Purchase Agreement"), by and
between First Merchants and the
Seller, Receivables having an
aggregate principal balance of
approximately $
as of ,
199 (the "Cutoff Date"). The
Trust, in turn, will acquire the
Receivables from the Seller
pursuant to a Sale and Servicing
Agreement to be dated as of
, 199 (as
amended and supplemented from time
to time, the "Sale and Servicing
Agreement"), among the Trust, the
Seller, the Servicer, the
Indenture Trustee and the Back-up
Servicer, and the Servicer will
agree to service the Receivables
upon the terms set forth in the
Sale and Servicing Agreement.
First Merchants will make certain
representations and warranties
concerning the Receivables in the
Receivables Purchase Agreement,
and the Seller will, in the Sale
and Servicing Agreement, assign
its rights under the Receivables
Purchase Agreement to the Trust,
including its right to cause First
Merchants to repurchase
Receivables with respect to which
First Merchants is in breach of
any such representation and
warranty as of the Cutoff Date, if
such breach has a material and
adverse effect on the rights of
the Trust in such Receivables and
such breach is not cured in a
timely manner. The Seller will
have no obligation to repurchase
from the Trust any Receivable with
respect to which First Merchants
is in breach of a representation
or warranty, nor will it have any
other obligation with respect to
the Receivables or the Securities.

The Receivables will consist of
sub-prime motor vehicle retail
installment sale contracts (the
"Contracts") secured by new or
used automobiles, light trucks,
vans and minivans financed thereby
(the "Financed Vehicles"),
including the right to receive
certain payments in respect
thereof, security interests in the
vehicles financed thereby and the
proceeds thereof. The Receivables
arise, or will arise, from
Contracts originated or acquired
from motor vehicle dealers (the
"Dealers") by First Merchants in
the ordinary course of business.
The Obligors on the Contracts are
primarily consumers with limitedy
access to traditional sources of
credit ("sub-prime" borrowers),
who are generally relatively
higher credit risks due to various
factors, including their past
credit experience and the absence
or limited extent of their credit
history. See "Risk Factors --
Nature of Obligors and Financed
Vehicles; Servicing" in the
Prospectus.

The Receivables have been selected
from First Merchants' portfolio of
motor vehicle installment sale
contracts and motor vehicle
installment loan agreements based
on the criteria specified in the
Sale and Servicing Agreement and
described herein under "The
Receivables Pool" and in the
Prospectus under "The Receivables
Pools". As of the Cutoff Date,
the weighted average annual
percentage rate of the Receivables
was approximately %, the
weighted average remaining
maturity of the Receivables was
approximately months and
the weighted average original
maturity of the Receivables was
approximately months.
No Receivable has a scheduled
maturity later than
(the "Final
Scheduled Maturity Date").

The "Pool Balance" at any time
will equal the aggregate principal
balance of all of the outstanding
Receivables owned by the Trust at
the end of the preceding
Collection Period after giving
effect to (i) all payments
received from Obligors during such
Collection Period and (ii) all
losses realized on Receivables
that were liquidated during such
Collection Period.

Terms of the Notes

A. Distribution Dates . . . . Payments of interest and principal
on the Notes will be made on the
day of each month or, if
any such day is not a Business
Day, on the next succeeding
Business Day (each, a
"Distribution Date") commencing
, 199 .
Payments will be made to holders
of record of the Notes (the
"Noteholders") as of the day
immediately preceding such
Distribution Date (each, a "Record
Date"). As used herein, "Business
Day" means a day that in New York
City or in the city in which the
corporate trust office of the
Indenture Trustee is located is
neither a legal holiday nor a day
on which banking institutions are
authorized by law, regulation or
executive order to be closed.

B. Interest Rates . . . . . . Interest will be paid on the Class
A-1 Notes at a per annum rate of
(Floating Rate)( %) (the "Class
A-1 Rate") and on the Class A-2
Notes at a per annum rate of
(Floating Rate)( %) (the "Class A-
2 Rate"). The Class A-1 Rate and
the Class A-2 Rate are sometimes
referred to herein collectively as
the "Interest Rates".

C. Interest . . . . . . . . . Interest on the outstanding
principal amount of the Class A-1
Notes and the Class A-2 Notes in
respect of any Distribution Date
will accrue at the Class A-1 Rate
and the Class A-2 Rate,
respectively, from and including
the most recent Distribution Date
on which interest payments were
distributed to Noteholders (or, in
the case of the first Distribution
Date, from and including the
Closing Date) to but excluding
such Distribution Date. Interest
on the Notes will be calculated on
the basis of a 360-day year
consisting of twelve 30-day
months. See "Description of the
Notes -- Payments of Interest"
herein.

D. Principal . . . . . . . . For as long as the Class A-1 Notes
are outstanding, principal of the
Class A-1 Notes will be payable on
each Distribution Date in an
amount equal to 100% of the Total
Distribution Amount remaining
following payment of the Servicing
Fee and the Noteholders' Interest
Distributable Amount on such date.
On each Distribution Date from and
including the Distribution Date on
which the Class A-1 Notes are paid
in full and for as long as the
Class A-2 Notes are outstanding,
principal of the Class A-2 Notes
will be payable in an amount equal
to 100% of the Total Distribution
Amount remaining following payment
of the Servicing Fee, the
Noteholders' Interest
Distributable Amount and, on the
Distribution Date on which the
Class A-1 Notes are paid in full,
any amount distributed as
principal to holders of the Class
A-1 Notes. No principal payment
will be made on the Class A-2
Notes until the Class A-1 Notes
have been paid in full.

The outstanding principal amount,
if any, of the Class A-1 Notes
will be payable in full on
(the "Class
A-1 Final Scheduled Payment Date")
and the outstanding principal
amount, if any, of the Class A-2
Notes will be payable in full on
(the "Class A-2
Final Scheduled Payment Date").

See "Description of the Notes --
Payments of Principal" and
"Description of the Transfer and
Servicing Agreements --
Distributions" herein.

E. Optional Redemption . . . The Class A-2 Notes may be
redeemed in whole, but not in
part, on any Distribution Date on
which the Servicer exercises its
option to purchase the
Receivables. Under the terms of
the Sale and Servicing Agreement,
the Servicer may purchase the
Receivables when the aggregate
principal amount thereof has been
reduced to 10% or less of the
original Pool Balance. The
redemption price for the Class A-2
Notes will equal the unpaid
principal amount of the Class A-2
Notes plus accrued and unpaid
interest thereon. See
"Description of the Notes --
Optional Redemption" herein.

Terms of the Certificates

A. Distribution Dates . . . . Distributions with respect to the
Certificates will be made on each
Distribution Date, commencing
, 199 .
Distributions will be made to
holders of record of the
C e r t i f i c a t e s ( t h e
"Certificateholders", and,
together with the Noteholders, the
"Securityholders") as of the
related Record Date.

B. Pass-Through Rate . . . . (Floating Rate)( %) per annum (the
"Pass-Through Rate").

C. Interest . . . . . . . . . On each Distribution Date, the
Owner Trustee will distribute pro
rata to Certificateholders accrued
interest at the Pass-Through Rate
on the Certificate Balance as of
the preceding Distribution Date
(after giving effect to
distributions made on such
preceding Distribution Date)
generally to the extent of funds
available following payment of the
Servicing Fee and the Noteholders'
Distributable Amount from the
Total Distribution Amount and the
Reserve Account. Interest on the
Certificates in respect of any
Distribution Date will accrue from
the most recent Distribution Date
on which interest payments were
distributed to Certificateholders
(or, in the case of the first
Distribution Date, the Closing
Date) to but excluding such
Distribution Date and will be
calculated on the basis of a
360-day year consisting of twelve
30-day months. See "Description
of the Certificates --
Distributions of Interest" herein.

D. Principal . . . . . . . . On each Distribution Date on and
after the date on which the Class
A-2 Notes are paid in full,
principal of the Certificates will
be payable in an amount generally
equal to the Total Distribution
Amount remaining after payment of
the Servicing Fee, the
Noteholders' Distributable Amount
(on the Distribution Date on which
the outstanding principal amount
of the Class A-2 Notes is reduced
t o z e r o ) a n d t h e
Certificateholders' Interest
Distributable Amount.

The outstanding principal amount,
if any, of the Certificates will
be payable in full on
(the "Final
Scheduled Distribution Date").

See "Description of the
Certificates -- Distributions of
Principal" and "Description of the
Transfer and Servicing Agreements
-- Distributions" herein.

E. Optional Prepayment . . . If the Servicer exercises its
option to purchase the
Receivables, which it may do when
the aggregate principal amount of
the Receivables is 10% or less of
the original Pool Balance, the
Certificateholders will receive an
amount in respect of the
Certificates equal to the
Certificate Balance plus accrued
interest at the Pass-Through Rate,
and the Certificates will be
retired. See "Description of the
Certificates -- Optional
Prepayment" herein.

Reserve Account . . . . . . . . . On the Closing Date, the Seller
will establish a separate reserve
account (the "Reserve Account")
with the Indenture Trustee and
will make an initial deposit
thereto of $ .
Funds will be withdrawn from
the Reserve Account on any
Distribution Date on which, and to
the extent that, the Total
Distribution Amount for the
related Collection Period
remaining after payment of the
Servicing Fee is less than the
Noteholders' Distributable Amount
and will be deposited in the Note
Distribution Account for
distribution to the Noteholders.
In addition, funds will be
withdrawn from the Reserve Account
to the extent that the portion of
the Total Distribution Amount
remaining after payment of the
Servicing Fee and the Noteholders'
Distributable Amount is less than
the Certificateholders'
Distributable Amount and will be
deposited in the Certificate
Distribution Account for
distribution to the
Certificateholders. On each
Distribution Date, the amount
available in the Reserve Account
will be reinstated up to the
Specified Reserve Account Balance
by the deposit thereto of amounts
remaining in the Collection
Account after payment on such date
of the Servicing Fee, the
Noteholders' Distributable Amount
and the Certificateholders'
Distributable Amount. Amounts on
deposit in the Reserve Account on
any Distribution Date (after
giving effect to all distributions
to be made on such Distribution
Date) in excess of the Specified
Reserve Account Balance will be
released to the Company. The
Reserve Account will be maintained
as an account in the name of the
Indenture Trustee. See
"Description of the Transfer and
Servicing Agreements -- Reserve
Account" herein.

Collection Account . . . . . . . Except under certain conditions
described herein, the Servicer
will be required to remit
collections received with respect
to the Receivables within two
Business Days of receipt thereof
to one or more accounts in the
name of the Indenture Trustee (the
"Collection Account"). Pursuant
to the Sale and Servicing
Agreement, the Servicer will have
the revocable power to instruct
the Indenture Trustee to withdraw
funds on deposit in the Collection
Account and to apply such funds on
each Distribution Date to the
following (in the priority
indicated): (i) the Servicing Fee
for the prior Collection Period
and any overdue Servicing Fees to
the Servicer, (ii) the
Noteholders' Interest
Distributable Amount and the
Noteholders' Principal
Distributable Amount to the Note
Distribution Account, (iii) the
Certificateholders' Interest
Distributable Amount and, after
the Class A-2 Notes have been paid
in full, the Certificateholders'
Principal Distributable Amount to
the Certificate Distribution
Account, and (iv) the remaining
balance, if any, to the Reserve
Account. See "Description of the
Transfer and Servicing Agreements
-- Distributions" and "-- Reserve
Account" herein.

Tax Status . . . . . . . . . . . In the opinion of Brown & Wood
LLP, for federal income tax
purposes, the Notes will be
characterized as debt and the
Trust will not be characterized as
an association (or a publicly
traded partnership) that is
taxable as a corporation. In the
opinion of Sonnenschein Nath &
Rosenthal, special Illinois tax
counsel, the same characterization
will apply for state income tax
purposes. Each Noteholder, by the
acceptance of a Note, will agree
to treat the Notes as
indebtedness, and each
Certificateholder, by the
acceptance of a Certificate, will
agree to treat the Trust as a
partnership in which the
Certificateholders are partners
for federal income and state
income tax purposes. Alternative
characterizations of the Trust and
the Certificates are possible, but
would not result in materially
adverse tax consequences to
Certificateholders. See "Certain
Federal Income Tax Consequences"
in the Prospectus for additional
information concerning the
application of federal income tax
laws to the Trust and the
Securities.

ERISA Considerations . . . . . . Subject to the considerations
discussed under "ERISA
Considerations" herein and in the
Prospectus, the Notes are eligible
for purchase by employee benefit
plans. The Certificates may not
be acquired by any employee
benefit plan subject to the
Employee Retirement Income
Security Act of 1974, as amended,
or by an individual retirement
account. See "ERISA
Considerations" herein and in the
Prospectus.

Rating of the Securities . . . . It is a condition to the issuance
of the Notes and Certificates that
the Notes be rated in the highest
rating category and the
Certificates be rated at least
" " or its equivalent, in
each case by at least two
nationally recognized statistical
rating agencies.

A rating is not a recommendation
to purchase, hold or sell the
Notes or Certificates, inasmuch as
such rating does not comment as to
market price or suitability for a
particular investor. A rating
addresses the likelihood that
principal of and interest on the
particular class of Notes or the
Certificates, as applicable, will
be paid pursuant to its terms.
There can be no assurance that a
rating will not be lowered or
withdrawn by a rating agency if
circumstances so warrant. See
"Risk Factors -- Ratings of the
Securities" herein.

RISK FACTORS

Limited Liquidity. There is currently no secondary market for the
Securities. The Underwriter currently intends to make a market in the
Securities, but is under no obligation to do so. There can be no
assurance that a secondary market will develop or, if a secondary market
does develop, that it will provide Securityholders with liquidity of
investment or that it will continue for the life of the Securities.

Servicer Default. If a Servicer Default occurs, the Indenture
Trustee or the Noteholders may remove the Servicer without the consent of
the Owner Trustee or the Certificateholders, in the manner described in
the Prospectus under "Description of the Transfer and Servicing Agreements
-- Rights upon Servicer Default". Neither the Owner Trustee nor the
Certificateholders will have the ability to remove the Servicer if a
Servicer Default occurs. In addition, the Noteholders have the ability,
with certain specified exceptions, to waive defaults by the Servicer,
including defaults that might have a materially adverse effect on
Certificateholders. See "Description of the Transfer and Servicing
Agreements -- Waiver of Past Defaults" in the Prospectus.

Subordination of the Class A-2 Notes. Payments of principal of the
Class A-2 Notes will be subordinated in priority of payment to principal
due on the Class A-1 Notes. Consequently, Class A-2 Noteholders will not
receive any payments of principal until after the Class A-1 Notes have
been paid in full. See "Description of the Transfer and Servicing
Agreements -- Distributions" herein.

Subordination of the Certificates. Distributions of interest on and
principal of the Certificates will be subordinated in priority of payment
to interest and principal due on the Notes. Consequently,
Certificateholders will not receive any distributions with respect to a
Collection Period until the full amount of interest on and principal of
the Notes distributable on such Distribution Date has been deposited in
the Note Distribution Account. The Certificateholders will not receive
any distributions of principal until after the Notes have been paid in
full. See "Description of the Transfer and Servicing Agreements --
Distributions" herein.

Limited Assets of the Trust. The Trust will not have, nor is it
permitted or expected to have, any significant assets or sources of funds
other than the Receivables and certain rights with respect to the Reserve
Account; therefore, holders of the Securities must rely for repayment upon
payments on the Receivables and, if and to the extent available, amounts
on deposit in the Reserve Account. Although any funds available in the
Reserve Account on each Distribution Date will be applied to cover
shortfalls in distributions of interest and principal on the Notes and the
Certificates, the funds to be deposited in the Reserve Account are limited
in amount. If the Reserve Account is exhausted, the Trust will have to
rely solely on current distributions on the Receivables to make payments
on the Notes and the Certificates. See "The Trust" and "Description of
the Transfer and Servicing Agreements -- Reserve Account" herein.

Ratings of the Securities. It is a condition to the issuance of the
Notes and the Certificates that the Notes be rated in the highest rating
category and the Certificates be rated " " or its equivalent, in each
case by at least two nationally recognized statistical rating agencies
(the "Rating Agencies"). A rating is not a recommendation to purchase,
hold or sell Securities, inasmuch as such rating does not comment as to
market price or suitability for a particular investor. The ratings of the
Securities address the likelihood of the timely payment of interest on,
and the ultimate repayment of principal of, the Securities pursuant to
their terms. There can be no assurance that a rating will remain for any
given period of time or that a rating will not be lowered or withdrawn
entirely by a Rating Agency if in its judgment circumstances in the future
so warrant. In the event that a rating is subsequently lowered or
withdrawn, no person or entity will be required to provide any additional
credit
enhancement. The ratings of the Notes are based primarily on the credit
quality of the Receivables, the subordination provided by the Certificates
and the availability of funds in the Reserve Account. The ratings of the
Certificates are based primarily on the credit quality of the Receivables
and the availability of funds in the Reserve Account.

Limited Obligations of the Seller and First Merchants. Neither the
Seller nor First Merchants is generally obligated to make any payments in
respect of the Notes, the Certificates or the Receivables. In connection
with its sale of the Receivables to the Seller, First Merchants will make
certain representations and warranties and, in certain circumstances, will
be required to repurchase Receivables with respect to which such
representations and warranties are not true as of the date made. There
can be no assurance, however, that First Merchants will have the financial
ability to effect any such repurchase. If First Merchants fails to
repurchase any Receivable with respect to which it is in breach of a
representation or warranty, the Seller will have no obligation to purchase
such Receivable from the Trust.

THE SELLER

Information regarding the Seller is set forth under "The Seller" in
the Prospectus. (Additional information regarding the applicable Seller
will be provided in each related Prospectus Supplement)

FIRST MERCHANTS' AUTOMOBILE FINANCING PROGRAM

GENERAL

First Merchants is a specialty finance company primarily engaged in
financing the purchase of used automobiles by acquiring dealer-originated
finance contracts. Since First Merchants' incorporation in March 1991, it
has targeted its marketing efforts on dealers that sell automobiles to
consumers who have limited access to traditional sources of credit ("non-
prime" borrowers). First Merchants serves two customers, the dealer and,
indirectly, the dealer's customer, the "non-prime" borrower. As of June
30, 1996, First Merchants operated dealer service centers ("Dealer Service
Centers") servicing Dealers in 35 states. First Merchants' finance
contract portfolio (net finance receivables, including receivables sold or
held-for-sale, before deducting the allowance for credit losses and
reserves attributable to contracts sold or held for sale) increased to
$479 million at June 30, 1996 from $284 million at December 31, 1995 and
$94 million at December 31, 1994, while maintaining net charge-offs as a
percentage of average net finance receivables of under 6.0%.

The automobile dealer business is highly fragmented and includes
businesses selling principally new automobiles, but also operating a used
automobile business, that are franchised by an automobile manufacturer
("franchised dealers") and businesses selling exclusively used automobiles
that are not affiliated with an automobile manufacturer ("independent
dealers"). During 1996, approximately 80% (by aggregate principal
balance) of the finance contracts purchased by First Merchants were
originated by franchised dealers and the remainder were originated by
independent dealers.

THE INDUSTRY

At December 31, 1995 there were approximately 22,750 franchised
dealers and approximately 63,750 independent dealers. According to
industry data, the used automobile finance market grew from approximately
$141 billion in 1987 to approximately $281 billion in 1995. The
automobile finance market that provides financing to "non-prime" borrowers
is highly fragmented and primarily served by small and locally oriented
companies. Many large financial service entities, such as commercial
banks, credit unions, savings and loans and financing arms of automobile
manufacturers do not solicit business in this segment of the market.
First Merchants also believes that increased regulatory oversight and
capital requirements imposed by governmental agencies have limited the
activities of many commercial banks and savings and loans in the
automobile finance market. In many cases, those organizations electing to
remain in the automobile finance business have migrated toward higher
credit quality customers to allow reductions in their overhead cost
structures and to maintain higher levels of credit quality.

First Merchants believes that demographic and economic trends favor
increased growth in the non-prime segment of the automobile finance
industry. Currently, the average American family must spend a
significantly higher percentage of its income to purchase an automobile
than it did several years ago. According to industry data, the average
price of a new automobile in 1994 represented approximately 59.3% of the
U.S. median family income for that year, an increase from approximately
51.5% in 1986. This increase, combined with increases in the average
useful life of automobiles and the number of late-model used automobiles
available for sale (including rental car and cars that were formerly
leased), have led industry analysts to believe that the market for retail
sales of used automobiles will continue to expand.

BUSINESS STRATEGY

First Merchants' business strategy is to focus its resources on
dealers that sell automobiles to "non-prime" borrowers. The key elements
of First Merchants' business strategy are as follows:

Providing Superior Service to Quality Dealers. By providing prompt,
flexible service and a reliable source of financing for "non-prime"
borrowers, First Merchants helps to expand the dealers' customer base,
thereby increasing the efficiency and effectiveness of their used car
sales operations. First Merchants believes that its guidelines and
procedures allow it to respond quickly to the dealers. First Merchants
typically responds to credit applications on the date received, in many
cases within 2 to 3 hours, and generally pays the dealer within 24 hours
after First Merchants has received required documentation from the dealer.
Management believes that because of its prompt and reliable response time
and geographic proximity to dealers, many dealers conduct business with
First Merchants. As of December 31, 1995, First Merchants serviced
approximately 2,000 dealers, with no single dealer accounting for more
than 3% of First Merchants' finance contract portfolio. Using a hub and
spoke strategy, First Merchants solicits business from automobile dealers
through the business development efforts of its sales force and Dealer
Service Centers. First Merchants evaluates each dealer with which it
establishes a financing relationship to endeavor to ensure that First
Merchants purchases finance contracts from only reputable automobile
dealers carrying an inventory of high quality used automobiles. First
Merchants evaluates historical financial information on prospective
dealers to determine the financial viability of each dealer and assesses
the length of service and reputation of prospective dealers through the
local Better Business Bureau and state regulatory authorities. Each
dealer with which First Merchants establishes a financing relationship
enters into a non-exclusive written dealer agreement (a "Dealer
Agreement") with First Merchants governing First Merchants' finance
contract purchases from the dealer. First Merchants periodically reviews
each dealer's financial information and inspects its physical premises and
automobile inventory to determine whether such dealer appears to be
operating its business satisfactorily and maintaining consistently high
quality inventory. First Merchants' management information systems track
the monthly performance of borrowers' accounts by dealer, allowing First
Merchants to review and evaluate the quality of finance contracts
purchased from each dealer.

Attracting and Retaining Experienced Management Personnel. First
Merchants actively recruits experienced management personnel at the
executive, supervisory and managerial levels. First Merchants believes
that the hiring and retention of such experienced management personnel is
important in maintaining credit quality, supervising its operations and
formulating and implementing its growth strategy. The executive officers
of First Merchants have an average of over 15 years of experience in the
financial services industry. In addition, First Merchants' Directors of
Operations and Directors of Account Services, and the managers of its
Dealer Service Centers and Account Service Centers have an average of over
15 years of experience in the consumer or automobile finance industries.
In addition to recruiting experienced management personnel, First
Merchants places an
emphasis on retaining such personnel through professional development
programs, competitive compensation and equity incentives.

Efficient Operational Structure. First Merchants' operational
structure is designed to maximize dealer service and finance contract
originations, thereby directly contributing to the growth of First
Merchants' finance contract portfolio. First Merchants' sales, credit and
collection functions are organized as follows: (i) a national sales force
dedicated to developing new dealer relationships and expanding the
geographic scope of Dealer Service Centers; (ii) local Dealer Service
Centers, which coordinate with the sales force to build and nurture dealer
relationships through a local market presence, underwrite and process
credit applications and disburse funds to dealers; (iii) "Account Service
Centers", which perform all account servicing functions such as finance
contract verification, payment processing, delinquency follow-ups and
cost-effective recovery of charged-off account balances; and (iv) the
Asset Disposition Group ("ADG"), which arranges the disposition of
repossessed collateral.

First Merchants establishes Dealer Service Centers in locations that
allow First Merchants personnel to provide personalized service to
dealers, while covering a wide geographical area. By utilizing a hub and
spoke strategy, First Merchants through either its Dealer Service Center
managers or its sales professionals meet individually with local dealers
to negotiate dealer agreements, quickly resolve problems as they develop
and respond to the competitive conditions of a particular market.
Management believes that this structure significantly enhances First
Merchants' operations and competitive advantage.

Each Dealer Service Center functions independently of the other
centers and is operated by a full-time Dealer Service Center manager who
reports to a Director of Operations. The Account Service Centers are
primarily responsible for collections, including recoveries of charged-off
account balances, and payment processing. Each Account Service Center is
operated by a Director of Account Services. The ADG arranges the
disposition of repossessed collateral and is under the responsibility of a
Director of Asset Disposition. First Merchants' nine Directors of
Operations are responsible for reviewing compliance with First Merchants'
guidelines and procedures and conducting periodic on-site reviews of First
Merchants' Dealer Service Centers. In addition, Directors of Operations
provide day-to-day guidance to Dealer Service Center managers in making
credit decisions. The Directors of Operations report directly to the Vice
President -- Operations. The Directors of Account Services and the
Director of Asset Disposition report to the Vice President -- Account
Services.

Utilizing Uniform Guidelines and Procedures for Credit Evaluation. To
mitigate the higher risks often associated with "non-prime" borrowers,
First Merchants has developed uniform guidelines and procedures for
evaluating credit applications in connection with the purchase of
automobile finance contracts from dealers. First Merchants' guidelines
and procedures relate to such matters as the borrower's stability of
residence, employment history, credit history, capacity to pay, income,
discretionary income, debt ratio, and credit bureau score, as well as the
value of the collateral. First Merchants has also developed a credit
scoring system with a leading credit evaluating company that is used as an
additional objective guideline for evaluating a "non-prime" borrower's
creditworthiness. In addition, First Merchants has assigned each Dealer
Service Center manager a maximum credit authority per finance contract
based on various factors, including such manager's experience level.
Within the guidelines and procedures established by First Merchants, each
Dealer Service Center manager is authorized to approve or reject credit
applications and to supplement objective credit criteria with subjective
judgment and knowledge of local conditions in making credit decisions. If
the proposed financing amount exceeds the Dealer Service Center manager's
maximum credit authority or does not meet First Merchants' guidelines, the
Dealer Service Center manager must obtain the approval of a Director of
Operations.

First Merchants has a risk based pricing system of interest rates
representing the varying degrees of risk assigned to different ranges of
credit risks.

Proactive Collection Management. First Merchants pursues a policy of
proactive collection management through its Account Service Centers with
respect to both current and delinquent accounts, including activities
related to monthly billing and collections, borrower inquiries and
repossessions. Previously these responsibilities were performed solely at
the Dealer Service Centers. In order to allow Dealer Service Centers to
operate more efficiently, First Merchants operates two Account Service
Centers to perform these tasks. These Account Service Centers service the
Dealer Service Centers. Shortly after First Merchants purchases a finance
contract, personnel at an Account Service Center typically contact the
borrower by telephone to verify the terms of the sale. First Merchants
also sends the borrower a letter which describes the procedures and
schedules for repaying the finance contract and explains First Merchants'
delinquency and repossession policies. The Company utilizes predictive
dialing technology to complement its calling efforts. Any finance
contract for which a payment is one day overdue is treated as a past due
account for collection purposes, and First Merchants typically contacts a
borrower within two days after such borrower's account becomes past due.
First Merchants typically commences repossession procedures before an
account is more than two payments past due. Management believes that
proactive collection management is critical in maintaining a low level of
delinquencies and charge-offs.

Monitoring and Supervising the Operational Structure. First
Merchants has instituted the following three independent control functions
that monitor and review the operations of First Merchants and report their
findings to senior management: (i) Risk Management, which analyzes trends
in the finance contract portfolio and performs daily analyses of new
finance contracts purchased by First Merchants to ensure that such finance
contracts meet First Merchants' credit guidelines and were purchased in
compliance with First Merchants' operational procedures; (ii) Internal
Audit, which performs on-site audits of each Dealer Service Center and
Account Service Center at least annually to ensure compliance with First
Merchants' guidelines and procedures and maintenance of First Merchants'
credit quality standards; and (iii) Directors of Operations, who typically
visit and review the operations of each Dealer Service Center throughout
the year in order to evaluate compliance with First Merchants' policies
and procedures, measure the effectiveness of business development efforts,
and review general portfolio credit and performance quality and office
profitability. Each control function actively utilizes First Merchants'
management information system, which provides real time, on-line reports
on a daily basis and which contains operational information from each of
First Merchants' Dealer Service Centers, Account Service Centers and the
ADG. These functions complement the daily reviews of the volume of
finance contracts purchased, aging of accounts, repossession activities,
and other operating data conducted by all levels of management. See
"First Merchants' Automobile Financing Program -- Management Information
Systems".

CREDIT LOSS EXPERIENCE

The following table summarizes data relating to First Merchants'
charge-off experience and includes Receivables sold or held for sale. The
charge-off experience includes estimated losses to be incurred upon the
sale of repossessed collateral. An account is charged-off at the earliest
of the time the account's collateral is repossessed, the account is 91
days or more past due or the account is otherwise deemed to be
uncollectible.

<TABLE>
<CAPTION>
Six Months Ended
June 30, Year Ended December 31,
---------------------------- ---------------------------------------
1996 1995 1995 1994 1993
------------ -------------- ------------ ----------- --------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Average finance receivables serviced $384,497 $128,000 $171,737 $62,898 $22,005
Net charge-offs managed . . . . . . 11,204 3,051 8,969 2,820 1,016
Net charge-offs as a percentage of
average net finance receivables
serviced - twelve months
preceding the date
set forth above . . . . . . . . . 5.7% 4.7% 5.2% 4.5% 4.6%

</TABLE>

DELINQUENCY EXPERIENCE

A payment is considered past due if the borrower fails to make any
full payment on or before the due date as specified by the terms of the
finance contract. First Merchants typically contacts borrowers whose
payments are not received by the due date within two days after such due
date. For a discussion of First Merchants' delinquency control and
collection strategy, see "First Merchants' Automobile Financing Program --
Delinquency Control and Collection".

The following table summarizes First Merchants' delinquency
experience for accounts with payments 31 days or more past due on both a
number and dollar basis for its finance contract portfolio and includes
Receivables sold or held for sale as of June 30, 1996 and December 31,
1995, 1994 and 1993. The delinquency experience data excludes contracts
where the collateral has been repossessed.

<TABLE>
<CAPTION>
AS OF JUNE 30, As of December 31,
1996 1995 1994 1993
------------------- ------------------- -------------------- -------------------
NUMBER Number Number Number
OF of of of
DOLLARS CONTRACTS Dollars Contracts Dollars Contracts Dollars Contracts
-------- --------- -------- --------- --------- --------- -------- ---------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net finance receivables
serviced . . . . . . . $479,243 49,287 $284,173 31,082 $94,090 12,670 $ 33,563 6,194
Past due accounts:
31 - 60 days . . . . . 11,171 1,253 5,163 595 446 85 178 42
61 days or more . . . . 4,323 494 2,021 251 177 29 24 7
--------- --------- -------- --------- --------- --------- -------- ---------
Total . . . . $15,494 1,747 $ 7,184 846 $ 623 114 $ 202 49
========= ========= ======== ========= ========= ========= ======== =========

Accounts with payments
31 days
or more past due as a
percentage of net
finance
receivables and number
of contracts 3.2% 3.5% 2.5% 2.7% 0.7% 0.9% 0.6% 0.8%
========= ========= ======== ========= ========= ========= ======== =========

</TABLE>

REPOSSESSED COLLATERAL

First Merchants commences repossession procedures against the
underlying collateral when it determines that collection efforts are
likely to be unsuccessful. Repossession generally occurs before a
borrower has missed more than two consecutive monthly payments. In such
cases, the net amount due under the finance contract is reduced to the
estimated fair value of the collateral, less the cost of
disposition. Repossessed collateral included 786, 505, 150 and 69
automobiles at June 30, 1996, December 31, 1995, December 31, 1994 and
December 31, 1993, respectively.

CONTRACT ACQUISITION PROCESS

The following is a summary of the process that First Merchants
typically follows in connection with its acquisition of an automobile
finance contract.

Dealer Relations. Each dealer with which First Merchants establishes
a financing relationship enters into a non-exclusive written Dealer
Agreement with First Merchants, which governs First Merchants' finance
contract purchases from the dealer. A Dealer Agreement generally provides
that the dealer shall indemnify First Merchants against any damages or
liabilities, including reasonable attorneys' fees, arising out of (i) any
breach of a representation or warranty of the dealer set forth in the
Dealer Agreement or (ii) any claim or defense that a borrower may have
against a dealer relating to a finance contract. Representations and
warranties in a Dealer Agreement generally relate to such matters as
whether (i) the financed automobile is free of all liens, claims and
encumbrances except First Merchants' lien, (ii) the down payment specified
in the finance contract has been paid in full and no part of the down
payment was loaned to the borrower by the dealer and (iii) the dealer has
complied with applicable law. If the dealer violates the terms of the
Dealer Agreement with respect to any finance contract, the dealer must
repurchase such contract on demand for the unpaid balance and all other
indebtedness due to First Merchants from the borrower.

Credit Evaluation Procedures. If a "non-prime" borrower elects to
finance the purchase of an automobile through a dealer, the dealer will
submit the borrower's credit application to First Merchants for review of
the borrower's creditworthiness and the proposed transaction terms.
Dealer Service Center personnel conduct such review in accordance with
First Merchants' guidelines and procedures, which generally take into
account, among other things, the individual's stability of residence,
employment history, credit history, ability to pay, income, discretionary
income, debt ratio, and credit bureau score, as well as the value of the
collateral. In addition, Dealer Service Center personnel evaluate a
credit bureau report in order to determine if (i) the individual's credit
quality is deteriorating, (ii) the individual's credit history suggests a
high probability of default or (iii) the individual's credit experience is
too limited for First Merchants to assess the probability of performance.
First Merchants has also developed a credit scoring system with a leading
credit evaluation company that is used as an additional objective
guideline for evaluating a "non-prime" borrower's creditworthiness.
Dealer Service Center personnel may also require verification of certain
applicant or dealer provided information prior to making the credit
decision. Such verification typically requires submission of supporting
documentation, such as a paycheck stub or other substantiation of income,
and is performed solely by First Merchants' personnel. First Merchants
has assigned each Dealer Service Center manager a maximum credit authority
per finance contract based on various factors, including such manager's
experience level. Within the guidelines and procedures established by
First Merchants, each Dealer Service Center manager is authorized to
approve or reject credit applications within such manager's maximum credit
authority and to supplement objective credit criteria with subjective
judgment and knowledge of local conditions in making credit decisions. If
the proposed financing exceeds the Dealer Service Center manager's maximum
credit authority or does not meet First Merchants' guidelines, the Dealer
Service Center manager must also obtain the approval of a Director of
Operations.

After reviewing the credit application and the terms of the sale, the
Dealer Service Center notifies the dealer whether or not First Merchants
would be willing to purchase the finance contract upon sale of the
automobile to the applicant. First Merchants typically responds to
submitted dealer applications on the date received, in many cases within 2
to 3 hours. First Merchants is selective in its approval process. First
Merchants historically has approved approximately 25% of all submitted
credit applications, and approximately 52% of those approved finance
contracts have been purchased by First Merchants. The difference between
the number of applications approved and the number of finance contracts
entered into is due primarily to industry practice whereby the dealer
typically submits
the credit application to more than one finance company and then selects
the finance company that is willing to provide the most favorable terms.
In cases where First Merchants is unwilling to purchase a finance contract
from a dealer under the proposed terms but believes the applicant has the
capacity to meet other repayment obligations, the Dealer Service Center
personnel will work with the dealer to restructure the terms of the
financing or suggest the sale of an alternative automobile with a price
more suited to the applicant's financial means.

Approval Process. When First Merchants approves the purchase of a
finance contract, the Dealer Service Center notifies the dealer by
facsimile or telephone. Such notice specifies all pertinent information
relating to the terms of the approval, including the interest rate, the
term, information about the automobile to be sold, a list of ancillary
products purchased by the borrower and the amount of discount that First
Merchants will take from the principal amount of the finance contract.
Generally, a borrower is required to make a down payment of at least 10%
of the purchase price. First Merchants' guidelines and procedures require
that the advance to the dealers on the underlying collateral cannot exceed
110% of the wholesale value. Generally, advances to dealers have not
exceeded 100% of the automobile's wholesale value.

Contract Purchase. Upon final confirmation of the terms by the
borrower, the dealer completes the sale of the automobile to the borrower.
After the dealer delivers all required documentation to First Merchants,
First Merchants remits funds to the dealer, generally within 24 hours.
Upon purchase of the finance contract, First Merchants acquires a
perfected security interest in the financed automobile. Each finance
contract requires that the automobile be properly insured and that First
Merchants be named as a loss payee, and compliance with these requirements
is verified prior to the remittance of funds to the dealer. Additionally,
First Merchants maintains a blanket insurance policy covering physical
property damages in the event that the borrower does not maintain
insurance.

CONTRACT SERVICING AND ADMINISTRATION

First Merchants' contract servicing and administration activities
have been specifically tailored to the unique challenges of servicing
finance contracts of the "non-prime" borrower. Each Account Service
Center (i) collects payments, (ii) accounts for and posts all payments
received, (iii) responds to borrower inquiries, (iv) takes all necessary
action to maintain the security interest granted in the financed
automobile, (v) investigates delinquencies and communicates with the
borrower to obtain timely payments and (vi) monitors the finance contract
and its related collateral. When necessary, the ADG contracts with third
parties to repossess and dispose of the financed automobile.

First Merchants' activities incorporate proactive procedures and
systems. For example, First Merchants has established a process through
which it attempts to educate borrowers, both in writing and by telephone,
upon First Merchants' purchase of their finance contracts. This process
is designed to ensure that borrowers clearly understand their obligations
and includes a review of the terms of the finance contract with particular
emphasis on the amount and due date of each payment obligation, First
Merchants' expectations as to the timely receipt of payments and
maintenance of insurance coverage and First Merchants' delinquency and
repossession policies.

First Merchants utilizes a monthly billing statement system (rather
than payment coupon books) to remind borrowers of their monthly payment
obligations. This system also serves as an early warning mechanism in the
event that a borrower has failed to notify First Merchants of an address
change. First Merchants typically contacts borrowers whose payments are
not received by the due date earlier than it believes is customary in the
industry, commencing within one to two days after a borrower's due date
and continuing until payment has been received. First Merchants believes
that early and frequent contact with the borrower reinforces the
borrower's recognition of his or her obligation and First Merchants'
expectation of timely payment.

DELINQUENCY CONTROL AND COLLECTION

Personnel at each Account Service Center review accounts that are
past due to assess collection efforts to date and to define the
appropriate collection strategy, if appropriate. Each Account Service
Center designs a collection strategy that includes a specific deadline
before which each delinquent obligation should be collected. Accounts
that have not been collected during such period are again reviewed and,
unless there are specific circumstances which warrant further collection
efforts, such accounts are assigned to an outside agency for repossession.
Repossessed automobiles are generally resold through wholesale auctions.
The elapsed time between repossession and resale is generally 30 to 45
days, including passage of the period during which the law of the
applicable jurisdiction permits the borrower to redeem the automobile.
Since its inception, First Merchants has, on average, recovered
approximately 52% of the principal amount of the finance contracts
relating to its repossessed automobiles. Typically, after repossession,
the borrower will be pursued by recovery specialists based in the Account
Service Centers for any deficiency, subject to applicable legal
limitations.

MANAGEMENT INFORMATION SYSTEMS

Management believes that a high level of information flow and
analysis is essential to control First Merchants' decentralized
organizational structure and to maintain First Merchants' competitive
position. First Merchants has contracted with a third party, Norwest
Financial Information Services Group ("Norwest"), to provide data
processing for First Merchants' portfolio of finance contracts. Norwest
provides on-line, real-time information processing services with terminals
located in each of First Merchants' offices that are connected to
Norwest's main computer center in Des Moines, Iowa. This system allows
for the complete processing of First Merchants' finance contracts,
including application processing, the retrieval of credit bureau reports
and the processing of finance contract purchases, payments to dealers,
payment posting and all other credit and collection monitoring activity.
In addition, each Dealer Service Center and Account Service Center has the
ability to create its own specialized daily informational reports, such as
automatic retrieval of delinquency and collection work lists.

By utilizing third party processing, management believes that it can
focus on the performance of First Merchants' Dealer Service Centers,
Account Service Centers and ADG. Management uses the Norwest system to
track and monitor Dealer Service Center activity on a real-time basis,
allowing senior management, Directors of Operations, Directors of Account
Services, Directors of the ADG and Dealer Service Center managers to
retrieve information for tracking and analysis. In addition, management
uses customized reports, along with a download of information to databases
maintained on personal computers, to analyze First Merchants' portfolio on
a monthly basis.

THE TRUST

GENERAL

The Trust is a business trust formed under the laws of the State of
Delaware pursuant to the Trust Agreement for the transactions described in
this Prospectus Supplement. After its formation, the Trust will not
engage in any activity other than (i) acquiring, holding and managing the
Receivables and the other assets of the Trust and the proceeds therefrom,
(ii) issuing the Notes and the Certificates, (iii) making payments on the
Notes and the Certificates and (iv) engaging in other activities that are
necessary, suitable or convenient to accomplish the foregoing or that are
incidental thereto or connected therewith.

The Trust initially will be capitalized with equity equal to $
, excluding amounts in the Reserve Account.
Certificates with an original principal balance of $
(which represents approximately (1)% of the initial Certificate Balance)
will be sold to the Seller and the
remaining Certificates will be sold to third party investors that are
expected to be unaffiliated with the Seller, First Merchants, the Servicer
and the Trust. The proceeds from the initial sale of the Notes and
Certificates will be used by the Trust to purchase the Receivables from
the Seller pursuant to the Sale and Servicing Agreement. The Servicer
will service the Receivables pursuant to the Sale and Servicing Agreement
and will be compensated for acting as Servicer. See "Description of the
Transfer and Servicing Agreements -- Servicing Compensation" herein. To
facilitate servicing and to minimize administrative burden and expense,
the Servicer will be appointed custodian of the Receivables by the Owner
Trustee, but will not stamp the Receivables to reflect their sale and
assignment by First Merchants to the Seller or by the Seller to the Trust,
or amend the certificates of title of the related Financed Vehicles. In
the absence of amendments to the certificates of title, the Trust may not
have perfected security interests in the Financed Vehicles securing the
Receivables in some states. See "Certain Legal Aspects of the
Receivables" in the Prospectus.

If the protection provided to the investment of the Securityholders
by the Reserve Account is insufficient, the Trust will look only to the
Obligors on the Receivables and the proceeds from the repossession and
sale of Financed Vehicles that secure defaulted Receivables to fund
distributions of principal and interest on the Securities. In such event,
certain factors, such as the Trust's not having a first priority perfected
security interest in some of the Financed Vehicles, may affect the Trust's
ability to realize on the collateral securing the Receivables and thus may
reduce the proceeds to be distributed to Securityholders with respect to
the Securities. See "Description of the Transfer and Servicing Agreements
-- Distributions" and "-- Reserve Account" herein and "Certain Legal
Aspects of the Receivables" in the Prospectus.

The Trust's principal offices are located in
, Delaware, in care of
, as Owner Trustee, at the address listed below under "--
The Owner Trustee".

CAPITALIZATION OF THE TRUST

The following table illustrates the capitalization of the Trust as of
the Cutoff Date, as if the issuance and sale of the Notes and the
Certificates had taken place on such date:

Class A-1 Notes . . . . . . . . . . . . . . . . . . . . . $
Class A-2 Notes . . . . . . . . . . . . . . . . . . . . .
Certificates . . . . . . . . . . . . . . . . . . . . .
----------
Total . . . . . . . . . . . . . . . . . . . $
==========

THE OWNER TRUSTEE

is the Owner Trustee under the Trust Agreement.
is a banking corporation and
its principal offices are located at . The
Owner Trustee's liability in connection with the issuance and sale of the
Notes and Certificates is limited solely to the express obligations of the
Owner Trustee set forth in the Trust Agreement and the Sale and Servicing
Agreement. The Seller and its affiliates may maintain normal commercial
banking relations with the Owner Trustee and its affiliates.

THE RECEIVABLES POOL

The Receivables were originated or purchased from Dealers by First
Merchants in the ordinary course of business, and were selected from First
Merchants' portfolio for inclusion in the Receivables Pool based on
several criteria, including the following: (i) on the Cutoff Date, each
Receivable had an outstanding gross balance of at least $
, (ii) as of the Cutoff Date, none of the Receivables was more than
days past due and (iii) as of the Cutoff Date, no Obligor on any
Receivable was noted in First Merchant's records as being the subject of a
bankruptcy proceeding.
Certain additional criteria that each Receivable must meet are set forth
in the Prospectus under "The Receivables Pools". No selection procedures
believed by either First Merchants or the Seller to be adverse to
Securityholders were used in selecting the Receivables.

The composition and distribution of the Receivables Pool as of the
Cutoff Date are as set forth in the following tables.

COMPOSITION OF THE RECEIVABLES POOL AS OF THE CUTOFF DATE
<TABLE>
<CAPTION>
Weighted Aggregate Number of Weighted Average Weighted Average Average
Average APR Principal Balance Receivables Remaining Term Original Term Principal Balance
----------- ----------------- ----------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
% $ months months $

DISTRIBUTION BY APR OF THE RECEIVABLES POOL AS OF THE CUTOFF DATE

</TABLE>
<TABLE>
<CAPTION>
Percentage of
Number of Aggregate Aggregate
APR Range Receivables Principal Balance Principal Balance/(1)/
- ----------------------- ----------- ----------------- ----------------------
<S> <C> <C> <C>
(Dollars in Thousands)
0.00% to 15.00% $ %
15.01% to 16.00%
16.01% to 17.00%
17.01% to 18.00%
18.01% to 19.00%
19.01% to 20.00%
20.01% to 21.00%
21.01% to 22.00%
22.01% to 23.00%
23.01% to 24.00%
24.01% to 25.00%
Greater than 25.00%
----------- ----------------- ----------------------
$ 100%
=========== ================= ======================
</TABLE>

___________________
/(1)/ Percentages may not add to 100.00% because of rounding.

DISTRIBUTION BY REMAINING PRINCIPAL BALANCE OF THE RECEIVABLES POOL AS OF
THE CUTOFF DATE
<TABLE>
<CAPTION>
Percentage of
Range of Remaining Number of Aggregate Aggregate
Principal Balances Receivables Principal Balance Principal Balance/(1)/
------------------ ----------- ----------------- ----------------------
<S> <C> <C> <C>
(Dollars in Thousands)

$ 1,000 to $ 2,499 . . . $ %
$ 2,500 to $ 4,999 . . .
$ 5,000 to $ 7,499 . . .
$ 7,500 to $ 9,999 . . .
$10,000 to $12,499 . . .
$12,500 to $14,999 . . .
$15,000 to $17,499 . . .
$17,500 to $19,999 . . .
$20,000 to $22,499 . . .
$22,500 to $24,999 . . .
$25,000 to $27,499 . . .
$27,500 to $29,999 . . .
$30,000 to $39,999 . . .
$40,000 to $49,999 . . .
----------- ----------------- ----------------------
Total $ 100.00%
=========== ================= ======================
</TABLE>
_____________
/(1)/ Percentages may not add to 100.00% because of rounding.

DISTRIBUTION BY REMAINING TERM OF THE RECEIVABLES POOL AS OF THE CUTOFF
DATE
<TABLE>
<CAPTION>

Percentage of
Number of Aggregate Aggregate
Range of Remaining Terms Receivables Principal Balances Principal Balance/(1)/
------------------------ ------------- ------------------ -----------------------
<S> <C> <C> <C>
(Dollars in Thousands)
3 to 11 months . . . $ %
12 to 17 months . . .
18 to 23 months . . .
24 to 29 months . . .
30 to 35 months . . .
36 to 41 months . . .
42 to 47 months . . .
48 to 53 months . . .
54 to 59 months . . .
60 to 65 months . . .
66 to 72 months . . .
------------- ------------------ -----------------------
Total $ 100.00%
============= ================== =======================
</TABLE>
-------------------
/(1)/ Percentages may not add to 100.00% because of rounding.

GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES POOL AS OF THE CUTOFF DATE

<TABLE>
<CAPTION>
Percentage of
Number of Aggregate Aggregate
State/(1)/ Receivables Principal Balance Principal Balance/(2)/
------------ ----------- ----------------- ----------------------
<S> <C> <C> <C>
(Dollars in Thousands)

----------- ----------------- ----------------------
Total $ 100.00%
=========== ================= ======================

</TABLE>
_____________
/(1)/ Based on billing addresses of the Obligors.
/(2)/ Percentages may not add to 100.00% because of rounding.

As of the Cutoff Date, approximately % of the Receivables,
by aggregate principal balance, constitute Precomputed Receivables and
% of the Receivables constitute Simple Interest Receivables. See
"The Receivables Pools" in the Prospectus for a description of the
characteristics of Precomputed Receivables and Simple Interest
Receivables. As of the Cutoff Date, approximately % of the
aggregate principal balance of the Receivables, constituting % of
the number of Receivables, represent used vehicles.

WEIGHTED AVERAGE LIFE OF THE SECURITIES

Information regarding certain maturity and prepayment considerations
with respect to the Securities is set forth under "Weighted Average Life
of the Securities" in the Prospectus. In addition, holders of the Class
A-2 Notes will not receive any principal payments until the Class A-1
Notes are paid in full, and holders of the Certificates will not receive
any principal payments until the Class A-1 Notes and the Class A-2 Notes
have been paid in full. See "Description of the Notes -- Payments of
Principal" and "Description of the Certificates -- Distributions of
Principal" herein. As the rate of payment of principal of each class of
Notes and the Certificates depends on the rate of payment (including
prepayments) of the principal balance of the Receivables, final payment of
the Class A-1 Notes or the Class A-2 Notes and the final distribution in
respect of the Certificates could occur significantly earlier than the
Class A-1 Final Scheduled Payment Date, the Class A-2 Final Scheduled
Payment Date or the Final Scheduled Distribution Date, as applicable.
Securityholders will bear the risk of being able to reinvest principal
payments on the Securities at yields at least equal to the yield on their
respective Securities.

DESCRIPTION OF THE NOTES

GENERAL

The Notes will be issued pursuant to the terms of the Indenture, a
form of which has been filed as an exhibit to the Registration Statement.
A copy of the Indenture will be filed with the Commission following the
issuance of the Securities. The following summary describes certain terms
of the Notes and the Indenture. The summary does not purport to be
complete and is subject to, and is qualified in its entirety by reference
to, all the provisions of the Notes and the Indenture. Where particular
provisions or terms used in the Indenture are referred to, the actual
provisions (including definitions of terms) are incorporated by reference
as part of this summary. The following summary supplements the
description of the general terms and provisions of the Notes of any given
Series and the description
of the related Indenture set forth under the headings "Description of the
Notes" and "Certain Information Regarding the Securities" in the
Prospectus, to which descriptions reference is hereby made.
, a banking corporation,
will be the Indenture Trustee under the Indenture.

PAYMENTS OF INTEREST

Interest on the principal balance of the Class A-1 Notes and the
Class A-2 Notes will accrue at the Class A-1 Rate and Class A-2 Rate,
respectively, and will be payable to the holders of the Class A-1 Notes
and the Class A-2 Notes monthly on each Distribution Date commencing
, 199 . Interest with respect to any Distribution Date
will accrue from and including the most recent Distribution Date on which
interest was distributed to Noteholders (or, with respect to the first
Distribution Date, from and including the Closing Date) to but excluding
such Distribution Date. Interest on each class of Notes will be
calculated on the basis of a 360-day year of twelve 30-day months.
Interest accrued as of any Distribution Date but not paid on such
Distribution Date will be due on the next Distribution Date, together with
interest on such amount at the applicable Interest Rate (to the extent
lawful). Interest payments on the Notes will generally be made out of the
Total Distribution Amount remaining after the payment of the Servicing Fee
and the Reserve Account. See "Description of the Transfer and Servicing
Agreements -- Distributions" and "-- Reserve Account" herein. Interest
payments to holders of both classes of Notes will have the same priority.
Under certain circumstances, the amount available for such payments could
be less than the amount of interest payable on the Notes on any
Distribution Date, in which case the holders of each class of Notes will
receive their ratable share (based on the aggregate amount of interest due
on each class of Notes) of the aggregate amount available for distribution
in respect of interest on the Notes.

PAYMENTS OF PRINCIPAL

On each Distribution Date for as long as the Class A-1 Notes are
outstanding, principal of the Class A-1 Notes will be distributed to
holders of the Class A-1 Notes in an amount equal to the Total
Distribution Amount remaining after payment of the Servicing Fee and the
Noteholders' Interest Distributable Amount for such date. On each
Distribution Date from and including the Distribution Date on which the
Class A-1 Notes are paid in full and for as long as the Class A-2 Notes
are outstanding, principal will be distributed to holders of the Class A-2
Notes in an amount equal to the Total Distribution Amount remaining after
payment of the Servicing Fee, the Noteholders' Interest Distributable
Amount and, on the Distribution Date on which the outstanding principal
amount of the Class A-1 Notes is reduced to zero, any amounts distributed
as principal to holders of the Class A-1 Notes and funds available, if
any, in the Reserve Account. No principal will be paid on the Class A-2
Notes until the Class A-1 Notes have been paid in full. See "Description
of the Transfer and Servicing Agreements -- Distributions" and "-- Reserve
Account" herein.

The principal balance of the Class A-1 Notes, to the extent not
previously paid, will be due on the Class A-1 Final Scheduled Payment Date
and the principal balance of the Class A-2 Notes, to the extent not
previously paid, will be due on the Class A-2 Final Scheduled Payment
Date. The actual date on which the aggregate outstanding principal amount
of either the Class A-1 Notes or the Class A-2 Notes is paid in full may
be earlier than the applicable Final Scheduled Payment Date set forth
above due to a variety of factors, including those described under
"Weighted Average Life of the Securities" herein and in the Prospectus.

OPTIONAL REDEMPTION

The Class A-2 Notes may be redeemed in whole, but not in part, on any
Distribution Date on which the Servicer exercises its option to purchase
the Receivables, which the Servicer may do after the aggregate outstanding
principal amount of the Receivables is reduced to 10% or less of the
original Pool Balance. See "Description of the Transfer and Servicing
Agreements -- Termination" in the
Prospectus. The redemption price for the Class A-2 Notes will equal the
unpaid principal amount of the Class A-2 Notes plus accrued and unpaid
interest thereon.

DESCRIPTION OF THE CERTIFICATES

GENERAL

The Certificates will be issued pursuant to the terms of the Trust
Agreement, a form of which has been filed as an exhibit to the
Registration Statement. A copy of the Trust Agreement will be filed with
the Commission following the issuance of the Securities. The following
summary describes certain terms of the Certificates and the Trust
Agreement. This summary does not purport to be complete and is subject
to, and qualified in its entirety by reference to, all the provisions of
the Certificates and the Trust Agreement. The following summary
supplements the description of the general terms and provisions of the
Certificates of any given Series and the description of the related Trust
Agreement set forth in the Prospectus, to which descriptions reference is
hereby made.

DISTRIBUTIONS OF INTEREST

Certificateholders will be entitled to distributions of interest on
each Distribution Date beginning on , 199 .
Interest will accrue on the Certificates at the Pass-Through Rate on the
Certificate Balance as of the preceding Distribution Date (or with respect
to the first Distribution Date, on the Closing Date) after giving effect
to distributions on such Distribution Date. Interest distributable with
respect to the Certificates on a Distribution Date will accrue from and
including the most recent Distribution Date on which interest was
distributed to Certificateholders (or, with respect to the first
Distribution Date, from and including the Closing Date) to but excluding
such Distribution Date and will be calculated on the basis of a 360-day
year of twelve 30-day months. Interest distributions due but not
distributed on any Distribution Date will be due on the next Distribution
Date, with interest on such overdue interest at the Pass-Through Rate (to
the extent lawful). Interest distributions with respect to the
Certificates generally will be funded from the portion of the Total
Distribution Amount and funds in the Reserve Account remaining after the
distribution of the Servicing Fee and the Noteholders' Distributable
Amount. See "Description of the Transfer and Servicing Agreements --
Distributions" and "-- Reserve Account" herein.

DISTRIBUTIONS OF PRINCIPAL

Certificateholders will not be entitled to distributions of principal
on any Distribution Date until the Notes have been paid in full. On each
Distribution Date on and after the Distribution Date on which the Class A-
2 Notes are paid in full, the Certificateholders will be entitled to
distributions of principal in a maximum amount equal to the lesser of (i)
the Total Distribution Amount plus any funds in the Reserve Account
remaining after payment of the Servicing Fee, the Noteholders'
Distributable Amount (on the Distribution Date on which the outstanding
principal amount of the Class A-2 Notes is reduced to zero) and the
Certificateholders' Interest Distributable Amount and (ii) the outstanding
Certificate Balance. See "Description of the Transfer and Servicing
Agreements -- Distributions" and "-- Reserve Account" herein.

OPTIONAL PREPAYMENT

If the Servicer exercises its option to purchase the Receivables,
which it may do when the aggregate outstanding principal amount of the
Receivables is reduced to 10% or less of the original Pool Balance, the
Certificateholders will receive an amount in respect of the Certificates
equal to the outstanding Certificate Balance, together with accrued
interest thereon at the Pass-Through Rate, which distribution shall effect
an early retirement of the Certificates. See "Description of the Transfer
and Servicing Agreements -- Termination" in the Prospectus.

DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS

The following summary describes certain terms of the Receivables
Purchase Agreement, the Sale and Servicing Agreement, the Administration
Agreement and the Trust Agreement (collectively, the "Transfer and
Servicing Agreements"). Forms of the Transfer and Servicing Agreements
have been filed as exhibits to the Registration Statement. A copy of the
Transfer and Servicing Agreements will be filed with the Commission
following the issuance of the Securities. This summary does not purport
to be complete and is subject to, and is qualified in its entirety by
reference to, all the provisions of the Transfer and Servicing Agreements.
The following summary supplements the description of the general terms and
provisions of the Transfer and Servicing Agreements (as such term is used
in the Prospectus) set forth under the heading "Description of the
Transfer and Servicing Agreements" in the Prospectus, to which description
reference is hereby made.

SALE AND ASSIGNMENT OF RECEIVABLES

Certain information with respect to the conveyance of the Receivables
on the Closing Date by First Merchants to the Seller pursuant to the
Receivables Purchase Agreement and by the Seller to the Trust pursuant to
the Sale and Servicing Agreement is set forth under "Description of the
Transfer and Servicing Agreements -- Sale and Assignment of Receivables"
in the Prospectus. See also "The Receivables Pool" herein and "The
Receivables Pools" in the Prospectus for additional information regarding
the Receivables and certain obligations of First Merchants and the
Servicer with respect to the Receivables.

ACCOUNTS

In addition to the Accounts referred to under "Description of the
Transfer and Servicing Agreements -- Trust Accounts" in the Prospectus,
the Seller will also establish and maintain the Reserve Account with the
Indenture Trustee, in the name of the Indenture Trustee on behalf of the
Noteholders and the Certificateholders.

SERVICING COMPENSATION

The Servicer will be entitled to receive the Servicing Fee for each
Collection Period in an amount equal to % per annum of the Pool
Balance as of the first day of such Collection Period. The Servicing Fee
(together with any portion of the Servicing Fee that remains unpaid from
prior Distribution Dates) will be paid on each Distribution Date solely
out of the Interest Distribution Amount; however, the Servicing Fee will
be paid to the Servicer prior to the distribution of any portion of the
Interest Distribution Amount to Noteholders and Certificateholders. See
"Description of the Transfer and Servicing Agreements -- Servicing
Compensation and Payment of Expenses" in the Prospectus.

DISTRIBUTIONS

Deposits to Collection Account. On or about the Business Day
of each month, the Servicer will provide the Indenture Trustee with
certain information with respect to the related Collection Period,
including the amount of aggregate collections on the Receivables and the
aggregate Repurchase Amount of Receivables to be repurchased by First
Merchants or to be purchased by the Servicer.

On or before each Distribution Date, the Servicer will cause the
Total Distribution Amount to be deposited into the Collection Account.
The "Total Distribution Amount" for a Distribution Date will equal the sum
of the Interest Distribution Amount and the Principal Distribution Amount
(other than the portion thereof attributable to Realized Losses) for such
Distribution Date. "Realized Losses" means the excess of the principal
balance of any Liquidated Receivable over Liquidation Proceeds to the
extent allocable to principal.

The "Interest Distribution Amount" for a Distribution Date will equal
the sum of the following amounts with respect to the related Collection
Period: (i) that portion of all collections on the Receivables allocable
to interest; (ii) all proceeds of the liquidation of defaulted Receivables
("Liquidated Receivables"), net of expenses incurred by the Servicer in
connection with such liquidation and any amounts required by law to be
remitted to the related Obligor ("Liquidation Proceeds"), to the extent
attributable to interest due thereon in accordance with the Servicer's
customary servicing procedures, and all recoveries in respect of
Liquidated Receivables that were written off in prior Collection Periods;
(iii) the Repurchase Amount of each Receivable that was repurchased by
First Merchants or purchased by the Servicer during the related Collection
Period, to the extent attributable to accrued interest thereon; and (iv)
Investment Earnings for such Distribution Date.

The "Principal Distribution Amount" for a Distribution Date will
equal the sum of the following amounts with respect to the related
Collection Period: (i) that portion of all collections on the Receivables
allocable to principal; (ii) all Liquidation Proceeds attributable to the
principal amount of Receivables that became Liquidated Receivables during
such Collection Period in accordance with the Servicer's customary
servicing procedures, plus all Realized Losses with respect to such
Liquidated Receivables; (iii) to the extent attributable to principal, the
Repurchase Amount received with respect to each Receivable repurchased by
First Merchants or purchased by the Servicer during the related Collection
Period; (iv) losses caused by the issuance of an order by a court in any
insolvency proceeding reducing the amount owed under a Receivable and (v)
partial prepayments relating to refunds of extended warranty protection
plan costs or of physical damage, credit life or disability insurance
policy premiums, but only if such costs or premiums were financed by the
respective Obligor as of the date of the original Contract.

The Interest Distribution Amount and the Principal Distribution
Amount on any Distribution Date shall exclude all payments and proceeds
(including Liquidation Proceeds) of any Receivables the Repurchase Amount
of which has been included in the Total Distribution Amount in a prior
Collection Period.

Deposits to the Distribution Accounts. On each Distribution Date,
the Servicer will instruct the Indenture Trustee to make the following
deposits and distributions, to the extent of the Total Distribution
Amount, in the following order of priority:

(i) to the Servicer, from the Interest Distribution Amount, the
Servicing Fee and all unpaid Servicing Fees from prior Collection
Periods;

(ii) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of clause (i),
the Noteholders' Interest Distributable Amount;

(iii) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of clauses (i)
and (ii), the Noteholders' Principal Distributable Amount;

(iv) to the Certificate Distribution Account, from the Total
Distribution Amount remaining after the application of clauses (i)
through (iii), the Certificateholders' Interest Distributable Amount;

(v) to the Certificate Distribution Account, from the Total
Distribution Amount remaining after the application of clauses (i)
through (iv), the Certificateholders' Principal Distributable Amount;
and

(vi) to the Reserve Account, the Total Distribution Amount
remaining after the application of clauses (i) through (v).

For purposes hereof, the following terms shall have the following
meanings:

"Noteholders' Distributable Amount" means, with respect to any
Distribution Date, the sum of the Noteholders' Principal
Distributable Amount and the Noteholders' Interest Distributable
Amount.

"Noteholders' Interest Distributable Amount" means, with respect
to any Distribution Date, the sum of the Noteholders' Monthly
Interest Distributable Amount for such Distribution Date and the
Noteholders' Interest Carryover Shortfall for such Distribution Date.

"Noteholders' Monthly Interest Distributable Amount" means, with
respect to any Distribution Date, 30 days of interest (or, in the
case of the first Distribution Date, interest accrued from and
including the Closing Date to but excluding such Distribution Date)
on the Class A-1 Notes and the Class A-2 Notes at the Class A-1 Rate
and the Class A-2 Rate, respectively, on the respective outstanding
principal balance of the Notes of such class on the immediately
preceding Distribution Date (or, in the case of the first
Distribution Date, on the Closing Date) after giving effect to all
payments of principal to the Noteholders of such class on or prior to
such Distribution Date.

"Noteholders' Interest Carryover Shortfall" means, with respect
to any Distribution Date, (i) the excess of the Noteholders' Monthly
Interest Distributable Amount for the preceding Distribution Date,
plus any outstanding Noteholders' Interest Carryover Shortfall on
such preceding Distribution Date, over the amount in respect of
interest that is actually deposited in the Note Distribution Account
on such preceding Distribution Date, plus (ii) interest on the amount
of interest due but not paid to Noteholders on the preceding
Distribution Date, to the extent permitted by law, at the respective
Interest Rates borne by each class of the Notes from such preceding
Distribution Date to but excluding such current Distribution Date.

"Noteholders' Principal Distributable Amount" means, with
respect to any Distribution Date, the sum of the Noteholders' Monthly
Principal Distributable Amount for such Distribution Date and the
Noteholders' Principal Carryover Shortfall as of the close of the
preceding Distribution Date; provided, however, that the Noteholders'
Principal Distributable Amount shall not exceed the outstanding
principal balance of the Notes. In addition, (i) on the Class A-1
Final Scheduled Payment Date, the Noteholder's Principal
Distributable Amount will not be less than the amount that is
necessary (after giving effect to all other amounts to be deposited
in the Note Distribution Account on such Distribution Date and
allocable to principal) to reduce the outstanding principal balance
of the Class A-1 Notes to zero; and (ii) on the Class A-2 Final
Scheduled Payment Date the Noteholders' Principal Distributable
Amount will not be less than the amount that is necessary (after
giving effect to all other amounts to be deposited in the Note
Distribution Account on such Distribution Date and allocable to
principal) to reduce the outstanding principal balance of the Class
A-2 Notes to zero.

"Noteholders' Monthly Principal Distributable Amount" means,
with respect to any Distribution Date for as long as the Class A-1
Notes or the Class A-2 Notes are outstanding, 100% of the Principal
Distribution Amount; provided, however, that on the Distribution Date
on which the principal balance of the Class A-2 Notes is reduced to
zero, the portion, if any, of the Principal Distribution Amount that
is not applied to the principal of the Class A-2 Notes will be
applied to the Certificate Balance.

"Noteholders' Principal Carryover Shortfall" means, as of the
close of any Distribution Date, the excess of the Noteholders'
Monthly Principal Distributable Amount and any outstanding
Noteholders' Principal Carryover Shortfall from the preceding
Distribution Date over the amount in respect of principal that is
actually deposited in the Note Distribution Account.

"Certificateholders' Distributable Amount" means, with respect
to any Distribution Date, the sum of the Certificateholders'
Principal Distributable Amount and the Certificateholders' Interest
Distributable Amount.

"Certificateholders' Interest Distributable Amount" means, with
respect to any Distribution Date, the sum of the Certificateholders'
Monthly Interest Distributable Amount for such Distribution Date and
the Certificateholders' Interest Carryover Shortfall for such
Distribution Date.

"Certificateholders' Monthly Interest Distributable Amount"
means, with respect to any Distribution Date, 30 days of interest
(or, in the case of the first Distribution Date, interest accrued
from and including the Closing Date to but excluding such
Distribution Date) at the Pass-Through Rate on the Certificate
Balance on the last day of the preceding Collection Period (or, in
the case of the first Distribution Date, on the Closing Date) after
giving effect to all distributions of principal to the
Certificateholders on or prior to such Distribution Date.

"Certificateholders' Interest Carryover Shortfall" means, with
respect to any Distribution Date, the excess of the
Certificateholders' Monthly Interest Distributable Amount for the
preceding Distribution Date and any outstanding Certificateholders'
Interest Carryover Shortfall on such preceding Distribution Date,
over the amount in respect of interest that is actually deposited in
the Certificate Distribution Account on such preceding Distribution
Date, plus interest on such excess, to the extent permitted by law,
at the Pass-Through Rate from such preceding Distribution Date to but
excluding such current Distribution Date.

"Certificateholders' Principal Distributable Amount" means, with
respect to any Distribution Date, the sum of the Certificateholders'
Monthly Principal Distributable Amount for such Distribution Date and
the Certificateholders' Principal Carryover Shortfall as of the close
of the preceding Distribution Date; provided, however, that the
Certificateholders' Principal Distributable Amount shall not exceed
the Certificate Balance. In addition, on the Final Scheduled
Distribution Date, the principal required to be distributed to
Certificateholders will include the lesser of (a) the sum of (i) any
scheduled payments of principal due and remaining unpaid on each
Precomputed Receivable and (ii) any principal due and remaining
unpaid on each Simple Interest Receivable, in each case, owned by the
Trust as of the Final Scheduled Maturity Date or (b) the amount that
is necessary (after giving effect to the other amounts to be
deposited in the Certificate Distribution Account on such
Distribution Date and allocable to principal) to reduce the
Certificate Balance to zero.

"Certificateholders' Monthly Principal Distributable Amount"
means, with respect to any Distribution Date prior to the
Distribution Date on which the Notes are paid in full, zero; and with
respect to any Distribution Date commencing on the Distribution Date
on which the Notes are paid in full, 100% of the Principal
Distribution Amount (less, on the Distribution Date on which the
Notes are paid in full, the portion thereof payable as principal of
the Notes).

"Certificateholders' Principal Carryover Shortfall" means, as of
the close of any Distribution Date, the excess of the
Certificateholders' Monthly Principal Distributable Amount and any
outstanding Certificateholders' Principal Carryover Shortfall from
the preceding Distribution Date, over the amount in respect of
principalthatis actuallydepositedintheCertificate DistributionAccount.

"Certificate Balance" equals, initially, $
and, thereafter, equals the initial Certificate Balance,
reduced by all amounts allocable to principal previously distributed
to Certificateholders and all Realized Losses allocable to the
Certificates.

On each Distribution Date, all amounts on deposit in the Note
Distribution Account generally will be paid in the following order of
priority:

(i) to the applicable Noteholders, accrued and unpaid interest
on the outstanding principal balance of the applicable class of Notes
at the applicable Interest Rate;

(ii) to the Class A-1 Noteholders in reduction of principal
until the principal balance of the Class A-1 Notes has been reduced
to zero; and

(iii) to the Class A-2 Noteholders in reduction of principal
until the principal balance of the Class A-2 Notes has been reduced
to zero.

On each Distribution Date, all amounts on deposit in the Certificate
Distribution Account will be distributed to the Certificateholders, first,
on account of the Certificateholders Interest Distributable Amount and
second, on account of the Certificateholder's Principal Distributable
Amount.

RESERVE ACCOUNT

The rights of the Certificateholders to receive distributions with
respect to the Receivables generally will be subordinated to the rights of
the Noteholders in the event of defaults or delinquencies on the
Receivables, as provided in the Sale and Servicing Agreement. The
protection afforded to the Noteholders through subordination will be
effected both by the preferential right of the Noteholders to receive
current distributions with respect to the Receivables and by the
establishment of the Reserve Account. The Reserve Account will be created
with an initial deposit by the Seller on the Closing Date of $
. In addition, on each Distribution Date until the amount on
deposit in the Reserve Account equals (state amount or formula for
determining amount) (the "Specified Reserve Account Balance"), all amounts
remaining in the Collection Account after payment of the Servicing Fee,
the Noteholders' Distributable Amount and the Certificateholders'
Distributable Amount will be deposited into the Reserve Account.
Thereafter, the amount available in the Reserve Account will be reinstated
on each Distribution Date up to the Specified Reserve Account Balance by
the deposit thereto of any portion of the Total Distribution Amount
remaining after payment on such date of the Servicing Fee, the
Noteholders' Distributable Amount and the Certificateholders'
Distributable Amount. If the amount on deposit in the Reserve Account on
any Distribution Date (after giving effect to all deposits or withdrawals
therefrom on such Distribution Date) is greater than the Specified Reserve
Account Balance for such Distribution Date, the Servicer will instruct the
Indenture Trustee to distribute an amount equal to such excess to the
Seller, subject to certain limitations set forth in the Sale and Servicing
Agreement. Upon any distribution to the Seller of amounts from the
Reserve Account, neither the Noteholders nor the Certificateholders will
have any rights in, recourse against or claims to, such amounts.

Except as provided in the previous paragraph, amounts held from time
to time in the Reserve Account will continue to be held for the benefit of
the Noteholders and Certificateholders. Funds will be withdrawn from cash
in the Reserve Account to the extent that the Total Distribution Amount
(after the payment of the Servicing Fee) with respect to any Collection
Period is less than the Noteholders' Distributable Amount and will be
deposited to the Note Distribution Account for distribution to the
Noteholders. In addition, funds will be withdrawn from cash in the
Reserve Account to the extent that the portion of the Total Distribution
Amount remaining after the payment of the Servicing Fee and the deposit of
the Noteholders' Distributable Amount to the Note Distribution Account is
less than the Certificateholders' Distributable Amount and will be
deposited to the Certificate Distribution Account for distribution to the
Certificateholders.

If on any Distribution Date the entire Noteholders' Distributable
Amount for such Distribution Date (after giving effect to any amounts
withdrawn from the Reserve Account) is not deposited in the Note
Distribution Account, the Certificateholders generally will not receive
any distributions.

The subordination of the Certificates and the Reserve Account are
intended to enhance the likelihood of receipt by Noteholders of the full
amount of principal and interest due to them and to
decrease the likelihood that the Noteholders will experience losses. In
addition, the Reserve Account is intended to enhance the likelihood of
receipt by Certificateholders of the full amount of principal and interest
due to them and to decrease the likelihood that the Certificateholders
will experience losses. However, in certain circumstances, the Reserve
Account could be depleted.

ERISA CONSIDERATIONS

THE NOTES

The Notes may be purchased by an employee benefit plan or an
individual retirement account (a "Plan") subject to the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") or Section
4975 of the Internal Revenue Code of 1986, as amended (the "Code"). A
fiduciary of a Plan must determine that the purchase of a Note is
consistent with its fiduciary duties under ERISA and will not result in a
nonexempt prohibited transaction as defined in Section 406 of ERISA or
Section 4975 of the Code. For additional information regarding treatment
of the Notes under ERISA, see "ERISA Considerations" in the Prospectus.

THE CERTIFICATES

The Certificates may not be acquired by (a) an employee benefit plan
(as defined in Section 3(3) of ERISA) that is subject to the provisions of
Title I of ERISA, (b) a plan described in Section 4975(e) (1) of the Code
or (c) any entity whose underlying assets include plan assets by reason of
a plan's investment in the entity. By its acceptance of a Certificate,
each Certificateholder will be deemed to have represented and warranted
that it is not subject to the foregoing limitations. For additional
information regarding treatment of the Certificates under ERISA, see
"ERISA Considerations" in the Prospectus.

UNDERWRITING

Subject to the terms and conditions set forth in the Underwriting
Agreement relating to the Notes and the Certificates (the "Underwriting
Agreement"), the Seller has agreed to cause the Trust to sell to Salomon
Brothers Inc (the "Underwriter"), and the Underwriter has agreed to
purchase, all of the Securities.

The Seller has been advised by the Underwriter that it proposes to
offer the Securities to the public initially at the public offering prices
set forth on the cover page of this Prospectus Supplement, and to certain
dealers at such prices less a concession of % per Class A-1 Note,
% per Class A-2 Note and % per Certificate; that the
Underwriter and such dealers may allow a discount of % per Class
A-1 Note, % per Class A-2 Note and % per Certificate on
sales to certain other dealers; and that after the initial public offering
of the Securities, the public offering prices and the concessions and
discounts to dealers may be changed by the Underwriter.

The Underwriting Agreement provides that the Seller will indemnify
the Underwriter against certain liabilities, including liabilities under
applicable securities laws, or contribute to payments the Underwriter may
be required to make in respect thereof.

The Trust may, from time to time, invest the funds in the Trust
Accounts in Eligible Investments acquired from the Underwriter.

The closing of the sale of the Certificates is conditioned on the
closing of the sale of the Notes, and the closing of the sale of the Notes
is conditioned on the closing of the sale of the Certificates.

Upon receipt of a request by an investor who has received an
electronic Prospectus Supplement and Prospectus from the Underwriter or of
such investor's representative within the period during which there is an
obligation to deliver a Prospectus Supplement and Prospectus, the Seller
or the Underwriter will promptly deliver, or cause to be delivered,
without charge, a paper copy of the Prospectus Supplement and the
Prospectus.

LEGAL MATTERS

Certain legal matters relating to the Securities will be passed upon
for the Trust and the Seller by Sonnenschein Nath & Rosenthal, Chicago,
Illinois. Certain federal income tax and other matters will be passed
upon for the Trust by Brown & Wood LLP, New York, New York and certain
state income and business tax matters will be passed upon for the Trust by
Sonnenschein Nath & Rosenthal. It is anticipated that Sonnenschein Nath &
Rosenthal will from time to time render legal services to the Seller, the
Servicer and their affiliates.

INDEX OF TERMS

ADG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-12
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Certificate Balance . . . . . . . . . . . . . . . . . . . . . . . . . S-27
Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . S-6
Certificateholders' Distributable Amount . . . . . . . . . . . . . . S-26
Certificateholders' Interest Carryover Shortfall . . . . . . . . . . S-27
Certificateholders' Interest Distributable Amount . . . . . . . . . . S-27
Certificateholders' Monthly Interest Distributable Amount . . . . . . S-27
Certificateholders' Monthly Principal Distributable Amount . . . . . S-27
Certificateholders' Principal Carryover Shortfall . . . . . . . . . . S-27
Certificateholders' Principal Distributable Amount . . . . . . . . . S-27
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . Cover, S-3
Class A-1 Final Scheduled Payment Date . . . . . . . . . . . . . . . S-5
Class A-1 Notes . . . . . . . . . . . . . . . . . . . . . . . . Cover, S-3
Class A-1 Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Class A-2 Final Scheduled Payment Date . . . . . . . . . . . . . . . S-5
Class A-2 Notes . . . . . . . . . . . . . . . . . . . . . . . . Cover, S-3
Class A-2 Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . Cover, S-3
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-29
Collection Account . . . . . . . . . . . . . . . . . . . . . . . . . S-7
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Cutoff Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Dealer Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . S-11
Dealer Service Centers . . . . . . . . . . . . . . . . . . . . . . . S-10
Distribution Date . . . . . . . . . . . . . . . . . . . . . . . . S-2, S-5
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-29
Final Scheduled Distribution Date . . . . . . . . . . . . . . . . . . S-6
Final Scheduled Maturity Date . . . . . . . . . . . . . . . . . . . . S-4
Financed Vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
First Merchants . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
franchised dealers . . . . . . . . . . . . . . . . . . . . . . . . . S-10
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
independent dealers . . . . . . . . . . . . . . . . . . . . . . . . . S-10
Interest Distribution Amount . . . . . . . . . . . . . . . . . . . . S-25
Interest Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Liquidated Receivables . . . . . . . . . . . . . . . . . . . . . . . S-25
Liquidation Proceeds . . . . . . . . . . . . . . . . . . . . . . . . S-25
non-prime borrowers . . . . . . . . . . . . . . . . . . . . . . . . . S-10
Norwest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-17
Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Noteholders' Distributable Amount . . . . . . . . . . . . . . . . . . S-26
Noteholders' Interest Carryover Shortfall . . . . . . . . . . . . . . S-26
Noteholders' Interest Distributable Amount . . . . . . . . . . . . . S-26
Noteholders' Monthly Interest Distributable Amount . . . . . . . . . S-26
Noteholders' Monthly Principal Distributable Amount . . . . . . . . . S-26
Noteholders' Principal Carryover Shortfall . . . . . . . . . . . . . S-26
Noteholders' Principal Distributable Amount . . . . . . . . . . . . . S-26
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover, S-3
Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Pass-Through Rate . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-29
Pool Balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Principal Distribution Amount . . . . . . . . . . . . . . . . . . . . S-25
Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-2
Receivables Purchase Agreement . . . . . . . . . . . . . . . . . . . S-3
Rating Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . S-9
Realized Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . S-24
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . Cover, S-4
Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-5
Reserve Account . . . . . . . . . . . . . . . . . . . . . . . . . . . S-7
Sale and Servicing Agreement . . . . . . . . . . . . . . . . . . . . S-4
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . S-6
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover, S-3
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Specified Reserve Account Balance . . . . . . . . . . . . . . . . . . S-28
Sub-prime Borrowers . . . . . . . . . . . . . . . . . . . . . . . . . S-4
Total Distribution Amount . . . . . . . . . . . . . . . . . . . . . . S-24
Transfer and Servicing Agreements . . . . . . . . . . . . . . . . . . S-24
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Cover, S-3
Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
Underwriter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-29
Underwriting Agreements . . . . . . . . . . . . . . . . . . . . . . . S-29

<TABLE>
<CAPTION>
<S> <C>
No dealer, salesperson or other person has been
authorized to give any information or to make any
representations other than those contained or
incorporated by reference in this Prospectus
Supplement and the Prospectus in connection with
the offer made by this Prospectus Supplement and FIRST MERCHANTS AUTO TRUST
the Prospectus and, if given or made, such 199 -
information or representations must not be relied
upon as having been authorized. This Prospectus
Supplement and the Prospectus do not constitute an $ (Floating Rate)( %)
offer or solicitation by anyone in any state in ASSET BACKED NOTES, CLASS A-1
which such offer or solicitation is unauthorized
or in which the person making such offer or $ (Floating Rate)( %)
solicitation is not qualified to do so or to ASSET BACKED NOTES, CLASS A-2
anyone to whom it is unlawful to make such offer
or solicitation. Neither the delivery of this $
Prospectus Supplement and the Prospectus nor any ASSET BACKED CERTIFICATES
sale made hereunder shall, under any
circumstances, create any implication that the
information contained herein or therein is correct
as of any time subsequent to the date of this
Prospectus Supplement or Prospectus.
( )
Seller
TABLE OF CONTENTS Page
PROSPECTUS SUPPLEMENT
Reports to Securityholders . . . . . . . . S-2
Summary of Terms . . . . . . . . . . . . . S-3
Risk Factors . . . . . . . . . . . . . . . . S-9 FIRST MERCHANTS ACCEPTANCE CORPORATION
The Seller . . . . . . . . . . . . . . . . S-10 Servicer
First Merchants Automobile Financing Program S-10
The Trust . . . . . . . . . . . . . . . . . S-17
The Receivables Pool . . . . . . . . . . . S-18
Weighted Average Life of the Securities . . S-21
Description of the Notes . . . . . . . . . S-21
Description of the Certificates . . . . . S-23 PROSPECTUS SUPPLEMENT
Description of the Transfer and Servicing
Agreements . . . . . . . . . . . . . . . . S-24 ___________________________________
ERISA Considerations . . . . . . . . . . . S-29
Underwriting . . . . . . . . . . . . . . . S-29 Salomon Brothers Inc
Legal Matters . . . . . . . . . . . . . . . S-30 ___________________________________
Index of Terms . . . . . . . . . . . . . . S-31
PROSPECTUS
Available Information . . . . . . . . . . . . 2
Incorporation of Certain Documents by Reference 2
Summary of Terms . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . 12
The Trusts . . . . . . . . . . . . . . . . . . 18
The Receivables Pools . . . . . . . . . . . . 20
Weighted Average Life of the Securities . . . 22
Pool Factors and Trading Information. . . . . 22
Use of Proceeds . . . . . . . . . . . . . . . 23
The Company and the Seller . . . . . . . . . 23
Description of the Notes . . . . . . . . . . . 24
Description of the Certificates . . . . . . . 28
Certain Information Regarding the Securities . 29
Description of the Transfer and Servicing
Agreements . . . . . . . . . . . . . . . . . 36
Certain Legal Aspects of the Receivables . . . 46
Certain Federal Income Tax Consequences . . . . 50
Certain State Tax Consequences with respect
to Owner Trusts . . . . . . . . . . . . . . . 61
ERISA Considerations . . . . . . . . . . . . . 62
Plan of Distribution . . . . . . . . . . . . . 64
Legal Matters . . . . . . . . . . . . . . . . . 65
Index of Principal Terms . . . . . . . . . . . 66

Until 90 days after the date of this Prospectus Supplement, all
dealers effecting transactions in the Certificates described in
this Prospectus Supplement, whether or not participating in
this distribution, may be required to deliver this Prospectus
Supplement and the Prospectus. This is in addition to the
obligation of dealers to deliver this Prospectus Supplement
and the Prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.

</TABLE>

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State.

Subject to Completion, dated August 2, 1996
PROSPECTUS
- ----------
FIRST MERCHANTS AUTO TRUSTS
ASSET BACKED NOTES
ASSET BACKED CERTIFICATES

FIRST MERCHANTS ACCEPTANCE CORPORATION

The Asset Backed Notes (the "Notes") and the Asset Backed Certificates
(the "Certificates" and, together with the Notes, the "Securities")
described herein may be sold from time to time in one or more series,
in amounts, at prices and on terms to be determined at the time of sale
and to be set forth in a supplement to this Prospectus (a "Prospectus
Supplement"). Each series of Securities, which may include one or more
classes of Notes and/or one or more classes of Certificates, will be
issued by a trust to be formed with respect to such series (each, a
"Trust"). Each Trust will be formed pursuant to either (i)
a Trust Agreement to be entered into between either First Merchants
Acceptance Corporation (the "Company") or a special-purpose finance
subsidiary of the
Company which may be organized and established by the Company (each such
special-purpose finance subsidiary, a "Transferor"), as depositor, and the
Trustee specified in the related Prospectus Supplement (the "Trustee"), or
(ii)
a Pooling and Servicing Agreement to be entered into among the Trustee,
either
the Company or a Transferor, as seller (the "Seller"), and the Company, as
servicer (the "Servicer"). If a series of Securities includes Notes, such
Notes
will be issued and secured pursuant to an Indenture between the Trust and the
Indenture Trustee specified in the related Prospectus Supplement (the
"Indenture
Trustee") and will represent indebtedness of the related Trust. The
Certificates of a series will represent fractional undivided interests in the
related Trust. The related Prospectus Supplement will specify which class or
classes of Notes, if any, and which class or classes of Certificates, if any,
of the related series are being offered thereby. The property of each Trust
will include a pool of motor vehicle retail installment sale contracts
secured
by new or used automobiles, light trucks, vans and minivans (the
"Receivables"),
certain monies due or received thereunder on and after the applicable Cutoff
Date set forth in the related Prospectus Supplement, security interests in
the
vehicles financed thereby and certain other property all as described herein
and
in the related Prospectus Supplement (the "Trust Property"). In addition, if
so specified in the related Prospectus Supplement, the property of the Trust
will include monies on deposit in a trust account (the "Pre-Funding Account")
and/or monies on deposit in a trust account (the "Collateral Reinvestment
Account") to be established with the Indenture Trustee, which will be used to
purchase additional motor vehicle retail installment sale contracts (the
"Subsequent Receivables") from the Seller from time to time during the
Funding
Period or Revolving Period specified in the related Prospectus Supplement.
Except as otherwise provided in the related Prospectus Supplement, each
class of Securities of any series will represent the right to receive a
specified amount of payments of principal and interest on the related
Receivables, at the rates, on the dates and in the manner described herein
and
in the related Prospectus Supplement. If a series includes multiple classes
of
Securities, the rights of one or more classes of Securities to receive
payments
may be senior or subordinate to the rights of one or more of the other
classes
of such series. Distributions on Certificates of a series may be
subordinated
in priority to payments due on any related Notes to the extent described
herein
and in the related Prospectus Supplement. A series may include one or more
classes of Notes and/or Certificates which differ as to the timing and
priority
of payment, interest rate or amount of distributions in respect of principal
or
interest or both. A series may include one or more classes of Notes or
Certificates entitled to distributions in respect of principal with
disproportionate, nominal or no interest distributions, or to interest
distributions, with disproportionate, nominal or no distributions in respect
of
principal. The rate of payment in respect of principal of any class of Notes
and distributions in respect of the Certificate Balance of the Certificates
of
any class will depend on the priority of payment of such class and the rate
and
timing of payments (including prepayments, defaults, liquidations and
repurchases of Receivables) on the related Receivables. A rate of payment
lower
or higher than that anticipated may affect the weighted average life of each
class of Securities in the manner described herein and in the related
Prospectus
Supplement.
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER "RISK
FACTORS" HEREIN AND IN THE RELATED PROSPECTUS SUPPLEMENT.
EXCEPT AS OTHERWISE SPECIFIED IN THE RELATED PROSPECTUS SUPPLEMENT, THE
NOTES OF A SERIES WILL REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES OF A
SERIES WILL REPRESENT BENEFICIAL INTERESTS IN, THE RELATED TRUST ONLY AND
WILL
NOT REPRESENT OBLIGATIONS OF OR INTERESTS IN, AND ARE NOT GUARANTEED OR
INSURED
BY, FIRST MERCHANTS ACCEPTANCE CORPORATION OR ANY OF ITS AFFILIATES OR ANY
GOVERNMENTAL AGENCY.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

Retain this Prospectus for future reference. This Prospectus may not be
used to consummate sales of Securities offered hereby unless accompanied
by a Prospectus Supplement.

The date of this Prospectus is August __, 1996.

REPORTS TO SECURITYHOLDERS

With respect to each series of Securities, the Servicer will prepare for
distribution to the related Securityholders certain monthly and annual
reports concerning such Securities and the related Trust. See, "Certain
Information Regarding the Securities -- Statements to Securityholders".

AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 (together with all
amendments and exhibits thereto, the "Registration Statement") under the
Securities Act of 1933, as amended, with respect to the Securities being
offered hereby. This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which have been omitted
in accordance with the rules and regulations of the Commission. For further
information, reference is made to the Registration Statement, which is
available for inspection without charge at the public reference facilities
of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and the regional offices of the Commission at Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and Seven
World Trade Center, Suite 1300, New York, New York 10048. Copies of such
information can be obtained from the Public Reference Section of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates.

UPON RECEIPT OF A REQUEST BY AN INVESTOR WHO HAS RECEIVED AN ELECTRONIC
PROSPECTUS SUPPLEMENT AND PROSPECTUS FROM AN UNDERWRITER OR A REQUEST BY SUCH
INVESTOR'S REPRESENTATIVE WITHIN THE PERIOD DURING WHICH THERE IS AN
OBLIGATION TO DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS, THE SELLER OR
THE UNDERWRITERS WITH RESPECT TO THE RELATED TRUST WILL PROMPTLY DELIVER, OR
CAUSE TO BE DELIVERED, WITHOUT CHARGE, TO SUCH INVESTOR A PAPER COPY OF THE
PROSPECTUS SUPPLEMENT AND PROSPECTUS.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

All documents filed by the Servicer on behalf of the Trust referred to
in the accompanying Prospectus Supplement with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended, after the date of this Prospectus and prior to the termination of
the offering of the Securities offered by such Trust shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
dates of filing of such documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein (or in the accompanying Prospectus
Supplement) or in any subsequently filed document that also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.

Any such statement so modified or superseded shall not be deemed, except as
so modified or superseded, to constitute a part of this Prospectus.

The Servicer on behalf of any Trust will provide without charge to each
person, including any beneficial owner, to whom a copy of this Prospectus is
delivered, on the written or oral request of such person, a copy of any or
all of the documents incorporated herein by reference, except the exhibits
to such documents (unless such exhibits are specifically incorporated by
reference into the documents incorporated herein by reference). Requests for
such copies should be directed to Secretary, First Merchants Acceptance
Corporation, 570 Lake Cook Road, Suite 126, Deerfield, Illinois 60015;
telephone (847) 948-9300.

SUMMARY OF TERMS

The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus and by reference
to the information with respect to the Securities of any series contained in
the related Prospectus Supplement to be prepared and delivered in connection
with the offering of such Securities. Certain capitalized terms used in this
summary are defined elsewhere in this Prospectus on the pages indicated in
the "Index of Terms".

Issuer . . . . . . . . . . . . . With respect to each series of
Securities, the Trust to be formed
pursuant to either a Trust
Agreement
(as amended and supplemented from
time to time, a "Trust Agreement")
between the Seller, and the
Trustee
for such Trust or a Pooling and
Servicing Agreement (as amended
and
supplemented from time to time,
the
"Pooling and Servicing Agreement")
among the Trustee, the Seller and
First Merchants Acceptance
Corporation, as Servicer (the
"Servicer") for such Trust. Each
Trust that is taxable as a
partnership will be referred to
herein as an "Owner Trust" and
each
Trust that is taxable as a grantor
trust under subpart E, Part I of
subchapter J of the Code (as
hereinafter defined) will be
referred to herein as a "Grantor
Trust".

Company . . . . . . . . . . . . . First Merchants Acceptance
Corporation ("First Merchants" or,
the "Company"), a Delaware
corporation. The Company's
principal executive offices are
located at 570 Lake Cook Road,
Suite
126, Deerfield, Illinois 60015,
and
its telephone number is (847) 948-
9300. See "The Company and the
Seller".

Seller . . . . . . . . . . . . . The "Seller" with respect to each
series of Securities will be
either
the Company or a special-purpose
finance subsidiary of the Company
(each such special-purpose finance
subsidiary, a "Transferor").

Servicer . . . . . . . . . . . . First Merchants Acceptance
Corporation (the "Servicer" or
"First Merchants").

Trustee . . . . . . . . . . . . . With respect to each series of
Securities, the Trustee specified
in
the related Prospectus Supplement.

Indenture Trustee . . . . . . . . With respect to any applicable
series of Securities, the
Indenture
Trustee specified in the related
Prospectus Supplement.

Securities Offered . . . . . . . Each series of Securities issued
by
an Owner Trust will include one or
more classes of Certificates and
may
also include one or more classes
of
Notes. Each series of Securities
issued by a Grantor Trust will
include one or more classes of
Certificates, but will not include
any Notes. Each class of Notes
will
be issued pursuant to an indenture
(each, an "Indenture") between the
related Owner Trust and the
Indenture Trustee specified in the
related Prospectus Supplement.
Each
class of Certificates will be
issued
pursuant to the related Trust
Agreement or the related Pooling
and
Servicing Agreement. The related
Prospectus Supplement will specify
which class or classes of Notes
and/or Certificates of the related
series are being offered thereby.

The Notes . . . . . . . . . . . . Unless otherwise specified in the
related Prospectus Supplement,
Notes
will be available for purchase in
denominations of $1,000 and
integral
multiples thereof and will be
available in book-entry form only.

Unless otherwise specified in the
related Prospectus Supplement,
Noteholders will be able to
receive
Definitive Notes only in the
limited
circumstances described hereinor in
the related Prospectus Supplement.

See "Certain Information Regarding
the Securities -- Definitive
Securities".

Unless otherwise specified in the
related Prospectus Supplement,
each
class of Notes will have a stated
principal amount and will bear
interest at a specified rate or
rates (with respect to each class
of
Notes, the "Interest Rate"). Each
class of Notes may have a
different
Interest Rate, which may be a
fixed,
variable or adjustable Interest
Rate, or any combination of the
foregoing. The related Prospectus
Supplement will specify the
Interest
Rate for each class of Notes, or
the
method for determining the
Interest
Rate.

With respect to a series that
includes two or more classes of
Notes, each class may differ as to
the timing and priority of
payments,
seniority, allocations of losses,
Interest Rate or amount of
payments
of principal or interest, or
payments of principal or interest
in
respect of any such class or
classes
may or may not be made upon the
occurrence of specified events or
on
the basis of collections from
designated portions of the
Receivables Pool.

In addition, a series may include
one or more classes of Notes
("Strip
Notes") entitled to (i) principal
payments with disproportionate,
nominal or no interest payments or
(ii) interest payments with
disproportionate, nominal or no
principal payments.

If the Servicer exercises its
option
to purchase the Receivables of a
Trust (or, if not, to the extent
provided in the related Prospectus
Supplement, if satisfactory bids
for
the purchase of such Receivables
are
received) in the manner and on the
respective terms and conditions
described under "Description of
the
Transfer and Servicing Agreements
-- Termination", the outstanding
Notes
will be redeemed as set forth in
the
related Prospectus Supplement. In
addition, if the related
Prospectus
Supplement provides that the
property of a Trust will include a
Pre-Funding Account or Collateral
Reinvestment Account that will be
used to purchase additional
Receivables after the Closing
Date,
one or more classes of the
outstanding Notes will be subject
to
partial redemption on or
immediately
following the end of the Funding
Period (as such term is defined in
the related Prospectus Supplement,
the "Funding Period") or Revolving
Period, as applicable, in an
amount
and manner specified in the
related
Prospectus Supplement. In the
event
of such partial redemption, the
Noteholders may be entitled to
receive a prepayment premium from
the Trust, in the amount and to
the
extent provided in the related
Prospectus Supplement.

The Certificates . . . . . . . . Unless otherwise specified in the
related Prospectus Supplement,
Certificates will be available for
purchase in a minimum denomination
of $1,000 and integral multiples
thereof and will be available in
book-entry form only. Unless
otherwise specified in the related
Prospectus Supplement,
Certificateholders will be able to
receive Definitive Certificates
only
in the limited circumstances
described herein or in the related
Prospectus Supplement. See
"Certain
Information Regarding the
Securities
-- Definitive Securities".

Unless otherwise specified in the
related Prospectus Supplement,
each
class of Certificates will have a
stated Certificate Balance
specified
in the related Prospectus
Supplement
(the "Certificate Balance")and will
accrue interest on such
Certificate
Balance at a specified rate (with
respect to each class of
Certificates, the "Pass Through
Rate"). Each class of
Certificates
may have a different Pass Through
Rate, which may be a fixed,
variable
or adjustable Pass Through Rate,
or
any combination of the foregoing.
The related Prospectus Supplement
will specify the Pass Through Rate
for each class of Certificates or
the method for determining the
Pass
Through Rate.

With respect to a series that
includes two or more classes of
Certificates, each class may
differ
as to timing and priority of
distributions, seniority,
allocations of losses, Pass
Through
Rate or amount of distributions in
respect of principal or interest,
or
distributions in respect of
principal or interest in respect
of
any such class or classes may or
may
not be made upon the occurrence of
specified events or on the basis
of
collections from designated
portions
of the Receivables Pool. In
addition, a series may include one
or more classes of Certificates
("Strip Certificates") entitled to
(i) distributions in respect of
principal with disproportionate,
nominal or no interest
distributions
or (ii) interest distributions
with
disproportionate, nominal or no
distributions in respect of
principal.

If a series of securities includes
classes of Notes, distributions in
respect of the Certificates may be
subordinated in priority of
payment
to payments on the Notes to the
extent specified in the related
Prospectus Supplement.

If the Servicer exercises its
option
to purchase the Receivables of a
Trust (or, if not, and if and to
the
extent provided in the related
Prospectus Supplement, if
satisfactory bids for the purchase
of such Receivables are received)
in
the manner and on the respective
terms and conditions described
under
"Description of the Transfer and
Servicing Agreements --
Termination", Certificateholders
will receive as a prepayment an
amount in respect of the
Certificates as specified in the
related Prospectus Supplement. In
addition, if the related
Prospectus
Supplement provides that the
property of a Trust will include a
Pre-Funding Account,
Certificateholders may receive a
partial prepayment of principal on
or immediately following the end
of
the Funding Period in an amount
and
manner specified in the related
Prospectus Supplement. In the
event
of such partial prepayment, the
Certificateholders may be entitled
to receive a prepayment premium
from
the Trust, in the amount and to
the
extent provided in the related
Prospectus Supplement.

Master Trusts; Issuance of
Additional Series . . . . . . . . If so provided in the related
Prospectus Supplement, the Seller
may cause one or more of the
Trusts
(such a Trust, a "Master Trust")
to
issue additional series of
Securities from time to time.
Under
each Trust Agreement relating to a
Master Trust (each, a "Master
Trust
Agreement"), the Seller may
determine the terms of any such
new
series. See "The Trusts-Master
Trusts".

The Seller may cause the related
Trustee to offer any such new
series
to the public or other investors,
in
transactions either registered
under
the Securities Act or exempt from
registration thereunder, directly
or
through one or more underwriters
or
placement agents, in fixed-price
offerings or in negotiated
transactions or otherwise.

A new series to be issued by a
Master Trust which has a series
outstanding may only be issued
upon
satisfaction of the conditions
described herein under "The
Trusts-Master Trusts". Securities
secured by Receivables held by a
Master Trust shall be entitled to
moneys received relating to such
Receivables on a pari passu basis
with other Securities issued
pursuant to the other Trust
Agreements or Pooling and
Servicing
Agreements, as applicable by such
Master Trust.

Cross-Collateralization . . . . . As described in the related Trust
Agreement or Pooling and Servicing
Agreement, as applicable, and the
related Prospectus Supplement, the
source of payment for Securities
of
each series will be the assets of
the related Trust Property only.

However, as may be described in
the
related Prospectus Supplement, a
series or class of Securities may
include the right to receive
moneys
from a common pool of credit
enhancement which may be available
for more than one series of
Securities, such as a master
reserve
account, master insurance policy
or
a master collateral pool
consisting
of similar Receivables.
Notwithstanding the foregoing, and
as described in the related
Prospectus Supplement, no payment
received on any Receivable held by
any Trust may be applied to the
payment of Securities issued by
any
other Trust (except to the limited
extent that certain collections in
excess of the amounts needed to
pay
the related Securities may be
deposited in a common master
reserve
a c c o u n t o r a n
overcollateralization
account that provides credit
enhancement for more than one
series
of Securities issued pursuant to
the
related Trust Agreement or Pooling
and Servicing Agreement, as
applicable).

The Trust Property . . . . . . . The property of each Trust will
include a pool of motor vehicle
retail installment sale contracts
secured by new or used
automobiles,
light duty trucks, vans and
minivans
(the "Receivables"), certain
monies
due or received thereunder on and
after the applicable Cutoff Date
set
forth in the related Prospectus
Supplement, security interests in
the vehicles financed thereby (the
"Financed Vehicles"), certain
accounts and the proceeds thereof
and any proceeds from claims on
certain related insurance
policies.
On the Closing Date specified in
the
related Prospectus Supplement with
respect to a Trust, the Seller
will,
if so specified in such Prospectus
Supplement, sell or transfer
Receivables (the "Initial
Receivables") having an aggregate
principal balance specified in the
related Prospectus Supplement as
of
the dates specified therein (the
"Initial Cutoff Date") to such
Trust
pursuant to either, in the case of
certain Owner Trusts, a Sale and
Servicing Agreement among the
Seller, the Servicer and the Owner
Trust (as amended and supplemented
from time to time, a "Sale and
Servicing Agreement") or, in the
case of Grantor Trusts and certain
other Owner Trusts, the related
Pooling and Servicing Agreement
among the Seller, the Servicer and
the Trustee. The property of each
Trust will also include amounts on
deposit in certain trust accounts,
including the related Collection
Account, any Pre-Funding Account,
any Collateral Reinvestment
Account,
any Reserve Account and any other
account identified in the
applicable
Prospectus Supplement and such
other
property as is specified in the
related Prospectus Supplement
including notes or other
securities
evidencing or backed by
Receivables,
security interests in the Financed
Vehicles and related property
("Receivables Backed Assets").

To the extent provided in the
related Prospectus Supplement, the
Seller will be obligated (subject
only to the availability thereof)
to
sell, and the related Trust will
be
obligated to purchase (subject to
the satisfaction of certain
conditions described in the
applicable Sale and Servicing
Agreement or Pooling and Servicing
Agreement), additional Receivables
(the "Subsequent Receivables")
from
time to time (as frequently as
daily) during the Funding Period
or
Revolving Period specified in the
related Prospectus Supplement
having
an aggregate principal balance
approximately equal to the amount
on
deposit in the Pre-Funding Account
(the "Pre-Funded Amount") on such
Closing Date or the amount on
deposit in the Collateral
Reinvestment Account, as
applicable.

In addition, if so provided in the
related Prospectus Supplement, in
lieu of a Funding Period, during
the
period (the "Revolving Period")
from
the Closing Date until the first
to
occur of (i) such event or events
as
are described in the related
Prospectus Supplement (each, an
"Early Amortization Event") or
(ii)
the last day of the Collection
Period preceding a Distribution
Date
specified in the related
Prospectus
Supplement, an account will be
maintained in the name of the
related Trustee or Indenture
Trustee
(the "Collateral Reinvestment
Account"). The amount on deposit
in
the Collateral Reinvestment
Account
on the Closing Date may, if so
specified in the related
Prospectus
Supplement, include an amount
specified which will be deposited
out of the net proceeds of the
sale
of the related Securities. During
the Revolving Period, principal
will
not be distributed on the
Securities
of the related series. Principal
collections, together with (if and
to the extent described in the
related Prospectus Supplement)
interest collections on the
Receivables that are in excess of
amounts required to be distributed
therefrom will be deposited from
time to time in the Collateral
Reinvestment Account and will be
used to purchase Subsequent
Receivables.

As used in this Prospectus, the
term
Receivables will include the
Initial
Receivables transferred to a Trust
on the Closing Date as well as any
Subsequent Receivables transferred
to such Trust during the related
Funding Period or Revolving
Period,
if any.

Amounts on deposit in any Pre-
Funding Account during the related
Funding Period or in any
Collateral
Reinvestment Account during the
related Revolving Period will be
invested by the applicable Trustee
(as directed by the Servicer) in
Eligible Investments, and any
resultant investment income, less
any related investment expenses
("Investment Income"), will be
added, on the Distribution Date
immediately following the date on
which such Investment Income is
paid
to the Trust, to interest
collections on the Receivables for
the related Collection Period and
distributed in the manner
specified
in the related Prospectus
Supplement. Any funds remaining
in
a Pre-Funding Account at the end
of
the related Funding Period or in a
Collateral Reinvestment Account at
the end of the related Revolving
Period will be distributed as a
prepayment or early distribution
of
principal to holders of one or
more
classes of the Notes and/or
Certificates of the related Series
of Securities, in the amounts and
in
accordance with the payment
priorities specified in the
related
Prospectus Supplement. In no
event
will a Funding Period continue for
more than one year after the
related
Closing Date. See "Risk Factors -
-
Pre-Funding Accounts", "-- Sales
of
Subsequent Receivables" and
"Description of the Transfer and
Servicing Agreements -- Accounts".

The Receivables arise or will
arise
from loans originated by motor
vehicle dealers (the "Dealers")
and
purchased by the Company pursuant
to
agreements with the Dealers. The
Receivables for any given
Receivables Pool will be sold by
the
Company to the Trust or to a
Transferor who will in turn sell
the
Receivables to the Trust and will
be
selected from the contracts owned
by
the Seller based on the criteria
specified in the related Sale and
Servicing Agreement or Pooling and
Servicing Agreement, as
applicable,
and described herein and in the
related Prospectus Supplement.

Credit and Cash Flow
Enhancement . . . . . . . . . . . If and to the extent specified in
the related Prospectus Supplement,
credit enhancement with respect to
a Trust or any class or classes of
Securities may include any one or
more of the following:
subordination
of one or more other classes of
Securities, reserve funds, a
Reserve
Account, spread accounts, over-
collateralization, insurance
policies, letters of credit,
credit
or liquidity facilities, cash
collateral accounts, surety bonds,
guaranteed investment contracts,
swaps or other interest rate
protection agreements, repurchase
obligations, yield supplement
agreements, other agreements with
respect to third party payments or
other support, cash deposits or
other arrangements. To the extent
specified in the related
Prospectus
Supplement, a form of credit
enhancement will be subject to
certain limitations and exclusions
from coverage thereunder.

Reserve Account . . . . . . . . . If and to the extent specified in
the related Prospectus Supplement,
a Reserve Account will be created
for a Trust with an initial
deposit
by the Seller of cash or certain
investments having a value equal
to
the amount specified in the
related
Prospectus Supplement. To the
extent specified in the related
Prospectus Supplement, funds in
the
Reserve Account will thereafter be
supplemented by the deposit of
amounts remaining on any
Distribution Date after making all
other distributions required on
such
date and any amounts deposited
from
time to time from the Pre-Funding
Account or Collateral Reinvestment
Account in connection with a
purchase of Subsequent
Receivables.
Amounts in the Reserve Account, if
any, will be available to cover
shortfalls in amounts due to the
holders of those classes of
Securities specified in the
related
Prospectus Supplement in the
manner
and under the circumstances
specified therein. The related
Prospectus Supplement will also
specify to whom and the manner and
circumstances under which amounts
on
deposit in the Reserve Account
(after giving effect to all other
required distributions to be made
by
the applicable Trust) in excess of
the Specified Reserve Account
Balance (as defined in the related
Prospectus Supplement) will be
distributed.

Transfer and Servicing
Agreements . . . . . . . . . . . With respect to each Trust, the
Seller will sell the related
Receivables and such other Trust
Property as is specified in the
related Prospectus Supplement to
such Trust pursuant to a Sale and
Servicing Agreement or a Pooling
and
Servicing Agreement. The rights
and
benefits of the Owner Trust under
any Sale and Servicing Agreement
will be assigned to the Indenture
Trustee as collateral for the
Notes
of the related series. The
Servicer
will agree with such Trust to be
responsible for servicing,
managing,
maintaining custody of and making
collections on the Receivables.
The
Company will undertake certain
administrative duties under an
Administration Agreement with
respect to each Owner Trust that
is
formed pursuant to a Trust
Agreement.

If so provided in the related
Prospectus Supplement, the
Servicer
will advance scheduled payments
under each Precomputed Receivable
that are not timely made (a
"Precomputed Advance") and will
advance shortfalls in interest
payments with respect to Simple
Interest Receivables (a "Simple
Interest Advance"), in each case
to
the extent that the Servicer, in
its
sole discretion, expects to be
able
to recoup such Precomputed Advance
or Simple Interest Advance from
subsequent payments on or with
respect to the Receivables or from
any other source identified in the
related Prospectus Supplement. As
used herein, "Advance" means any
Precomputed Advance or Simple
Interest Advance. The Servicer
will
be entitled to reimbursement of
Advances from subsequent payments
on
or with respect to the Receivables
or from other sources to the
extent
described in the related
Prospectus
Supplement.

Unless otherwise provided in the
related Prospectus Supplement, the
Seller will be obligated to
repurchase any Receivable in which
the interest of the applicable
Trust
is materially and adversely
affected
as a result of a breach of any
representation or warranty made by
the Seller in the related Sale and
Servicing Agreement or Pooling and
Servicing Agreement, as
applicable,
if such breach is not cured in a
timely manner following the
discovery by or notice to the
Seller
thereof.

Unless otherwise provided in the
related Prospectus Supplement, the
Servicer will be obligated to
purchase any Receivable if, among
other things, it extends the date
for final payment by the Obligor
of
such Receivable beyond the last
day
of the Collection Period relating
to
the applicable Final Scheduled
Maturity Date (as defined in the
related Prospectus Supplement, the
"Final Scheduled Maturity Date"),
changes the annual percentage rate
("APR") or amount of a scheduled
payment of such Receivable or
fails
to maintain a perfected security
interest in the related Financed
Vehicle.

Unless otherwise specified in the
related Prospectus Supplement, the
Servicer will be entitled to
receive
a fee for servicing the
Receivables
of each Trust equal to a specified
percentage of the aggregate
principal balance of the related
Receivables Pool, as set forth in
the related Prospectus Supplement,
plus certain late fees, prepayment
charges and other administrative
fees or similar charges. See
"Description of the Transfer and
Servicing Agreements -- Servicing
Compensation and Payment of
Expenses" herein and in the
related
Prospectus Supplement.

Certain Legal Aspects of the
Receivables; Repurchase
Obligations . . . . . . . . . . . In connection with the sale of the
Receivables, security interests in
the Financed Vehicles securing the
Receivables will be assigned by
the
Company (i) the related Trust
pursuant to either a Sale and
Servicing Agreement or a Pooling
and
Servicing Agreement and may be
pledged by the Trust pursuant to
an
Indenture as securityfor the Notes,
if any or (ii) to a Transferor
pursuant to a Receivables Purchase
Agreement, which Transferor will,
in
turn, assign such security
interests
to the Trust pursuant to either a
Sale and Servicing Agreement or a
Pooling and Servicing Agreement.
Due to the administrative burden
and
expense, however, the certificates
of title to the Financed Vehicles
will not be amended or reissued to
reflect the sale of the
Receivables
to either a Transferor or the
Trust
or the pledge pursuant to any
Indenture. In the absence of such
amendments, either the related
Trust, the Applicable Trustee or
both may not have a perfected
security interest in the Financed
Vehicles securing the Receivables
in
some states. The Company will be
obligated to repurchase any
Receivables sold to the related
Trust or to a Transferor (and
subsequently sold by such
Transferor
to the related Trust) as to which
there did not exist on the Closing
Date a first perfected priority
security interest in the name of
the
Company in the related Financed
Vehicle if such failure materially
and adversely affects the interest
of the Transferor or the related
Trust in such Receivable and if
such
failure is not cured in a timely
manner.

To the extent their respective
security interests in a Financed
Vehicle are perfected, the related
Trust and the Applicable Trustee
will have a prior claim over
subsequent purchasers of such
Financed Vehicle and holders of
subsequently perfected security
interests therein. However, as
against liens for repairs or
storage
of a Financed Vehicle or for taxes
unpaid by the related Obligor, or
through fraud or negligence, the
related Trust or the Applicable
Trustee could lose their
respective
security interests or the priority
of their respective security
interests in a Financed Vehicle.
The Company will not have any
obligation to repurchase a
Receivable with respect to which
the
related Trust or the Applicable
Trustee loses their respective
security interests or the priority
of their security interests in the
related Financed Vehicle after the
Closing Date due to any such lien
for repairs, storage or taxes or
the
negligence or fraud of a third
party.

Federal and state consumer
protection laws impose
requirements
upon creditors in connection with
extensions of credit and
collections
of retail installment loans, and
certain of these laws make an
assignee of such a loan liable to
the obligor thereon for any
violation by the lender. Unless
otherwise specified in the related
Prospectus Supplement, the Seller
will be obligated to repurchase
any
Receivable which fails to comply
with such requirements.

Tax Status . . . . . . . . . . . Unless the Prospectus Supplement
specifies that the related Trust
will be a Grantor Trust and,
except
as otherwise provided in such
Prospectus Supplement, upon the
issuance of the related series of
Securities (a) Federal Tax Counsel
to such Trust will deliver an
opinion to the effect that, for
federal income tax purposes:
(i) any
Notes of such series will be
characterized as debt and
(ii) such
Trust will not be characterized as
an association (or a publicly
traded
partnership) taxable as a
corporation and (b) Illinois Tax
Counsel to such Trust will deliver
an opinion to the effect that the
same characterizations would apply
for Illinois income and business
tax
purposes as for federal income tax
purposes. In respect of any such
series, each Noteholder, if any,
by
the acceptance of a Note of such
series, will agree to treat such
Note as indebtedness, and each
Certificateholder, by the
acceptance
of a Certificate of such series,
will agree to treat such Trust as
a
partnership in which such
Certificateholder is a partner for
federal income and Illinois income
and business tax purposes.
Alternative characterizations of
such Trust and such Certificates
are
possible, but would not result in
materially adverse tax
consequences
to Certificateholders.

If the Prospectus Supplement
specifies that the related Trust
will be a Grantor Trust and except
as otherwise provided in such
Prospectus Supplement, upon the
issuance of the related series of
Certificates, Federal Tax Counsel
to
such Trust will deliver an opinion
to the effect that such Trust will
be treated as a grantor trust for
federal income tax purposes and
will
not be subject to federal income
tax.

See "Certain Federal Income Tax
Consequences" and "Certain State
Tax
Consequences with Respect to Owner
Trusts" for additional information
concerning the application of
federal and Illinois tax laws.

ERISA Considerations . . . . . . Subject to the considerations
discussed under "ERISA
Considerations" herein and in the
related Prospectus Supplement, and
unless otherwise specified
therein,
any Notes of a series issued by an
Owner Trust and any Certificates
that are issued by a Grantor Trust
and that meet certain Department
of
Labor requirements are eligible
for
purchase by employee benefit
plans.

Unless otherwise specified in the
related Prospectus Supplement, the
Certificates of any series that
are
subordinated to any other Security
of that series may not be acquired
by any employee benefit plan
subject
to the Employee Retirement Income
Security Act of 1974, as amended
("ERISA"), or by any individual
retirement account. See "ERISA
Considerations" herein and in the
related Prospectus Supplement.

Ratings . . . . . . . . . . . . It is a condition to the issuance
of
the Securities to be offered
hereunder that they be rated in
one
of the four highest rating
categories by at least one
nationally recognized statistical
rating organization. A rating is
not a recommendation to purchase,
hold or sell Securities inasmuch
as
such rating does not comment as to
market price or suitability for a
particular investor. Ratings of
Securities will address the
likelihood of the payment of
principal and interest thereon
pursuant to their terms. There
can
be no assurance that a rating will
remain for a given period of time
or
that a rating will not be lowered
or
withdrawn entirely by a rating
agency if in its judgment
circumstances in the future so
warrant. For more detailed
information regarding the ratings
assigned to any class of a
particular series of Securities,
see
"Summary of Terms -- Rating of the
Securities" or " -- Ratings of
the
Certificates", as applicable, and
"Risk Factors -- Ratings of the
Securities" or " -- Ratings of the
Certificates", as applicable in
the
related Prospectus Supplement.

RISK FACTORS

In addition to the other information contained in this Prospectus and
in the related Prospectus Supplement to be prepared and delivered in
connection with the offering of any series of Securities, prospective
investors should carefully consider the following risk factors before
investing in any class or classes of Securities of any such series.

Pre-Funding Accounts and Collateral Reinvestment Accounts. If so
provided in the related Prospectus Supplement, on the Closing Date the Pre-
Funded Amount specified in such Prospectus Supplement will be deposited into
the Pre-Funding Account. In no event will the Pre-Funded Amount exceed 40%
of the initial aggregate principal amount of the Notes and/or Certificates
of the related Series of Securities. In addition, if so specified in the
related Prospectus Supplement, on the Closing Date specified amounts will be
deposited into the Collateral Reinvestment Account. During the Revolving
Period, principal will not be distributed on the Securities of the related
Series, and principal collections, together with (if and to the extent
described in the related Prospectus Supplement) interest collections on the
Receivables that are in excess of amounts required to be distributed
therefrom will be deposited from time to time in the Collateral Reinvestment
Account. The Pre-Funded Amount and the amounts on deposit in the Collateral
Reinvestment Account will be used to purchase Subsequent Receivables from the
Seller (which, if not the Company, in turn, will acquire such Subsequent
Receivables from the Company) from time to time during the related Funding
Period or Revolving Period. During the related Funding Period or Revolving
Period and until such amounts are applied by the Trustee to purchase
Subsequent Receivables, amounts on deposit in the Pre-Funding Account or the
Collateral Reinvestment Account will be invested by the Applicable Trustee
(as instructed by the Servicer) in Eligible Investments. Any investment
income with respect thereto (net of any related investment expenses) will be
added to amounts received on or in respect of the Receivables during the
related Collection Period and allocated to interest. Such amounts will be
distributed on the Distribution Date pursuant to the payment priorities
specified in the related Prospectus Supplement. No Funding Period will end
more than one year after the related Closing Date.

To the extent that the entire Pre-Funded Amount or the entire amount on
deposit in the Collateral Reinvestment Account has not been applied to the
purchase of Subsequent Receivables by the end of the related Funding Period
or Revolving Period, any amounts remaining in the Pre-Funding Account or the
Collateral Reinvestment Account will be distributed as a prepayment of
principal to Noteholders and Certificateholders (collectively the
"Securityholders") on the Distribution Date at or immediately following the
end of the Funding Period or Revolving Period, in the amounts and pursuant
to the priorities set forth in the related Prospectus Supplement.

Sales of Subsequent Receivables. If so provided in the related
Prospectus Supplement, the Seller will be obligated pursuant to the Pooling
and Servicing Agreement or Sale and Servicing Agreement, as applicable, to
sell Subsequent Receivables to the Trust, and the Trust will be obligated to
purchase such Subsequent Receivables, subject only to the satisfaction of
certain conditions set forth in the Pooling and Servicing Agreement or Sale
and Servicing Agreement, as applicable, and described in the related
Prospectus Supplement. If the principal amount of the eligible Subsequent
Receivables acquired by the Company from Dealers during a Funding Period or
Revolving Period is less than the Pre-Funded Amount or the amount on deposit
in the Collateral Reinvestment Account, as the case may be, the Company may
have insufficient Subsequent Receivables to transfer to a Trust. As a
result, holders of one or more classes of the related Series of Securities
may receive a prepayment or early distribution of principal
at the end of the Funding Period or Revolving Period as described above under
"Pre-Funding Accounts and Collateral Reinvestment Accounts".

Any conveyance of Subsequent Receivables to a Trust is subject to the
satisfaction, on or before the related transfer date (each, a "Subsequent
Transfer Date"), of the following conditions precedent, among others: (i)
each such Subsequent Receivable must satisfy the eligibility criteria
specified in the related Pooling and Servicing Agreement or Sale and
Servicing Agreement, as applicable; (ii) the Seller shall not have selected
such Subsequent Receivables in a manner that is adverse to the interests of
holders of the related Securities; (iii) as of the respective Cutoff Dates
for such Subsequent Receivables, all of the Receivables in the Trust,
including the Subsequent Receivables to be conveyed to the Trust as of such
date, must satisfy the parameters described under "The Receivables Pools"
herein and "The Receivables Pool" in the related Prospectus Supplement; and
(iv) the Seller must execute and deliver to such Trust a written assignment
conveying such Subsequent Receivables to such Trust. In addition, as and to
the extent specified in the related Prospectus Supplement, the conveyance of
Subsequent Receivables to a Trust is subject to the satisfaction of the
condition subsequent, among others, which must be satisfied within the
applicable time period specified in the related Prospectus Supplement, that
the Seller deliver certain legal opinions to the related Trustee with respect
to the validity of the conveyance of the Subsequent Receivables to the Trust.
If any such conditions precedent or conditions subsequent are not met with
respect to any Subsequent Receivables within the time period specified in the
related Prospectus Supplement, the Seller will be required to repurchase such
Subsequent Receivables from the related Trust, at a purchase price equal to
the related Purchase Amounts therefor.

Except as described herein and in the related Prospectus Supplement,
there will be no other required characteristics of Subsequent Receivables.
Therefore, the characteristics of the entire Receivables Pool included in any
Trust may vary significantly as Subsequent Receivables are conveyed to such
Trust from time to time during the Funding Period or Revolving Period. See
"The Receivables Pools" herein.

Certain Legal Aspects - Security Interests in Financed Vehicles. In
connection with the sale and assignment of the Receivables by the Company to
either the related Trust or a Transferor and by such Transferor, if any, to
the related Trust and any pledge of the Receivables by such Trust to the
related Indenture Trustee, the security interests in the related Financed
Vehicles granted to the Company by the Obligors on such Receivables will be
transferred and assigned by the Company to either such Trust or such
Transferor and by such Transferor, if any, to such Trust and may be pledged
by such Trust to the Indenture Trustee as security for the Notes, if any.
Due to the administrative burden and expense, however, the certificates of
title to the Financed Vehicles will not be amended or reissued to reflect the
assignment of such security interests by the Company to the related Trust or
related Transferor, if any, or by such Transferor, if any, to the related
Trust or any pledge pursuant to an Indenture. In the absence of such
amendments, either the Trust, the Applicable Trustee or both may not have a
perfected security interest in the Financed Vehicles securing the Receivables
in some states. In addition, by not identifying the related Trust as the
secured party on the certificate of title, the security interest of either
such Trust, the Indenture Trustee or both could be defeated through the
negligence or fraud of the Company or as a result of the imposition of a lien
for repairs or storage of a Financed Vehicle or for taxes unpaid by the
related Obligor. The Company will make certain representations and
warranties in the related Receivables Purchase Agreement (in the case of a
sale of the Receivables from the Company to a Transferor) or in the related
Sale and Servicing Agreement or Pooling and Servicing Agreement (in the case
of a sale of the Receivables from the Company to the related Trust) with
respect to its conveyance of a perfected security
interest in the Financed Vehicles and will be obligated to repurchase from
the Trust any Receivable with respect to which the interest of either the
Trust, the Applicable Trustee or both is materially and adversely affected
by (1) the failure to amend or reissue the certificate of title of the
Financed Vehicle to reflect the Trust's interest therein or (2) the failure
of the Company to have a first priority perfected security interest in its
name in the Financed Vehicle on the Closing Date if such failure is not cured
in a timely manner. The Servicer also will be obligated under the related
Sale and Servicing Agreement or Pooling and Servicing Agreement to purchase
from the Trust any Receivable with respect to which the Servicer fails to
maintain a perfected security interest in the name of the Company in the
related Financed Vehicle if such failure (i) is not cured in a timely manner
and (ii) materially and adversely affects the interest of the Trust in such
Receivable. The repurchase obligations of the Company and the Servicer will
constitute the sole remedy available to the Trust with respect to the Company
or the Servicer for any such uncured breach or failure.

To the extent that the Trust's and the Indenture Trustee's security
interest in a Financed Vehicle is perfected, the Trust and the Indenture
Trustee will have a prior claim under applicable state laws over subsequent
purchasers of such Financed Vehicle and holders of subsequently perfected
security interests therein. However, as against liens for repairs or storage
of a Financed Vehicle or taxes unpaid by the Obligor on the Receivable
secured thereby, the Trust and the Applicable Trustee could lose their
security interest or the priority of their security interest in a Financed
Vehicle. In addition, even if the Seller, the Trust or the Applicable
Trustee were to be identified as the secured party on the certificate of
title of a Financed Vehicle, its security interest could be defeated by the
fraud or forgery of the vehicle owner or by administrative errors by
applicable state or local agencies responsible for titling vehicles. The
Company will not have any obligation to repurchase a Receivable with respect
to which the Trust or the Applicable Trustee loses its security interest in
the related Financed Vehicle after the Closing Date due to any such lien for
repairs, storage or taxes or due to the negligence or fraud of a third party.

Certain Legal Aspects--Consumer Protection Laws. Federal and state
consumer protection laws impose requirements on creditors in connection with
extensions of credit and collections of retail installment loans, and certain
of these laws make an assignee of such a loan liable to the obligor thereon
for any violation by the lender. The Company will also be obligated to
purchase from the applicable Trust any Receivable that does not comply with
such consumer protection law requirements.

Most states impose requirements and restrictions relating to foreclosure
sales of vehicles and on obtaining deficiency judgments relating to such
sales. A Trust may not realize the full amount due on a Receivable because
of the application of those requirements and restrictions, or because of
depreciation, damage or loss of a Financed Vehicle or other factors. Federal
bankruptcy laws and related state laws also may interfere with or affect the
ability of a secured party to realize upon collateral or enforce a deficiency
judgment. For example, in a Chapter 13 proceeding under the federal
bankruptcy law, a court may prevent a creditor from repossessing a Financed
Vehicle, and as part of the rehabilitation plan, reduce the amount of the
secured indebtedness to the market value of the Financed Vehicle at the time
of the bankruptcy, leaving the creditor as a general unsecured creditor for
the remainder of the indebtedness.

Certain Legal Aspects--Insolvency Considerations. The Company will take
steps in structuring the transactions contemplated hereby that are intended
to ensure that the voluntary or involuntary application for relief by the
Company under the United States Bankruptcy Code or similar applicable state
laws ("Insolvency Laws") will not result in the consolidation of the assets
and
liabilities of any Transferor, with those of the Company. These steps may
include the creation of such Transferor, if any, as a separate,
limited-purpose entity pursuant to a certificate of incorporation containing
certain limitations (including restrictions on the nature of its business,
the requirement that an independent director be on its Board of Directors and
a restriction on its ability to commence a voluntary case or proceeding under
any Insolvency Law without the prior unanimous affirmative vote of all its
directors). In connection with the issuance of the Securities, counsel to
the Company will deliver its opinion to the effect that the assets and
liabilities of the related Trust and the related Transferor, if any, would
not be consolidated with those of the Company in the case of a proceeding
under any Insolvency Law in respect of the Company. However, there can be
no assurance that the assets and liabilities of the related Trust and the
related Transferor, if any, would not be consolidated with those of the
Company in a proceeding under an Insolvency Law. See "The Company and the
Seller".

First Merchants will warrant either (i) to a Transferor, if any, in the
related Receivables Purchase Agreement or (ii) to the related Trust in the
related Sale and Servicing Agreement or Pooling and Servicing Agreement that
the sale of the Receivables to such Transferor or Trust, respectively, by the
Company will be a valid sale. In addition, the Company will treat the
transactions described herein as sales of the Receivables to such Transferor
or such Trust and will commit to take all actions that are required to
perfect such Transferor's or such Trust's ownership interests in the
Receivables, and the related Transferor, if any, will treat the transactions
described herein as sales to such Trust of all of such Transferor's right,
title and interest in and to the Receivables and will take all actions
required to protect such Trust's ownership interest in the Receivables.
Notwithstanding the foregoing, if the Company or any Transferor were to
become a debtor in a bankruptcy case and a creditor or trustee-in-bankruptcy
of such debtor or such debtor itself were to take the position that the sales
of the Receivables to any Transferor or such Trust, as applicable, should be
recharacterized as pledges of the Receivables to secure a borrowing of the
debtor, then delays in payments to such Trust of collections on Receivables
could occur or (should the court rule in favor of any such trustee, debtor
or creditor) reductions in the amounts of such payments could result. If the
sales of the Receivables to any Transferor or such Trust are recharacterized
as pledges, a tax or government lien arising before the transfer of the
Receivables to any Transferor or such Trust, as applicable, might have
priority over such Trust's interest in such Receivables. Each Trust will
receive an opinion of counsel to the effect that the transactions
contemplated herein will be treated as sales and the Receivables would not
be part of the Company's or any Transferor's bankruptcy estate and would not
be available to the Company's or any Transferor's creditors or, in the
alternative, that the transferor will have a perfected first priority
security interest in the Receivables.

The U.S. Court of Appeals for the Tenth Circuit in its decision in
Octagon Gas Systems, Inc. v. Rimmer (In re Meridian Reserve, Inc.) (decided
May 27, 1993) determined that "accounts," a defined term under the Uniform
Commercial Code, would be included in the bankruptcy estate of a transferor
regardless of whether the transfer is treated as a sale or a secured loan.
Although the Receivables are likely to be viewed as "chattel paper," as
defined under the Uniform Commercial Code, rather than as accounts, the
Octagon holding is equally applicable to chattel paper. The circumstances
under which the Octagon ruling would apply are not fully known and the extent
to which the Octagon decision will be followed in other courts or outside the
Tenth Circuit is not certain. If the holding in the Octagon case were
applied in a bankruptcy of the Company or any Transferor even if the transfer
of Receivables were treated as a sale, the Receivables would be part of the
Company's or such Transferor's bankruptcy estate and would be subject to
claims of certain creditors, and delays and reductions in payments to the
Securityholders could result.

Unless otherwise provided in the related Prospectus Supplement, with
respect to each Trust that is not a grantor trust, if an Insolvency Event
occurs with respect to the Seller, the Indenture Trustee or Trustee for such
Trust will promptly sell, dispose of or otherwise liquidate the related
Receivables in a commercially reasonable manner on commercially reasonable
terms, except under certain limited circumstances. The proceeds from any
such sale, disposition or liquidation of Receivables will be treated as
collections on the Receivables and deposited in the Collection Account of
such Trust. If the proceeds from the liquidation of the Receivables and any
amounts on deposit in the Reserve Account, the Note Distribution Account, if
any, and the Certificate Distribution Account with respect to any such Trust
and any amounts available from any credit enhancement are not sufficient to
pay any Notes and the Certificates of the related series in full, the amount
of principal returned to any Noteholders or the Certificateholders will be
reduced and such Noteholders and Certificateholders will incur a loss. See
"Description of the Transfer and Servicing Agreements-Insolvency Event".

Nature of Obligors and Financed Vehicles; Servicing. The Obligors on
the Receivables are primarily "non-prime" borrowers who are generally
relatively higher credit risks due to various factors, including their past
credit experience and the absence or limited extent of their credit history.
Typical "non-prime" borrowers include young borrowers (18 to 25 years old)
who are trying to establish an initial credit history, previously bankrupt
borrowers who have reestablished their credit history, slow payers of credit
cards and department store accounts and borrowers who desire payment terms
slightly longer than the maximum term permitted by traditional sources of
consumer credit. The average interest rate charged by the Company to such
"non-prime" borrowers is generally higher than that charged by commercial
banks, financing arms of automobile manufacturers and other traditional
sources of consumer credit, which typically impose more stringent credit
requirements. The payment experience on receivables of obligors with this
credit profile is likely to be different from that on receivables of
traditional auto financing sources and is likely to be more sensitive to
changes in the economic climate in the areas in which such obligors reside.
As a result of the credit profile of the Obligors and the APRs of the
Receivables, the historical credit loss and delinquency rates on the
Receivables may be higher than those experienced by banks and the captive
finance companies of the automobile manufacturers. In the event of a default
under a Receivable, the only source of repayment may be liquidation proceeds
from the related Financed Vehicle; the Financed Vehicles securing the
Receivables will consist primarily of used vehicles which may not have a
liquidation value sufficient to pay in full the amount financed by the
related Contract. See "First Merchants' Automobile Financing Program --
Credit Loss Experience" and "-- Delinquency Experience" in the related
Prospectus Supplement.

The servicing of receivables of customers with such credit profiles
requires special skill and diligence. The Servicer believes that its credit
loss and delinquency experience reflect in part its trained staff and
collection procedures. If the Company is removed as Servicer, or if the
Company resigns or is terminated as Servicer by the Security Insurer, if any,
a backup servicer, if any, or other successor Servicer will agree to assume
the obligations of successor Servicer under the related Sale and Servicing
Agreement or the related Pooling and Servicing Agreement. There can be no
assurance, however, that collections with respect to the Receivables would
not be adversely affected by a change in Servicer.

Trust's Relationship to the Seller, the Company and their Affiliates.
None of the Company, any Transferor or any of their affiliates is generally
obligated to make any payments in respect of any Notes, the Certificates or
the Receivables of a given Trust.

However, in connection with the sale of Receivables by the Seller to a
given Trust, the Seller will make representations and warranties with respect
to the characteristics of such Receivables and, in certain circumstances, the
Seller may be required to repurchase Receivables with respect to which such
representations and warranties have been breached. See "Description of the
Transfer and Servicing Agreements -- Sale and Assignment of Receivables".
In addition, under certain circumstances, the Servicer may be required to
purchase Receivables or to advance amounts with respect to payments due on
the Receivables. See "Description of the Transfer and Servicing Agreements -
- - Servicing Procedures". Moreover, if the Company were to cease acting as
Servicer, delays in processing payments on the Receivables and information
in respect thereof could occur and result in delays in payments to the
Securityholders.

The related Prospectus Supplement may set forth certain additional
information regarding the Company and any Transferor. In addition, the
Company is subject to the information requirements of the Exchange Act and
in accordance therewith files reports and other information with the
Commission. For further information regarding the Company, reference is made
to such reports and other information, which are available as described under
"Available Information".

Subordination of Certain Classes of Securities. To the extent specified
in the related Prospectus Supplement, distributions of interest and principal
on one or more classes of Notes or Certificates of a series may be
subordinated in priority of payment to interest and principal due on certain
of the Notes, if any, of such series or one or more classes of Certificates
of such series.

Limited Assets of the Trust. None of the Trusts will have, nor will any
Trust be permitted or expected to have, any significant assets or sources of
funds other than the Receivables and, to the extent provided in the related
Prospectus Supplement, a Pre-Funding Account, a Collateral Reinvestment
Account, a Reserve Account and any other credit enhancement or Trust
Property. The Notes of any series will represent obligations solely of, and
the Certificates of any series will represent interests solely in, the
related Trust and neither the Notes nor the Certificates of any series will
be insured or guaranteed by the Seller, the Servicer, the applicable Trustee,
any Indenture Trustee or any other person or entity. Consequently, holders
of the Securities of any series must rely for repayment upon payments on the
related Receivables and, if and to the extent available, amounts on deposit
in the Pre-Funding Account (if any), the Collateral Reinvestment Account (if
any), the Reserve Account (if any) and any other credit enhancement, all as
specified in the related Prospectus Supplement.

Master Trusts. As may be described in the related Prospectus
Supplement, a Master Trust may issue from time to time more than one series.
While the terms of any additional series will be specified in a supplement
to the related Master Trust Agreement, the provisions of such supplement and,
therefore, the terms of any additional series, will not be subject to prior
review by, or consent of, holders of the Securities of any series previously
issued by such Master Trust. Such terms may include methods for determining
applicable investor Percentages and allocating collections, provisions
creating different or additional security or credit enhancements and any
other provisions which are made applicable only to such series. The
obligation of the related Trustee to issue any new series is subject to the
condition, among others, that such issuance will not result in any Rating
Agency reducing or withdrawing its rating of the Securities of any
outstanding series (any such reduction or withdrawal is referred to herein
as a "Ratings Effect"). There can be no assurance, however, that the terms
of any series might not have an impact on the timing or amount of payments
received by a Securityholder of another series issued by the same Master
Trust. See "The Trusts -- Master Trusts".

Maturity and Prepayment Considerations. All the Receivables are
prepayable at any time. (For this purpose the term "prepayments" includes
prepayments in full, partial prepayments (including those related to rebates
of extended warranty contract costs and insurance premiums), liquidations due
to default, losses caused by the issuance of an order by a court in any
insolvency proceeding reducing the amount owed under a Receivable, as well
as receipts of proceeds from physical damage, credit life and disability
insurance policies and certain other Receivables repurchased for
administrative reasons.) The rate of prepayments on the Receivables may be
influenced by a variety of economic, social and other factors, including the
fact that an Obligor generally may not sell or transfer the Financed Vehicle
securing a Receivable without the consent of the Seller. The rate of
prepayment on the Receivables may also be influenced by the structure of the
loan. In addition, under certain circumstances, the Seller will be obligated
to repurchase Receivables pursuant to a Sale and Servicing Agreement or
Pooling and Servicing Agreement as a result of breaches of representations
and warranties and, under certain circumstances, the Servicer will be
obligated to purchase Receivables pursuant to such Sale and Servicing
Agreement or Pooling and Servicing Agreement as a result of breaches of
certain covenants. See "Description of the Transfer and Servicing Agreements
- -- Sale and Assignment of Receivables". Any reinvestment risks resulting
from a faster or slower incidence of prepayment of Receivables held by a
given Trust will be borne entirely by the Securityholders of the related
series of Securities. See also "Description of the Transfer and Servicing
Agreements -- Termination" regarding the Servicer's option to purchase the
Receivables of a given Receivables Pool and "-- Insolvency Event" regarding
the sale of the Receivables owned by an Owner Trust if an Insolvency Event
with respect to the Seller occurs.

Risk of Commingling. With respect to each Trust, the Servicer will
deposit all payments on the related Receivables (from whatever source) and
all proceeds of such Receivables collected during each Collection Period into
the Collection Account of such Trust within two business days of receipt
thereof. However, if so provided in the related Prospectus Supplement, in
the event that the Company satisfies certain requirements for monthly or less
frequent remittances and the Rating Agencies (as such term is defined in the
related Prospectus Supplement, the "Rating Agencies") affirm their ratings
of the related Securities at the initial level, then for so long as the
Company is the Servicer and provided that (i) there exists no Servicer
Default and (ii) each other condition to making such monthly or less frequent
deposits as may be specified by the Rating Agencies and described in the
related Prospectus Supplement is satisfied, the Servicer will not be required
to deposit such amounts into the Collection Account of such Trust until on
or before the business day preceding each Distribution Date. The Servicer
will deposit the aggregate Purchase Amount of Receivables purchased by the
Servicer into the applicable Collection Account on or before the business day
preceding each Distribution Date. Pending deposit into such Collection
Account, collections may be invested by the Servicer at its own risk and for
its own benefit and will not be segregated from funds of the Servicer. If
the Servicer were unable to remit such funds, the applicable Securityholders
might incur a loss. To the extent set forth in the related Prospectus
Supplement, the Servicer may, in order to satisfy the requirements described
above, obtain a letter of credit or other security for the benefit of the
related Trust to secure timely remittances of collections on the related
Receivables and payment of the aggregate Purchase Amount with respect to
Receivables purchased by the Servicer.

Servicer Default. Unless otherwise provided in the related Prospectus
Supplement with respect to a series of Securities issued by an Owner Trust,
in the event a Servicer Default occurs, the Indenture Trustee or the
Noteholders with respect to such series, as described under "Description of
the Transfer and Servicing Agreements -- Rights upon Servicer Default", may
remove the Servicer without the consent of the Trustee or any of the
Certificateholders with respect
to such series. The Trustee or the Certificateholders with respect to such
series will not have the ability to remove the Servicer if a Servicer Default
occurs. In addition, the Noteholders of such series have the ability, with
certain specified exceptions, to waive defaults by the Servicer, including
defaults that could materially adversely affect the Certificateholders of
such series. See "Description of the Transfer and Servicing Agreements --
Waiver of Past Defaults".

Ratings of the Securities. It is a condition to the issuance of the
Securities to be offered hereunder that they be rated in one of the four
highest rating categories by at least one nationally recognized statistical
rating organization. A rating is not a recommendation to purchase, hold or
sell Securities inasmuch as such rating does not comment as to market price
or suitability for a particular investor. Ratings of Securities will address
the likelihood of the payment of principal and interest thereon pursuant to
their terms. There can be no assurance that a rating will remain for a given
period of time or that a rating will not be lowered or withdrawn entirely by
a rating agency if in its judgment circumstances in the future so warrant.
For more detailed information regarding the ratings assigned to any class of
a particular series of Securities, see "Summary of Terms -- Rating of the
Securities" and "Risk Factors -- Ratings of the Securities" in the related
Prospectus Supplement.

Book-Entry Registration. Unless otherwise specified in the related
Prospectus Supplement, each class of Securities of a given series will be
initially represented by one or more certificates registered in the name of
Cede & Co. ("Cede"), or any other nominee for DTC set forth in the related
Prospectus Supplement (Cede, or such other nominee, "DTC's Nominee"), and
will not be registered in the names of the holders of the Securities of such
series or their nominees. Because of this, unless and until Definitive
Securities for such series are issued, holders of such Securities will not
be recognized by the Trustee or any applicable Indenture Trustee as
"Certificateholders", "Noteholders" or "Securityholders", as the case may be
(as such terms are used herein or in the related Pooling and Servicing
Agreement or related Indenture and Trust Agreement, as applicable). Hence,
until Definitive Securities are issued, holders of such Securities will only
be able to exercise the rights of Securityholders indirectly through DTC and
its participating organizations. See "Certain Information Regarding the
Securities -- Book-Entry Registration" and "-- Definitive Securities".

THE TRUSTS

With respect to each series of Securities, the Seller will establish a
separate Trust pursuant to the respective Trust Agreement or Pooling and
Servicing Agreement, as applicable, for the transactions described herein and
in the related Prospectus Supplement. The property of each Trust will
include a pool (a "Receivables Pool") of motor vehicle retail installment
sales contracts between dealers (the "Dealers") and purchasers (the
"Obligors") of new and used automobiles, light trucks, vans and minivans and,
unless otherwise provided in the related Prospectus Supplement, all payments
due thereunder on and after the applicable Cutoff Date (as such term is
defined in the related Prospectus Supplement, a "Cutoff Date") in the case
of Precomputed Receivables and all payments received thereunder on and after
the applicable Cutoff Date in the case of Simple Interest Receivables. The
Receivables of each Receivables Pool were or will be originated by the
Dealers and purchased by the Company pursuant to agreements with Dealers
("Dealer Agreements") for subsequent sale to the Seller. Such Receivables
will continue to be serviced by the Servicer. On the applicable Closing
Date, after the issuance of the Certificates and any Notes of a given series,
the Seller will sell the Initial Receivables of the applicable Receivables
Pool to the Trust to the extent, if any, specified in the related Prospectus
Supplement. If and to the extent so provided in the related
Prospectus Supplement, Subsequent Receivables will be conveyed to the Trust
as frequently as daily during the Funding Period. In addition, if so
provided in the related Prospectus Supplement, the property of a Trust may
also include monies deposited into the Collateral Reinvestment Account on the
Closing Date. During the Revolving Period, principal collections on the
Receivables of the related Series, together with (if and to the extent
described in the related Prospectus Supplement) interest collections on such
Receivables that are in excess of amounts required to be distributed
therefrom will be deposited from time to time in the Collateral Reinvestment
Account and will be used by the Trust to purchase Subsequent Receivables
during the related Revolving Period. Any Subsequent Receivables so conveyed
will also be assets of the applicable Trust, subject to the prior rights of
the related Indenture Trustee and the Noteholders, if any, therein. The
property of each Trust will also include (i) such amounts as from time to
time may be held in separate trust accounts established and maintained
pursuant to the related Sale and Servicing Agreement or Pooling and Servicing
Agreement and the proceeds of such accounts, as described herein and in the
related Prospectus Supplement; (ii) security interests in the Financed
Vehicles and any other interest of the Seller in such Financed Vehicles;
(iii) the rights to proceeds from claims on certain physical damage, credit
life and disability insurance policies covering the Financed Vehicles or the
Obligors, as the case may be; (iv) the interest of the Seller in any proceeds
from recourse to Dealers on Receivables or Financed Vehicles with respect to
which the Servicer has determined that eventual repayment in full is
unlikely; (v) any property that shall have secured a Receivable and that
shall have been acquired by the applicable Trust; and (vi) any and all
proceeds of the foregoing. To the extent specified in the related Prospectus
Supplement, a Pre-Funding Account, a Collateral Reinvestment Account, a
Reserve Account or other form of credit enhancement or such other property
including Receivables Backed Assets may be a part of the property of any
given Trust or may be held by the Trustee or an Indenture Trustee for the
benefit of holders of the related Securities. Additionally, pursuant to
contracts between the Company and the Dealers, the Dealers have an obligation
after origination to repurchase Receivables as to which Dealers have made
certain misrepresentations.

The Servicer will continue to service the Receivables held by each Trust
and will receive fees for such services. See "Description of the Transfer
and Servicing Agreements -- Servicing Compensation and Payment of Expenses"
herein and in the related Prospectus Supplement. To facilitate the servicing
of the Receivables, the Seller and each Trustee will authorize the Servicer
to retain physical possession of the Receivables held by each Trust and other
documents relating thereto as custodian for each such Trust. Due to the
administrative burden and expense, the certificates of title to the Financed
Vehicles will not be amended to reflect the sale and assignment of the
security interest in the Financed Vehicles to each Trust. In the absence of
such an amendment, any Trust may not have a perfected security interest in
the Financed Vehicles in all states. See "Certain Legal Aspects of the
Receivables" and "Description of the Transfer and Servicing Agreements --
Sale and Assignment of Receivables".

If the protection provided to any Noteholders of a given series by the
subordination of the related Certificates and by the Reserve Account, if any,
or other credit enhancement for such series or the protection provided to
Certificateholders by any such Reserve Account or other credit enhancement
is insufficient, such Noteholders or Certificateholders, as the case may be,
would have to look principally to the Obligors on the related Receivables,
the proceeds from the repossession and sale of Financed Vehicles which secure
defaulted Receivables and the proceeds from any recourse against Dealers with
respect to such Receivables. In such event, certain factors, such as the
applicable Trust's not having perfected security interests in the Financed
Vehicles in all states, may affect the Servicer's ability to repossess and
sell the collateral securing the Receivables, and thus may reduce the
proceeds to be distributed to the
holders of the Securities of such series. See "Description of the Transfer
and Servicing Agreements -- Distributions", "-- Credit and Cash Flow
Enhancement" and "Certain Legal Aspects of the Receivables".

The principal offices of each Trust and the related Trustee will be
specified in the applicable Prospectus Supplement.

THE TRUSTEE

The Trustee for each Trust will be specified in the related Prospectus
Supplement. The Trustee's liability in connection with the issuance and sale
of the related Securities will be limited solely to the express obligations
of such Trustee set forth in the related Trust Agreement and the Sale and
Servicing Agreement or the related Pooling and Servicing Agreement, as
applicable. A Trustee may resign at any time, in which event the Servicer,
or its successor, will be obligated to appoint a successor trustee. The
Administrator of any Owner Trust and the Servicer in respect of any Grantor
Trust may also remove the Trustee if the Trustee ceases to be eligible to
continue as Trustee under the related Trust Agreement or Pooling and
Servicing Agreement, as applicable, or if the Trustee becomes insolvent. In
such circumstances, the Administrator or Servicer, as applicable, will be
obligated to appoint a successor trustee. Any resignation or removal of a
Trustee and appointment of a successor trustee will not become effective
until acceptance of the appointment by the successor trustee.

MASTER TRUSTS

If so provided in the related Prospectus Supplement, each Trust
Agreement or Pooling and Servicing Agreement, as applicable, may provide
that, pursuant to any one or more supplements thereto, the Seller may direct
the related Trustee to issue from time to time new series subject to the
conditions described below (each such issuance a "Master Trust New
Issuance"). Each Master Trust New Issuance will have the effect of
decreasing the Residual Interest in the related Master Trust. Under each
such Master Trust Agreement, the Seller may designate, with respect to any
newly issued series: (i) its name or designation; (ii) its initial principal
amount (or method for calculating such amount); (iii) its Interest Rate (or
formula for the determination thereof); (iv) the Distribution Dates and the
date or dates from which interest shall accrue; (v) the method for allocating
collections to Securityholders of such series; (vi) any bank accounts to be
used by such series and the terms governing the operation of any such bank
accounts; (vii) the percentage used to calculate monthly servicing fees;
(viii) the provider and terms of any form of credit enhancement with respect
thereto; (ix) the terms on which the Securities of such series may be
repurchased or remarketed to other investors; (x) the number of classes of
Securities of such series, and if such series consists of more than one
class, the rights and priorities of each such class; (xi) the extent to which
the Securities of such series will be issuable in book-entry form; (xii) the
priority of such series with respect to any other series; and (xiii) any
other relevant terms. None of the Seller, the Servicer, the related Trustee
or any Master Trust is required or intends to obtain the consent of any
Securityholder of any outstanding series to issue any additional series.

Each Master Trust Agreement provides that the Seller may designate terms
such that each Master Trust New Issuance has an amortization period which may
have a different length and begin on a different date than such periods for
any series previously issued by the related Master Trust and then
outstanding. Moreover, each Master Trust New Issuance may have the benefits
of credit enhancements issued by enhancement providers different from the
providers of the credit enhancement, if any, with respect to any series
previously issued by the related Master Trust and then outstanding. Under
each Master Trust Agreement,
the related Trustee shall hold any such credit enhancement only on behalf of
the Securityholders to which such credit enhancement relates. The Seller
will have the option under each Master Trust Agreement to vary among series
the terms upon which a series may be repurchased by the Issuer or remarketed
to other investors. As more fully described in a related Prospectus
Supplement, there is no limit to the number of Master Trust New Issuances
that the Seller may cause under a Master Trust Agreement. Each Master Trust
will terminate only as provided in the related Master Trust Agreement. There
can be no assurance that the terms of any Master Trust New Issuance might not
have an impact on the timing and amount of payments received by
Securityholders of another series issued by the same Master Trust.

Under each Master Trust Agreement and pursuant to a related supplement,
a Master Trust New Issuance may only occur upon the satisfaction of certain
conditions provided in each such Master Trust Agreement. The obligation of
the related Trustee to authenticate the Securities of any such Master Trust
New Issuance and to execute and deliver the supplement to the related Master
Trust Agreement is subject to the satisfaction of the following conditions:
(a) on or before the date upon which the Master Trust New Issuance is to
occur, the Seller shall have given the related Trustee, the Servicer, the
Rating Agencies and certain related providers of credit enhancement, if any,
written notice of such Master Trust New Issuance and the date upon which the
Master Trust New Issuance is to occur; (b) the Seller shall have delivered
to the related Trustee a supplement to the related Master Trust Agreement,
in form satisfactory to such Trustee, executed by each party to the related
Master Trust Agreement other than such Trustee; (c) the Seller shall have
delivered to the related Trustee any related credit enhancement agreement;
(d) the related Trustee shall have received confirmation from the Rating
Agency that such Master Trust New Issuance will not result in any Rating
Agency reducing or withdrawing its rating with respect to any other series
or class of such Trust (any such reduction or withdrawal is referred to
herein as a "Ratings Effect"); (e) the Seller shall have delivered to the
related Trustee, the Rating Agency and certain providers of credit
enhancement, if any, an opinion of counsel acceptable to the related Trustee
that for federal income tax purposes (i) following such Master Trust New
Issuance the related Master Trust will not be deemed to be an association (or
publicly traded partnership) taxable as a corporation, (ii) such Master Trust
New Issuance will not affect the tax characterization as debt of Securities
of any outstanding series or class issued by such Master Trust that were
characterized as debt at the time of their issuance and (iii) such Master
Trust New Issuance will not cause or constitute an event in which gain or
loss would be recognized by any Securityholders or the related Master Trust;
and (f) any other conditions specified in any supplement. Upon satisfaction
of the above conditions, the related Trustee shall execute the supplement to
the related Master Trust Agreement and issue the Securities of such new
series.

THE RECEIVABLES POOLS
GENERAL

The Receivables in each Receivables Pool have been or will be purchased
by the Company from Dealers in the ordinary course of business through its
branches located in the United States. The retail installment sale contracts
are purchased pursuant to the Dealer Agreements. The Company purchases
contracts in accordance with its credit standards which are based upon the
vehicle buyer's ability and willingness to repay the obligation as well as
the value of the vehicle being financed. The Company will sell retail
installment sale contracts that it acquires to either (i) the related Trust
pursuant to a Sale and Servicing Agreement or a Pooling and Servicing
Agreement or (ii) a Transferor pursuant to Receivables Purchase Agreements.

The Receivables to be held by each Trust will be selected from the
Company's portfolio for inclusion in a Receivables Pool by several criteria,
including that, unless otherwise provided in the related Prospectus
Supplement, each Receivable (i) is secured by a new or used vehicle, (ii) was
originated or acquired (either from a Dealer or a financial institution) by
the Company in the United States, (iii) provides for level monthly payments
(except for the last payment, which may be minimally different from the level
payments that fully amortize the amount financed over its original term to
maturity, (iv) is a Precomputed Receivable or a Simple Interest Receivable
and (v) satisfies the other criteria, if any, set forth in the related
Prospectus Supplement. No selection procedures believed by the Seller to be
adverse to the Securityholders of any series were or will be used in
selecting the related Receivables.

"Precomputed Receivables" consist of either (i) monthly actuarial
receivables ("Actuarial Receivables") or (ii) receivables that provide for
allocation of payments according to the "sum of periodic balances" or "sum
of monthly payments" method "Rule of 78's Receivables"). An Actuarial
Receivable provides for amortization of the loan over a series of fixed level
payment monthly installments. Each monthly installment, including the
monthly installment representing the final payment on the Receivable,
consists of an amount of interest equal to 1/12 of the APR of the loan
multiplied by the unpaid principal balance of the loan, and an amount of
principal equal to the remainder of the monthly payment. A Rule of 78's
Receivable provides for the payment by the obligor of a specified total
amount of payments, payable in equal monthly installments on each due date,
which total represents the principal amount financed and add-on interest in
an amount calculated on the stated APR for the term of the receivable. The
rate at which such amount of add-on interest is earned and, correspondingly,
the amount of each fixed monthly payment allocated to reduction of the
outstanding principal are calculated in accordance with the "Rule of 78's".

"Simple Interest Receivables" are receivables that provide for the
amortization of the amount financed under each receivable over a series of
fixed level monthly payments. However, unlike the monthly payment under an
Actuarial Receivable, each monthly payment consists of an installment of
interest which is calculated on the basis of the outstanding principal
balance of the receivable multiplied by the stated APR and further multiplied
by the period elapsed (as a fraction of a calendar year) since the preceding
payment of interest was made. As payments are received under a Simple
Interest Receivable, the amount received is applied first to interest accrued
to the date of payment and the balance is applied to reduce the unpaid
principal balance. Accordingly, if an obligor pays a fixed monthly
installment before its scheduled due date, the portion of the payment
allocable to interest for the period since the preceding payment was made
will be less than it would have been had the payment been made as scheduled,
and the portion of the payment applied to reduce the unpaid principal balance
will be correspondingly greater. Conversely, if an obligor pays a fixed
monthly installment after its scheduled due date, the portion of the payment
allocable to interest for the period since the preceding payment was made
will be greater than it would have been had the payment been made as
scheduled, and the portion of the payment applied to reduce the unpaid
principal balance will be correspondingly less. In either case, the obligor
pays a fixed monthly installment until the final scheduled payment date, at
which time the amount of the final installment is increased or decreased as
necessary to repay the then outstanding principal balance.

In the event of the prepayment in full (voluntarily or by acceleration)
of a Rule of 78's Receivable, under the terms of the contract, a "refund" or
"rebate" will be made to the obligor of the portion of the total amount of
payments then due and payable under the contract allocable to "unearned" add-
on
interest, calculated in accordance with a method equivalent to the Rule of
78's. If an Actuarial Receivable is prepaid in full, with minor variations
based upon state law, the Actuarial Receivable requires that the rebate be
calculated on the basis of a constant interest rate. If a Simple Interest
Receivable is prepaid, rather than receive a rebate, the obligor is required
to pay interest only to the date of prepayment. The amount of a rebate under
a Rule of 78's Receivable generally will be less than the amount of a rebate
on an Actuarial Receivable and generally will be less than the remaining
scheduled payments of interest that would have been due under a Simple
Interest Receivable for which all payments were made on schedule.

Unless otherwise provided in the related Prospectus Supplement, each
Trust will account for the Rule of 78's Receivables as if such Receivables
were Actuarial Receivables. Amounts received upon prepayment in full of a
Rule of 78's Receivable in excess of the then outstanding principal balance
of such Receivable and accrued interest thereon (calculated pursuant to the
actuarial method) will not be paid to the Noteholders or passed through to
the Certificateholders of the applicable series but will be paid to the
Servicer as additional servicing compensation.

Information with respect to each Receivables Pool will be set forth in
the related Prospectus Supplement, including, to the extent appropriate, the
composition, the distribution by APR and by the states of origination, the
portion of such Receivables Pool consisting of Precomputed Receivables and
of Simple Interest Receivables and the portion of such Receivables Pool
secured by new vehicles and by used vehicles.

DELINQUENCIES, REPOSSESSIONS AND NET LOSSES

Certain information concerning the experience of the Company pertaining
to delinquencies, repossessions and net losses with respect to new and used
retail automobile, light duty truck, van and minivan receivables (including
receivables previously sold which the Company continues to service) will be
set forth in each Prospectus Supplement. There can be no assurance that the
delinquency, repossession and net loss experience on any Receivables Pool
will be comparable to prior experience or to such information.

WEIGHTED AVERAGE LIFE OF THE SECURITIES

The weighted average life of the Notes, if any, and the Certificates of
any series will generally be influenced by the rate at which the principal
balances of the related Receivables are paid, which payment may be in the
form of scheduled amortization or prepayments. (For this purpose, the term
"prepayments" includes prepayments in full, partial prepayments (including
those related to rebates of extended warranty contract costs and insurance
premiums), liquidations due to default, losses caused by the issuance of an
order by a court in any insolvency proceeding reducing the amount owed under
a Receivable as well as receipts of proceeds from physical damage, credit
life and disability insurance policies and certain other Receivables
repurchased by the Seller or the Servicer for administrative reasons.) All
of the Receivables are prepayable at any time without penalty to the Obligor.
The rate of prepayment of automotive receivables is influenced by a variety
of economic, social and other factors, including the fact that an Obligor
generally may not sell or transfer the Financed Vehicle securing a Receivable
without the consent of the Seller. The rate of prepayment on the Receivables
may also be influenced by the structure of the loan. In addition, under
certain circumstances, the Company or a Transferor, if any, will be obligated
to repurchase Receivables from a given Trust pursuant to the related Sale and
Servicing Agreement or Pooling and Servicing Agreement as a result of
breaches of representations and warranties and the Servicer will be obligated
to purchase Receivables from such Trust pursuant to such Sale and Servicing
Agreement or Pooling and Servicing Agreement as a result of breaches of
certain covenants. See "Description of the Transfer and Servicing Agreements
- -- Sale and Assignment of Receivables" and "-- Servicing Procedures". See
also "Description of the Transfer and Servicing Agreements -- Termination"
regarding the Servicer's option to purchase the Receivables from a given
Trust and "-- Insolvency Event" regarding the sale of the Receivables owned
by an Owner Trust if an Insolvency Event with respect to the Seller
applicable to such Trust occurs.

In light of the above considerations, there can be no assurance as to
the amount of principal payments to be made on the Notes, if any, or the
Certificates of a given series on each Distribution Date since such amount
will depend, in part, on the amount of principal collected on the related
Receivables Pool during the applicable Collection Period. Any reinvestment
risks resulting from a faster or slower incidence of prepayment of
Receivables will be borne entirely by the Noteholders, if any, and the
Certificateholders of a given series. The related Prospectus Supplement may
set forth certain additional information with respect to the maturity and
prepayment considerations applicable to the particular Receivables Pool and
the related series of Securities.

POOL FACTORS AND TRADING INFORMATION

The "Note Pool Factor" for each class of Notes will be a seven-digit
decimal which the Servicer will compute prior to each distribution with
respect to such class of Notes indicating the remaining outstanding principal
balance of such class of Notes, as of the applicable Distribution Date (after
giving effect to payments to be made on such Distribution Date), as a
fraction of the initial outstanding principal balance of such class of Notes.

The "Certificate Pool Factor" for each class of Certificates will be a seven-
digit decimal which the Servicer will compute prior to each distribution with
respect to such class of Certificates indicating the remaining Certificate
Balance of such class of Certificates, as of the applicable Distribution Date
(after giving effect to distributions to be made on such Distribution Date),
as a fraction of the initial Certificate Balance of such class of
Certificates. Each Note Pool Factor and each Certificate Pool Factor will
initially be 1.0000000 and thereafter will decline to reflect reductions in
the outstanding principal balance of the applicable class of Notes, or the
reduction of the Certificate Balance of the applicable class of Certificates,
as the case may be. A Noteholder's portion of the aggregate outstanding
principal balance of the related class of Notes is the product of (i) the
original denomination of such Noteholder's Note and (ii) the applicable Note
Pool Factor. A Certificateholder's portion of the aggregate outstanding
Certificate Balance for the related class of Certificates is the product of
(a) the original denomination of such Certificateholder's Certificate and
(b) the applicable Certificate Pool Factor.

Unless otherwise provided in the related Prospectus Supplement, the
Noteholders, if any, and the Certificateholders will receive reports on or
about each Distribution Date concerning, with respect to the Collection
Period immediately preceding such Distribution Date, payments received on the
Receivables, the Pool Balance (as such term is defined in the related
Prospectus Supplement, the "Pool Balance"), each Certificate Pool Factor or
Note Pool Factor, as applicable, and various other items of information. In
addition, Securityholders of record during any calendar year will be
furnished information for tax reporting purposes not later than the latest
date permitted by law. See "Certain Information Regarding the Securities --
Reports to Securityholders".

USE OF PROCEEDS

Unless otherwise provided in the related Prospectus Supplement, the net
proceeds from the sale of the Securities of a series will be applied by the
applicable Trust (i) to the purchase of the Receivables from the Seller,
(ii) to
make the initial deposit into the Reserve Account, if any, (iii) to make the
deposit of the Pre-Funded Amount into the Pre-Funding Account, if any and
(iv) to make the initial deposit, if any, to the Collateral Reinvestment
Account. Unless otherwise specified in the related Prospectus Supplement,
the Seller will use that portion of such net proceeds paid to it with respect
to any such Trust for general corporate purposes.

THE COMPANY AND THE SELLER
THE COMPANY

The Company is a specialty finance company primarily engaged in
financing the purchase of used automobiles by acquiring dealer-originated
retail installment contracts. Since the Company's incorporation in March
1991, it has expanded its operations by targeting and servicing an under-
served market -- financing used automobile purchases by consumers who have
limited access to traditional sources of credit. The Company serves two
customers, the automobile dealer and, indirectly, the dealer's customer, the
"non-prime" borrower. See "First Merchants' Automobile Financing Program --
General" in the related Prospectus Supplement.

The Company is a Delaware corporation. The Company's principal
executive office and mailing address is 570 Lake Cook Road, Suite 126,
Deerfield, Illinois 60015 and its telephone number is (847) 948-9300. The
common stock of the Company is quoted on The Nasdaq Stock Market's National
Market under the symbol "FMAC". The Company is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended, and in
accordance therewith files reports and other information with the Securities
and Exchange Commission.

The Company will take steps in structuring the transactions contemplated
hereby that are intended to ensure that the voluntary or involuntary
application for relief by the Company under any Insolvency Laws will not
result in the consolidation of the assets and liabilities of the related
Transferor, if any, or the related Trust with those of the Company. These
steps may include the creation of a Transferor as a separate, limited-purpose
subsidiary pursuant to a certificate of incorporation containing certain
limitations on its activities (including restrictions on the nature of such
Transferor's business, the requirement of an independent director being on
such Transferor's Board of Directors and a restriction on such Transferor's
ability to commence a voluntary case or proceeding under any Insolvency Law
without the prior unanimous affirmative vote of all of its directors).

THE SELLER

With respect to each series of Securities, the Seller will be either the
Company or a Transferor. Each Transferor, if any, will be a special purpose
finance subsidiary of the Company.

DESCRIPTION OF THE NOTES
GENERAL

Each Owner Trust may issue one or more classes of Notes pursuant to an
Indenture, a form of which has been filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. The following summary does
not purport to be complete and is subject to, and is qualified in its
entirety by reference to, all the provisions of the Notes and the Indenture.

Unless otherwise specified in the related Prospectus Supplement, each
class of Notes will initially be represented by one or more Notes, in each
case registered in the name of the nominee of DTC (together with any
successor depository selected by the Trust, the "Depository") except as set
forth below. Unless otherwise specified in the related Prospectus
Supplement, the Notes will be available for purchase in denominations of
$1,000 and integral multiples thereof in book-entry form only. The Seller
has been informed by DTC that DTC's nominee will be Cede, unless another
nominee is specified in the related Prospectus Supplement. Accordingly, such
nominee is expected to be the holder of record of the Notes of each class.
Unless and until Definitive Notes are issued under the limited circumstances
described herein or in the related Prospectus Supplement, no Noteholder will
be entitled to receive a physical certificate representing a Note. All
references herein and in the related Prospectus Supplement to actions by
Noteholders refer to actions taken by DTC upon instructions from its
participating organizations (the "Participants") and all references herein
and in the related Prospectus Supplement to distributions, notices, reports
and statements to Noteholders refer to distributions, notices, reports and
statements to DTC or its nominee, as the registered holder of the Notes, for
distribution to Noteholders in accordance with DTC's procedures with respect
thereto. See "Certain Information Regarding the Securities -- Book-Entry
Registration" and "-- Definitive Securities".

PRINCIPAL AND INTEREST ON THE NOTES

The timing and priority of payment, seniority, allocations of losses,
Interest Rate and amount of or method of determining payments of principal
and interest on each class of Notes of a given series will be described in
the related Prospectus Supplement. The right of holders of any class of
Notes to receive payments of principal and interest may be senior or
subordinate to the rights of holders of any other class or classes of Notes
of such series, as described in the related Prospectus Supplement. Unless
otherwise provided in the related Prospectus Supplement, payments of interest
on the Notes of such series will be made prior to payments of principal
thereon. If so provided in the related Prospectus Supplement, a series may
include one or more classes of Strip Notes entitled to (i) principal payments
with disproportionate, nominal or no interest payments or (ii) interest
payments with disproportionate, nominal or no principal payments. Each class
of Notes may have a different Interest Rate, which may be a fixed, variable
or adjustable Interest Rate (and which may be zero for certain classes of
Strip Notes), or any combination of the foregoing. The related Prospectus
Supplement will specify the Interest Rate for each class of Notes of a given
series or the method for determining such Interest Rate. See also "Certain
Information Regarding the Securities -- Fixed Rate Securities" and
"-- Floating Rate Securities". One or more classes of Notes of a series may
be redeemable in whole or in part under the circumstances specified in the
related Prospectus Supplement, including if a Pre-Funding Account or
Collateral Reinvestment Account has been established with respect to a
related series, from amounts remaining in the applicable account at the end
of the Funding Period or Revolving Period, as the case may be, or as a result
of the Servicer's exercising its option to purchase the related Receivables
Pool.

To the extent specified in any Prospectus Supplement, one or more
classes of Notes of a given series may have fixed principal payment
schedules, as set forth in such Prospectus Supplement; Noteholders of such
Notes would be entitled to receive as payments of principal on any given
Distribution Date the applicable amounts set forth on such schedule with
respect to such Notes, in the manner and to the extent set forth in the
related Prospectus Supplement.

Unless otherwise specified in the related Prospectus Supplement,
payments to Noteholders of all classes within a series in respect of interest
will have the same priority. Under certain circumstances, the amount
available for such payments could be less than the amount of interest payable
on the Notes on any of the dates specified for payments in the related
Prospectus Supplement (each, a "Distribution Date", which may be the same
date as each Distribution Date as specified in the related Prospectus
Supplement), in which case each class of Noteholders will receive its ratable
share (based upon the aggregate amount of interest due to such class of
Noteholders) of the aggregate amount available to be distributed in respect
of interest on the Notes of such series. See "Description of the Transfer
and Servicing Agreements -- Distributions" and "-- Credit and Cash Flow
Enhancement".

In the case of a series of Securities which includes two or more classes
of Notes, the sequential order and priority of payment in respect of
principal and interest, and any schedule or formula or other provisions
applicable to the determination thereof, of each such class will be set forth
in the related Prospectus Supplement. Payments in respect of principal and
interest of any class of Notes will be made on a pro rata basis among all the
Noteholders of such class. One or more classes of Notes of a Series may be
redeemable in whole or in part under the circumstances specified in the
related Prospectus Supplement, including, if a Pre-Funding Account or
Collateral Reinvestment Account has been established with respect to the
related Series, from amounts remaining in the applicable account at the end
of the Funding Period or Revolving Period, as the case may be, or as a result
of the exercise by the Servicer, a subservicer or such other party as may be
specified in the related Prospectus Supplement of its option to purchase the
related Receivables Pool. See "Description of the Transfer and Servicing
Agreements -- Termination".

CERTAIN PROVISIONS OF THE INDENTURE

Events of Default; Rights upon Event of Default. With respect to the
Notes of a given series, unless otherwise specified in the related Prospectus
Supplement, "Events of Default" under the related Indenture will consist of:
(i) a default for five days or more in the payment of any interest on any
such Note; (ii) a default for five days or more in the payment of the
principal of or any installment of the principal of any such Note when the
same becomes due and payable; (iii) a default in the observance or
performance of any covenant or agreement of the applicable Trust made in the
related Indenture and the continuation of any such default for a period of
30 days after notice thereof is given to such Trust by the applicable
Indenture Trustee or to such Trust and such Indenture Trustee by the holders
of at least 25% in principal amount of such Notes then outstanding; (iv) any
representation or warranty made by such Trust in the related Indenture or in
any certificate delivered pursuant thereto or in connection therewith having
been incorrect in a material respect as of the time
made, and such breach not having been cured within 30 days after notice
thereof is given to such Trust by the applicable Indenture Trustee or to such
Trust and such Indenture Trustee by the holders of at least 25% in principal
amount of such Notes then outstanding; or (v) certain events of bankruptcy,
insolvency, receivership or liquidation of the applicable Trust. However,
the amount of principal required to be paid to Noteholders of such series
under the related Indenture will generally be limited to amounts available
to be deposited in the applicable Note Distribution Account. Therefore,
unless otherwise specified in the related Prospectus Supplement, the failure
to pay principal on a class of Notes generally will not result in the
occurrence of an Event of Default until the final scheduled Distribution Date
for such class of Notes.

Unless otherwise specified in the related Prospectus Supplement, if an
Event of Default should occur and be continuing with respect to the Notes of
any series, the related Indenture Trustee or holders of a majority in
principal amount of such Notes then outstanding may declare the principal of
such Notes to be immediately due and payable. Unless otherwise specified in
the related Prospectus Supplement, such declaration may, under certain
circumstances, be rescinded by the holders of a majority in principal amount
of such Notes then outstanding.

If the Notes of any series are due and payable following an Event of
Default with respect thereto, the related Indenture Trustee may institute
proceedings to collect amounts due or foreclose on Trust property, exercise
remedies as a secured party, sell the related Receivables or elect to have
the applicable Trust maintain possession of such Receivables and continue to
apply collections on such Receivables as if there had been no declaration of
acceleration. Unless otherwise specified in the related Prospectus
Supplement, however, such Indenture Trustee is prohibited from selling the
related Receivables following an Event of Default, other than a default for
five days or more in the payment of any principal of or a default for five
days or more in the payment of any interest on any Note of such series,
unless (i) the holders of all such outstanding Notes consent to such sale,
(ii) the proceeds of such sale are sufficient to pay in full the principal
of and the accrued interest on such outstanding Notes at the date of such
sale or (iii) such Indenture Trustee determines that the proceeds of
Receivables would not be sufficient on an ongoing basis to make all payments
on such Notes as such payments would have become due if such obligations had
not been declared due and payable, and such Indenture Trustee obtains the
consent of the holders of a majority of the aggregate outstanding principal
amount of such Notes.

Subject to the provisions of the applicable Indenture relating to the
duties of the related Indenture Trustee, if an Event of Default occurs and
is continuing with respect to a series of Notes, such Indenture Trustee will
be under no obligation to exercise any of the rights or powers under such
Indenture at the request or direction of any of the holders of such Notes,
if such Indenture Trustee reasonably believes it will not be adequately
indemnified against the costs, expenses and liabilities which might be
incurred by it in complying with such request. Subject to the provisions for
indemnification and certain limitations contained in the related Indenture,
the holders of a majority in principal amount of the outstanding Notes of a
given series will have the right to direct the time, method and place of
conducting any proceeding or any remedy available to the applicable Indenture
Trustee, and the holders of a majority in principal amount of such Notes then
outstanding may, in certain cases, waive any default with respect thereto,
except a default in the payment of principal or interest or a default in
respect of a covenant or provision of such Indenture that cannot be modified
without the waiver or consent of all the holders of such outstanding Notes.

Unless otherwise specified in the related Prospectus Supplement, no
holder of a Note of any series will have the right to institute any
proceeding with respect to the related Indenture, unless (i) such holder
previously has given to the applicable Indenture Trustee written notice of
a continuing Event of Default, (ii) the holders of not less than 25% in
principal amount of the outstanding Notes of such series have made written
request to such Indenture Trustee to institute such proceeding in its own
name as Indenture Trustee, (iii) such holder or holders have offered such
Indenture Trustee reasonable indemnity, (iv) such Indenture Trustee has for
60 days failed to institute such proceeding and (v) no direction inconsistent
with such written request has been given to such Indenture Trustee during
such 60-day period by the holders of a majority in principal amount of such
outstanding Notes.

In addition, each Indenture Trustee and the related Noteholders, by
accepting the related Notes, will covenant that they will not at any time
institute against the applicable Trust any bankruptcy, reorganization or
other proceeding under any federal or state bankruptcy or similar law.

With respect to any Trust, neither the related Indenture Trustee nor the
related Trustee in its individual capacity, nor any holder of a Certificate
representing an ownership interest in such Trust nor any of their respective
owners, beneficiaries, agents, officers, directors, employees, affiliates,
successors or assigns will, in the absence of an express agreement to the
contrary, be personally liable for the payment of the principal of or
interest on the related Notes or for the agreements of such Trust contained
in the applicable Indenture.

Certain Covenants. Each Indenture will provide that the related Trust
may not consolidate with or merge into any other entity, unless (i) the
entity formed by or surviving such consolidation or merger is organized under
the laws of the United States, any state or the District of Columbia,
(ii) such entity expressly assumes such Trust's obligation to make due and
punctual payments upon the Notes of the related series and the performance
or observance of every agreement and covenant of such Trust under the
Indenture, (iii) no Event of Default shall have occurred and be continuing
immediately after such merger or consolidation, (iv) such Trust has been
advised that the rating of the Notes or the Certificates of such series then
in effect would not be reduced or withdrawn by the Rating Agencies as a
result of such merger or consolidation and (v) such Trust has received an
opinion of counsel to the effect that such consolidation or merger would have
no material adverse tax consequence to the Trust or to any related Noteholder
or Certificateholder.

No Owner Trust will, among other things, (i) except as expressly
permitted by the applicable Indenture, the applicable Transfer and Servicing
Agreements or certain related documents with respect to such Trust
(collectively, the "Related Documents"), sell, transfer, exchange or
otherwise dispose of any of the assets of such Trust, (ii) claim any credit
on or make any deduction from the principal and interest payable in respect
of the Notes of the related series (other than amounts withheld under the
Code or applicable state law) or assert any claim against any present or
former holder of such Notes because of the payment of taxes levied or
assessed upon such Trust, (iii) dissolve or liquidate in whole or in part,
(iv) permit the validity or effectiveness of the related Indenture to be
impaired or permit any person to be released from any covenants or
obligations with respect to such Notes under such Indenture except as may be
expressly permitted thereby or (v) permit any lien, charge, excise, claim,
security interest, mortgage or other encumbrance to be created on or extend
to or otherwise arise upon or burden the assets of such Trust or any part
thereof, or any interest therein or the proceeds thereof.

No Trust may engage in any activity other than as described herein or
in the Prospectus Supplement. No Trust will incur, assume or guarantee any
indebtedness other than indebtedness incurred pursuant to the related Notes
and the related Indenture, pursuant to any Advances made to it by the
Servicer or otherwise in accordance with the Related Documents.

Modification of Indenture. Each Owner Trust and the related Indenture
Trustee may, with the consent of the holders of a majority of the outstanding
Notes of the related series, execute a supplemental indenture to add
provisions to, change in any manner or eliminate any provisions of, the
related Indenture, or modify (except as provided below) in any manner the
rights of the related Noteholders.

However, unless otherwise specified in the related Prospectus Supplement
with respect to a series of Notes, without the consent of the holder of each
such outstanding Note affected thereby, no supplemental indenture will:
(i) change the due date of any installment of principal of or interest on any
such Note or reduce the principal amount thereof, the interest rate specified
thereon or the redemption price with respect thereto or change any place of
payment where or the coin or currency in which any such Note or any interest
thereon is payable; (ii) impair the right to institute suit for the
enforcement of certain provisions of the related Indenture regarding payment;
(iii) reduce the percentage of the aggregate amount of the outstanding Notes
of such series, the consent of the holders of which is required for any such
supplemental indenture or the consent of the holders of which is required for
any waiver of compliance with certain provisions of the related Indenture or
of certain defaults thereunder and their consequences as provided for in such
Indenture; (iv) modify or alter the provisions of the related Indenture
regarding the voting of Notes held by the applicable Trust, any other obligor
on such Notes, the Seller or an affiliate of any of them; (v) reduce the
percentage of the aggregate outstanding amount of such Notes, the consent of
the holders of which is required to direct the related Indenture Trustee to
sell or liquidate the Receivables if the proceeds of such sale would be
insufficient to pay the principal amount and accrued but unpaid interest on
the outstanding Notes of such series; (vi) decrease the percentage of the
aggregate principal amount of such Notes required to amend the sections of
the related Indenture which specify the applicable percentage of aggregate
principal amount of the Notes of such series necessary to amend such
Indenture or certain other related agreements; or (vii) permit the creation
of any lien ranking prior to or on a parity with the lien of the related
Indenture with respect to any of the collateral for such Notes or, except as
otherwise permitted or contemplated in such Indenture, terminate the lien of
such Indenture on any such collateral or deprive the holder of any such Note
of the security afforded by the lien of such Indenture.

Unless otherwise provided in the applicable Prospectus Supplement, an
Owner Trust and the applicable Indenture Trustee may also enter into
supplemental indentures, without obtaining the consent of the Noteholders of
the related series, for the purpose of, among other things, adding any
provisions to or changing in any manner or eliminating any of the provisions
of the related Indenture or of modifying in any manner the rights of such
Noteholders; provided that such action will not materially and adversely
affect the interest of any such Noteholder.

Annual Compliance Statement. Each Owner Trust that issues Notes will
be required to file annually with the related Indenture Trustee a written
statement as to the fulfillment of its obligations under the Indenture.

Indenture Trustee's Annual Report. The Indenture Trustee for each Owner
Trust will be required to mail each year to all related Noteholders a brief
report relating to its eligibility and qualification to continue as Indenture
Trustee under the related Indenture, any amounts advanced by it under the
Indenture, the amount, interest rate and maturity date of certain
indebtedness owing by the related Owner Trust to the applicable Indenture
Trustee in its individual capacity, the property and funds physically held
by such Indenture Trustee as such and any action taken by it that materially
affects the related Notes and that has not been previously reported.

Satisfaction and Discharge of Indenture. An Indenture will be
discharged with respect to the collateral securing the related Notes upon the
delivery to the related Indenture Trustee for cancellation of all such Notes
or, with certain limitations, upon deposit with such Indenture Trustee of
funds sufficient for the payment in full of all such Notes.

THE INDENTURE TRUSTEE

The Indenture Trustee for a series of Notes will be specified in the
related Prospectus Supplement. The Indenture Trustee for any series may
resign at any time, in which event the related Owner Trust will be obligated
to appoint a successor trustee for such series. An Owner Trust may also
remove any such Indenture Trustee if such Indenture Trustee ceases to be
eligible to continue as such under the related Indenture or if such Indenture
Trustee becomes insolvent. In such circumstances, such Owner Trust will be
obligated to appoint a successor trustee for the applicable series of Notes.
Any resignation or removal of the Indenture Trustee and appointment of a
successor trustee for any series of Notes does not become effective until
acceptance of the appointment by the successor trustee for such series.

DESCRIPTION OF THE CERTIFICATES

GENERAL

With respect to each Trust, one or more classes of Certificates of the
related series will be issued pursuant to the terms of a Trust Agreement or
a Pooling and Servicing Agreement, a form of each of which has been filed as
an exhibit to the Registration Statement of which this Prospectus forms a
part. The following summary does not purport to be complete and is subject
to, and is qualified in its entirety by reference to, all the provisions of
the Certificates and the Trust Agreement or Pooling and Servicing Agreement,
as applicable.

Unless otherwise specified in the related Prospectus Supplement and
except for the Certificates, if any, of a given series purchased by the
Seller, each class of Certificates will initially be represented by one or
more Certificates registered in the name of the Depository, except as set
forth below. Unless otherwise specified in the related Prospectus Supplement
and except for the Certificates, if any, of a given series purchased by the
Seller, the Certificates will be available for purchase in minimum
denominations of $1,000 and integral multiples thereof in book-entry form
only. The Seller has been informed by DTC that DTC's nominee will be Cede,
unless another nominee is specified in the related Prospectus Supplement.
Accordingly, such nominee is expected to be the holder of record of the
Certificates of any series that are not purchased by the Seller. Unless and
until Definitive Certificates are issued under the limited circumstances
described herein or in the related Prospectus Supplement, no
Certificateholder (other than the Seller) will be entitled to receive a
physical certificate representing a Certificate. All references herein and
in the related Prospectus Supplement to actions by Certificateholders refer
to actions taken by DTC upon instructions from the Participants and all
references herein and in the related Prospectus Supplement to distributions,
notices, reports and statements to Certificateholders refer to distributions,
notices, reports and statements to DTC or its nominee, as the case may be,
as the registered holder of the Certificates, for distribution to
Certificateholders in accordance with DTC's
procedures with respect thereto. See "Certain Information Regarding the
Securities -- Book-Entry Registration" and " -- Definitive Securities". Any
Certificates of a given series owned by the Seller or its affiliates will be
entitled to equal and proportionate benefits under the applicable Trust
Agreement, except that such Certificates will be deemed not to be outstanding
for the purpose of determining whether the requisite percentage of
Certificateholders have given any request, demand, authorization, direction,
notice, consent or other action under the Related Documents (other than the
commencement by the related Trust of a voluntary proceeding in bankruptcy as
described under "Description of the Transfer and Servicing Agreements --
Insolvency Event").

DISTRIBUTIONS OF PRINCIPAL AND INTEREST

The timing and priority of distributions, seniority, allocations of
losses, Pass Through Rate and amount of or method of determining
distributions with respect to principal and interest of each class of
Certificates will be described in the related Prospectus Supplement.
Distributions of interest on such Certificates will be made on the dates
specified in the related Prospectus Supplement (each, a "Distribution Date")
and will be made prior to distributions with respect to principal of such
Certificates. To the extent provided in the related Prospectus Supplement,
a series may include one or more classes of Strip Certificates entitled to
(i) distributions in respect of principal with disproportionate, nominal or
no interest distributions or (ii) interest distributions with
disproportionate, nominal or no distributions in respect of principal. Each
class of Certificates may have a different Pass Through Rate, which may be
a fixed, variable or adjustable Pass Through Rate (and which may be zero for
certain classes of Strip Certificates) or any combination of the foregoing.
The related Prospectus Supplement will specify the Pass Through Rate for each
class of Certificates of a given series or the method for determining such
Pass Through Rate. See also "Certain Information Regarding the Securities --
Fixed Rate Securities" and "-- Floating Rate Securities". Unless otherwise
provided in the related Prospectus Supplement, distributions in respect of
the Certificates of a given series that includes Notes may be subordinate to
payments in respect of the Notes of such series as more fully described in
the related Prospectus Supplement. Unless otherwise provided in the related
Prospectus Supplement, distributions in respect of interest on and principal
of any class of Certificates will be made on a pro rata basis among all the
Certificateholders of such class.

In the case of a series of Certificates which includes two or more
classes of Certificates, the timing, sequential order, priority of payment
or amount of distributions in respect of interest and principal, and any
schedule or formula or other provisions applicable to the determination
thereof, of each such class shall be as set forth in the related Prospectus
Supplement. One or more classes of Certificates of a Series may be
redeemable in whole or in part under the circumstances specified in the
related Prospectus Supplement, including, if a Pre-Funding Account or
Collateral Reinvestment Account has been established with respect to the
related Series, from amounts remaining in the applicable account at the end
of the Funding Period or Revolving Period, as the case may be, or as a result
of the exercise by the Servicer, a subservicer or such other party as may be
specified in the related Prospectus Supplement of its option to purchase the
related Receivables Pool. See "Description of the Transfer and Servicing
Agreements -- Termination".

CERTAIN INFORMATION REGARDING THE SECURITIES

FIXED RATE SECURITIES

Each class of Securities (other than certain classes of Strip Notes or
Strip Certificates) may bear interest at a fixed rate per annum ("Fixed Rate
Securities") or at a variable or adjustable rate per annum ("Floating Rate
Securities"), as more fully described below and in the applicable Prospectus
Supplement. Each class of Fixed Rate Securities will bear interest at the
applicable per annum Interest Rate or Pass Through Rate, as the case may be,
specified in the applicable Prospectus Supplement. Unless otherwise set
forth in the applicable Prospectus Supplement, interest on each class of
Fixed Rate Securities will be computed on the basis of a 360-day year of
twelve 30-day months. See "Description of the Notes -- Principal and
Interest on the Notes" and "Description of the Certificates -- Distributions
of Principal and Interest".

FLOATING RATE SECURITIES

Each class of Floating Rate Securities will bear interest for each
applicable Interest Reset Period (as such term is defined in the related
Prospectus Supplement with respect to a class of Floating Rate Securities,
the "Interest Reset Period") at a rate per annum determined by reference to
an interest rate basis (the "Base Rate"), plus or minus the Spread, if any,
or multiplied by the Spread Multiplier, if any, in each case as specified in
the related Prospectus Supplement. The "Spread" is the number of basis
points (one basis point equals one one-hundredth of a percentage point) that
may be specified in the applicable Prospectus Supplement as being applicable
to such class, and the "Spread Multiplier" is the percentage that may be
specified in the applicable Prospectus Supplement as being applicable to such
class.

The applicable Prospectus Supplement will designate one of the following
Base Rates as applicable to a given Floating Rate Security: (i) LIBOR (a
"LIBOR Security"), (ii) the Commercial Paper Rate (a "Commercial Paper Rate
Security"), (iii) the Treasury Rate (a "Treasury Rate Security"), (iv) the
Federal Funds Rate (a "Federal Funds Rate Security"), (v) the CD Rate (a "CD
Rate Security") or (vi) such other Base Rate as is set forth in such
Prospectus Supplement. The "Index Maturity" for any class of Floating Rate
Securities is the period of maturity of the instrument or obligation from
which the Base Rate is calculated. "H.15(519)" means the publication
entitled "Statistical Release H.15(519), Selected Interest Rates", or any
successor publication, published by the Board of Governors of the Federal
Reserve System. "Composite Quotations" means the daily statistical release
entitled "Composite 3:30 p.m. Quotations for U.S. Government Securities"
published by the Federal Reserve Bank of New York. "Interest Reset Date"
will be the first day of the applicable Interest Reset Period, or such other
day as may be specified in the related Prospectus Supplement with respect to
a class of Floating Rate Securities.

As specified in the applicable Prospectus Supplement, Floating Rate
Securities of a given class may also have either or both of the following (in
each case expressed as a rate per annum): (i) a maximum limitation, or
ceiling, on the rate at which interest may accrue during any interest period
and (ii) a minimum limitation, or floor, on the rate at which interest may
accrue during any interest period. In addition to any maximum interest rate
that may be applicable to any class of Floating Rate Securities, the interest
rate applicable to any class of Floating Rate Securities will in no event be
higher than the maximum rate permitted by applicable law, as the same may be
modified by United States law of general application.

Each Trust with respect to which a class of Floating Rate Securities
will be issued will appoint, and enter into agreements with, a calculation
agent (each, a "Calculation Agent") to calculate interest rates on each such
class of Floating Rate Securities issued with respect thereto. The
applicable Prospectus Supplement will set forth the identity of the
Calculation Agent for each such class of Floating Rate Securities of a given
series, which may be either the related Trustee or Indenture Trustee with
respect to such series. All determinations of interest by the Calculation
Agent shall, in the absence of
manifest error, be conclusive for all purposes and binding on the holders of
Floating Rate Securities of a given class. Unless otherwise specified in the
applicable Prospectus Supplement, all percentages resulting from any
calculation of the rate of interest on a Floating Rate Security will be
rounded, if necessary, to the nearest 1/100,000 of 1% (.0000001), with five
one-millionths of a percentage point rounded upward.

CD Rate Securities. Each CD Rate Security will bear interest for each
Interest Reset Period at the interest rate calculated with reference to the
CD Rate and the Spread or Spread Multiplier, if any, specified in such
Security and in the applicable Prospectus Supplement.

Unless otherwise specified in the applicable Prospectus Supplement, the
"CD Rate" for each Interest Reset Period shall be the rate as of the second
business day prior to the Interest Reset Date for such Interest Reset Period
(a "CD Rate Determination Date") for negotiable certificates of deposit
having the Index Maturity designated in the applicable Prospectus Supplement
as published in H.15(519) under the heading "CDs (Secondary Market)". In the
event that such rate is not published prior to 3:00 p.m., New York City time,
on the Calculation Date (as defined below) pertaining to such CD Rate
Determination Date, then the "CD Rate" for such Interest Reset Period will
be the rate on such CD Rate Determination Date for negotiable certificates
of deposit of the Index Maturity designated in the applicable Prospectus
Supplement as published in Composite Quotations under the heading
"Certificates of Deposit". If by 3:00 p.m., New York City time, on such
Calculation Date such rate is not yet published in either H.15(519) or
Composite Quotations, then the "CD Rate" for such Interest Reset Period will
be calculated by the Calculation Agent for such CD Rate Security and will be
the arithmetic mean of the secondary market offered rates as of 10:00 a.m.,
New York City time, on such CD Rate Determination Date, of three leading
nonbank dealers in negotiable U.S. dollar certificates of deposit in The
City of New York selected by the Calculation Agent for such CD Rate Security
for negotiable certificates of deposit of major United States money center
banks of the highest credit standing (in the market for negotiable
certificates of deposit) with a remaining maturity closest to the Index
Maturity designated in the related Prospectus Supplement in a denomination
of $5,000,000; provided, however, that if the dealers selected as aforesaid
by such Calculation Agent are not quoting offered rates as mentioned in this
sentence, the "CD Rate" for such Interest Reset Period will be the same as
the CD Rate for the immediately preceding Interest Reset Period.

The "Calculation Date" pertaining to any CD Rate Determination Date
shall be the first to occur of (a) the tenth calendar day after such CD Rate
Determination Date or, if such day is not a business day, the next succeeding
business day or (b) the second business day preceding the date any payment
is required to be made for any period following the applicable Interest Reset
Date.

Commercial Paper Rate Securities. Each Commercial Paper Rate Security
will bear interest for each Interest Reset Period at the interest rate
calculated with reference to the Commercial Paper Rate and the Spread or
Spread Multiplier, if any, specified in such Security and in the applicable
Prospectus Supplement.

Unless otherwise specified in the applicable Prospectus Supplement, the
"Commercial Paper Rate" for each Interest Reset Period will be determined by
the Calculation Agent for such Commercial Paper Rate Security as of the
second business day prior to the Interest Reset Date for such Interest Reset
Period (a "Commercial Paper Rate Determination Date") and shall be the Money
Market Yield (as defined below) on such Commercial Paper Rate Determination
Date of the rate for commercial paper having the Index Maturity specified in
the applicable Prospectus Supplement, as such rate shall be published in
H.15(519) under the heading "Commercial Paper". In the event that such rate
is not published prior
to 3:00 p.m., New York City time, on the Calculation Date (as defined below)
pertaining to such Commercial Paper Rate Determination Date, then the
"Commercial Paper Rate" for such Interest Reset Period shall be the Money
Market Yield on such Commercial Paper Rate Determination Date of the rate for
commercial paper of the specified Index Maturity as published in Composite
Quotations under the heading "Commercial Paper". If by 3:00 p.m., New York
City time, on such Calculation Date such rate is not yet published in either
H.15(519) or Composite Quotations, then the "Commercial Paper Rate" for such
Interest Reset Period shall be the Money Market Yield of the arithmetic mean
of the offered rates, as of 11:00 a.m., New York City time, on such
Commercial Paper Rate Determination Date of three leading dealers of
commercial paper in The City of New York selected by the Calculation Agent
for such Commercial Paper Rate Security for commercial paper of the specified
Index Maturity placed for an industrial issuer whose bonds are rated "AA" or
the equivalent by a nationally recognized rating agency; provided, however,
that if the dealers selected as aforesaid by such Calculation Agent are not
quoting offered rates as mentioned in this sentence, the "Commercial Paper
Rate" for such Interest Reset Period will be the same as the Commercial Paper
Rate for the immediately preceding Interest Reset Period.

"Money Market Yield" shall be a yield calculated in accordance with the
following formula:

Money Market Yield = / D x 360 / X 100
--------------
360 - (D X M)

where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal, and "M" refers to the
actual number of days in the specified Index Maturity.

The "Calculation Date" pertaining to any Commercial Paper Rate
Determination Date shall be the first to occur of (a) the tenth calendar day
after such Commercial Paper Rate Determination Date or, if such day is not
a business day, the next succeeding business day or (b) the second business
day preceding the date any payment is required to be made for any period
following the applicable Interest Reset Date.

Federal Funds Rate Securities. Each Federal Funds Rate Security will
bear interest for each Interest Reset Period at the interest rate calculated
with reference to the Federal Funds Rate and the Spread or Spread Multiplier,
if any, specified in such Security and in the applicable Prospectus
Supplement.

Unless otherwise specified in the applicable Prospectus Supplement, the
"Federal Funds Rate" for each Interest Reset Period shall be the effective
rate on the Interest Reset Date for such Interest Reset Period (a "Federal
Funds Rate Determination Date") for Federal Funds as published in H.15(519)
under the heading "Federal Funds (Effective)". In the event that such rate
is not published prior to 3:00 p.m., New York City time, on the Calculation
Date (as defined below) pertaining to such Federal Funds Rate Determination
Date, the "Federal Funds Rate" for such Interest Reset Period shall be the
rate on such Federal Funds Rate Determination Date as published in Composite
Quotations under the heading "Federal Funds/Effective Rate". If by 3:00
p.m., New York City time, on such Calculation Date such rate is not yet
published in either H.15(519) or Composite Quotations, then the "Federal
Funds Rate" for such Interest Reset Period shall be the rate on such Federal
Funds Rate Determination Date made publicly available by the Federal Reserve
Bank of New York which is equivalent to the rate which appears in H.15(519)
under the heading "Federal Funds (Effective)"; provided, however, that if
such rate is not made publicly available by the Federal Reserve Bank of New
York by 3:00 p.m., New York City time, on such Calculation Date, the "Federal
Funds Rate" for such Interest Reset Period will
be the same as the Federal Funds Rate in effect for the immediately preceding
Interest Reset Period. In the case of a Federal Funds Rate Security that
resets daily, the interest rate on such Security for the period from and
including a Monday to but excluding the succeeding Monday will be reset by
the Calculation Agent for such Security on such second Monday (or, if not a
business day, on the next succeeding business day) to a rate equal to the
average of the Federal Funds Rates in effect with respect to each such day
in such week.

The "Calculation Date" pertaining to any Federal Funds Rate
Determination Date shall be the next succeeding business day.

LIBOR Securities. Each LIBOR Security will bear interest for each
Interest Reset Period at the interest rate calculated with reference to LIBOR
and the Spread or Spread Multiplier, if any, specified in such Security and
in the applicable Prospectus Supplement.

Unless otherwise specified in the applicable Prospectus Supplement, with
respect to LIBOR indexed to the offered rates for U.S. dollar deposits,
"LIBOR" for each Interest Reset Period will be established by the Calculation
Agent for any LIBOR Security and will equal the offered rate for United
States dollar deposits for one month that appears on Telerate Page 3750 as
of 11:00 A.M., London time, on the second LIBOR Business Day prior to the
Interest Reset Date for such Interest Reset Period (the "LIBOR Determination
Date"). "Telerate Page 3750" means the display page so designated on the Dow
Jones Telerate Service (or such other page as may replace that page on that
service or such other service as may be nominated by the information vendor
for the purpose of displaying London interbank offered rates of major banks).
If such rate appears on Telerate Page 3750 on a LIBOR Determination Date,
LIBOR for the related Interest Reset Period will be such rate. If on any
LIBOR Determination Date such offered rate does not appear on Telerate Page
3750, the Calculation Agent will request each of the reference banks (which
will be major banks that are engaged in transactions in the London interbank
market selected by the Calculation Agent) to provide the Calculation Agent
with its offered quotation for United States dollar deposits for one month
to prime banks in the London interbank market as of 11:00 A.M., London time,
on such date. If at least two reference banks provide the Calculation Agent
with such offered quotations, LIBOR with respect to such date will be the
arithmetic mean (rounded upwards, if necessary, to the nearest one-sixteenth
of one percent) of all such quotations. If on such date fewer than two of
the reference banks provide the Calculation Agent with such offered
quotations, LIBOR with respect to such date will be the arithmetic mean
(rounded upwards, if necessary, to the nearest one-sixteenth of one percent)
of the offered per annum rates that one or more leading banks in The City of
New York selected by the Calculation Agent are quoting as of 11:00 A.M., New
York City time, on such date to leading European banks for United States
dollar deposits for one month; provided, however, that if such banks are not
quoting as described above, LIBOR with respect to such date will be LIBOR
applicable to the immediately preceding Interest Reset Period. "LIBOR
Business Day" as used herein means a day that is both a Business Day and a
day on which banking institutions in the City of London, England are not
required or authorized by law to be closed.

Treasury Rate Securities. Each Treasury Rate Security will bear
interest for each Interest Reset Period at the interest rate calculated with
reference to the Treasury Rate and the Spread or Spread Multiplier, if any,
specified in such Security and in the applicable Prospectus Supplement.

Unless otherwise specified in the applicable Prospectus Supplement, the
"Treasury Rate" for each Interest Period will be the rate for the auction
held on the Treasury Rate Determination Date (as defined below) for such
Interest Reset Period of direct obligations of the United States ("Treasury
bills") having
the Index Maturity specified in the applicable Prospectus Supplement, as such
rate shall be published in H.15(519) under the heading "U.S. Government
Securities -- Treasury bills -- auction average (investment)" or, in the
event that such rate is not published prior to 3:00 p.m., New York City time,
on the Calculation Date (as defined below) pertaining to such Treasury Rate
Determination Date, the auction average rate (expressed as a bond equivalent
on the basis of a year of 365 or 366 days, as applicable, and applied on a
daily basis) on such Treasury Rate Determination Date as otherwise announced
by the United States Department of the Treasury. In the event that the
results of the auction of Treasury bills having the specified Index Maturity
are not published or reported as provided above by 3:00 p.m., New York City
time, on such Calculation Date, or if no such auction is held on such
Treasury Rate Determination Date, then the "Treasury Rate" for such Interest
Reset Period shall be calculated by the Calculation Agent for such Treasury
Rate Security and shall be the yield to maturity (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) of the arithmetic mean of the secondary market bid
rates, as of approximately 3:30 p.m., New York City time, on such Treasury
Rate Determination Date, of three leading primary United States government
securities dealers selected by such Calculation Agent for the issue of
Treasury bills with a remaining maturity closest to the specified Index
Maturity; provided, however, that if the dealers selected as aforesaid by
such Calculation Agent are not quoting bid rates as mentioned in this
sentence, then the "Treasury Rate" for such Interest Reset Period will be the
same as the Treasury Rate for the immediately preceding Interest Reset
Period.

The "Treasury Rate Determination Date" for each Interest Reset Period
will be the day of the week in which the Interest Reset Date for such
Interest Reset Period falls on which Treasury bills would normally be
auctioned. Treasury bills are normally sold at auction on Monday of each
week, unless that day is a legal holiday, in which case the auction is
normally held on the following Tuesday, except that such auction may be held
on the preceding Friday. If, as the result of a legal holiday, an auction
is so held on the preceding Friday, such Friday will be the Treasury Rate
Determination Date pertaining to the Interest Reset Period commencing in the
next succeeding week. If an auction date shall fall on any day that would
otherwise be an Interest Reset Date for a Treasury Rate Security, then such
Interest Reset Date shall instead be the business day immediately following
such auction date.

Unless otherwise specified in the applicable Prospectus Supplement, the
"Calculation Date" pertaining to any Treasury Rate Determination Date shall
be the first to occur of (a) the tenth calendar day after such Treasury Rate
Determination Date or, if such a day is not a business day, the next
succeeding business day or (b) the second business day preceding the date any
payment is required to be made for any period following the applicable
Interest Reset Date.

BOOK-ENTRY REGISTRATION

Unless otherwise specified in the related Prospectus Supplement, DTC
will act as securities depository for each class of Securities offered
hereby. Each class of Securities initially will be represented by one or
more certificates registered in the name of Cede, the nominee of DTC. As
such, it is anticipated that the only "Noteholder" and/or "Certificateholder"
with respect to a series of Securities will be Cede, as nominee of DTC.
Beneficial owners of the Securities ("Security Owners") will not be
recognized as "Noteholders" by the related Indenture Trustee, as such term
is used in each Indenture, or as "Certificateholders" by the related Trustee,
as such term is used in each Trust Agreement and Pooling and Servicing
Agreement, and Security Owners will be permitted to exercise the rights of
Noteholders or Certificateholders only indirectly through DTC and its
participating members ("Participants").

DTC is a limited-purpose trust company organized under the laws of the
State of New York, a "banking organization" within the meaning of the New
York Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the Uniform Commercial Code as in effect
in the State of New York, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for the Participants and to facilitate the clearance and
settlement of securities transactions between Participants through electronic
book-entries, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers, banks,
trust companies and clearing corporations. Indirect access to the DTC system
also is available to banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a Participant, either
directly or indirectly ("Indirect Participants").

Unless otherwise specified in the related Prospectus Supplement,
Security Owners that are not Participants or Indirect Participants but desire
to purchase, sell or otherwise transfer ownership of, or an interest in, the
Securities may do so only through Participants and Indirect Participants.
In addition, all Security Owners will receive all distributions of principal
and interest from the related Indenture Trustee or the related Trustee, as
applicable (the "Applicable Trustee"), through Participants. Under a book-
entry format, Security Owners may experience some delay in their receipt of
payments, since such payments will be forwarded by the Applicable Trustee to
DTC's nominee. DTC will then forward such payments to the Participants,
which thereafter will forward them to Indirect Participants or Security
Owners.

Under the rules, regulations and procedures creating and affecting DTC
and its operations (the "Rules"), DTC is required to make book-entry
transfers among Participants on whose behalf it acts with respect to the
Securities and to receive and transmit distributions of principal of and
interest on the Securities. Participants and Indirect Participants with
which Security Owners have accounts with respect to the Securities similarly
are required to make book-entry transfers and to receive and transmit such
payments on behalf of their respective Security Owners. Accordingly,
although Security Owners will not possess physical certificates representing
the Securities, the Rules provide a mechanism by which Participants and
Indirect Participants will receive payments and transfer interests, directly
or indirectly, on behalf of Security Owners.

Because DTC can act only on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a Security
Owner to pledge Securities to persons or entities that do not participate in
the DTC system, or otherwise take actions with respect to such Securities,
may be limited due to the lack of a physical certificate representing such
Securities.

DTC has advised the Seller that it will take any action permitted to be
taken by a Security Owner under the Indenture, Trust Agreement or Pooling and
Servicing Agreement, as applicable, only at the direction of one or more
Participants to whose account with DTC the Securities are credited. DTC may
take conflicting actions with respect to other undivided interests to the
extent that such actions are taken on behalf of Participants whose holdings
include such undivided interests.

Except as required by law, none of the Seller, the Servicer, the related
Administrator or the Applicable Trustee will have any liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests of Securities of any series held by DTC's nominee, or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.

DEFINITIVE SECURITIES

Unless otherwise specified in the related Prospectus Supplement, the
Notes, if any, and the Certificates of a given series will be issued in fully
registered, certificated form ("Definitive Notes" and "Definitive
Certificates", respectively, and collectively referred to herein as
"Definitive Securities") to Noteholders or Certificateholders or their
respective nominees, rather than to DTC or its nominee, only if (i) the
related Administrator of an Owner Trust or Trustee of a Grantor Trust, as
applicable, determines that DTC is no longer willing or able to discharge
properly its responsibilities as depository with respect to such Securities
and such Administrator or Trustee is unable to locate a qualified successor
(and if it is an Administrator that has made such determination, such
Administrator so notifies the Applicable Trustee in writing), (ii) the
Administrator or Trustee, as applicable, at its option, elects to terminate
the book-entry system through DTC or (iii) after the occurrence of an Event
of Default or a Servicer Default with respect to such Securities, Security
Owners representing at least a majority of the outstanding principal amount
of the Notes or the Certificates, as the case may be, of such series advise
the Applicable Trustee through DTC in writing that the continuation of a
book-entry system through DTC (or a successor thereto) with respect to such
Notes or Certificates is no longer in the best interest of the related
Security Owners.

Upon the occurrence of any event described in the immediately preceding
paragraph, the Applicable Trustee will be required to notify all applicable
Security Owners of a given series through Participants of the availability
of Definitive Securities. Upon surrender by DTC of the definitive
certificates representing the corresponding Securities and receipt of
instructions for re-registration, the Applicable Trustee will reissue such
Securities as Definitive Securities to such Security Owners.

Distributions of principal of, and interest on, such Definitive
Securities will thereafter be made by the Applicable Trustee in accordance
with the procedures set forth in the related Indenture or the related Trust
Agreement or Pooling and Servicing Agreement, as applicable, directly to
holders of Definitive Securities in whose names the Definitive Securities
were registered at the close of business on the applicable Record Date
specified for such Securities in the related Prospectus Supplement. Such
distributions will be made by check mailed to the address of such holder as
it appears on the register maintained by the Applicable Trustee. The final
payment on any such Definitive Security, however, will be made only upon
presentation and surrender of such Definitive Security at the office or
agency specified in the notice of final distribution to the applicable
Securityholders.

Definitive Securities will be transferable and exchangeable at the
offices of the Applicable Trustee or of a registrar named in a notice
delivered to holders of Definitive Securities. No service charge will be
imposed for any registration of transfer or exchange, but the Applicable
Trustee may require payment of a sum sufficient to cover any tax or other
governmental charge imposed in connection therewith.

REPORTS TO SECURITYHOLDERS

With respect to each series of Securities that includes Notes, on or
prior to each Distribution Date, the Servicer will prepare and provide to the
related Indenture Trustee a statement to be delivered to the related
Noteholders on such Distribution Date, and on or prior to each Distribution
Date, the Servicer will prepare and provide to the related Trustee a
statement to be delivered to the related Certificateholders. With respect
to each series of Securities, each such statement to be delivered to
Noteholders will include (to the extent applicable) the following information
(and any other information so specified in the related
Prospectus Supplement) as to the Notes of such series with respect to such
Distribution Date or the period since the previous Distribution Date, as
applicable, and each such statement to be delivered to Certificateholders
will include (to the extent applicable) the following information (and any
other information so specified in the related Prospectus Supplement) as to
the Certificates of such series with respect to such Distribution Date or the
period since the previous Distribution Date, as applicable:

(i) the amount of the distribution allocable to principal of each
class to such Notes and to the Certificate Balance of each class of such
Certificates;

(ii) the amount of the distribution allocable to interest on or
with respect to each class of Securities of such series;

(iii) the Pool Balance as of the close of business on the last day
of the preceding Collection Period;

(iv) the aggregate outstanding principal balance and the Note Pool
Factor for each class of such Notes, and the Certificate Balance and the
Certificate Pool Factor for each class of such Certificates, each as of the
related record date;

(v) the amount of the Servicing Fee paid to the Servicer with
respect to the related Collection Period or Collection Periods, as the case
may be;

(vi) the Interest Rate or Pass Through Rate for the next period for
any class of Notes or Certificates of such series with variable or adjustable
rates;

(vii) the amount of the aggregate realized losses, if any, for the
related Collection Period;

(viii) the Noteholders' Interest Carryover Shortfall, the
Noteholders' Principal Carryover Shortfall, the Certificateholders' Interest
Carryover Shortfall and the Certificateholders' Principal Carryover Shortfall
(each as defined in the related Prospectus Supplement), if any, in each case
as applicable to each class of Securities, and the change in such amounts
from the preceding statement;

(ix) the aggregate Purchase Amounts for receivables, if any, that
were repurchased in the related Collection Period;

(x) the balance of the Reserve Account (if any) on such date, after
giving effect to changes therein on such date;

(xi) for each such date during the Funding Period (if any), the
remaining Pre-Funded Amount;

(xii) for the first such date that is on or immediately following
the end of the Funding Period (if any), the amount of any remaining Pre-
Funded Amount that has not been used to fund the purchase of Subsequent
Receivables and is being passed through as payments of principal on the
Securities of such series;

(xiii) for each such date during the Revolving Period (if any), the
remaining Amount in the Collateral Reinvestment Account; and

(xiv) for the first such date that is on or immediately following
the end of the Revolving Period (if any), the amount remaining in the
Collateral Reinvestment Account that has not been used to fund the purchase
of Subsequent Receivables and is being passed through as payments of
principal on the Securities of such series.

Each amount set forth pursuant to subclauses (i), (ii), (v) and (viii)
with respect to the Notes or the Certificates of any series will be expressed
as a dollar amount per $1,000 of the initial principal balance of such Notes
or the initial Certificate Balance of such Certificates, as applicable.

Within the prescribed period of time for tax reporting purposes after
the end of each calendar year during the term of each Trust, the Applicable
Trustee will mail to each person who at any time during such calendar year
has been a registered Securityholder with respect to such Trust and received
any payment thereon a statement containing certain information for the
purposes of such Securityholder's preparation of federal income tax returns.
See "Certain Federal Income Tax Consequences".

LIST OF SECURITYHOLDERS

Unless otherwise specified in the related Prospectus Supplement with
respect to the Notes of any series, three or more holders of the Notes of
such series or one or more holders of such Notes evidencing not less than 25%
of the aggregate outstanding principal balance of such Notes may, by written
request to the related Indenture Trustee, obtain access to the list of all
Noteholders maintained by such Indenture Trustee for the purpose of
communicating with other Noteholders with respect to their rights under the
related Indenture or under such Notes. Such Indenture Trustee may elect not
to afford the requesting Noteholders access to the list of Noteholders if it
agrees to mail the desired communication or proxy, on behalf of and at the
expense of the requesting Noteholders, to all Noteholders of such series.

Unless otherwise specified in the related Prospectus Supplement with
respect to the Certificates of any series, three or more holders of the
Certificates of such series or one or more holders of such Certificates
evidencing not less than 25% of the Certificate Balance of such Certificates
may, by written request to the related Trustee, obtain access to the list of
all Certificateholders maintained by such Trustee for the purpose of
communicating with other Certificateholders with respect to their rights
under the related Trust Agreement or Pooling and Servicing Agreement or under
such Certificates.

DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS

The following summary describes certain terms of each Sale and Servicing
Agreement or Pooling and Servicing Agreement pursuant to which a Trust will
purchase Receivables and other Trust Property from the Seller and the
Servicer will agree to service such Receivables, each Trust Agreement or
Pooling and Servicing Agreement, as applicable pursuant to which a Trust will
be created and Certificates will be issued and each Administration Agreement
pursuant to which the Company will undertake certain administrative duties
with respect to an Owner Trust (collectively, the "Transfer and Servicing
Agreements"). Forms of the Transfer and Servicing Agreements have been filed
as exhibits to the Registration Statement of which this Prospectus forms a
part. This summary does not purport to be complete and is subject to, and
qualified in its entirety by reference to, all the provisions of the Transfer
and Servicing Agreements.

SALE AND ASSIGNMENT OF RECEIVABLES

On the Closing Date specified with respect to any given Trust in the
related Prospectus Supplement (the "Closing Date"), the Seller will, if so
specified in such Prospectus Supplement, transfer and assign to the
applicable Trustee, without recourse, pursuant to a Sale and Servicing
Agreement or a Pooling and Servicing Agreement, as applicable, its entire
interest in the Initial Receivables, including its security interests in the
related Financed Vehicles. Each such Receivable will be identified in a
schedule appearing as an exhibit to such Pooling and Servicing Agreement or
Sale and Servicing Agreement (a "Schedule of Receivables"). The applicable
Trustee will, concurrently with such transfer and assignment, execute and
deliver the related Notes and/or Certificates. Unless otherwise provided in
the related Prospectus Supplement, the net proceeds received from the sale
of the Certificates and the Notes of a given series will be applied to the
purchase of the related Receivables and other Trust Property from the Seller
and, to the extent specified in the related Prospectus Supplement, to the
deposit of the Pre-Funded Amount into the Pre-Funding Account and the initial
deposit to the Collateral Reinvestment Account. The related Prospectus
Supplement for a given Trust will specify whether, and the terms, conditions
and manner under which, Subsequent Receivables will be sold by the Seller to
the applicable Trust from time to time during any Funding Period or Revolving
Period on each date specified as a transfer date in the related Prospectus
Supplement (each, a "Subsequent Transfer Date").

In each Sale and Servicing Agreement or Pooling and Servicing Agreement,
the Seller will represent and warrant to the applicable Trust, among other
things, that: (i) the information provided in the related Schedule of
Receivables is correct in all material respects as of the applicable Cutoff
Date; (ii) the Obligor on each related Receivable is required to maintain
physical damage insurance covering the Financed Vehicle in accordance with
the Seller's normal requirements; (iii) as of the applicable Closing Date or
the applicable Subsequent Transfer Date, if any, to the best of its
knowledge, the related Receivables are free and clear of all security
interests, liens, charges and encumbrances and no offsets, defenses or
counterclaims have been asserted or threatened; (iv) as of the Closing Date
or the applicable Subsequent Transfer Date, if any, each of such Receivables
is or will be secured by a first perfected security interest in favor of the
Seller in the Financed Vehicle; (v) each related Receivable, at the time it
was originated, complied and, as of the Closing Date or the applicable
Subsequent Transfer Date, if any, complies in all material respects with
applicable federal and state laws, including, without limitation, consumer
credit, truth in lending, equal credit opportunity and disclosure laws; and
(vi) any other representations and warranties that may be set forth in the
related Prospectus Supplement.

Unless otherwise provided in the related Prospectus Supplement, as of
the last day of the second (or, if the Seller elects, the first) month
following the discovery by or notice to the Seller of a breach of any
representation or warranty of the Seller that materially and adversely
affects the interests of the related Trust in any Receivable, the Seller,
unless the breach is cured, will repurchase such Receivable from such Trust
at a price equal to the unpaid principal balance owed by the Obligor thereof
plus interest thereon at the respective APR to the last day of the month of
repurchase (the "Purchase Amount"). The repurchase obligation constitutes
the sole remedy available to the Certificateholders or the Trustee and any
Noteholders or Indenture Trustee in respect of such Trust for any such
uncured breach.

Pursuant to each Sale and Servicing Agreement or Pooling and Servicing
Agreement, to assure uniform quality in servicing the Receivables and to
reduce administrative costs, the Seller and each Trust will designate the
Servicer as custodian to maintain possession, as such Trust's agent, of the
related motor vehicle retail installment sale contracts and any other
documents relating to the Receivables. The Seller's and the Servicer's
accounting records and computer
systems will reflect the sale and assignment of the related Receivables to
the applicable Trust, and Uniform Commercial Code ("UCC") financing
statements reflecting such sale and assignment will be filed.

ACCOUNTS

With respect to Owner Trusts that issue Notes, the Servicer will
establish and maintain with the related Indenture Trustee one or more
accounts, in the name of the Indenture Trustee on behalf of the related
Noteholders and Certificateholders, into which all payments made on or with
respect to the related Receivables will be deposited (the "Collection
Account"). The Servicer will establish and maintain with such Indenture
Trustee an account, in the name of such Indenture Trustee on behalf of such
Noteholders, into which amounts released from the Collection Account and any
Pre-Funding Account, any Collateral Reinvestment Account, Reserve Account or
other credit enhancement for payment to such Noteholders will be deposited
and from which all distributions to such Noteholders will be made (the "Note
Distribution Account"). With respect to each Owner Trust and Grantor Trust,
the Servicer will establish and maintain with the related Trustee an account,
in the name of such Trustee on behalf of such Certificateholders, into which
amounts released from the Collection Account and any Pre-Funding Account, any
Collateral Reinvestment Account, Reserve Account or other credit or cash flow
enhancement for distribution to such Certificateholders will be deposited and
from which all distributions to such Certificateholders will be made (the
"Certificate Distribution Account"). With respect to each Grantor Trust and
each Owner Trust that does not issue Notes, the Servicer will also establish
and maintain the Collection Account and any other Trust Account in the name
of the related Trustee on behalf of the related Certificateholders.

If so provided in the related Prospectus Supplement, the Servicer will
establish for each series of Securities an additional account (the "Payahead
Account"), in the name of the related Indenture Trustee (in the case of Owner
Trusts that issue Notes) or Trustee (in the case of a Grantor Trust or an
Owner Trust that does not issue Notes), into which, to the extent required
in the related Sale and Servicing Agreement or Pooling and Servicing
Agreement, as applicable, early payments made by or on behalf of Obligors on
Precomputed Receivables will be deposited until such time as such payments
become due. Until such time as payments are transferred from the Payahead
Account to the Collection Account, they will not constitute collected
interest or collected principal and will not be available for distribution
to Noteholders or Certificateholders.

If so provided in the related Prospectus Supplement, the Servicer will
establish and maintain a Pre-Funding Account, in the name of the related
Trustee on behalf of the related Securityholders, into which the Seller will
deposit the Pre-Funded Amount on the related Closing Date. The Pre-Funded
Amount will not exceed 40% of the initial aggregate principal amount of the
Notes and Certificates of the related Series. In addition, if so provided
in the related Prospectus Supplement, the Servicer will establish and
maintain a Collateral Reinvestment Account, in the name of the related
Trustee on behalf of the related Securityholders, into which the Seller will
deposit the amount, if any, specified in such Prospectus Supplement. During
the Revolving Period, principal will not be distributed on the Securities of
the related Series and principal collections, together with (if and to the
extent described in the related Prospectus Supplement) interest collections
on the Receivables that are in excess of amounts required to be distributed
therefrom will be deposited from time to time in the Collateral Reinvestment
Account. The Pre-Funded Amount and the amounts on deposit in the Collateral
Reinvestment Account will be used by the related Trustee to purchase
Subsequent Receivables from the Seller from time to time during the Funding
Period and Revolving Period, respectively. The amounts on deposit in the
Pre-Funding Account during the Funding Period and the amount on deposit in
the Collateral Reinvestment Account will be invested by the Trustee
in Eligible Investments. Any Investment Income received on the Eligible
Investments during a Collection Period will be included in the interest
distribution amount on the following Distribution Date. The Funding Period
or Revolving Period, if any, for a Trust will begin on the related Closing
Date and will end on the date specified in the related Prospectus Supplement,
which, in the case of the Funding Period, in no event will be later than the
date that is one year after the related Closing Date. Any amounts remaining
in the Pre-Funding Account at the end of the Funding Period or in the
Collateral Reinvestment Account at the end of the Revolving Period will be
distributed to the related Securityholders in the manner and priority
specified in the related Prospectus Supplement, as a prepayment of principal
of the related Securities.

Any other accounts to be established with respect to a Trust, including
any Reserve Account, will be described in the related Prospectus Supplement.

For any series of Securities, funds in the Collection Account, the Note
Distribution Account, any Pre-Funding Account, any Collateral Reinvestment
Account, any Reserve Account and other accounts identified as such in the
related Prospectus Supplement (collectively, the "Trust Accounts") will be
invested as provided in the related Sale and Servicing Agreement or Pooling
and Servicing Agreement in Eligible Investments. "Eligible Investments" are
generally limited to investments acceptable to the Rating Agencies rating
such Securities as being consistent with the rating of such Securities and
may include motor vehicle retail sale contracts. Except as described below
or in the related Prospectus Supplement, Eligible Investments are limited to
obligations or securities that mature on or before the date of the next
distribution for such series. However, to the extent permitted by the Rating
Agencies, funds in any Reserve Account may be invested in securities that
will not mature prior to the date of the next distribution with respect to
such Certificates or Notes and will not be sold to meet any shortfalls.
Thus, the amount of cash in any Reserve Account at any time may be less than
the balance of the Reserve Account. If the amount required to be withdrawn
from any Reserve Account to cover shortfalls in collections on the related
Receivables (as provided in the related Prospectus Supplement) exceeds the
amount of cash in the Reserve Account, a temporary shortfall in the amounts
distributed to the related Noteholders or Certificateholders could result,
which could, in turn, increase the average life of the Notes or the
Certificates of such series. Except as otherwise specified in the related
Prospectus Supplement, investment earnings on funds deposited in the Trust
Accounts, net of losses and investment expenses (collectively, "Investment
Earnings"), shall be deposited in the applicable Collection Account on each
Distribution Date and shall be treated as collections of interest on the
related Receivables.

The Trust Accounts will be maintained as Eligible Deposit Accounts.
"Eligible Deposit Account" means either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with the corporate
trust department of a depository institution organized under the laws of the
United States of America or any one of the states thereof or the District of
Columbia (or any domestic branch of a foreign bank), having corporate trust
powers and acting as trustee for funds deposited in such account, so long as
any of the securities of such depository institution have a credit rating
from each Rating Agency in one of its generic rating categories which
signifies investment grade. "Eligible Institution" means, with respect to
a Trust, (a) the corporate trust department of the related Indenture Trustee
or the related Trustee, as applicable, or (b) a depository institution
organized under the laws of the United States of America or any one of the
states thereof or the District of Columbia (or any domestic branch of a
foreign bank), (i) which has either (A) a long-term unsecured debt rating
acceptable to the Rating Agencies or (B) a short-term unsecured debt rating
or certificate of deposit rating acceptable to the Rating Agencies and
(ii) whose deposits are insured up to applicable limits by the FDIC.

SERVICING PROCEDURES

The Servicer will make reasonable efforts to collect all payments due
with respect to the Receivables held by any Trust and will, consistent with
the related Sale and Servicing Agreement or Pooling and Servicing Agreement,
follow such collection procedures as it follows with respect to comparable
motor vehicle retail installment sale contracts it services for itself or
others. Consistent with its normal procedures, the Servicer may, in its
discretion, arrange with the Obligor on a Receivable to extend or modify the
payment schedule, but no such arrangement will, for purposes of any Sale and
Servicing Agreement or Pooling and Servicing Agreement, modify the original
due dates or the amount of the scheduled payments or extend the final payment
date of any Receivable beyond the last day of the Collection Period relating
to the Final Scheduled Maturity Date (as such term is defined with respect
to any Receivables Pool in the related Prospectus Supplement). Some of such
arrangements may result in the Servicer purchasing the Receivable for the
Purchase Amount, while others may result in the Servicer making Advances.
The Servicer may sell the Financed Vehicle securing the respective Receivable
at public or private sale, or take any other action permitted by applicable
law. See "Certain Legal Aspects of the Receivables".

If so specified in the related Prospectus Supplement, a "backup
servicer" may be appointed and assigned certain oversight servicing
responsibilities with respect to the Receivables. The identity of any backup
servicer, as well as a description of its responsibilities, of any fees
payable to such backup servicer and the source of payment of such fees, will
be included in the related Prospectus Supplement.

COLLECTIONS

With respect to each Trust, the Servicer will deposit all payments on
the related Receivables (from whatever source) and all proceeds of such
Receivables collected during each collection period specified in the related
Prospectus Supplement (each, a "Collection Period") into the related
Collection Account within two business days after receipt thereof.

Collections on a Precomputed Receivable made during a Collection Period
shall be applied first to repay any outstanding Precomputed Advances made by
the Servicer with respect to such Receivable (as described below), and to the
extent that collections on a Precomputed Receivable during a Collection
Period exceed the outstanding Precomputed Advances, the collections shall
then be applied to the scheduled payment on such Receivable. If any
collections remaining after the scheduled payment is made are insufficient
to prepay the Precomputed Receivable in full, then, unless otherwise provided
in the related Prospectus Supplement, generally such remaining collections
(the "Payaheads") shall be transferred to and kept in the Payahead Account,
until such later Collection Period as the collections may be transferred to
the Collection Account and applied either to the scheduled payment or to
prepay such Receivable in full.

ADVANCES

If so provided in the related Prospectus Supplement, to the extent the
collections of interest and principal on a Precomputed Receivable with
respect to a Collection Period fall short of the respective scheduled
payment, the Servicer will make a Precomputed Advance of the shortfall. The
Servicer will be obligated to make a Precomputed Advance on a Precomputed
Receivable only to the extent that the Servicer, in its sole discretion,
expects to recoup such advance from subsequent collections or recoveries on
such Receivable or other Precomputed Receivables in the related Receivables
Pool or from any other source of funds identified in the related Prospectus
Supplement. The Servicer will deposit the Precomputed Advance in the
applicable Collection Account on or before the
business day preceding the applicable Distribution Date. To the extent
possible, the Servicer will recoup its Precomputed Advance from subsequent
payments by or on behalf of the respective Obligor or from insurance or
liquidation proceeds with respect to the Receivable and will release its
right to reimbursement in conjunction with its purchase of the Receivable as
Servicer, or, upon the determination that reimbursement from the preceding
sources is unlikely, will recoup its Precomputed Advance from any collections
made on other Precomputed Receivables in the related Receivables Pool or from
any other source of funds identified in the related Prospectus Supplement.

If so provided in the related Prospectus Supplement, on or before the
business day prior to each applicable Distribution Date, the Servicer shall
deposit into the related Collection Account as a Simple Interest Advance an
amount equal to the amount of interest that would have been due on the
related Simple Interest Receivables at their respective APRs for the related
Collection Period (assuming that such Simple Interest Receivables are paid
on their respective due dates) minus the amount of interest actually received
on such Simple Interest Receivables during the related Collection Period.
If such calculation results in a negative number, an amount equal to such
amount shall be paid to the Servicer in reimbursement of outstanding Simple
Interest Advances. In addition, in the event that a Simple Interest
Receivable becomes a Liquidated Receivable (as such term is defined in the
related Prospectus Supplement), the amount of accrued and unpaid interest
thereon (but not including interest for the then current Collection Period)
shall be withdrawn from the Collection Account and paid to the Servicer in
reimbursement of outstanding Simple Interest Advances. No advances of
principal will be made with respect to Simple Interest Receivables. As used
herein, "Advances" means both Precomputed Advances and Simple Interest
Advances.

SERVICING COMPENSATION AND PAYMENT OF EXPENSES

Unless otherwise specified in the Prospectus Supplement with respect to
any Trust, the Servicer will be entitled to receive the Servicing Fee for
each Collection Period in an amount equal to specified percentage per annum
(as set forth in the related Prospectus Supplement, the "Servicing Fee Rate")
of the Pool Balance as of the first day of the related Collection Period (the
"Servicing Fee"). The Servicing Fee (together with any portion of the
Servicing Fee that remains unpaid from prior Distribution Dates) will be paid
solely to the extent of the Interest Distribution Amount. However, unless
otherwise specified in the related Prospectus Supplement, the Servicing Fee
will be paid prior to the distribution of any portion of the Interest
Distribution Amount to the Noteholders or the Certificateholders of the given
series.

Unless otherwise provided in the related Prospectus Supplement with
respect to a given Trust, the Servicer will also collect and retain any late
fees, prepayment charges and other administrative fees or similar charges
allowed by applicable law with respect to the related Receivables and will
be entitled to reimbursement from such Trust for certain liabilities.
Payments by or on behalf of Obligors will be allocated to scheduled payments
and late fees and other charges in accordance with the Servicer's normal
practices and procedures.

The Servicing Fee will compensate the Servicer for performing the
functions of a third party servicer of motor vehicle receivables as an agent
for their beneficial owner, including collecting and posting all payments,
responding to inquiries of Obligors on the Receivables, investigating
delinquencies, sending payment coupons to Obligors, reporting tax information
to Obligors, paying costs of collections and disposition of defaults and
policing the collateral. The Servicing Fee also will compensate the Servicer
for administering the particular Receivables Pool, including making Advances,
accounting for collections and furnishing monthly and annual statements to
the related Trustee and Indenture
Trustee with respect to distributions and generating federal income tax
information for such Trust and for the related Noteholders and
Certificateholders. The Servicing Fee also will reimburse the Servicer for
certain taxes, the fees of the related Trustee and Indenture Trustee, if any,
accounting fees, outside auditor fees, data processing costs and other costs
incurred in connection with administering the applicable Receivables Pool.

DISTRIBUTIONS

With respect to each series of Securities, beginning on the Distribution
Date specified in the related Prospectus Supplement, distributions of
principal and interest (or, where applicable, of principal or interest only)
on each class of such Securities entitled thereto will be made by the
Applicable Trustee to the Noteholders and the Certificateholders of such
series. The timing, calculation, allocation, order, source, priorities of
and requirements for all payments to each class of Noteholders and all
distributions to each class of Certificateholders of such series will be set
forth in the related Prospectus Supplement.

With respect to each Trust, on each Distribution Date collections on the
related Receivables will be transferred from the Collection Account to the
Note Distribution Account, if any, and the Certificate Distribution Account
for distribution to Noteholders, if any, and Certificateholders to the extent
provided in the related Prospectus Supplement. Credit enhancement, such as
a Reserve Account, will be available to cover any shortfalls in the amount
available for distribution on such date to the extent specified in the
related Prospectus Supplement. As more fully described in the related
Prospectus Supplement, and unless otherwise specified therein, distributions
in respect of principal of a class of Securities of a given series will be
subordinate to distributions in respect of interest on such class, and
distributions in respect of one or more classes of Certificates of such
series may be subordinate to payments in respect of Notes, if any, of such
series or other classes of Certificates of such series. Distributions of
principal on the Securities of a series may be based on the amount of
principal collected or due, or the amount of Realized Losses incurred, in a
Collection Period.

CREDIT AND CASH FLOW ENHANCEMENT

The amounts and types of credit and cash flow enhancement arrangements
and the provider thereof, if applicable, with respect to each class of
Securities of a given series, if any, will be set forth in the related
Prospectus Supplement. If and to the extent provided in the related
Prospectus Supplement, credit and cash flow enhancement may be in the form
of subordination of one or more classes of Securities, Reserve Accounts,
spread accounts, over-collateralization, letters of credit, credit or
liquidity facilities, surety bonds, insurance policies, guaranteed investment
contracts, swaps or other interest rate protection agreements, repurchase
obligations, yield supplement agreements, other agreements with respect to
third party payments or other support, cash deposits or such other
arrangements as may be described in the related Prospectus Supplement or any
combination of two or more of the foregoing. If specified in the applicable
Prospectus Supplement, credit or cash flow enhancement for a class of
Securities may cover one or more other classes of Securities of the same
series, and credit or cash flow enhancement for a series of Securities may
cover one or more other series of Securities.

The presence of a Reserve Account and other forms of credit enhancement
for the benefit of any class or series of Securities is intended to enhance
the likelihood of receipt by the Securityholders of such class or series of
the full amount of principal and interest due thereon and to decrease the
likelihood that such Securityholders will experience losses. Unless
otherwise specified in the
related Prospectus Supplement, the credit enhancement for a class or series
of Securities will not provide protection against all risks of loss and will
not guarantee repayment of the entire principal balance and interest thereon.
If losses occur which exceed the amount covered by any credit enhancement or
which are not covered by any credit enhancement, Securityholders of any class
or series will bear their allocable share of deficiencies, as described in
the related Prospectus Supplement. In addition, if a form of credit
enhancement covers more than one series of Securities, Securityholders of any
such series will be subject to the risk that such credit enhancement will be
exhausted by the claims of Securityholders of other series.

Reserve Account. If so provided in the related Prospectus Supplement,
pursuant to the related Sale and Servicing Agreement or Pooling and Servicing
Agreement, the Seller will establish for a series or class of Securities an
account, as specified in the related Prospectus Supplement (the "Reserve
Account"), which will be maintained with the related Trustee or Indenture
Trustee, as applicable. Unless otherwise provided in the related Prospectus
Supplement, the Reserve Account will be funded by an initial deposit by the
Seller on the Closing Date in the amount set forth in the related Prospectus
Supplement and, if the related series has a Funding Period, will also be
funded on each Subsequent Transfer Date to the extent described in the
related Prospectus Supplement. As further described in the related
Prospectus Supplement, the amount on deposit in the Reserve Account will be
increased on each Distribution Date thereafter up to the Specified Reserve
Account Balance (as defined in the related Prospectus Supplement) by the
deposit therein of the amount of collections on the related Receivables
remaining on each such Distribution Date after the payment of all other
required payments and distributions on such date. The related Prospectus
Supplement will describe the circumstances and manner under which
distributions may be made out of the Reserve Account, either to holders of
the Securities covered thereby or to the Seller or to any other entity.

NET DEPOSITS

If so specified in the related Prospectus Supplement as an
administrative convenience, unless the Servicer is required to remit
collections daily (see "-- Collections" above), the Servicer will be
permitted to make the deposit of collections, aggregate Advances and Purchase
Amounts for any Trust for or with respect to the related Collection Period
net of distributions to be made to the Servicer for such Trust with respect
to such Collection Period. The Servicer may cause to be made a single, net
transfer from the Collection Account to the related Payahead Account, if any,
or vice versa. The Servicer, however, will account to the Trustee, any
Indenture Trustee, the Noteholders, if any, and the Certificateholders with
respect to each Trust as if all deposits, distributions and transfers were
made individually. With respect to any Trust that issues both Certificates
and Notes, if the related Distribution Dates do not coincide with
Distribution Dates, all distributions, deposits or other remittances made on
a Distribution Date will be treated as having been distributed, deposited or
remitted on the Distribution Date for the applicable Collection Period for
purposes of determining other amounts required to be distributed, deposited
or otherwise remitted on such Distribution Date.

STATEMENTS TO TRUSTEES AND TRUST

Prior to each Distribution Date with respect to each series of
Securities, the Servicer will provide to the applicable Indenture Trustee,
if any, and the applicable Trustee as of the close of business on the last
day of the preceding Collection Period a statement setting forth
substantially the same information as is required to be provided in the
periodic reports provided to Securityholders
of such series described under "Certain Information Regarding the Securities
- -- Reports to Securityholders".

EVIDENCE AS TO COMPLIANCE

Each Sale and Servicing Agreement and Pooling and Servicing Agreement
will provide that a firm of independent public accountants will furnish to
the related Trust and Indenture Trustee or Trustee, as applicable, annually
a statement as to compliance by the Servicer during the preceding twelve
months (or, in the case of the first such certificate, from the applicable
Closing Date) with certain standards relating to the servicing of the
applicable Receivables, the Servicer's accounting records and computer files
with respect thereto and certain other matters.

Each Sale and Servicing Agreement and Pooling and Servicing Agreement
will also provide for delivery to the related Trust and Indenture Trustee or
Trustee, as applicable, substantially simultaneously with the delivery of
such accountants' statement referred to above, of a certificate signed by an
officer of the Servicer stating that the Servicer has fulfilled its
obligations under the Sale and Servicing Agreement or Pooling and Servicing
Agreement, as applicable, throughout the preceding twelve months (or, in the
case of the first such certificate, from the Closing Date) or, if there has
been a default in the fulfillment of any such obligation, describing each
such default. The Servicer has agreed to give each Indenture Trustee and
each Trustee notice of certain Servicer Defaults under the related Sale and
Servicing Agreement or Pooling and Servicing Agreement, as applicable.

Copies of such statements and certificates may be obtained by
Securityholders by a request in writing addressed to the Applicable Trustee.

CERTAIN MATTERS REGARDING THE SERVICER

Each Sale and Servicing Agreement and Pooling and Servicing Agreement
will provide that the Company may not resign from its obligations and duties
as Servicer thereunder, except upon determination that the Company's
performance of such duties is no longer permissible under applicable law.
No such resignation will become effective until the related Indenture Trustee
or Trustee, as applicable, or a successor servicer has assumed the Company's
servicing obligations and duties under such Sale and Servicing Agreement or
Pooling and Servicing Agreement.

Each Sale and Servicing Agreement and Pooling and Servicing Agreement
will further provide that neither the Servicer nor any of its directors,
officers, employees and agents will be under any liability to the related
Trust or the related Noteholders or Certificateholders for taking any action
or for refraining from taking any action pursuant to such Sale and Servicing
Agreement or Pooling and Servicing Agreement or for errors in judgment;
except that neither the Servicer nor any such person will be protected
against any liability that would otherwise be imposed by reason of willful
misfeasance, bad faith or negligence in the performance of the Servicer's
duties thereunder or by reason of reckless disregard of its obligations and
duties thereunder. In addition, each Sale and Servicing Agreement and
Pooling and Servicing Agreement will provide that the Servicer is under no
obligation to appear in, prosecute or defend any legal action that is not
incidental to the Servicer's servicing responsibilities under such Sale and
Servicing Agreement or Pooling and Servicing Agreement and that, in its
opinion, may cause it to incur any expense or liability.

Under the circumstances specified in each Sale and Servicing Agreement
and Pooling and Servicing Agreement , any entity into which the Servicer may
be merged or consolidated, or any entity resulting from any merger or
consolidation
to which the Servicer is a party, or any entity succeeding to the business
of the Servicer or, with respect to its obligations as Servicer, any
corporation 50% or more of the voting stock of which is owned, directly or
indirectly, by the Company, which corporation or other entity in each of the
foregoing cases assumes the obligations of the Servicer, will be the
successor of the Servicer under such Sale and Servicing Agreement or Pooling
and Servicing Agreement.

Under each Sale and Servicing Agreement and Pooling and Servicing
Agreement, the Servicer may appoint a subservicer to perform all or any
portion of its obligations as Servicer; however, in the event that the
Servicer does appoint any such subservicer, the Servicer will remain
obligated and liable to the related Trustee and Securityholders for the
servicing and administering of the Receivables and will also be responsible
for any fees and expenses of the subservicer.

SERVICER DEFAULT

Except as otherwise provided in the related Prospectus Supplement,
"Servicer Default" under each Sale and Servicing Agreement and Pooling and
Servicing Agreement will consist of (i) any failure by the Servicer to
deliver to the Applicable Trustee for deposit in any of the Trust Accounts
or the Certificate Distribution Account any required payment or to direct the
Applicable Trustee to make any required distributions therefrom, which
failure continues unremedied for five business days after written notice from
the Applicable Trustee is received by the Servicer or after discovery of such
failure by the Servicer; (ii) any failure by the Servicer or the Seller, as
the case may be, duly to observe or perform in any material respect any other
covenant or agreement in such Sale and Servicing Agreement or Pooling and
Servicing Agreement, which failure materially and adversely affects the
rights of the Noteholders or the Certificateholders of the related series and
which continues unremedied for 60 days after the giving of written notice of
such failure (A) to the Servicer or the Seller, as the case may be, by the
Applicable Trustee or (B) to the Servicer or the Seller, as the case may be,
and to the Applicable Trustee by holders of Notes or Certificates of such
series, as applicable, evidencing not less than 25% in principal amount of
such outstanding Notes or of such Certificate Balance; and (iii) the
occurrence of an Insolvency Event with respect to the Servicer or the Seller.
"Insolvency Event" means, with respect to any Person, any of the following
events or actions: certain events of insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings with respect to
such Person and certain actions by such Person indicating its insolvency,
reorganization pursuant to bankruptcy proceedings or inability to pay its
obligations.

RIGHTS UPON SERVICER DEFAULT

In the case of Owner Trusts that issue Notes, unless otherwise provided
in the related Prospectus Supplement, as long as a Servicer Default under a
Sale and Servicing Agreement remains unremedied, the related Indenture
Trustee or holders of Notes of the related series evidencing not less than
25% of principal amount of such Notes then outstanding may terminate all the
rights and obligations of the Servicer under such Sale and Servicing
Agreement, whereupon such Indenture Trustee or a successor servicer appointed
by such Indenture Trustee will succeed to all the responsibilities, duties
and liabilities of the Servicer under such Sale and Servicing Agreement and
will be entitled to similar compensation arrangements. In the case of any
Grantor Trust and any Owner Trust that does not issue Notes, unless otherwise
provided in the related Prospectus Supplement, as long as a Servicer Default
under the related Pooling and Servicing Agreement remains unremedied, the
related Trustee or holders of Certificates of the related series evidencing
not less than 25% of the principal amount of such Certificates then
outstanding may terminate all the rights and obligations of the Servicer
under such Pooling and Servicing Agreement, whereupon such Trustee or a
successor servicer appointed by such Trustee will succeed to all the
responsibilities, duties and liabilities of the Servicer under such Pooling
and Servicing Agreement and will be entitled to similar compensation
arrangements. If, however, a bankruptcy trustee or similar official has been
appointed for the Servicer, and no Servicer Default other than such
appointment has occurred, such trustee or official may have the power to
prevent such Indenture Trustee, such Noteholders, such Trustee or such
Certificateholders from effecting a transfer of servicing. In the event that
such Indenture Trustee or Trustee is unwilling or unable to so act, it may
appoint, or petition a court of competent jurisdiction for the appointment
of, a successor with a net worth of at least $100,000,000 and whose regular
business includes the servicing of motor vehicle receivables. Such Indenture
Trustee or Trustee may make such arrangements for compensation to be paid,
which in no event may be greater than the servicing compensation to the
Servicer under such Sale and Servicing Agreement or Pooling and Servicing
Agreement.

WAIVER OF PAST DEFAULTS

With respect to each Owner Trust that issues Notes, unless otherwise
provided in the related Prospectus Supplement, the holders of Notes
evidencing at least a majority in principal amount of the then outstanding
Notes of the related series (or the holders of the Certificates of such
series evidencing not less than a majority of the outstanding Certificate
Balance, in the case of any Servicer Default which does not adversely affect
the related Indenture Trustee or such Noteholders) may, on behalf of all such
Noteholders and Certificateholders, waive any default by the Servicer in the
performance of its obligations under the related Sale and Servicing Agreement
and its consequences, except a Servicer Default in making any required
deposits to or payments from any of the Trust Accounts or to the Certificate
Distribution Account in accordance with such Sale and Servicing Agreement.
With respect to each Grantor Trust and each Owner Trust that is formed
pursuant to a Pooling and Servicing Agreement, holders of Certificates of
such series evidencing not less than a majority of the principal amount of
such Certificates then outstanding may, on behalf of all such
Certificateholders, waive any default by the Servicer in the performance of
its obligations under the related Pooling and Servicing Agreement, except a
Servicer Default in making any required deposits to or payments from the
Certificate Distribution Account or the related Trust Accounts in accordance
with such Pooling and Servicing Agreement. No such waiver will impair such
Noteholders' or Certificateholders' rights with respect to subsequent
defaults.

AMENDMENT

Unless otherwise provided in the related Prospectus Supplement, each of
the Transfer and Servicing Agreements may be amended by the parties thereto,
without the consent of the related Noteholders or Certificateholders, for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of such Transfer and Servicing Agreements or of
modifying in any manner the rights of such Noteholders or Certificateholders;
provided that such action will not, in the opinion of counsel satisfactory
to the related Trustee or Indenture Trustee, as applicable, materially and
adversely affect the interest of any such Noteholder or Certificateholder.

Unless otherwise specified in the related Prospectus Supplement, the
Transfer and Servicing Agreements may also be amended by the Seller, the
Servicer, the related Trustee and any related Indenture Trustee with the
consent of the holders of Notes evidencing at least a majority in principal
amount of then outstanding Notes, if any, of the related series and the
holders of the Certificates of such series evidencing at least a majority of
the principal amount of such Certificates then outstanding, for the purpose
of adding any
provisions to or changing in any manner or eliminating any of the provisions
of such Transfer and Servicing Agreements or of modifying in any manner the
rights of such Noteholders or Certificateholders; provided, however, that no
such amendment may (i) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments on the related
Receivables or distributions that are required to be made for the benefit of
such Noteholders or Certificateholders or (ii) reduce the aforesaid
percentage of the Notes or Certificates of such series which are required to
consent to any such amendment, without the consent of the holders of all the
outstanding Notes or Certificates, as the case may be, of such series.

INSOLVENCY EVENT

With respect to any Owner Trust that issues Notes, if an Insolvency
Event occurs with respect to the Seller, the related Receivables of such
Trust will be liquidated and the Trust will be terminated 90 days after the
date of such Insolvency Event, unless, before the end of such 90-day period,
the related Trustee shall have received written instructions from (i) holders
of each class of Certificates (excluding any Certificates held by the Seller)
with respect to such Trust representing more than 50% of the aggregate unpaid
principal amount of each such class (not including the principal amount of
such Certificates held by the Seller) and (ii) holders of each class of
Notes, if any, with respect to such Trust representing more than 50% of the
aggregate unpaid principal amount of each such class, to the effect that each
such party disapproves of the liquidation of such Receivables and termination
of such Trust. Promptly after the occurrence of an Insolvency Event with
respect to the Seller, notice thereof is required to be given to the related
Security holder; provided that any failure to give such required notice will
not prevent or delay termination of such Trust. Upon termination of any
Trust, the related Trustee shall, or shall direct the related Indenture
Trustee to, promptly sell the assets of such Trust (other than the Trust
Accounts and the Certificate Distribution Account) in a commercially
reasonable manner and on commercially reasonable terms. The proceeds from
any such sale, disposition or liquidation of the Receivables of such Trust
will be treated as collections on such Receivables and deposited in the
related Collection Account. With respect to any Trust, if the proceeds from
the liquidation of the related Receivables and any amounts on deposit in the
Reserve Account (if any), the Payahead Account (if any), the Note
Distribution Account (if any) and the Certificate Distribution Account are
not sufficient to pay the Notes, if any, and the Certificates of the related
series in full, the amount of principal returned to Noteholders and
Certificateholders thereof will be reduced and some or all of such
Noteholders and Certificateholders will incur a loss.

Each Trust Agreement will provide that the applicable Trustee does not
have the power to commence a voluntary proceeding in bankruptcy with respect
to the related Trust without the unanimous prior approval of all
Certificateholders (including the Seller) of such Trust and the delivery to
such Trustee by each such Certificateholder (including the Seller) of a
certificate certifying that such Certificateholder reasonably believes that
such Trust is insolvent.

PAYMENT OF NOTES

Upon the payment in full of all outstanding Notes of a given series and
the satisfaction and discharge of the related Indenture, the related Trustee
will succeed to all the rights of the Indenture Trustee, and the
Certificateholders of such series will succeed to all the rights of the
Noteholders of such series, under the related Sale and Servicing Agreement,
except as otherwise provided therein.

SELLER LIABILITY

In the case of each Owner Trust that issues Notes, under each Trust
Agreement, the Seller will agree to be liable directly to an injured party
for the entire amount of any losses, claims, damages or liabilities (other
than those incurred by a Noteholder or a Certificateholder in the capacity
of an investor with respect to such Owner Trust) arising out of or based on
the arrangement created by such Trust Agreement as though such arrangement
created a partnership under the Delaware Revised Uniform Limited Partnership
Act in which the Seller was a general partner.

TERMINATION

Unless otherwise specified in the related Prospectus Supplement, with
respect to each Trust, the obligations of the Servicer, the Seller, the
related Trustee and the related Indenture Trustee, if any, pursuant to the
Transfer and Servicing Agreements will terminate upon the earlier of (i) the
maturity or other liquidation of the last related Receivable and the
disposition of any amounts received upon liquidation of any such remaining
Receivables, (ii) the payment to Noteholders, if any, and Certificateholders
of the related series of all amounts required to be paid to them pursuant to
the Transfer and Servicing Agreements and (iii) the occurrence of either
event described below.

Unless otherwise provided in the related Prospectus Supplement, in order
to avoid excessive administrative expense, the Servicer will be permitted at
its option to purchase from each Trust, as of the end of any applicable
Collection Period, if the then outstanding Pool Balance with respect to the
Receivables held by such Trust is 10% or less of the Initial Pool Balance (as
defined in the related Prospectus Supplement, the "Initial Pool Balance"),
all remaining related Receivables at a price equal to the aggregate of the
Purchase Amounts thereof as of the end of such Collection Period.

If and to the extent provided in the related Prospectus Supplement with
respect to a Trust, the Applicable Trustee will, within ten days following
a Distribution Date as of which the Pool Balance is equal to or less than the
percentage of the Initial Pool Balance specified in the related Prospectus
Supplement, solicit bids for the purchase of the Receivables remaining in
such Trust, in the manner and subject to the terms and conditions set forth
in such Prospectus Supplement. If the Applicable Trustee receives
satisfactory bids as described in such Prospectus Supplement, then the
Receivables remaining in such Trust will be sold to the highest bidder.

As more fully described in the related Prospectus Supplement, any
outstanding Notes of the related series will be redeemed concurrently with
either of the events specified above and the subsequent distribution to the
related Certificateholders of all amounts required to be distributed to them
pursuant to the applicable Trust Agreement or Pooling and Servicing Agreement
will effect early retirement of the Certificates of such series.

ADMINISTRATION AGREEMENT

The Company, in its capacity as administrator (the "Administrator"),
will enter into an agreement (as amended and supplemented from time to time,
an "Administration Agreement") with each Owner Trust that issues Notes and
the related Indenture Trustee pursuant to which the Administrator will agree,
to the extent provided in such Administration Agreement, to provide the
notices and to perform other administrative obligations required by the
related Indenture. Unless otherwise specified in the related Prospectus
Supplement with respect to any such Trust, as compensation for the
performance of the Administrator's obligations under the applicable
Administration Agreement and as reimbursement for its expenses related
thereto, the Administrator will be entitled to a monthly
administration fee (the "Administration Fee"), which fee will be paid by the
Servicer.

CERTAIN LEGAL ASPECTS OF THE RECEIVABLES

SECURITY INTEREST IN VEHICLES

The Receivables evidence the credit sale of new and used automobiles,
light trucks, vans and minivans by dealers to Obligors and also constitute
personal property security agreements granting the holder of such Receivable
a security interest in the Financed Vehicles under the applicable UCC.
Perfection of security interests in the Financed Vehicles is generally
governed by the motor vehicle registration laws of the state in which a
Financed Vehicle is located. In almost all states in which the Receivables
have been originated, a security interest in automobiles, light trucks, vans
and minivans is perfected by notation of the secured party's lien on the
vehicle's certificate of title.

All of the Receivables purchased by the Company name the Company as
obligee (by assignment or otherwise) and as the secured party. The Company
also takes all actions necessary under the laws of the state in which the
Financed Vehicle is located to perfect the Company's security interest in the
Financed Vehicle, including, where applicable, having a notation of its lien
recorded on such vehicle's certificate of title.

The Company will sell its interests in Receivables and assign its
security interests in the Financed Vehicles securing the Receivables to
either (i) the related Trust pursuant to either a Sale and Servicing
Agreement or a Pooling and Servicing Agreement or (ii) a Transferor pursuant
to a Receivables Purchase Agreement, which Transferor will, in turn, sell
such interests and assign such security interests to the Trust pursuant to
either a Sale and Servicing Agreement or a Pooling and Servicing Agreement.
However, because of the administrative burden and expense, the certificates
of title to the Financed Vehicles will not be amended to reflect any
Transferor or the Trust as the new secured party on the certificate of title
relating to the Financed Vehicles. Each Sale and Servicing Agreement or
Pooling and Servicing Agreement, as applicable, provides that the Company,
as custodian, will hold any certificates of title and the documents and other
items relating to the Financed Vehicles in its possession on behalf of the
Trust and the Indenture Trustee.

With respect to certain limitations on the enforceability of the
Indenture Trustee's security interest, see "Risk Factors -- Certain Legal
Aspects".

Under the laws of most states, the perfected security interest in a
Financed Vehicle would continue for four months after such vehicle is moved
to a state other than the state in which it is initially registered, and
thereafter until the owner of the vehicle re-registers the Financed Vehicle
in the new state. A majority of states generally require surrender of a
certificate of title in connection with the re-registration of a vehicle;
accordingly, a secured party must surrender possession if it holds the
certificate of title to the vehicle, or, in the case of a vehicle registered
in a state providing for the notation of a lien on the certificate of title
but not possession by the secured party, assuming no fraud or negligence, the
secured party noted on the certificate of title would receive notice of
surrender if the security interest is noted on the certificate of title.
Thus, the secured party would have the opportunity to re-perfect its security
interest in the vehicle in the state of relocation. In states that do not
require a certificate of title for registration of a motor vehicle, a
re-registration could defeat perfection. In the ordinary course of servicing
Receivables, the Servicer takes steps to effect re-perfection upon receipt
of notice of re-registration or information from the
Obligor as to relocation. Similarly, when an Obligor sells a Financed
Vehicle, the Servicer must surrender possession of the certificate of title
or will receive notice as a result of its lien noted thereon and,
accordingly, will have an opportunity to require satisfaction of the related
Receivable before release of the lien. Under each Sale and Servicing
Agreement or Pooling and Servicing Agreement, as applicable, the Servicer is
obligated to take appropriate steps, at its own expense, to maintain
perfection of security interests in such Financed Vehicle and is obligated
to repurchase the related Receivable if it fails to do so.

Under the laws of most states, liens for repairs performed on a motor
vehicle, liens for unpaid storage fees and liens for unpaid taxes take
priority over even a perfected security interest in a Financed Vehicle. The
Company will represent that, as of the date of issuance of the Notes, each
security interest in a Financed Vehicle is prior to all other present liens
upon and security interests in such Financed Vehicle. However, liens for
repairs, unpaid storage fees or taxes could arise at any time during the term
of a Receivable. No notice will be given to the Indenture Trustee or the
Noteholders in the event such a lien arises nor will the Company be obligated
to repurchase the related Receivable if such a lien arises after the Closing
Date.

REPOSSESSION

In the event of default by a vehicle purchaser, a holder of a retail
installment sale contract has all the remedies of a secured party under the
UCC, except where specifically limited by other state laws. Among its UCC
remedies, the secured party has the right to perform self-help repossession
unless such act would constitute a breach of the peace. Self-help is the
method employed by the Servicer in most cases and is accomplished simply by
retaking possession of the Financed Vehicle. In the event of default by the
Obligor, some jurisdictions require that the Obligor be notified of the
default and be given a time period within which he or she may cure the
default prior to repossession. Generally, the right to cure a default may
be exercised on a limited number of occasions in any one-year period. In
cases where the Obligor objects or raises a defense to repossession, if a
Financed Vehicle cannot be retaken without a breach of the peace, or if
otherwise required by applicable state law, a court order must be obtained
from an appropriate court, and the Financed Vehicle must then be repossessed
in accordance with that order.

NOTICE OF SALES; REDEMPTION RIGHTS

The UCC and other state laws require the secured party to provide the
Obligor with reasonable notice of the date, time and place of any public sale
or the date after which any private sale or other intended disposition of the
collateral may be held. All aspects of the disposition of the collateral
including the method, manner, time, place and terms must be commercially
reasonable. The Obligor has the right to redeem the collateral prior to
actual sale by paying the secured party the unpaid principal balance of the
obligation plus reasonable expenses for repossessing, holding, and preparing
the collateral for disposition and arranging for its sale plus, in some
jurisdictions, reasonable attorneys' fees. In some states the Obligor may
have a post-repossession right to reinstate the terms of the contract and
redeem the collateral by the payment of delinquent installments and expenses
incurred by the secured party in repossessing the collateral.

DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS

The proceeds obtained upon repossession and resale of the Financed
Vehicles generally will be applied first to the expenses of resale and
repossession and then to the satisfaction of the indebtedness. While some
states impose
prohibitions or limitations on deficiency judgments if the net proceeds from
resale do not cover the full amount of the indebtedness, a deficiency
judgment can be sought in those states that do not prohibit or limit such
judgments, provided that certain procedures are followed. However, the
deficiency judgment would be a personal judgment against the Obligor for the
shortfall, and a defaulting Obligor can be expected to have very little
capital or sources of income available following repossession. Therefore,
in many cases, it may not be useful to seek a deficiency judgment or, if one
is obtained, it may be settled at a significant discount.

Occasionally, after resale of collateral and payment of all expenses and
all indebtedness, there is a surplus of funds. In that case, the UCC
requires the secured party to remit the surplus to any holder of a lien with
respect to the collateral or, if no such lienholder exists or there are
remaining funds, the UCC requires the secured party to remit the surplus to
the former owner of the collateral. Certain other statutory provisions,
including federal and state bankruptcy and insolvency laws, may limit or
delay the ability of a lender to repossess and resell collateral or enforce
a deficiency judgment.

CONSUMER PROTECTION LAWS

Courts have applied general equitable principles to limit and restrict
secured parties pursuing repossession or litigation involving deficiency
balances. These equitable principles may have the effect of relieving an
Obligor from some or all of the legal consequences of a default.

In several cases, consumers have asserted that the self-help remedies
of secured parties under the UCC and related laws violate the due process
protection provided under the 14th Amendment of the Constitution of the
United States. Courts have generally upheld the notice provisions of the UCC
and related laws as reasonable or have found that the repossession and resale
by the creditor do not involve sufficient state action to afford
constitutional protection to consumers.

Numerous 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 Credit Billing Act, the Fair Debt Collection
Procedures Act, the Moss-Magnuson Warranty Act, the Federal Reserve Board's
Regulations B and Z, the Soldiers' and Sailors' Civil Relief Act, state
adaptations of the Uniform Consumer Credit Code and state motor vehicle
retail installment sales acts, retail installment sales acts, and other
similar laws. State laws generally impose finance charge ceilings and other
restrictions on consumer transactions and often require contract disclosure
in addition to those required under federal law. These requirements impose
specific statutory liabilities upon creditors who fail to comply with their
provisions. In some cases, this liability could affect an assignee's ability
to enforce consumer finance contracts such as the Receivables.

The so-called "Holder-in-Due-Course" Rule of the Federal Trade
Commission (the "FTC Rule"), the provisions of which are generally duplicated
by the Uniform Consumer Credit Code and other state laws, has the effect of
subjecting a seller (and certain related lenders and their assignees) in a
consumer credit transaction and any assignee of the seller to all claims and
defenses that the obligor in the transaction could assert against the seller
of the goods. With respect to used automobiles specifically, the FTC Rule
requires that all sellers of used automobiles prepare, complete and display
a Buyer's Guide that explains the warranty coverage for such automobiles.

All of the Receivables will be subject to the requirements of the FTC
Rule. Accordingly, the Trust, as holder of the Receivables, will be subject
to any claims or defenses that the purchaser of the related Financed Vehicle
may assert against the seller of the Vehicle. Such claims are limited to a
maximum liability equal to the amounts actually paid by the Obligor on the
Receivable. If an Obligor were successful in asserting any such claim or
defense, such claim or defense would constitute a breach of the Company's
representations and warranties under the related Receivables Purchase
Agreement and would create an obligation of the Company to repurchase the
Receivables unless the breach were cured. The Seller will assign its rights
under the related Receivables Purchase Agreement, including its right to
cause The Company to repurchase Receivables with respect to which it is in
breach of its representations and warranties, to the Trust pursuant to either
the related Sale and Servicing Agreement or Pooling and Servicing Agreement.
See "Description of the Transfer and Servicing Agreements -- Sale and
Assignment of Receivables".

Under most state vehicle dealer licensing laws, sellers of automobiles,
minivans and light duty trucks are required to be licensed to sell vehicles
at retail sale. In addition, with respect to used vehicles, the Federal
Trade Commission's Rule on Sale of Used Vehicles requires that all sellers
of used vehicles prepare, complete and display a "Buyer's Guide" which
explains the warranty coverage for such vehicles. Furthermore, Federal
Odometer Regulations promulgated under the Motor Vehicle Information and Cost
Savings Act and the motor vehicle title laws of most states require that all
sellers of used vehicles furnish a written statement signed by the seller
certifying the accuracy of the odometer reading. If a seller is not properly
licensed or if either a Buyer's Guide or Odometer Disclosure Statement was
not provided to the purchaser of a Financed Vehicle, the Obligor may be able
to assert a defense against the seller of the Financed Vehicle. If an
Obligor on a Receivable were successful in asserting any such claim or
defense, the Servicer would pursue on behalf of the Trust any reasonable
remedies against the seller or the manufacturer of the vehicle, subject to
certain limitations as to the expense of any such action to be specified in
the Sale and Servicing Agreement.

The Company will warrant under either a Receivables Purchase Agreement,
a Sale and Servicing Agreement or a Pooling and Servicing Agreement that each
Receivable complies with all requirements of law in all material respects.
Accordingly, if an Obligor has a claim against the Trust for violation of any
law and such claim materially and adversely affects the Trust's interest in
a Receivable, such violation would constitute a breach of the warranties of
the Company under such Receivables Purchase Agreement, Sale and Servicing
Agreement or Pooling and Servicing Agreement and would create an obligation
of the Company to repurchase the Receivable from the Trust unless the breach
is cured. See "Description of the Transfer and Servicing Agreements -- Sale
and Assignment of Receivables".

OTHER LIMITATIONS

In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a secured
party to realize upon collateral or enforce a deficiency judgment. For
example, in a Chapter 13 proceeding under the federal bankruptcy code, a
court may prevent a secured party from repossessing an automobile, and as
part of the rehabilitation plan, reduce the amount of the secured
indebtedness to the market value of the automobile at the time of bankruptcy
(as determined by the court) leaving the party providing financing as a
general unsecured creditor as to the Cram Down amount. A bankruptcy court
may also reduce the monthly payments due under a contract or change the rate
of interest and time of repayment of the indebtedness.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

The following is a general summary of certain federal income tax
consequences of the purchase, ownership and disposition of the Notes and the
Certificates. The summary does not purport to deal with federal income tax
consequences applicable to all categories of holders, some of which may be
subject to special rules. For example, it does not discuss the tax treatment
of Noteholders or Certificateholders that are insurance companies, regulated
investment companies or dealers in securities. Moreover, there are no cases
or Internal Revenue Service ("IRS") rulings on similar transactions involving
both debt and equity interests issued by a trust with terms similar to those
of the Notes and the Certificates. As a result, the IRS may disagree with
all or a part of the discussion below. Prospective investors are urged to
consult their own tax advisors in determining the federal, state, local,
foreign and any other tax consequences to them of the purchase, ownership and
disposition of the Notes and the Certificates.

The following summary is based upon current provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), the Treasury regulations
promulgated thereunder and judicial or ruling authority, all of which are
subject to change, which change may be retroactive. Each Trust will be
provided with an opinion of special Federal tax counsel to each Trust
specified in the related Prospectus Supplement ("Federal Tax Counsel"),
regarding certain federal income tax matters discussed below. An opinion of
Federal Tax Counsel, however, is not binding on the IRS or the courts. No
ruling on any of the issues discussed below will be sought from the IRS. For
purposes of the following summary, references to the Trust, the Notes, the
Certificates and related terms, parties and documents shall be deemed to
refer, unless otherwise specified herein, to each Trust and the Notes,
Certificates and related terms, parties and documents applicable to such
Trust.

The federal income tax consequences to Certificateholders will vary
depending on whether an election is made to treat the Trust as a partnership
under the Code or whether the Trust will be treated as a grantor trust. The
Prospectus Supplement for each series of Certificates will specify whether
a partnership election will be made or the Trust will be treated as a grantor
trust.

OWNER TRUSTS

TAX CHARACTERIZATION OF OWNER TRUSTS

Federal Tax Counsel will deliver its opinion that a Trust for which a
partnership election is made will not be an association (or publicly traded
partnership) taxable as a corporation for federal income tax purposes. This
opinion will be based on the assumption that the terms of the Trust Agreement
and related documents will be complied with, and on counsel's conclusions
that (1) the Trust will not have certain characteristics necessary for a
business trust to be classified as an association taxable as a corporation
and (2) the nature of the income of the Trust will exempt it from the rule
that certain publicly traded partnerships are taxable as corporations.

If an Owner Trust were taxable as a corporation for federal income tax
purposes, such Trust would be subject to corporate income tax on its taxable
income. The Trust's taxable income would include all its income on the
Receivables, possibly reduced by its interest expense on the Notes, if any.
Any such corporate income tax could materially reduce cash available to make
payments
on the Notes, if any, and distributions on the Certificates, and
Certificateholders could be liable for any such tax that is unpaid by the
Trust.

TAX CONSEQUENCES TO HOLDERS OF THE NOTES

General. The following discussion only applies to a Trust which elects
to be treated as a partnership and issues one or more classes of Notes.
Furthermore, the following discussion assumes that all payments on the Notes
are denominated in U.S. dollars and that any such Notes are sold to persons
other than the Seller. If these conditions are not satisfied with respect
to any given series of Notes, any additional tax considerations with respect
to such Notes will be disclosed in the applicable Prospectus Supplement.

Treatment of the Notes as Indebtedness. The Seller will agree, and the
beneficial owners of the Notes (the "Note Owners") will agree by their
purchase of Notes, to treat the Notes as debt for federal income tax
purposes. Federal Tax Counsel will, except as otherwise provided in the
related Prospectus Supplement, advise the Trust that the Notes will be
classified as debt for federal income tax purposes. The discussion below
assumes this characterization of the Notes is correct.

OID, etc. The discussion below assumes that all payments on the Notes
are denominated in U.S. dollars and that the Notes are not Strip Notes.
Moreover, the discussion assumes that the interest formula for the Notes
meets the requirements for "qualified stated interest" under Treasury
regulations (the "OID regulations") relating to original issue discount
("OID"), and that any OID on the Notes (i.e., any excess of the principal
amount of the Notes over their issue price) does not exceed a de minimis
amount (i.e., 1/4% of their principal amount multiplied by the number of full
years included in their term), all within the meaning of the OID regulations.
If these conditions are not satisfied with respect to any given series of
Notes, additional tax considerations with respect to such Notes will be
disclosed in the applicable Prospectus Supplement.

Interest Income on the Notes. Based on the above assumptions, except
as discussed in the following paragraph, the Notes will not be considered
issued with OID. The stated interest thereon will be taxable to a Noteholder
as ordinary interest income when received or accrued in accordance with such
Noteholder's method of tax accounting. Under the OID regulations, a holder
of a Note issued with a de minimis amount of OID must include such OID in
income, on a pro rata basis, as principal payments are made on the Note. It
is believed that any prepayment premium paid as a result of a mandatory
redemption will be taxable as contingent interest when it becomes fixed and
unconditionally payable. A purchaser who buys a Note for more or less than
its principal amount will generally be subject, respectively, to the premium
amortization or market discount rules of the Code.

A holder of a Note that has a fixed maturity date of not more than one
year from the issue date of such Note (a "Short-Term Note") may be subject
to special rules. An accrual basis holder of a Short-Term Note (and certain
cash method holders, including regulated investment companies, as set forth
in Section 1281 of the Code) generally would be required to report interest
income as interest accrues on a straight-line basis over the term of each
interest period. Other cash basis holders of a Short-Term Note would, in
general, be required to report interest income as interest is paid (or, if
earlier, upon the taxable disposition of the Short-Term Note). However, a
cash basis holder of a Short-Term Note reporting interest income as it is
paid may be required to defer a portion of any interest expense otherwise
deductible on indebtedness incurred to purchase or carry the Short-Term Note
until the taxable disposition of the Short-Term Note. A cash basis taxpayer
may elect under Section 1281 of the Code to accrue interest income on all
nongovernment debt obligations with a term of one year or less, in
which case the taxpayer would include interest on the Short-Term Note in
income as it accrues, but would not be subject to the interest expense
deferral rule referred to in the preceding sentence. Certain special rules
apply if a Short-Term Note is purchased for more or less than its principal
amount.

Sale or Other Disposition. If a Note Owner sells a Note, the holder
will recognize gain or loss in an amount equal to the difference between the
amount realized on the sale and the holder's adjusted tax basis in the Note.
The adjusted tax basis of a Note to a particular Note Owner will equal the
holder's cost for the Note, increased by any market discount, acquisition
discount, OID and gain previously included by such Note Owner in income with
respect to the Note and decreased by the amount of bond premium (if any)
previously amortized and by the amount of principal payments previously
received by such Note Owner with respect to such Note. Any such gain or loss
will be capital gain or loss if the Note was held as a capital asset, except
for gain representing accrued interest and accrued market discount not
previously included in income. Capital losses generally may be used only to
offset capital gains.

Foreign Holders. Interest payments made (or accrued) to a Note Owner
who is a nonresident alien, foreign corporation or other non-United States
person (a "foreign person") generally will be considered "portfolio
interest", and generally will not be subject to United States federal income
tax and withholding tax, if the interest is not effectively connected with
the conduct of a trade or business within the United States by the foreign
person and the foreign person (i) is not actually or constructively a "10
percent shareholder" of the Trust or the Seller (including a holder of 10%
of the outstanding Certificates) or a "controlled foreign corporation" with
respect to which the Trust or the Seller is a "related person" within the
meaning of the Code and (ii) provides the Trustee or other person who is
otherwise required to withhold U.S. tax with respect to the Notes with an
appropriate statement (on Form W-8 or a similar form), signed under penalties
of perjury, certifying that the beneficial owner of the Note is a foreign
person and providing the foreign person's name and address. If a Note is
held through a securities clearing organization or certain other financial
institutions, the organization or institution may provide the relevant signed
statement to the withholding agent; in that case, however, the signed
statement must be accompanied by a Form W-8 or substitute form provided by
the foreign person that owns the Note. If such interest is not portfolio
interest, then it will be subject to United States federal income and
withholding tax at a rate of 30 percent, unless reduced or eliminated
pursuant to an applicable tax treaty.

Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a Note by a foreign person will be exempt from United
States federal income and withholding tax, provided that (i) such gain is not
effectively connected with the conduct of a trade or business in the United
States by the foreign person and (ii) in the case of an individual foreign
person, the foreign person is not present in the United States for 183 days
or more in the taxable year.

Backup Withholding. Each holder of a Note (other than an exempt holder
such as a corporation, tax-exempt organization, qualified pension and profit-
sharing trust, individual retirement account or nonresident alien who
provides certification as to status as a nonresident) will be required to
provide, under penalties of perjury, a certificate containing the holder's
name, address, correct federal taxpayer identification number and a statement
that the holder is not subject to backup withholding. Should a nonexempt
Note Owner fail to provide the required certification, the Trust will be
required to withhold 31 percent of the amount otherwise payable to the
holder, and remit the withheld amount to the IRS as a credit against the
holder's federal income tax liability.

Possible Alternative Treatments of the Notes. If, contrary to the
opinion of Federal Tax Counsel, the IRS successfully asserted that one or
more of the Notes did not represent debt for federal income tax purposes, the
Notes might be treated as equity interests in the Trust. If so treated, the
Trust might be taxable as a corporation with the adverse consequences
described above (and the taxable corporation would not be able to reduce its
taxable income by deductions for interest expense on Notes recharacterized
as equity). Alternatively, and most likely in the view of Federal Tax
Counsel, the Trust might be treated as a publicly traded partnership that
would not be taxable as a corporation because it would meet certain
qualifying income tests. Nonetheless, treatment of the Notes as equity
interests in such a publicly traded partnership could have adverse tax
consequences to certain holders. For example, income to certain tax-exempt
entities (including pension funds) would be "unrelated business taxable
income", income to foreign holders generally would be subject to U.S. tax
and U.S. tax return filing and withholding requirements, and individual
holders might be subject to certain limitations on their ability to deduct
their share of Trust expenses.

TAX CONSEQUENCES TO HOLDERS OF THE CERTIFICATES ISSUED BY AN OWNER TRUST

Treatment of the Trust as a Partnership. The Seller and the Servicer
will agree, and the beneficial owners of Certificates (the "Certificate
Owners") will agree by their purchase of Certificates, to treat the Trust as
a partnership for purposes of federal and state income tax, franchise tax and
any other tax measured in whole or in part by income, with the assets of the
partnership being the assets held by the Trust, the partners of the
partnership being the Certificate Owners (including the Seller in its
capacity as recipient of distributions from the Reserve Account), and the
Notes, if any, being debt of the partnership. However, the proper
characterization of the arrangement involving the Trust, the Certificates,
the Notes, if any, the Seller and the Servicer is not clear because there is
no authority on transactions closely comparable to that contemplated herein.

A variety of alternative characterizations are possible. For example,
because the Certificates have certain features characteristic of debt, the
Certificates might be considered debt of the Seller or the Trust. Any such
characterization would not result in materially adverse tax consequences to
Certificate Owners as compared to the consequences from treatment of the
Certificates as equity in a partnership, described below. The following
discussion assumes that the Certificates represent equity interests in a
partnership, that all payments on the Certificates are denominated in U.S.
dollars, none of the Certificates are Strip Certificates, and that a series
of Securities includes a single class of Certificates. If these conditions
are not satisfied with respect to any given series of Certificates,
additional tax considerations with respect to such Certificates will be
disclosed in the applicable Prospectus Supplement.

Partnership Taxation. As a partnership, the Trust will not be subject
to federal income tax. Rather, each Certificate Owner will be required to
separately take into account such holder's allocated share of income, gains,
losses, deductions and credits of the Trust. The Trust's income will consist
primarily of interest and finance charges earned on the Receivables
(including appropriate adjustments for market discount, OID and bond premium)
and any gain upon collection or disposition of Receivables. The Trust's
deductions will consist primarily of interest accruing with respect to the
Notes, servicing and other fees, and losses or deductions upon collection or
disposition of Receivables.

The tax items of a partnership are allocable to the partners in
accordance with the Code, Treasury regulations and the partnership agreement
(here, the
Trust Agreement and related documents). The Trust Agreement will provide,
in general, that the Certificate Owners will be allocated taxable income of
the Trust for each month equal to the sum of (i) the interest that accrues
on the Certificates in accordance with their terms for such month, including
interest accruing at the Pass Through Rate for such month and interest on
amounts previously due on the Certificates but not yet distributed; (ii) any
Trust income attributable to discount on the Receivables that corresponds to
any excess of the principal amount of the Certificates over their initial
issue price; (iii) prepayment premium payable to the Certificate Owners for
such month; and (iv) any other amounts of income payable to the Certificate
Owners for such month. Such allocation will be reduced by any amortization
by the Trust of premium on Receivables that corresponds to any excess of the
issue price of Certificates over their principal amount. All remaining
taxable income of the Trust will be allocated to the Seller. Based on the
economic arrangement of the parties, this approach for allocating Trust
income should be permissible under applicable Treasury regulations, although
no assurance can be given that the IRS would not require a greater amount of
income to be allocated to Certificate Owners. Moreover, even under the
foregoing method of allocation, Certificate Owners may be allocated income
equal to the entire Pass Through Rate plus the other items described above
even though the Trust might not have sufficient cash to make current cash
distributions of such amount. Thus, cash basis holders will in effect be
required to report income from the Certificates on the accrual basis and
Certificate Owners may become liable for taxes on Trust income even if they
have not received cash from the Trust to pay such taxes. In addition,
because tax allocations and tax reporting will be done on a uniform basis for
all Certificate Owners but Certificate Owners may be purchasing Certificates
at different times and at different prices, Certificate Owners may be
required to report on their tax returns taxable income that is greater or
less than the amount reported to them by the Trust.

All of the taxable income allocated to a Certificate Owner that is a
pension, profit sharing or employee benefit plan or other tax-exempt entity
(including an individual retirement account) will constitute "unrelated
business taxable income" generally taxable to such a holder under the Code.

An individual taxpayer's share of expenses of the Trust (including fees
to the Servicer but not interest expense) would be miscellaneous itemized
deductions. Such deductions might be disallowed to the individual in whole
or in part and might result in such holder being taxed on an amount of income
that exceeds the amount of cash actually distributed to such holder over the
life of the Trust.

The Trust intends to make all tax calculations relating to income and
allocations to Certificate Owners on an aggregate basis. If the IRS were to
require that such calculations be made separately for each Receivable, the
Trust might be required to incur additional expense but it is believed that
there would not be a material adverse effect on Certificate Owners.

Discount and Premium. It is believed that the Receivables were not
issued with OID, and, therefore, the Trust should not have OID income.
However, the purchase price paid by the Trust for the Receivables may be
greater or less than the remaining principal balance of the Receivables at
the time of purchase. If so, the Receivables will have been acquired at a
premium or discount, as the case may be. (As indicated above, the Trust will
make this calculation on an aggregate basis, but might be required to
recompute it on a Receivable-by-Receivable basis.)

If the Trust acquires the Receivables at a market discount or premium,
the Trust will elect to include any such discount in income currently as it
accrues over the life of the Receivables or to offset any such premium
against interest
income on the Receivables. As indicated above, a portion of such market
discount income or premium deduction may be allocated to Certificate Owners.

Section 708 Termination. Under Section 708 of the Code, the Trust will
be deemed to terminate for federal income tax purposes if 50% or more of the
capital and profits interests in the Trust are sold or exchanged within a 12-
month period. If such a termination occurs, the Trust will be considered to
distribute its assets to the partners, who would then be treated as
recontributing those assets to the Trust, as a new partnership. The Trust
will not comply with certain technical requirements that might apply when
such a constructive termination occurs. As a result, the Trust may be
subject to certain tax penalties and may incur additional expenses if it is
required to comply with those requirements. Furthermore, the Trust might not
be able to comply due to lack of data.

Disposition of Certificates. Generally, capital gain or loss will be
recognized on a sale of Certificates in an amount equal to the difference
between the amount realized and the seller's tax basis in the Certificates
sold. A Certificate Owner's tax basis in a Certificate will generally equal
the holder's cost increased by the holder's share of Trust income (includible
in income) and decreased by any distributions received with respect to such
Certificate. In addition, both the tax basis in the Certificates and the
amount realized on a sale of a Certificate would include the holder's share
of the Notes and other liabilities of the Trust. A holder acquiring
Certificates at different prices may be required to maintain a single
aggregate adjusted tax basis in such Certificates, and, upon sale or other
disposition of some of the Certificates, allocate a portion of such aggregate
tax basis to the Certificates sold (rather than maintaining a separate tax
basis in each Certificate for purposes of computing gain or loss on a sale
of that Certificate).

Any gain on the sale of a Certificate attributable to the holder's share
of unrecognized accrued market discount on the Receivables would generally
be treated as ordinary income to the holder and would give rise to special
tax reporting requirements. The Trust does not expect to have any other
assets that would give rise to such special reporting requirements. Thus,
to avoid those special reporting requirements, the Trust will elect to
include market discount in income as it accrues.

If a Certificate Owner is required to recognize an aggregate amount of
income (not including income attributable to disallowed itemized deductions
described above) over the life of the Certificates that exceeds the aggregate
cash distributions with respect thereto, such excess will generally give rise
to a capital loss upon the retirement of the Certificates.

Allocations Between Transferors and Transferees. In general, the
Trust's taxable income and losses will be determined monthly and the tax
items for a particular calendar month will be apportioned among the
Certificate Owners in proportion to the principal amount of Certificates
owned by them as of the close of the last day of such month. As a result,
a holder purchasing Certificates may be allocated tax items (which will
affect its tax liability and tax basis) attributable to periods before the
actual transaction.

The use of such a monthly convention may not be permitted by existing
regulations. If a monthly convention is not allowed (or only applies to
transfers of less than all of the partner's interest), taxable income or
losses of the Trust might be reallocated among the Certificate Owners. The
Seller is authorized to revise the Trust's method of allocation between
transferors and transferees to conform to a method permitted by future
regulations.

Section 754 Election. In the event that a Certificate Owner sells its
Certificates at a profit (loss), the purchasing Certificate Owner will have
a higher (lower) basis in the Certificates than the selling Certificate Owner
had. The tax basis of the Trust's assets will not be adjusted to reflect
that higher (or lower) basis unless the Trust were to file an election under
Section 754 of the Code. In order to avoid the administrative complexities
that would be involved in keeping accurate accounting records, as well as
potentially onerous information reporting requirements, the Trust will not
make such election. As a result, Certificate Owners might be allocated a
greater or lesser amount of Trust income than would be appropriate based on
their own purchase price for Certificates.

Administrative Matters. The Trustee is required to keep or have kept
complete and accurate books of the Trust. Such books will be maintained for
financial reporting and tax purposes on an accrual basis and the fiscal year
of the Trust will be the calendar year. The Trustee will file a partnership
information return (IRS Form 1065) with the IRS for each taxable year of the
Trust and will report each Certificate Owner's allocable share of items of
Trust income and expense to holders and the IRS on Schedule K-1. The Trust
will provide the Schedule K-1 information to nominees that fail to provide
the Trust with the information statement described below and such nominees
will be required to forward such information to the beneficial owners of the
Certificates. Generally, holders must file tax returns that are consistent
with the information return filed by the Trust or be subject to penalties
unless the holder notifies the IRS of all such inconsistencies.

Under Section 6031 of the Code, any person that holds Certificates as
a nominee at any time during a calendar year is required to furnish the Trust
with a statement containing certain information on the nominee, the
beneficial owners and the Certificates so held. Such information includes
(i) the name, address and taxpayer identification number of the nominee and
(ii) as to each beneficial owner (x) the name, address and identification
number of such person, (y) whether such person is a United States person, a
tax-exempt entity or a foreign government, an international organization, or
any wholly owned agency or instrumentality of either of the foregoing, and
(z) certain information on Certificates that were held, bought or sold on
behalf of such person throughout the year. In addition, brokers and
financial institutions that hold Certificates through a nominee are required
to furnish directly to the Trust information as to themselves and their
ownership of Certificates. A clearing agency registered under Section 17A
of the Exchange Act is not required to furnish any such information statement
to the Trust. The information referred to above for any calendar year must
be furnished to the Trust on or before the following January 31. Nominees,
brokers and financial institutions that fail to provide the Trust with the
information described above may be subject to penalties.

The Seller will be designated as the tax matters partner in the related
Trust Agreement and, as such, will be responsible for representing the
Certificate Owners in any dispute with the IRS. The Code provides for
administrative examination of a partnership as if the partnership were a
separate and distinct taxpayer. Generally, the statute of limitations for
partnership items does not expire before three years after the date on which
the partnership information return is filed. Any adverse determination
following an audit of the return of the Trust by the appropriate taxing
authorities could result in an adjustment of the returns of the Certificate
Owners, and, under certain circumstances, a Certificate Owner may be
precluded from separately litigating a proposed adjustment to the items of
the Trust. An adjustment could also result in an audit of a Certificate
Owner's returns and adjustments of items not related to the income and losses
of the Trust.

Tax Consequences to Foreign Certificate Owners. It is not clear whether
the Trust would be considered to be engaged in a trade or business in the
United States for purposes of federal withholding taxes with respect to non-
U.S. persons because there is no clear authority dealing with that issue
under facts substantially similar to those described herein. Although it is
not expected that the Trust would be engaged in a trade or business in the
United States for such purposes, the Trust will withhold as if it were so
engaged in order to protect the Trust from possible adverse consequences of
a failure to withhold. The Trust expects to withhold on the portion of its
taxable income that is allocable to foreign Certificate Owners pursuant to
Section 1446 of the Code, as if such income were effectively connected to a
U.S. trade or business, at a rate of 35% for foreign holders that are
taxable as corporations and 39.6% for all other foreign holders. Subsequent
adoption of Treasury regulations or the issuance of other administrative
pronouncements may require the Trust to change its withholding procedures.
In determining a holder's withholding status, the Trust may rely on IRS Form
W-8, IRS Form W-9 or the holder's certification of nonforeign status signed
under penalties of perjury.

Each foreign holder might be required to file a U.S. individual or
corporate income tax return (including, in the case of a corporation, the
branch profits tax) on its share of the Trust's income. Each foreign holder
must obtain a taxpayer identification number from the IRS and submit that
number to the Trust on Form W-8 in order to assure appropriate crediting of
the taxes withheld. A foreign holder generally would be entitled to file
with the IRS a claim for refund with respect to taxes withheld by the Trust,
taking the position that no taxes were due because the Trust was not engaged
in a U.S. trade or business. However, interest payments made (or accrued)
to a Certificate Owner who is a foreign person generally will be considered
guaranteed payments to the extent such payments are determined without regard
to the income of the Trust. If these interest payments are properly
characterized as guaranteed payments, then the interest will not be
considered "portfolio interest." As a result, Certificate Owners will be
subject to United States federal income tax and withholding tax at a rate of
30 percent, unless reduced or eliminated pursuant to an applicable treaty.
In such case, a foreign holder would only be entitled to claim a refund for
that portion of the taxes in excess of the taxes that should be withheld with
respect to the guaranteed payments.

Backup Withholding. Distributions made on the Certificates and proceeds
from the sale of the Certificates will be subject to a "backup" withholding
tax of 31% if, in general, the Certificate Owner fails to comply with certain
identification procedures, unless the holder is an exempt recipient under
applicable provisions of the Code.

GRANTOR TRUSTS
TAX CHARACTERIZATION OF GRANTOR TRUSTS

If a partnership election is not made, Federal Tax Counsel will deliver
its opinion that the Trust will not be classified as an association taxable
as a corporation and that such Trust will be classified as a grantor trust
under subpart E, Part I of subchapter J of the Code. In this case,
beneficial owners of Certificates (referred to herein as "Grantor Trust
Certificate Owners") will be treated for federal income tax purposes as
owners of a portion of the Trust's assets as described below. The
Certificates issued by a Trust that is treated as a grantor trust are
referred to herein as "Grantor Trust Certificates".

Characterization. Each Grantor Trust Certificate Owner will be treated
as the owner of a pro rata undivided interest in the interest and principal
portions of the Trust represented by the Grantor Trust Certificates and will
be considered
the equitable owner of a pro rata undivided interest in each of the
Receivables and any other assets in the Trust. Any amounts received by a
Grantor Trust Certificate Owner in lieu of amounts due with respect to any
Receivable or other asset in the Trust because of a default or delinquency
in payment will be treated for federal income tax purposes as having the same
character as the payments they replace.

Each Grantor Trust Certificate Owner will be required to report on its
federal income tax return in accordance with such Grantor Trust Certificate
Owner's method of accounting its pro rata share of the entire income from the
Receivables and any other assets in the Trust represented by Grantor Trust
Certificates, including interest, OID, if any, prepayment fees, assumption
fees, any gain recognized upon an assumption and late payment charges
received by the Servicer. Under Sections 162 or 212 each Grantor Trust
Certificate Owner will be entitled to deduct its pro rata share of servicing
fees, prepayment fees, assumption fees, any loss recognized upon an
assumption and late payment charges retained by the Servicer, provided that
such amounts are reasonable compensation for services rendered to the Trust.
Grantor Trust Certificate Owners that are individuals, estates or trusts will
be entitled to deduct their share of expenses only to the extent such
expenses plus all other Section 212 expenses exceed two percent of its
adjusted gross income. A Grantor Trust Certificate Owner using the cash
method of accounting must take into account its pro rata share of income and
deductions as and when collected by or paid to the Servicer. A Grantor Trust
Certificate Owner using an accrual method of accounting must take into
account its pro rata share of income and deductions as they become due or are
paid to the Servicer, whichever is earlier. If the servicing fees paid to
the Servicer are deemed to exceed reasonable servicing compensation, the
amount of such excess could be considered as an ownership interest retained
by the Servicer (or any person to whom the Servicer assigned for value all
or a portion of the servicing fees) in a portion of the interest payments on
the Receivables. The Receivables would then be subject to the "coupon
stripping" rules of the Code discussed below.

Premium. The price paid for a Grantor Trust Certificate by a holder
will be allocated to such holder's undivided interest in each asset of the
Trust based on such asset's relative fair market value, so that such holder's
undivided interest in each asset will have its own tax basis. A Grantor
Trust Certificate Owner that acquires an interest in Receivables or
Receivables Backed Assets at a premium may elect to amortize such premium
under a constant interest method. Amortizable bond premium will be treated
as an offset to interest income on such Grantor Trust Certificate. The basis
for such Grantor Trust Certificate will be reduced to the extent that
amortizable premium is applied to offset interest payments. It is not clear
whether a reasonable prepayment assumption should be used in computing
amortization of premium allowable under Section 171. A Grantor Trust
Certificate Owner that makes this election for a Grantor Trust Certificate
that is acquired at a premium will be deemed to have made an election to
amortize bond premium with respect to all debt instruments having amortizable
bond premium that such Grantor Trust Certificate Owner acquires during the
year of the election or thereafter.

If a premium is not subject to amortization using a reasonable
prepayment assumption, the holder of a Grantor Trust Certificate acquired at
a premium should recognize a loss if a Receivable or Receivables Backed Asset
prepays in full, equal to the difference between the portion of the prepaid
principal amount of such asset that is allocable to the Grantor Trust
Certificate and the portion of the adjusted basis of the Grantor Trust
Certificate that is allocable to such asset. If a reasonable prepayment
assumption is used to amortize such premium, it appears that such a loss
would be available, if at all, only if prepayments have occurred at a rate
faster than the reasonable assumed prepayment rate. It is not clear whether
any other adjustments would be required to reflect
differences between an assumed prepayment rate and the actual rate of
prepayments.

STRIPPED BONDS AND STRIPPED COUPONS

Although the tax treatment of stripped bonds is not entirely clear,
based on recent guidance by the IRS, each purchaser of a Grantor Trust
Certificate will be treated as the purchaser of a stripped bond which
generally should be treated as a single debt instrument issued on the day it
is purchased for purposes of calculating any original issue discount.
Generally, under recently issued Treasury regulations (the "Section 1286
Treasury Regulations"), if the discount on a stripped bond is larger than a
de minimis amount (as calculated for purposes of the OID rules of the Code)
such stripped bond will be considered to have been issued with OID. See "-
Original Issue Discount" below. Based on the preamble to the Section 1286
Treasury Regulations, Federal Tax Counsel is of the opinion that, although
the matter is not entirely clear, the interest income on the Certificates at
the sum of the Pass Through Rate and the portion of the Servicing Fee Rate
that does not constitute excess servicing will be treated as "qualified
stated interest" within the meaning of the Section 1286 Treasury Regulations
and such income will be so treated in the Trustee's tax information
reporting.

Original Issue Discount. The IRS has stated in published rulings that,
in circumstances similar to those described herein, the special rules of the
Code relating to "original issue discount" (currently Sections 1271 through
1273 and 1275) will be applicable to a Grantor Trust Certificate Owner's
interest in those Receivables or Receivables Backed Assets meeting the
conditions necessary for these sections to apply. Generally, a Grantor Trust
Certificate Owner that acquires an undivided interest in a Receivable or
Receivables Backed Asset issued or acquired with OID must include in gross
income the sum of the "daily portions," as defined below, of the OID on such
asset for each day on which it owns a Certificate, including the date of
purchase but excluding the date of disposition. In the case of an original
Grantor Trust Certificate Owner, the daily portions of OID with respect to
a Receivable or a Receivables Backed Asset generally would be determined as
follows. A calculation will be made of the portion of OID that accrues on
such asset during each successive monthly accrual period (or shorter period
in respect of the date of original issue or the final Distribution Date).
This will be done, in the case of each full monthly accrual period, by adding
(i) the present value of all remaining payments to be received on such asset
under the prepayment assumption used in respect of such assets and (ii) any
payments received during such accrual period, and subtracting from that total
the "adjusted issue price" of such asset at the beginning of such accrual
period. No representation is made that such assets will prepay at any
prepayment assumption. The "adjusted issue price" of a Receivable or
Receivables Backed Asset at the beginning of the first accrual period is its
issue price (as determined for purposes of the OID rules of the Code) and the
"adjusted issue price" of such asset at the beginning of a subsequent accrual
period is the "adjusted issue price" at the beginning of the immediately
preceding accrual period plus the amount of OID allocable to that accrual
period and reduced by the amount of any payment (other than "qualified stated
interest") made at the end of or during that accrual period. The OID
accruing during such accrual period will then be divided by the number of
days in the period to determine the daily portion of OID for each day in the
period. With respect to an initial accrual period shorter than a full
monthly accrual period, the daily portions of OID must be determined
according to an appropriate allocation under either an exact or approximate
method set forth in the OID Regulations, or some other reasonable method,
provided that such method is consistent with the method used to determine the
yield to maturity of such assets.

With respect to the Receivables or Receivables Backed Assets, the method
of calculating OID as described above will cause the accrual of OID to either
increase or decrease (but never below zero) in any given accrual period to
reflect the fact that prepayments are occurring at a faster or slower rate
than the prepayment assumption used in respect of such assets. Subsequent
purchasers that purchase such assets at more than a de minimis discount
should consult their tax advisors with respect to the proper method to accrue
such OID.

Market Discount. A Grantor Trust Certificate Owner that acquires an
undivided interest in Receivables or Receivables Backed Assets may be subject
to the market discount rules of Sections 1276 through 1278 to the extent an
undivided interest in a Receivable or Receivables Backed Asset is considered
or to have been purchased at a "market discount." Generally, the amount of
market discount is equal to the excess of the portion of the principal amount
of such asset allocable to such holder's undivided interest over such
holder's tax basis in such interest. Market discount with respect to a
Grantor Trust Certificate will be considered to be zero if the amount
allocable to the Grantor Trust Certificate is less than 0.25% of the Grantor
Trust Certificate's stated redemption price at maturity multiplied by the
weighted average maturity remaining after the date of purchase. Treasury
regulations implementing the market discount rules have not yet been issued;
therefore, investors should consult their own tax advisors regarding the
application of these rules and the advisability of making any of the
elections allowed under Code Sections 1276 through 1278.

The Code provides that any principal payment (whether a scheduled
payment or a prepayment) or any gain on disposition of a market discount bond
shall be treated as ordinary income to the extent that it does not exceed the
accrued market discount at the time of such payment. The amount of accrued
market discount for purposes of determining the tax treatment of subsequent
principal payments or dispositions of the market discount bond is to be
reduced by the amount so treated as ordinary income.

The Code also grants the Treasury Department authority to issue
regulations providing for the computation of accrued market discount on debt
instruments, the principal of which is payable in more than one installment.
While the Treasury Department has not yet issued regulations, rules described
in the relevant legislative history will apply. Under those rules, the
holder of a market discount bond may elect to accrue market discount either
on the basis of a constant interest rate or according to one of the following
methods. If a Grantor Trust Certificate is issued with OID, the amount of
market discount that accrues during any accrual period would be equal to the
product of (i) the total remaining market discount and (ii) a fraction, the
numerator of which is the OID accruing during the period and the denominator
of which is the total remaining OID at the beginning of the accrual period.
For Grantor Trust Certificates issued without OID, the amount of market
discount that accrues during a period is equal to the product of (i) the
total remaining market discount and (ii) a fraction, the numerator of which
is the amount of stated interest paid during the accrual period and the
denominator of which is the total amount of stated interest remaining to be
paid at the beginning of the accrual period. For purposes of calculating
market discount under any of the above methods in the case of instruments
(such as the Grantor Trust Certificates) that provide for payments that may
be accelerated by reason of prepayments of other obligations securing such
instruments, the same prepayment assumption applicable to calculating the
accrual of OID will apply. Because the regulations described above have not
been issued, it is impossible to predict what effect those regulations might
have on the tax treatment of a Grantor Trust Certificate purchased at a
discount or premium in the secondary market.

A holder who acquired a Grantor Trust Certificate at a market discount
also may be required to defer a portion of its interest deductions for the
taxable year attributable to any indebtedness incurred or continued to
purchase or carry
such Grantor Trust Certificate purchased with market discount. For these
purposes, the de minimis rule referred above applies. Any such deferred
interest expense would not exceed the market discount that accrues during
such taxable year and is, in general, allowed as a deduction not later than
the year in which such market discount is includible in income. If such
holder elects to include market discount in income currently as it accrues
on all market discount instruments acquired by such holder in that taxable
year or thereafter, the interest deferral rule described above will not
apply.

Premium. To the extent a Grantor Trust Certificate Owner is considered
to have purchased an undivided interest in a Receivable or Receivables Backed
Asset for an amount that is greater than its stated redemption price at
maturity of such asset, such Grantor Trust Certificate Owner will be
considered to have purchased the such asset with "amortizable bond premium"
equal in amount to such excess. A Grantor Trust Certificate Owner (who does
not hold the Certificate for sale to customers or in inventory) may elect
under Section 171 of the Code to amortize such premium. Under the Code,
premium is allocated among the interest payments on the assets to which it
relates and is considered as an offset against (and thus a reduction of) such
interest payments. With certain exceptions, such an election would apply to
all debt instruments held or subsequently acquired by the electing holder.
Absent such an election, the premium will be deductible as an ordinary loss
only upon disposition of the Certificate or pro rata as principal is paid on
such assets.

Election to Treat All Interest as OID. The OID regulations permit a
Grantor Trust Certificate Owner to elect to accrue all interest, discount
(including de minimis market or original issue discount) and premium in
income as interest, based on a constant yield method. If such an election
were to be made with respect to a Grantor Trust Certificate with market
discount, the Certificate Owner would be deemed to have made an election to
include in income currently market discount with respect to all other debt
instruments having market discount that such Grantor Trust Certificate Owner
acquires during the year of the election or thereafter. Similarly, a Grantor
Trust Certificate Owner that makes this election for a Grantor Trust
Certificate that is acquired at a premium will be deemed to have made an
election to amortize bond premium with respect to all debt instruments having
amortizable bond premium that such Grantor Trust Certificate Owner owns or
acquires. See "-- Premium" herein. The election to accrue interest,
discount and premium on a constant yield method with respect to a Grantor
Trust Certificate is irrevocable.

Subordinated Certificates. In the event the Trust issues two classes
of Grantor Trust Certificates, one class being a subordinate class and the
other being a senior class (referred to herein as the "Subordinate
Certificates" and "Senior Certificates", respectively) the Trust will be
deemed to have acquired the following assets: (i) the principal portion of
each Receivable or Receivables Backed Asset plus a portion of the interest
due on each such asset (the "Trust Stripped Bond"), and (ii) a portion of the
interest due on each such asset equal to the difference between the pass-
through rate on the Subordinate Certificates and the pass-through rate on the
Senior Certificates, if any, which difference is then multiplied by the
Subordinate Class Percentage (the "Trust Stripped Coupon"). The "Subordinate
Class Percentage" equals the initial aggregate principal amount of the
Subordinate Certificates divided by the sum of the initial aggregate
principal amount of the Subordinate Certificates and the Senior Certificates.
The "Senior Class Percentage" equals the initial aggregate principal amount
of the Senior Certificates divided by the sum of the initial aggregate
principal amount of the Subordinate Certificates and the Senior Certificates.

The Senior Certificateholders in the aggregate will own the Senior Class
Percentage of the Trust Stripped Bond and accordingly each Senior
Certificateholder will be treated as owning its pro rata share of such asset.
The Senior Certificateholders will not own any portion of the Trust Stripped
Coupon. The Subordinate Certificateholders in the aggregate own both the
Subordinate Class Percentage of the Trust Stripped Bond plus 100% of the
Trust Stripped Coupon, if any, and accordingly each Subordinate
Certificateholder will be treated as owning its pro rata share in both such
assets. The Trust Stripped Bond will be treated as a "stripped bond" and the
Trust Stripped Coupon will be treated as "stripped coupons" within the
meaning of Section 1286 of the Code. Because the purchase price paid by each
Subordinate Certificateholder will be allocated between that
Certificateholder's interest in the Trust Stripped Bond and the Trust
Stripped Coupon based on the relative fair market values of each asset on the
date such Subordinate Certificate is purchased, the Trust Stripped Bond may
be issued with original issue discount.

Trust Stripped Bond. Except to the extent modified below, the income
-------------------
of the Trust Stripped Bond represented by a Certificate will be reported in
the same manner as described generally above for holders of Certificates.
The interest income on the Subordinate Certificates at the Senior Certificate
pass-through rate and the portion of the Servicing Fee that does not
constitute excess servicing will be treated as qualified stated interest.

Trust Stripped Coupon. The Trust Stripped Coupon will be treated as a
---------------------
debt instrument with original issued discount equal to the excess of the
total amount payable with respect to such Trust Stripped Coupon (based on the
prepayment assumption used in pricing the Certificates) over the portion of
the purchase price allocated thereto. The sum of the daily portions of
original issue discount on the Trust Stripped Coupon for each day during a
year in which the Subordinate Certificateholder holds the Trust Stripped
Coupon will be included in the Subordinate Certificateholder's income.

Effect of Subordination. If the Subordinate Certificateholders receive
-----------------------
distribution of less than their share of the Trust's receipts of principal
or interest (the "Shortfall Amount") because of the subordination of the
Subordinate Certificates, holders of Subordinate Certificates would probably
be treated for federal income tax purposes as if they had (i) received as
distributions their full share of such receipts, (ii) paid over to the Senior
Certificateholders an amount equal to such Shortfall Amount and (iii)
retained the right to reimbursement of such amounts to the extent such
amounts are otherwise available as a result of collections on the Receivables
or amounts available from a Reserve Account or other form of credit
enhancement, if any.

Under this analysis, (a) Subordinate Certificateholders would be
required to accrue as current income any interest or OID income of the Trust
that was a component of the Shortfall Amount, even though such amount was in
fact paid to the Senior Certificateholders, (b) a loss would only be allowed
to the Subordinate Certificateholders when their right to receive
reimbursement of such Shortfall Amount became worthless (i.e., when it
becomes clear that amount will not be available from any source to reimburse
such loss) and (c) reimbursement of such Shortfall Amount prior to such a
claim of worthlessness would not be taxable income to Subordinate
Certificateholders because such amount was previously included in income.
Those results should not significantly affect the inclusion of income for
Subordinate Certificateholders on the accrual method of accounting, but could
accelerate inclusion of income to Subordinate Certificateholders on the cash
method of accounting by, in effect, placing them on the accrual method.
Moreover, the character and timing of loss deductions is unclear.
Subordinate Certificateholders are strongly urged to consult their own tax
advisors regarding the appropriate timing, amount and character of any losses
sustained with respect to the Subordinate Certificates including any loss
resulting from the failure to recover previously accrued interest or discount
income.

Sale or Exchange of a Grantor Trust Certificate. Sale or exchange of
a Grantor Trust Certificate prior to its maturity will result in gain or loss
equal to the difference, if any, between the amount received and the owner's
adjusted basis in the Grantor Trust Certificate. Such adjusted basis
generally will equal the seller's purchase price for the Grantor Trust
Certificate, increased by the OID included in the seller's gross income with
respect to the Grantor Trust Certificate, and reduced by principal payments
on the Grantor Trust Certificate previously received by the seller. Such
gain or loss will be capital gain or loss to an owner for which a Grantor
Trust Certificate is a "capital asset" within the meaning of Section 1221,
and will be long-term or short-term depending on whether the Grantor Trust
Certificate has been owned for the long-term capital gain holding period
(currently more than one year).

Grantor Trust Certificates will be "evidences of indebtedness" within
the meaning of Section 582(c)(1), so that gain or loss recognized from the
sale of a Grantor Trust Certificate by a bank or a thrift institution to
which such section applies will be treated as ordinary income or loss.

Non-U.S. Persons. Generally, to the extent that a Grantor Trust
Certificate evidences ownership in underlying Receivables that were issued
on or before July 18, 1984, interest or OID paid by the person required to
withhold tax under Section 1441 or 1442 to (i) an owner that is not a U.S.
Person (as defined below) or (ii) a Grantor Trust Certificate Owner holding
on behalf of an owner that is not a U.S. Person will be subject to federal
income tax, collected by withholding, at a rate of 30% or such lower rate as
may be provided for interest by an applicable tax treaty. Accrued OID
recognized by the owner on the sale or exchange of such a Grantor Trust
Certificate also will be subject to federal income tax at the same rate.
Generally, such payments would not be subject to withholding if such Grantor
Trust Certificate Owner complies with certain identification requirements
(including delivery of a statement, signed by the Grantor Trust Certificate
Owner under penalties of perjury, certifying that such Grantor Trust
Certificate Owner is not a U.S. Person and providing the name and address
of such Grantor Trust Certificate Owner).

As used herein, a "U.S. Person" means a citizen or resident of the
United States, a corporation or a partnership organized in or under the laws
of the United States or any political subdivision thereof or an estate or
trust, the income of which from sources outside the United States is
includible in gross income for federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States.

Information Reporting and Backup Withholding. The Servicer will furnish
or make available, within a reasonable time after the end of each calendar
year, to each person who was a Grantor Trust Certificate Owner at any time
during such year, such information as may be deemed necessary or desirable
to assist Grantor Trust Certificate Owners in preparing their federal income
tax returns, or to enable holders to make such information available to
beneficial owners or financial intermediaries that hold Grantor Trust
Certificates as nominees on behalf of beneficial owners. If a holder,
beneficial owner, financial intermediary or other recipient of a payment on
behalf of a beneficial owner fails to supply a certified taxpayer
identification number or if the Secretary of the Treasury determines that
such person has not reported all interest and dividend income required to be
shown on its federal income tax return, 31% backup withholding may be
required with respect to any payments. Any amounts deducted and withheld
from a distribution to a recipient would be allowed as a credit against such
recipient's federal income tax liability.

CERTAIN STATE TAX CONSEQUENCES WITH RESPECT TO OWNER TRUSTS

The activities to be undertaken by the Servicer in servicing and
collecting the Receivables will take place in Illinois. The State of
Illinois imposes a state income tax on corporations, partnerships and other
entities doing business in the State of Illinois. This discussion relates
only to Owner Trusts, and is based upon present provisions of Illinois
statutes and the regulations promulgated thereunder, and applicable judicial
or ruling authority, all of which are subject to change, which change may be
retroactive. No ruling on any of the issues discussed below will be sought
from the Illinois Department of Revenue.

Because of the variation in each state's tax laws based in whole or in
part upon income, it is impossible to predict tax consequences to holders of
Notes and Certificates in all of the state taxing jurisdictions in which they
are already subject to tax. Noteholders and Certificate Owners are urged to
consult their own tax advisors with respect to state tax consequences arising
out of the purchase, ownership and disposition of Notes and Certificates.

For purposes of the following summary, references to the Trust, the
Notes, the Certificates and related terms, parties and documents shall be
deemed to refer, unless otherwise specified herein, to each Owner Trust and
the Notes, Certificates and related terms, parties and documents applicable
to such Trust.

TAX CONSEQUENCES WITH RESPECT TO THE NOTES

It is expected that the General Counsel of the Seller ("Illinois Tax
Counsel") will advise each such Trust that issues Notes that, assuming the
Notes will be treated as debt for federal income tax purposes, the Notes will
be treated as debt for Illinois income tax purposes. Accordingly, Note
Owners not otherwise subject to taxation in Illinois should not become
subject to taxation in Illinois solely because of a holder's ownership of
Notes. However, a Note Owner already subject to Illinois's income tax could
be required to pay additional Illinois tax as a result of the holder's
ownership or disposition of Notes.

TAX CONSEQUENCES WITH RESPECT TO THE CERTIFICATES ISSUED BY AN OWNER TRUST

If the arrangement created by the Trust Agreement is treated as a
partnership (not taxable as a corporation) for federal income tax purposes,
Illinois Tax Counsel will deliver his opinion that the same treatment should
also apply for Illinois tax purposes. In such case, the resulting
constructive partnership should not be treated as doing business in Illinois
but rather should be viewed as a passive holder of investments and, as a
result, should not be subject to Illinois income taxes (which, if applicable,
could possibly result in reduced distributions to Certificate Owners). The
Certificate Owners also should not be subject to Illinois income taxes on
income received through the partnership.

Under current law, Certificate Owners that are nonresidents of Illinois
and are not otherwise subject to Illinois income tax should not be subject
to Illinois income tax on the income from the constructive partnership. In
any event, classification of the arrangement as a "partnership" would not
cause a Certificate Owner not otherwise subject to taxation in Illinois to
pay Illinois tax on income beyond that derived from the Certificates.

If the Certificates are instead treated as ownership interests in an
association taxable as a corporation or a "publicly traded partnership"
taxable as a corporation, then the hypothetical entity should not be subject
to Illinois income taxes (which, if applicable, could result in reduced
distributions to Certificate Owners). A Certificate Owner not otherwise
subject to tax in
Illinois would not become subject to Illinois tax as a result of its mere
ownership of such an interest.

* * *

THE FEDERAL AND STATE TAX DISCUSSIONS SET FORTH ABOVE ARE INCLUDED FOR
GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A
NOTEHOLDER'S OR CERTIFICATE OWNER'S PARTICULAR TAX SITUATION. PROSPECTIVE
PURCHASERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX
CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF NOTES AND
CERTIFICATES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND
OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX
LAWS.

ERISA CONSIDERATIONS

Section 406 of ERISA and Section 4975 of the Code prohibit a pension,
profit-sharing or other employee benefit plan, as well as individual
retirement accounts and certain types of Keogh Plans (each a "Benefit Plan"),
from engaging in certain transactions with persons that are "parties in
interest" under ERISA or "disqualified persons" under the Code with respect
to such Benefit Plan. A violation of these "prohibited transaction" rules
may result in an excise tax or other penalties and liabilities under ERISA
and the Code for such persons.

Certain transactions involving a Trust might be deemed to constitute
prohibited transactions under ERISA and the Code with respect to a Benefit
Plan that purchased Notes or Certificates if assets of the Trust were deemed
to be assets of the Benefit Plan. Under a regulation issued by the United
States Department of Labor (the "Plan Assets Regulation"), the assets of a
Trust would be treated as plan assets of a Benefit Plan for the purposes of
ERISA and the Code only if the Benefit Plan acquired an "equity interest" in
the Trust and none of the exceptions contained in the Plan Assets Regulation
was applicable. An equity interest is defined under the Plan Assets
Regulation as an interest other than an instrument which is treated as
indebtedness under applicable local law and which has no substantial equity
features.

Employee benefit plans that are governmental plans (as defined in
Section 3(32) of ERISA) and certain church plans (as defined in Section 3(33)
of ERISA) are not subject to ERISA requirements.

A plan fiduciary considering the purchase of Securities of a given
series should consult its tax and/or legal advisors regarding whether the
assets of the related Trust would be considered plan assets, the possibility
of exemptive relief from the prohibited transaction rules and other issues
and their potential consequences.

THE NOTES

Unless otherwise specified in the Prospectus Supplement, the Notes of
each series may be purchased by an employee benefit plan (as defined in
Section 3(3) of ERISA) that is subject to the provisions of Title I of ERISA
by a plan described in Section 4975(e)(1) of the Code, including an
individual retirement account (a "Plan"). A fiduciary of the Plan must
determine that the purchase of a Note is consistent with its fiduciary duties
under ERISA and does not result in a nonexempt prohibited transaction (as
defined in Section 3(32) of ERISA) and certain church plans (as defined in
Section 3(33) of ERISA) are not subject to the fiduciary responsibility or
prohibited transaction provisions of ERISA or the Code.

SENIOR CERTIFICATES

Unless otherwise specified in the related Prospectus Supplement, the
following discussion applies only to nonsubordinated Certificates (referred
to herein as "Senior Certificates") issued by a Grantor Trust or an Owner
Trust.

The U.S. Department of Labor has granted to the lead Underwriter named
in the Prospectus Supplement an exemption (the "Exemption") from certain of
the prohibited transaction rules of ERISA with respect to the initial
purchase, the holding and the subsequent resale by Benefit Plans of
certificates representing interests in asset-backed pass-through trusts that
consist of certain receivables, loans and other obligations that meet the
conditions and requirements of the Exemption. The receivables covered by the
Exemption include motor vehicle installment sales contracts such as the
Receivables. The Exemption will apply to the acquisition, holding and resale
of the Senior Certificates by a Benefit Plan, provided that certain
conditions (certain of which are described below) are met.

Among the conditions which must be satisfied for the Exemption to apply
to the Senior Certificates are the following:

(1) The acquisition of the Senior Certificates by a Benefit Plan
is on terms (including the price for the Senior Certificates) that are at
least as favorable to the Benefit Plan as they would be in an arm's length
transaction with an unrelated party;

(2) The rights and interests evidenced by the Senior Certificates
acquired by the Benefit Plan are not subordinated to the rights and interests
evidenced by other certificates of the Trust;

(3) The Senior Certificates acquired by the Benefit Plan have
received a rating at the time of such acquisition that is in one of the three
highest generic rating categories from either Standard & Poor's Corporation,
Moody's Investors Service, Inc., or Duff & Phelps Inc.;

(4) The Trustee is not an affiliate of any other member of the
Restricted Group (as defined below);

(5) The sum of all payments made to the Underwriters in connection
with the distribution of the Senior Certificates represents not more than
reasonable compensation for underwriting the Senior Certificates; the sum of
all payments made to and retained by the Seller pursuant to the sale of the
Contracts to the Trust represents not more than the fair market value of such
Contracts; and the sum of all payments made to and retained by the Servicer
represents not more than reasonable compensation for the Servicer's services
under the Agreement and reimbursement of the Servicer's reasonable expenses
in connection therewith; and

(6) The Benefit Plan investing in the Senior Certificates is an
"accredited investor" as defined in Rule 501 (a)(1) of Regulation D of the
Securities and Exchange Commission under the Securities Act of 1933.

Moreover, the Exemption would provide relief from certain self-
dealing/conflict of interest or prohibited transactions only if, among other
requirements, (i) in the case of the acquisition of Senior Certificates in
connection with the initial issuance, at least fifty (50) percent of the
Senior Certificates are acquired by persons independent of the Restricted
Group (as defined below), (ii) the Benefit Plan's investment in Senior
Certificates does not exceed twenty-five (25) percent of all of the Senior
Certificates outstanding at the time of the acquisition, and
(iii) immediately after the acquisition, no more than twenty-five (25)
percent of the assets of the Benefit Plan are invested
in certificates representing an interest in one or more trusts containing
assets sold or serviced by the same entity. The Exemption does not apply to
Plans sponsored by the Seller, any Underwriter, the Trustee, the Servicer,
any obligor with respect to Contracts included in the Trust constituting more
than five percent of the aggregate unamortized principal balance of the
assets in the Trust, or any affiliate of such parties (the "Restricted
Group").

Unless otherwise specified in the Prospectus Supplement, the Seller
believes that the Exemption will apply to the acquisition and holding by
Benefit Plans of Senior Certificates sold by the Underwriter or Underwriters
named in the Prospectus Supplement and that all conditions of the Exemption
other than those within the control of the investors have been met. In
addition, as of the date hereof, no obligor with respect to Contracts
included in the Trust constitutes more than five percent of the aggregate
unamortized principal balance of the assets of the Trust.

SUBORDINATE CERTIFICATES

Unless otherwise specified in the Prospectus Supplement, the
Certificates issued by Owner Trusts that also issue Notes and Subordinated
Certificates issued by Grantor Trusts may not be purchased by a Plan or by
any entity whose underlying assets include plan assets by reason of a plan's
investment in the entity. Such purchase of an equity interest in the Trust
will result in the assets of the Trust being deemed assets of a Benefit Plan
for the purposes of, ERISA and the Code, and certain transactions involving
the Trust may then be deemed to constitute prohibited transactions under
Section 406 of ERISA and Section 4975 of the Code. A violation of the
"prohibited transaction" rules may result in an excise tax or other penalties
and liabilities under ERISA and the Code for such persons.

By its acceptance of such Certificate, each Certificateholder will be
deemed to have represented and warranted that it is not a Benefit Plan.

If a given series of Certificates may be acquired by a Benefit Plan
because of the application of an exception contained in the Plan Assets
Regulation, such exception will be discussed in the related Prospectus
Supplement.

PLAN OF DISTRIBUTION

On the terms and conditions set forth in an underwriting agreement with
respect to the Notes, if any, of a given series and an underwriting agreement
with respect to the Certificates of such series (collectively, the
"Underwriting Agreements"), the Seller will agree to cause the related Trust
to sell to the underwriters named therein and in the related Prospectus
Supplement, and each of such underwriters will severally agree to purchase,
the principal amount of each class of Notes and Certificates, as the case may
be, of the related series set forth therein and in the related Prospectus
Supplement.

In each of the Underwriting Agreements with respect to any given series
of Securities, the several underwriters will agree, subject to the terms and
conditions set forth therein, to purchase all the Notes and Certificates, as
the case may be, described therein which are offered hereby and by the
related Prospectus Supplement if any of such Notes and Certificates, as the
case may be, are purchased.

Each Prospectus Supplement will either (i) set forth the price at which
each class of Notes and Certificates, as the case may be, being offered
thereby will be offered to the public and any concessions that may be offered
to certain dealers participating in the offering of such Notes and
Certificates or (ii) specify that the related Notes and Certificates, as the
case may be, are to be resold by the underwriters in negotiated transactions
at varying prices to be determined at the time of such sale. After the
initial public offering of any such Notes and Certificates, such public
offering prices and such concessions may be changed.

Each Underwriting Agreement will provide that the Seller will indemnify
the underwriters against certain civil liabilities, including liabilities
under the Securities Act, or contribute to payments the several underwriters
may be required to make in respect thereof.

Each Trust may, from time to time, invest the funds in its Trust
Accounts in Eligible Investments acquired from such underwriters or from the
Seller.

Pursuant to each Underwriting Agreement with respect to a given series
of Securities, the closing of the sale of any class of Securities subject to
such Underwriting Agreement will be conditioned on the closing of the sale
of all other such classes of Securities of that series.

The place and time of delivery for the Securities in respect of which
this Prospectus is delivered will be set forth in the related Prospectus
Supplement.

LEGAL MATTERS

Certain legal matters relating to the Securities of any series will be
passed upon for the related Trust, the Seller, the Servicer and the
Administrator by Sonnenschein Nath & Rosenthal, Chicago, Illinois, and for
the underwriters for such series by Brown & Wood LLP, New York, New York.
Certain federal income tax and other matters will be passed upon for each
Trust by Brown & Wood LLP and certain Illinois state tax and other matters
will be passed upon for each Trust by Sonnenschein Nath & Rosenthal. It is
anticipated that Sonnenschein Nath & Rosenthal will from time to time render
legal services to the Seller, the Servicer and their affiliates.

INDEX OF TERMS

Actuarial Receivables 21
Adjusted Issue Price 57
Administration Agreement 46
Administration Fee 46
Administrator 46
Advance 8
Advances 40
Applicable Trustee 34
APR 9
Base Rate 29
Benefit Plan 62
Calculation Agent 30
Calculation Date 31,32,33
CD Rate 30
CD Rate Determination Date 30
CD Rate Security 30
Cede 17
Certificate Balance 4
Certificate Distribution Account 38
Certificate Owners 52
Certificate Pool Factor 22
Certificateholders 17
Certificates 1
Closing Date 37
Code 50
Collateral Reinvestment Account 1,7
Collection Account 37
Collection Period 39
Commercial Paper Rate 31
Commercial Paper Rate
Determination Date 31
Commercial Paper Rate Security 30
Commission 2
Company 1,3
Composite Quotations 30
Cutoff Date 18
Dealer Agreements 18
Dealers 7,18
Definitive Certificates 34
Definitive Notes 34
Definitive Securities 34
Depository 24
Distribution Date 25,29
DTC's Nominee 18
Early Amortization Event 6
Eligible Deposit Account 39
Eligible Institution 39
Eligible Investments 38
ERISA 10
Events of Default 25
Exemption 62
Federal Funds Rate 31,32
Federal Funds Rate Determination Date 31
Federal Funds Rate Security 30
Federal Tax Counsel 50
Final Scheduled Maturity Date 9
Financed Vehicles 6
First Merchants 3
Fixed Rate Securities 29
Floating Rate Securities 29
Foreign Person 51
FTC Rule 49
Funding Period 4
Grantor Trust 3
Grantor Trust Certificate Owners 56
Grantor Trust Certificates 56
H.15(519) 30
Illinois Tax Counsel 61
Indenture 3
Indenture Trustee 1
Index Maturity 30
Indirect Participants 33
Initial Cutoff Date 6
Initial Pool Balance 46
Initial Receivables 6
Insolvency Event 43
Insolvency Laws 14
Interest Rate 4
Interest Reset Date 30
Interest Reset Period 29
Investment Earnings 39
Investment Income 7
IRS 50
LIBOR 32
LIBOR Business Day 32
LIBOR Determination Date 32
LIBOR Security 30
Master Trust 5
Master Trust Agreement 5
Master Trust New Issuance 19
Money Market Yield 31
Note Distribution Account 38
Noteholders 18,33
Note Owners 50
Note Pool Factor 22
Notes 1
Obligors 18
OID 51
OID Regulations 51
Owner Trust 3
Participants 24,33
Pass Through Rate 4
Payahead Account 38
Payaheads 40
Plan 62
Plan Assets Regulation 62
Pool Balance 23
Pooling and Servicing Agreement 3
Pre-Funded Amount 6
Pre-Funding Account 1
Precomputed Advance 8
Precomputed Receivables 21
Prepayments 16
Prospectus Supplement 1
Purchase Amount 37
Qualified Stated Interest 57
Rating Agencies 17
Ratings Effect 16,20
Receivables 1,6
Receivables Backed Assets 6
Receivables Pool 18
Registration Statement 2
Related Documents 27
Reserve Account 42
Restricted Group 63
Revolving Period 6
Rule of 78's Receivables 21
Rules 34
Sale and Servicing Agreement 6
Schedule of Receivables 37
Section 1286 Treasury Regulations 57
Securities 1
Securities Act 2
Security Owners 33
Securityholders 12,17
Seller 1,3
Senior Certificates 59,62
Senior Class Percentage 59
Servicer 1,3
Servicer Default 43
Servicing Fee 40
Servicing Fee Rate 40
Shortfall Amount 59
Short-Term Note 51
Simple Interest Advance 8
Simple Interest Receivables 21
Spread 29
Spread Multiplier 29
Strip Certificates 5
Strip Notes 4
Subordinate Certificates 59
Subordinate Class Percentage 59
Subsequent Receivables 1,6
Subsequent Transfer Date 12,37
Sum of Periodic Balances 21
Telerate Page 3750 32
Transfer and Servicing Agreements 36
Transferor 1,3
Treasury bills 32
Treasury Rate 32,33
Treasury Rate Determination Date 33
Treasury Rate Security 30
Trust 1
Trustee 1
Trust Accounts 38
Trust Agreement 3
Trust Property 1
Trust Stripped Bond 59
Trust Stripped Coupon 59
UCC 37
Underwriting Agreements 64
U.S. Person 60

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

Expenses in connection with the offering of the Securities being
registered herein are estimated as follows:

SEC registration fee . . . . . . . . . . . . . . . . . . . . $ 344.83
Legal fees and expenses . . . . . . . . . . . . . . . . *
Accounting fees and expenses . . . . . . . . . . . . . . . *
Blue sky fees and expenses . . . . . . . . . . . . . . . . *
Rating agency fees . . . . . . . . . . . . . . . . . . . *
Trustees' fees and expenses . . . . . . . . . . . . . . . *
Printing . . . . . . . . . . . . . . . . . . . . . . . . . *
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . *
Total . . . . . . . . . . . . . . . . . . . . . . . $ *
____________

* To be completed by amendment.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

First Merchants Acceptance Corporation has undertaken in its certificate
of incorporation and bylaws to indemnify, to the maximum extent permitted by
the Delaware General Corporation Law as from time to time amended, any
currently acting or former director, officer, employee and agent of First
Merchants Acceptance Corporation against any and all liabilities incurred in
connection with their services in such capacities.

ITEM 16. EXHIBITS.

1.1 Form of Underwriting Agreement for Owner Trusts*
1.2 Form of Underwriting Agreement for Grantor Trusts*
3.1 Certificate of Incorporation of the Seller*
3.2 Bylaws of the Seller*
4.1 Form of Trust Agreement (including form of Certificates)*
4.2 Form of Pooling and Servicing Agreement (including form of
Certificates)*
4.3 Form of Indenture (including form of Notes)*
5.1 Opinion of Brown & Wood LLP with respect to legality*
8.1 Opinion of Brown & Wood LLP with respect to tax matters*
8.2 Form of Opinion of Sonnenschein Nath & Rosenthal with respect
to tax matters*
10.1 Form of Sale and Servicing Agreement*
10.2 Form of Administration Agreement*
10.3 Form of Receivables Purchase Agreement*
23.1 Consent of Brown & Wood LLP (included in Exhibits 5.1 and 8.1)*
23.2 Consent of Sonnenschein Nath & Rosenthal (included in Exhibit 8.2)*
24.1 Power of Attorney (included on Page II-3)
25.1 Statement of Eligibility and Qualification of Indenture Trustee*
_____________________
* To be filed by amendment.

ITEM 17. UNDERTAKINGS.

The undersigned Registrant hereby undertakes as follows:

(a) To file during any period in which offers or sales are being made,
a post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.

(b) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended (the "Securities Act"), each such post-
effective amendment 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.

(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.

(d) For purposes of determining any liability under the Securities Act,
each filing of the Registrant's annual reports pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement 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.

(e) To provide to the Underwriters at the closing specified in the
Underwriting Agreements certificates in such denominations and registered in
such names as required by the Underwriters to provide prompt delivery to each
purchaser.

(f) Insofar as indemnification for liabilities arising under 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 (the "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.

(g) For purposes of determining any liability under the Securities Act,
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 Registrants 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.

(h) For the purpose of determining any liability under the Securities
Act, 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.

(i) The undersigned registrant hereby undertakes to file an application
for the purpose of determining the eligibility of the Indenture Trustee to
act under subsection (a) of Section 310 of the Trust Indenture Act in
accordance with the rules and regulations prescribed by the Commission under
Section 305(b)(2) of the Trust Indenture Act.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Deerfield, the State of Illinois
on the 2nd day of August, 1996.

FIRST MERCHANTS ACCEPTANCE CORPORATION

By: /s/ Mitchell C. Kahn
----------------------------------------
Name: Mitchell C. Kahn
Title: President and Chief Executive
Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned Directors and
Officers of First Merchants Acceptance Corporation, a Delaware corporation,
hereby constitute and appoint Mitchell C. Kahn and Thomas R. Ehmann, each
with full power of substitution and resubstitution, their true and lawful
attorneys and agents to sign the names of the undersigned Directors and
Officers in the capacities indicated below to the registration statement to
which this Power of Attorney is attached as an exhibit, and all amendments
(including post-effective amendments) and supplements thereto, and all
instruments or documents filed as a part thereof or in connection therewith,
and to file the same, with all exhibits thereto, and all other instruments
or documents in connection therewith, with the Securities and Exchange
Commission; and each of the undersigned hereby ratifies and confirms all that
said attorneys, agents or any of them shall do or cause to be done by virtue
thereof.

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:

<TABLE>
<CAPTION>
<S> <C> <C>
Signature Title Date
/s/ Mitchell C. Kahn President, Chief Executive Officer and Director August 2, 1996
Mitchell C. Kahn (Principal
Executive Officer)
/s/ Thomas R. Ehmann Vice President and Chief Financial Officer, August 2, 1996
Thomas R. Ehmann Assistant
Secretary (Principal Financial Officer and
Principal
Accounting Officer)
/s/ Thomas A. Hiatt Director August 2, 1996
Thomas A. Hiatt
/s/ William N. Plamondon Director August 2, 1996
William N. Plamondon
/s/ Marcy H. Shockey Director August 2, 1996
Marcy H. Shockey
/s/ Richard J. Uhl Director August 2, 1996
Richard J. Uhl
/s/ Solomon A. Weisgal Director August 2, 1996
Solomon A. Weisgal
/s/ Stowe W. Wyant Director August 2, 1996
Stowe W. Wyant
</TABLE>

Registration No. 333-

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

_____________________

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

_____________________

FIRST MERCHANTS AUTO TRUSTS
(Issuer with respect to the Securities)

FIRST MERCHANTS ACCEPTANCE CORPORATION
(Sponsor of the Trusts described herein)
(Exact name of Registrant as specified in its charter)

_____________________

EXHIBIT VOLUME

EXHIBIT INDEX

Exhibit Description
- ------- -----------
Page
- ----

1.1 Form of Underwriting Agreement for Owner Trusts*
1.2 Form of Underwriting Agreement for Grantor Trusts*
3.1 Certificate of Incorporation of the Seller*

3.2 Bylaws of the Seller*
4.1 Form of Trust Agreement (including form of Certificates)*
4.2 Form of Pooling and Servicing Agreement (including form of
Certificates)*
4.3 Form of Indenture (including form of Notes)*
5.1 Opinion of Brown & Wood LLP with respect to legality*
8.1 Opinion of Brown & Wood LLP with respect to tax matters*
8.2 Form of Opinion of Sonnenschein Nath & Rosenthal with respect to tax
matters*
10.1 Form of Sale and Servicing Agreement*
10.2 Form of Administration Agreement*
10.3 Form of Receivables Purchase Agreement*
23.1 Consent of Brown & Wood LLP (included in Exhibits 5.1 and 8.1)*
23.2 Consent of Sonnenschein Nath & Rosenthal (included in Exhibit 8.2)*
24.1 Power of Attorney (included on Page II-3)
25.1 Statement of Eligibility and Qualification of Indenture Trustee*

- -----------------------------------
* To be filed by amendment.