10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2007

Commission file number: 333-126538

TRIAD FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

California (State of Incorporation)	33-0356705 (IRS Employer Identification No)
7711 Center Avenue, Suite 200 Huntington Beach, California	92647 (Zip Code)
(Address of principal executive offices)

(714) 373-8300

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  o Yes     þ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of Acts.  o Yes     þ No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  þ Yes     o No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer o Non-accelerated filer þ Smaller reporting company o

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  o Yes     þ No

As of March 14, 2008, the registrant had 9,069 shares of common stock outstanding all of which were owned by the registrant’s parent Triad Holdings Inc.

Table of Contents

			Page
PART I
	ITEM 1.	BUSINESS		2
	ITEM 1A.	RISK FACTORS		13
	ITEM 1B.	UNRESOLVED STAFF COMMENTS		23
	ITEM 2.	PROPERTIES		23
	ITEM 3.	LEGAL PROCEEDINGS		24
	ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS		24
PART II
	ITEM 5.	MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES		25
	ITEM 6.	SELECTED FINANCIAL DATA		25
	ITEM 7.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		29
	ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		55
	ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA		60
	ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE		91
	ITEM 9A.	CONTROLS AND PROCEDURES		91
	ITEM 9B.	OTHER INFORMATION		91
PART III
	ITEM 10.	DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE		92
	ITEM 11.	EXECUTIVE COMPENSATION		95
	ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS		106
	ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE		107
	ITEM 14.	PRINCIPAL ACCOUNTING FEES AND SERVICES		114
PART IV
	ITEM 15.	EXHIBITS, FINANCIAL STATEMENT SCHEDULES		116
SIGNATURES				118
EXHIBIT 10.2
EXHIBIT 10.3
EXHIBIT 10.4
EXHIBIT 10.8
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32

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Forward-Looking Statements

This annual report on Form 10-K contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Such statements are based on the current beliefs of the Company’s Management as well as assumptions made by and information currently available to Management. All statements other than statements of historical fact included in this annual report, including without limitation, statements under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Business” regarding the Company’s financial position, business strategy and plans and objectives of Management for future operations, are forward-looking statements. When used in this annual report, the words “anticipate,” “believe,” “estimate,” “expect” and “intend” and words or phrases of similar meaning, as they relate to the Company or the Management, are intended to identify forward-looking statements. Although Management believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from Management’s expectations (“cautionary statements”) include, but are not limited to:

•  our ability to make payments of principal and interest on, or refinance, our substantial indebtedness;

•  our reliance on our warehouse and residual facilities, securitization program and credit enhancement arrangements;

•  our ability to generate significant amounts of cash to service our debt and fund our operations;

•  loss of contractual servicing rights;

•  general economic and business conditions, including wholesale auction values and interest rates;

•  our exposure to the risk of increases in defaults and prepayments of contracts purchased and held by us prior to their securitization and the subsequent performance of receivables held in securitization trusts;

•  changes in the delinquency, default and loss rates on the receivables included in each securitization trust;

•  failure to implement our business strategy;

•  the high degree of risk associated with non-prime borrowers;

•  our ability to successfully compete in our industry;

•  our ability to maintain the material licenses and permits required for our operations; and

•  other risks identified in this annual report under the caption “Risk Factors.”

Based upon changing conditions, if any one or more of these risks or uncertainties materialize, or if any underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated, expected or intended. We do not intend to update these forward-looking statements.

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PART I

ITEM 1.   BUSINESS

GENERAL

Triad Financial Corporation (the “Company”) was incorporated as a California corporation on May 19, 1989. We engage primarily in the business of purchasing and servicing automobile retail installment sales contracts originated by automobile dealers located throughout the United States. We also originate automobile loans directly to consumers. In this document, we collectively refer to these retail installment sales contracts and loans as “contracts.” We specialize in providing financing to consumers with limited credit histories, modest incomes or those who have experienced prior credit difficulties, generally referred to as “non-prime” borrowers.

We are a national automobile finance company with more than 18 years experience in the automobile finance industry. We provide financing to consumers for purchases of new and used automobiles through dealer and direct channels. In our dealer channel, we purchase automobile installment contracts from our active network of approximately 4,300 franchised and select independent automobile dealerships located in 37 states. In our direct channel, we provide financing directly to consumers who are referred to us by internet-based consumer finance marketing and finance companies or who contact us directly via our RoadLoans.com website. Our direct lending operations are currently licensed to do business in 47 states. We originated $1,346.5 million, $2,650.3 million and $1,880.2 million of contracts during the years ended December 31, 2007, 2006 and 2005, respectively. We managed a portfolio of approximately $3,868.6 million of contracts at December 31, 2007.

Before we finance any contract, it must pass our underwriting and credit approval process, which is supported and controlled by a centralized computer system that has automated features. The final funding approval for each contract is performed by one of our dedicated and experienced credit officers. Our system incorporates our independently-developed proprietary credit scoring models, which enhance our credit officers’ ability to maximize profitability through risk-based pricing.

We accumulate the contracts we finance until we have a sufficiently large group of contracts that we can subsequently securitize. In a securitization transaction, we sell eligible contracts to a trust, which then issues asset-backed securities that are sold to investors. The proceeds of the securitization are used to repay our warehouse facilities, providing additional funds to originate new contracts. We also service our contracts, both prior to and after securitization, through our servicing group, which performs customer service, contract and payment processing functions and monitors repossessions and remarketing functions.

From June 1999 through April 29, 2005, the Company was a wholly-owned subsidiary of Fairlane Credit, LLC, a wholly-owned subsidiary of Ford Motor Credit Company, or “Ford Credit”.

On April 29, 2005, a newly formed entity, Triad Holdings Inc. and its wholly-owned subsidiary, Triad Acquisition Corp., acquired all of the outstanding capital stock of the Company from Fairlane Credit, LLC, or the “Acquisition”. As part of the Acquisition, Triad Acquisition Corp. was merged with and into Triad Financial Corporation with the Company being the surviving corporation. Triad Holdings Inc. is beneficially owned by Hunter’s Glen/Ford Ltd. and affiliates of Goldman, Sachs & Co. and GTCR Golder Rauner, L.L.C.

In accordance with the guidelines for accounting for business combinations, the purchase price paid by Triad Holdings Inc., plus related purchase accounting adjustments, have been recorded in our financial statements for the period subsequent to April 29, 2005. This has resulted in a new basis of accounting reflecting the fair market value of our assets and liabilities for the “successor” period beginning April 30, 2005. Information for all “predecessor” periods prior to the acquisition are presented using our historical basis of accounting.

Our administrative offices are located at 7711 Center Avenue, Suite 200, Huntington Beach, California 92647 and our telephone number is (714) 373-8300. Our website address is www.triadfinancial.com. All reports filed under the Securities Exchange Act of 1934 are available on our website. Our website and the

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information included therein are not part of this annual report. As used herein, the terms “Company”, “we”, “us” and “our” refer collectively to Triad Financial Corporation.

History of Triad

We were formed in 1989 and originally focused on prime lending and automobile leasing. In 1993, we shifted our focus entirely to non-prime lending. In 1998, we became a subsidiary of ContiFinancial Corporation, a consumer and commercial finance company. In June 1999, we were acquired by a subsidiary of Ford Motor Company. From June 1999 until the Acquisition, we operated independently as a wholly-owned subsidiary of Ford Motor Company. We have grown our total managed receivables from approximately $849.6 million at December 31, 1999 to approximately $3.9 billion at December 31, 2007.

Our Competitive Strengths

We believe we have meaningful competitive advantages that allow us to compete effectively in the non-prime automobile finance market in the United States. Our key competitive strengths are:

Sourcing Customers Through Dealer and Direct Channels.  We originate contracts through both dealer and direct origination channels. Throughout 2007, we purchased contracts indirectly from dealers located in 37 states throughout the country from our operations center in North Richland Hills, Texas. Those aspects of our dealer origination business that require a local market presence are performed by regional and area sales managers and representatives who solicit new dealers and ongoing applications and facilitate communication between dealers and our production teams without requiring us to lease physical office space for these functions. We operate in markets in which we believe we can achieve targeted returns.

Our direct origination activities are centralized in our North Richland Hills, Texas facility and serve consumers in 47 states. We receive a majority of direct applications through referrals from third-party business partners, which are internet-based consumer finance marketing and finance companies. The balance are received through our website, www.RoadLoans.com. We offer consumers financing for use in refinancing an existing contract, purchasing a leased vehicle or purchasing a car from a private party or a franchised dealer, in each case, on terms that are consistent with our dealer program. We launched our direct origination business in 2000 and for the year ended December 31, 2007, 62.0% of all our originations were generated through our direct channel.

Utilizing Proprietary Credit Scoring Models for Risk-Based Pricing.  Our underwriting function utilizes a proprietary custom scorecard, and our Risk Management department continuously studies our performance data to refine our scoring models. They are designed to enable us to tailor each contract’s pricing to a statistical assessment of the underlying credit risk. We created our credit scoring system from our consumer demographic and portfolio performance databases.

Maintaining an Experienced Risk Management Team.  Our risk management team is responsible for monitoring the origination process, supporting management’s initiatives, tracking collateral value trends and pricing to achieve targeted portfolio returns. Our risk management team also provides strategic guidance, manages projects to improve collections and contract performance and develops statistical pricing models and subsequent calibration.

Managing Our Portfolio Through Technology and Best Practices.  Our centralized portfolio management group continuously develops and monitors collection strategies for our contracts in order to improve portfolio performance. We establish goals regarding delinquent accounts on a monthly basis, develop strategic initiatives for the collections processes and actively manage account handling to maximize account collections and reduce operating expenses. All portfolio management services are conducted from our offices in North Richland Hills, Texas.

Developing Significant Funding and Liquidity Sources.  Throughout most of 2007, we had two committed warehouse facilities and two committed residual facilities collectively providing us with ongoing availability to borrow up to $1,500.0 million in the aggregate, subject to borrowing base limitations and renewal. On October 26, 2007, the Company’s $750.0 million warehouse and residual facilities with Goldman

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Sachs Mortgage Company, due October 2007, were paid off. On January 10, 2008, we entered into a warehouse facility with Barclays Bank PLC. This facility provides up to $500.0 million of funding for automobile retail installment sales contract receivables originated or purchased by us.

Since August 2002, we have securitized $10.9 billion of contracts in one private and eleven public offerings of asset-backed securities. We securitized $847.1 million of receivables in May 2007 and $670.4 million of receivables in November 2007.

Based on our anticipated level of originations, we believe our cash flow from operations, available cash and available borrowings under our warehouse and residual facilities will provide us with sufficient liquidity to fund contract originations on an interim basis until a sufficient amount of receivables can be pooled together for subsequent securitizations. However, the unprecedented disruptions that we have been experiencing in the asset-backed securitization markets, particularly those involving non-prime and sub-prime borrowers, may require us to adjust our origination goals.

Our Business Strategy

Our goals are to maximize profitability through risk-based pricing and measured growth and create superior relationships with dealers and other business partners. To accomplish these objectives, we employ the following strategies:

Disciplined Growth in Dealer and Direct Channels.  We plan to continue to pursue originations of contracts that meet our underwriting standards and profitability targets in both our dealer and direct channels.

•  Dealer Channel.  The overall slowdown in the market, coupled with the initiatives we undertook in 2007 to provide better accessibility to our dealer customers, provide us with an opportunity to significantly increase the credit quality of the contracts we purchase. Although we decreased our overall dealer base throughout 2007, we were able to maintain a steady level of production among borrowers who appear to have better credit characteristics. We plan to continue to expand on this initiative, and selectively enroll new dealers who prefer this hands-on approach.

•  Direct Channel.  As the awareness and growth of the internet increases, we believe that the credit applicants will use the internet with increasing frequency in the selection of auto finance providers. In 2007, we increased our marketing efforts to enhance the brand awareness of our direct lending brand, www.RoadLoans.com, through media campaigns and sponsorship of a NASCAR team. We have expanded this relationship in 2008, with a goal of increasing volume from applications received directly through our website, www.RoadLoans.com, as well as volume from repeat RoadLoans customers. We will continue to evaluate our relationships with our business partners, as we look to maintain and strengthen relationships with those who provide us with a steady stream of qualified applicants.

Enhancement of Scoring Models with New Data.  We will continue to review and enhance our proprietary credit scoring models on an ongoing basis by validating our proprietary scorecards through the comparison of actual versus projected performance by score and incorporating data we derive in our lending business. We plan to update our scorecards periodically based on this new information and our correlations relating to receivables performance in an effort to effectively manage our contract origination processes and manage our credit risk. We have derived our proprietary scorecards independently over time and will continue to refine them. Based in part on enhancements to our credit scoring models implemented in December 2001, we have decreased our overall net charge-offs as a percentage of average total managed receivables from 8.6% in 2002, to 6.1% in 2005 and 5.8% in 2006. Net charge-offs as a percentage of total managed receivables increased to 8.0% in 2007 due to higher than expected credit losses on receivables originated after the acquisition. We introduced our third generation scorecard for our dealer channel in December 2005 and our first direct channel scorecard in January 2007. These scorecards were created based on our consumer demographic and portfolio performance databases. While we employ a credit scoring system in the credit approval process, credit scoring does not eliminate credit risk. Other factors, including adverse determinations in evaluating contracts for purchase and national or regional economic conditions could negatively affect the credit quality of our receivables portfolio.

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Portfolio and Account Management Improvement.  We continue to develop and implement enhancements to our collection process and improve information reporting to management and staff with the objective of operating efficiently while continuing to improve our contract performance. These enhancements include implementing and refining automatic dialer functionality to increase the effectiveness of calls to delinquent customers, adding call optimization capabilities to increase the probability of reaching delinquent customers when called. In 2006, we began utilizing new credit scorecards with statistically-assessed behavioral scoring information to project the relative probability that individual accounts will default, which gave us the ability to devote additional resources to those accounts.

Diversification of Funding Sources Throughout most of 2007, we relied on two warehouse facilities and two residual facilities, with aggregate commitments to fund up to $1,500.0 million, subject to borrowing base limitations. On October 26, 2007, the Company’s $750.0 million warehouse and residual facilities with Goldman Sachs Mortgage Company, due October 2007, were paid off. On January 10, 2008, we entered into a warehouse facility with Barclays Bank PLC. This facility provides up to $500.0 million of funding for automobile retail installment sales contract receivables originated or purchased by us. Our warehouse facility with Barclays and our warehouse and residual facility with Citigroup Global Markets Realty Corp. have multi-year terms and staggered maturity dates to enable us to maintain liquidity over time. We plan to continue to seek out additional providers of financial guaranty insurance in our securitization transactions and will continue to explore other forms of securitization financing, including transactions structured without reliance on financial guaranty insurance.

Industry Overview

General.  The non-prime automobile finance industry is very competitive. The automobile finance market is highly fragmented and is served by a variety of financial entities, including captive finance affiliates of major automotive manufacturers, banks, thrifts, credit unions and independent finance companies. Providers of automobile financing have traditionally competed on the basis of interest rates charged, the quality of credit accepted, the flexibility of contract terms offered and the quality of service provided to dealers and customers. In seeking to establish ourselves as one of the principal financing sources at the dealers we serve, we compete predominantly on the basis of our high level of service and strong dealer relationships and by offering flexible contract terms. In our direct channel, our competitive strengths are our prompt response times to all applicants, regardless of source, and our willingness to extend credit to online applicants who might not qualify for direct loans from more traditional financing sources. There can be no assurance that we will be able to compete successfully in this market or against our competitors.

Market Characteristics.  The non-prime automobile finance industry has certain characteristics which affect a finance company’s strategy, including the following:

•  Centralized Operations Serving Diverse Markets.  Contract performance in the non-prime automobile finance market varies regionally depending on each region’s economic vitality. To achieve economies of scale, some automobile finance companies have centralized origination and collections operations and utilize technology, proprietary performance data and third-party databases to effectively determine risk levels and recommend best practice solutions.

•  Lenders Compete on the Basis of Price and Service.  Providers of automobile financing have traditionally competed on the basis of interest rates charged, the quality of credit accepted, the flexibility of contract terms offered and the quality of service provided to dealers and customers. In order to compete effectively on a national scale, lenders must develop an efficient origination platform by providing incentives to employees to deliver targeted service levels while pricing contracts to achieve targeted returns.

•  Increased Risk of Non-payment or Default.  The rates of delinquencies, defaults, repossessions and losses on contracts with non-prime borrowers are higher than that experienced in the automobile finance industry generally. Underwriting criteria and collection methods are, therefore, tailored to manage the higher risks inherent in contracts to non-prime borrowers.

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•  Need for Significant Funding Capacity.  Providing financing to non-prime borrowers on a national basis requires substantial capital.

Automobile Finance Operations

Target Market

We specialize in non-prime financing to customers who generally would not qualify for traditional financing such as that provided by commercial banks or automobile manufacturers’ captive finance companies. These customers generally have lower than average income, limited credit history, past credit problems, or some combination thereof. Because we serve customers who are unable to meet the credit standards imposed by most traditional automobile financing sources, we generally charge higher interest rates than those charged by traditional financing sources. As we provide financing in a relatively high-risk market, we also expect to sustain a higher level of credit losses than traditional automobile financing sources.

Dealer Channel Marketing.  In our capacity as an indirect sales finance company, we focus our marketing activities on automobile dealerships, primarily manufacturer franchised dealerships. We select these dealers based on the type of vehicles sold and the extent of their non-prime loan activity. We will purchase contracts from non-franchise dealers if we are satisfied with their financial strength and stability. We prefer to finance late-model low-mileage used vehicles and moderately priced new vehicles. Approximately 86% of the retail installment sales contracts we purchased in 2007 were originated by manufacturer franchised dealers and 14% by select independent dealers. During 2007, we purchased retail installment sales contracts from approximately 4,300 dealers. No dealer location accounted for more than 0.3% of the total volume of retail installment sales contracts.

Dealer relationships are actively monitored with the objective of maximizing the volume of credit applications received from the dealer that meet our underwriting standards and profitability objectives. Due to the non-exclusive nature of our relationships with dealerships, the dealerships retain discretion to determine whether to obtain financing for their customers from us or from another source. We employ local sales representatives that manage a territory of dealers. They regularly telephone and visit dealers in their territory to solicit new business and to answer any questions dealers may have regarding our financing programs and capabilities. To increase the effectiveness of these contacts, marketing personnel have access to our management information systems, which detail current information regarding the number of credit applications submitted by a dealership, our responses and the reasons why particular applications were rejected. Dealers that do not consistently meet either our profitability returns or efficiency parameters are often deactivated.

Direct Channel Marketing.  Our direct channel, or “RoadLoans,” marketing initiatives include standard web methods of advertising such as opt-in email, where customers elect to receive email messages from us, search engine optimization and search engine pay-per-click advertising. In addition, we contract with several loan business partners such as LendingTree.com and have contractual relationships with numerous marketing companies similar to LendingTree. We also work with online banking institutions, which refer customers to us whose credit profiles do not meet their credit policies and procedures. We have also been increasing our print, radio and television marketing efforts in order to increase the brand awareness of our direct lending brand, www.RoadLoans.com. In 2007, we undertook a partial sponsorship of a NASCAR team to increase brand awareness among that sports’ spectators.

Underwriting, Purchasing and Originating Contracts

Proprietary Credit Scoring System and Risk-Based Pricing.  We utilize a proprietary credit scoring system to support the credit approval process. The credit scoring system was developed through statistical analysis of our consumer demographic and portfolio databases. Credit scoring is used to differentiate credit applicants and to categorize credit risk in terms of expected default rates, which enables us to evaluate credit applications for approval and tailor contract pricing and structure according to this statistical assessment of credit risk. For example, a consumer with a lower score would indicate a higher probability of default and, therefore, we would either decline the application, or, if approved, compensate for this higher default risk through the structuring and pricing of the transaction.

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Our credit scoring system considers data contained in the customer’s credit application and credit bureau report as well as the structure of the proposed contract and produces a statistical assessment of these attributes. This assessment is used to segregate applicant risk profiles and determine whether the risk is acceptable, as well as our pricing for that risk. Our credit scorecards are validated periodically through the comparison of actual versus projected performance by score.

We endeavor to refine our proprietary scorecards based on new information and identify correlations relating to contract performance. We expect to introduce a new scorecard for use in both channels in mid-2008.

While we employ a credit scoring system in the credit approval process, credit scoring does not eliminate credit risk. Other factors, including adverse determinations in evaluating contracts for purchase and national or regional economic conditions could negatively affect the credit quality of our receivables portfolio.

Dealer Channel Approval Process.  Production personnel have a specific credit authority based upon their experience and historical contract portfolio results as well as established credit scoring parameters. Our application processing includes controls designed to ensure that credit decisions comply with our credit scoring strategies and underwriting policies and procedures.

All of our credit applications are received electronically from dealers and automatically entered into our loan origination system, which accesses a credit bureau report and computes a credit score.

Our underwriting and collateral guidelines, including credit scoring parameters, form the basis for the credit decision. A designated credit officer must approve any exceptions to credit policies. After completion of the credit analysis, an underwriter makes a final decision regarding the application: approval, conditional approval or rejection. A conditional approval is an agreement by us to purchase the contract under certain specific conditions as determined by us. Once a dealer chooses the company as its funding source, it assembles the contract package in accordance with our requirements.

Upon receipt of contract packages, we verify certain applicant income, employment and residency information when required by our credit policies. We also scan the primary contract documentation to create electronic images and forward the originals to our off-site vendor for storage.

The contract processing department reviews the contract packages for proper documentation and regulatory compliance. We attempt to maintain a two-day turn-around time from the date we receive a complete funding package until we purchase the contract from the dealer. All contract purchases are without recourse to the selling dealers. However, the dealer makes certain representations as to the validity of the contract and compliance with certain laws, and indemnifies us against any claims, defenses and set-offs that may be asserted against us because of the acts or omissions of the dealer, among other things. Funding packages with deficiencies are not funded and are returned to the submitting dealer. Pursuant to our agreement with our dealers, a dealer is required to apply for a certificate of title reflecting our first lien security interest in the automobile that was financed. All of our contracts are fully amortizing with substantially equal monthly installments and substantially all of our contracts originated in the dealer channel contain interest rates computed using a simple interest calculation.

Direct Channel Approval Process.  Our direct channel provides customers with financing that may be used to refinance existing vehicle loans, purchase leased vehicles or purchase automobiles from a private party or a franchised dealer. We offer these programs to consumers in most states through our relationships with loan business partners, which are internet-based consumer finance marketing and finance companies that have online lending and application generation sources. We also receive applications through our own website, www.RoadLoans.com.

Consumers complete a credit application online, and submit the application to RoadLoans or one of our business partners via the internet. Upon receipt, we enter application data into our loan origination system, which screens the applicants’ state of residence, stated income and age. Following this initial screening, our loan origination system accesses a credit bureau report and computes a proprietary credit score. An underwriter reviews new applications which meet our minimum score parameters for approval or decline, and we send our decision via email to the applicant, followed by an appropriate adverse action notice if required.

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Our approval email contains the terms of our credit offer, including the amount for which the applicant qualifies.

We mail a fulfillment package to each approved applicant. The applicant then selects a vehicle that meets our program requirements, negotiates the price as if paying with cash, and completes the sale transaction with a RoadLoansChecksm. If all conditions for the loan are met, the seller is authorized to deposit the RoadLoansChecksm for funding.

Upon funding, we acquire a security interest in the vehicle that the borrower purchased with our loan proceeds, the selling dealer completes the necessary documentation to place our name on the title as lien holder, and the seller submits the paperwork to the appropriate government agency to perfect our security interest. In the case of person-to-person purchasing, an agent will complete the title work on behalf of RoadLoans and ensure that the requisite documents are executed. All of our direct contracts are fully amortizing with substantially equal monthly installments and contain interest rates computed using a simple interest calculation. Customers who seek to refinance their existing loans secured by motor vehicles apply through the same sources as those seeking loans to purchase new or used vehicles. The customers who are approved are sent a fulfillment package. They must complete the package and return it to us. We send the payoff check to his/her lender who, upon receipt of the payoff check, releases its lien on the vehicle so that our first lien may be perfected.

Servicing and Collections Procedures

General.  Our servicing responsibilities consist of collecting, processing and posting customer payments, responding to customer inquiries, initiating contact with customers who are delinquent, maintaining our security interest in financed vehicles or other collateral, repossessing and liquidating collateral when necessary and generally monitoring each contract and the related collateral. We service all contracts that we originate and purchase.

Approximately 15 days before a customer’s first payment due date and each month thereafter, we mail the customer a billing statement directing the customer to mail payments to a lockbox bank for deposit in a lockbox account. Payment receipt data is electronically transferred from our lockbox bank to us for posting to our contract accounting system. Payments may also be received directly by us from customers or through third-party vendors, such as Western Union. We perform all of our servicing and collection functions at our North Richland Hills, Texas facility.

In our collections activities, we use a predictive dialing system to make phone calls to customers whose payments are past due. The predictive dialer is a computer-controlled telephone dialing system that simultaneously dials phone numbers of multiple customers from a file of records extracted from our database. Once a live voice responds to the automated dialer’s call, the system automatically transfers the call to a collector and the relevant account information to the collector’s computer screen. The system also tracks and notifies collections management of phone numbers that the system has been unable to reach within a specified number of days, thereby promptly identifying for management all customers who cannot be reached by telephone. By eliminating the time spent on attempting to reach customers, the system gives a single collector the ability to speak with a greater number of customers daily.

As an account becomes more seriously delinquent, it moves to one of our later-stage collection units. The objective of these collectors is to prevent the account from becoming further delinquent. After a scheduled payment on an account becomes between 60 and 90 days contractually delinquent, we typically initiate repossession of the financed vehicle. We may repossess a financed vehicle without regard to the length of payment delinquency if an account is deemed uncollectable, the financed vehicle is deemed to be in danger of being damaged, destroyed or hidden, the customer deals in bad faith or the customer voluntarily surrenders the collateral.

At times, we offer payment extensions to customers who have encountered temporary financial difficulty, hindering their ability to pay as contracted. The collector reviews a customer’s past payment history and assesses the customer’s ability to make future payments. Exceptions to our extension policies and guidelines

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for extensions must be approved by designated personnel. While payment extensions are initiated and approved in the collections department, our portfolio management group determines the total frequency of extensions per month and recommended allocation. For example, seasonal delinquency and payment trends may influence our decision to grant more (or fewer) extensions in a given month. At December 31, 2007, approximately 27.4% of our total managed receivables had received an extension.

Repossessions.  Repossessions are subject to required statutory procedures, which may include one or more customer notifications, a waiting period prior to disposition of the repossessed automobile and return of personal items to the customer. Some jurisdictions provide the customer with reinstatement rights and most provide the borrower with a right to redeem the vehicle. Legal requirements, particularly in the event of bankruptcy, may restrict our ability to repossess or to dispose of the repossessed vehicle. Repossessions must be approved by a collections officer. The repossession assignments are handled by independent repossession firms engaged directly by us or by service companies who maintain relationships with companies who perform repossession work. Upon repossession and after any waiting period, the repossessed automobile is sold at auction. We do not sell any vehicles on a retail basis. The proceeds from the sale of automobiles at auction, together with any other recoveries, are credited against the balance of the contract. Auction proceeds from sale of the repossessed vehicle and other recoveries are usually not sufficient to cover the outstanding balance of the contract, and the resulting deficiency is charged-off. We may pursue collection of deficiencies when appropriate. If the auction proceeds from the sale of the repossessed vehicle exceed the outstanding balance of the contract, a refund is sent to the customer. The amount of the refund is calculated in accordance with the applicable law of the jurisdiction where the auction sale occurred, and generally comprises the amount in excess of the contract’s outstanding balance, less any late fees, accrued interest, auction fees and amounts owed to any junior lienholders.

Charge-Off Policy.  Our policy is to charge off a contract in the month in which the borrower becomes 120 days contractually delinquent if we have not previously repossessed the related vehicle. If a vehicle has been repossessed, and the underlying contract is an owned receivable, we charge off the underlying receivable upon repossession, taking into account the estimated value of our collateral, with a reconciliation upon liquidation. For sold receivables, the debt is charged off upon liquidation of the collateral. The net charge-off represents the difference between the actual net sales proceeds and the amount of the delinquent contract, including accrued interest on our owned receivables. Accrual of finance charge income is suspended on accounts that are more than 30 days contractually delinquent.

Risk Management

Overview.  Our risk management group prepares regular credit indicator packages reviewing portfolio performance at various levels of detail including total company, region, state and dealer. Various daily reports and analytical data also are generated by our management information systems. This information is used to monitor effectiveness of the collection process. Risk management works with operational management in establishing monthly and quarterly performance targets and leads strategic initiatives prioritized to improve business effectiveness. This group also regularly reviews the performance of our credit scoring system and is responsible for the development and enhancement of our credit scorecards.

Our production management group is responsible for monitoring the contract approval process and new account programs, supporting the supervisory role of senior operations management and improving operational efficiencies.

Behavioral Scoring.  We use statistically-based behavioral assessment models to project the relative probability that an individual account will default and to validate the credit scoring system after the contract has aged for a sufficient period of time, generally six months. Default probabilities are calculated for each borrower independent of the credit score. Projected default rates from the behavioral assessment models and credit scoring systems are compared and analyzed to monitor the effectiveness of our credit strategies.

Compliance Audits.  Our internal quality control and internal audit departments conduct regular reviews of contract origination operations, processing and servicing, collections and other functional areas. The primary objective of the reviews is to identify risks and associated controls and measure compliance with our

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written policies and procedures as well as regulatory matters. We perform reviews of compliance with underwriting policies, completeness of contract documentation and applicant data investigation. We distribute written reports to departmental managers and officers for response and follow-up. Our senior executive management team also reviews these results and responses.

Securitization of Receivables

Since August 2002, we have pursued a strategy of securitizing our receivables to diversify our funding, improve liquidity and obtain a cost-effective source of funds for the purchase of additional automobile finance contracts. Prior to the Acquisition, we applied the net proceeds from securitizations to pay down borrowings under our existing credit facility with Ford Credit. Since the Acquisition, we have used the net proceeds from our securitizations to pay down our warehouse facilities, thereby increasing availability thereunder for further contract purchases. Since August 2002, we have securitized over approximately $10.9 billion of automobile receivables.

In our securitizations, we, through wholly-owned subsidiaries, transfer automobile receivables to newly-formed securitization trusts which issue one or more classes of asset-backed securities. The asset-backed securities are, in turn, sold to investors.

We typically arrange for a financial guaranty insurance policy to achieve a high-grade credit rating on the asset-backed securities issued by the securitization trusts. Since August 2002, the financial guaranty insurance policies have been primarily provided by Ambac Assurance Corporation, or “Ambac”, and Financial Security Assurance Inc., or “FSA”, collectively referred to as “Guarantee Insurance Providers”, each of which is a monoline insurer, which insures the payment of principal and interest due on the asset-backed securities. We have limited reimbursement obligations to these Guarantee Insurance Providers; however, credit enhancement requirements, including security interests for the benefit of the insurers of certain restricted cash accounts and subordinated interests in trusts, provide a source of funds to cover shortfalls in collections and to reimburse the insurer for any claims which may be made under the policies issued with respect to our securitizations. There have been no claims under any insurance policies in our securitization transactions.

The credit enhancement requirements for our securitizations include restricted cash accounts that are generally established with an initial deposit. Funds would be withdrawn from the restricted cash accounts to cover any shortfalls in amounts payable on the asset-backed securities. Funds generated from securitization transactions insured by Guarantee Insurance Providers are also available to be withdrawn upon an event of default to reimburse the Guarantee Insurance Providers, as applicable, for draws on their respective financial guaranty insurance policies. We are entitled to receive amounts from the restricted cash accounts to the extent the amounts deposited exceed predetermined required minimum levels.

Each Guarantee Insurance Provider has a security interest in the restricted cash accounts and investments in trust receivables with respect to securitization transactions it has insured. If the security interest is foreclosed upon in the event of a payment by the Guarantee Insurance Provider under one of its insurance policies, or the occurrence of certain material adverse changes in our business, the Guarantee Insurance Provider would control all of the restricted cash accounts, and investments in trust receivables with respect to securitization transactions it has insured. The terms of each insured securitization also provide that, under certain tests relating to delinquencies and losses, cash may be retained in the restricted cash account and not released to us until increased minimum levels of credit enhancement requirements have been reached and maintained.

Regulation

Our operations are subject to regulation, supervision and licensing under various federal, state and local statutes, ordinances and regulations.

In most states in which we operate, a consumer credit regulatory agency regulates and enforces laws relating to consumer lenders and sales finance agencies such as us. Such rules and regulations generally provide for licensing of sales finance agencies and/or direct lenders, limitations on the amount, duration and

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charges, including interest rates, for various categories of contracts, requirements as to the form and content of finance contracts and other documentation, and restrictions on collection practices and creditors’ rights. In certain states, we are subject to periodic examination by state regulatory authorities. Some states in which we operate do not require special licensing or provide extensive regulation of our business.

We are also subject to extensive federal regulation, including the Truth in Lending Act, the Equal Credit Opportunity Act and the Fair Credit Reporting Act. These laws require us to provide certain disclosures to prospective borrowers and protect against discriminatory lending practices and unfair credit practices. The principal disclosures required under the Truth in Lending Act include the terms of repayment, the total finance charge and the annual percentage rate charged on each contract. The Equal Credit Opportunity Act prohibits creditors from discriminating against contract applicants on the basis of, among other factors, race, color, sex, age or marital status. Pursuant to Regulation B promulgated under the Equal Credit Opportunity Act, creditors are required to make certain disclosures regarding consumer rights and advise consumers whose credit applications are not approved of the reasons for the rejection. In addition, the credit scoring system we use must comply with the requirements for such a system as set forth in the Equal Credit Opportunity Act and Regulation B. The Fair Credit Reporting Act requires us to provide certain information to consumers whose credit applications are not approved on the basis of a report obtained from a consumer reporting agency. Additionally, we are subject to the Gramm-Leach-Bliley Act, which requires us to maintain privacy with respect to certain consumer data in our possession and to periodically communicate with consumers on privacy matters. We are also subject to the Servicemembers Civil Relief Act and similar state legislation, which require us to reduce the interest rate charged on each contract to customers who have subsequently joined, enlisted, been inducted or called to active military duty and may restrict the exercise of remedies against such customers.

The dealers who originate automobile finance contracts that we purchase also must comply with both state and federal credit and trade practice statutes and regulations. Failure of the dealers to comply with these statutes and regulations could result in consumers having rights of rescission and other remedies that could have an adverse effect on us.

We believe that we maintain all material licenses and permits required for our current operations and are in substantial compliance with all applicable local, state and federal regulations. There can be no assurance, however, that we will be able to maintain all requisite licenses and permits, and the failure to satisfy those and other regulatory requirements could have a material adverse effect on our operations. Further, the adoption of additional, or the revision of existing, rules and regulations could have a material adverse effect on our business.

Competition

Competition in the field of non-prime automobile finance is intense. The automobile finance market is highly fragmented and is served by a variety of financial entities, including the captive finance affiliates of major automotive manufacturers, banks, thrifts, credit unions and independent finance companies. Many of these competitors have substantially greater financial resources and lower costs of funds than we do. In addition, our competitors often provide financing on terms more favorable to automobile purchasers or dealers than we offer. Many of these competitors also have long-standing relationships with automobile dealerships and may offer dealerships or their customers other forms of financing, including dealer floor plan financing and leasing, which we do not provide. Providers of automobile financing have traditionally competed on the basis of interest rates charged, the quality of credit accepted, the flexibility of contract terms offered and the quality of service provided to dealers and customers. In seeking to establish ourselves as one of the principal financing sources for the dealers and business partners we serve, we compete predominantly on the basis of our high level of service and strong dealer and business partner relationships and by offering flexible contract terms. There can be no assurance that we will be able to compete successfully in this market or against these competitors.

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The Sarbanes-Oxley Act of 2002

We expect to incur significant costs in connection with our compliance with Sarbanes-Oxley, particularly with Section 404 thereof, which requires management to undertake an assessment of the adequacy and effectiveness of our internal controls over financial reporting and requires our auditors to attest to, and report on, management’s assessment and the operating effectiveness of these controls. We are required to be in compliance with the provisions of Section 404 at and for the year ended December 31, 2007 and an auditor attestation will be required at and for the year ended December 31, 2008.

Employees

As of December 31, 2007, we employ approximately 1,200 persons in 24 states. None of our employees are a part of a collective bargaining agreement, and we believe our relationships with our employees are satisfactory.

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ITEM 1A.   RISK FACTORS

Our ability to continue to purchase contracts and to fund our business is dependent on a number of financing sources.

Dependence on Warehouse and Residual Facilities.  We are a finance company that is highly dependent on obtaining financing to originate contracts. We depend on our warehouse and residual facilities to finance our purchase and funding of contracts pending securitization and our working capital needs. At December 31, 2007, our warehouse and residual facilities with Citibank Global Markets Realty Corp. provide for available borrowings of up to an aggregate amount of approximately $750.0 million on an ongoing basis, subject to borrowing base limitations and renewal. At December 31, 2007, we had advances outstanding under our warehouse and residual facilities totaling $334.4 million. On January 10, 2008, we entered into a warehouse facility with Barclays Bank PLC. This facility provides up to $500.0 million of funding for automobile retail installment sales contract receivables originated or purchased by us.

These financing resources may not continue to be available to us beyond their current maturity dates at reasonable terms or at all. The availability of these financing sources depends on factors outside of our control. If we are unable to extend or replace these facilities or arrange warehouse and residual facilities, we will have to curtail contract purchasing and originating activities, which would have a material adverse effect on our financial position, liquidity and results of operations.

Dependence on Securitization Transactions.  Our business depends on our ability to aggregate and sell automobile installment contracts in the form of privately and publicly offered asset-backed securities. These sales generate cash proceeds that allow us to repay amounts borrowed under our warehouse facilities and to finance additional contracts. In addition, historically, our sale of contracts to a securitization trust in preparation for a securitization created an accounting gain-on-sale that became a material part of our reported earnings. Beginning in 2005, we structured our securitizations so that the receivables and related securitization indebtedness would remain on our balance sheet. Changes in our asset-backed securities program could materially adversely affect our earnings or ability to purchase and resell automobile installment contracts on a timely basis. In addition to our change in accounting for securitization transactions, other changes could include a:

•  delay in the completion of a planned securitization;

•  negative market perception of us; and

•  failure of the contracts we intend to sell to conform to financial guaranty or rating agency requirements.

Various factors, both external and internal, may make it difficult for us to achieve our goals for the upcoming year. The past several months have seen unprecedented turmoil in the global credit markets in general, and the asset-backed securitization markets in particular. The Company executed an insured securitization in November 2007, and there have been no subsequent insured, non-prime automobile asset-backed securities issued publicly as of February 29, 2008.

The well-publicized problems involving credit insurance providers may also have an impact on our ability to successfully execute on our 2008 business plan. Recently, AMBAC, Inc., which has provided credit enhancement insurance on three of our seven securitization transactions since May 2005, announced that they would discontinue underwriting certain structured finance businesses, including auto loan securitizations. Those companies that continue to provide credit enhancement insurance may be less likely to do so at the rates and on the terms at which prior transactions were executed in 2006 and early 2007.

Credit losses in our securitized transactions executed in the latter part of 2006 have been greater than those experienced in prior years. The target loss performance ratios on two of these trusts were exceeded in December 2007 and January 2008 respectively, resulting in greater credit enhancement requirements, and a delay in cash distributions to the Company. While these events can be cured, there is no assurance that these loss ratios will not be exceeded in the future.

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Based on the early delinquency and loss performance of our 2006 vintage originations, we slowed production in the 4th quarter of 2006, and continued to scale back our production volume throughout 2007, especially in our dealer channel. As a result, a greater proportion of our 2007 vintage contracts were originated through our direct lending channel, which has historically experienced lower delinquencies and losses than our dealer channel. In addition, we adjusted our pricing in our direct channel to attract more borrowers who had better credit histories than our typical borrower. We believe these changes will result in an improvement in overall credit quality for the 2007 vintage, but there can be no assurance that other macroeconomic factors, such as the rising costs of consumer goods and energy products, will not continue to affect overall pool performance.

Anticipating the possibility that there will be limited accessibility to the securitization markets, we have continued to revise our credit origination strategies. In 2007, we began the process of selectively reducing the number of dealers from which we purchase contracts, and this process has continued in the first quarter of 2008. We have also reduced staff among our sales and underwriting departments, and have made changes to our credit underwriting criteria. In our direct channel, we have ceased accepting on-line applications from some sources, and have implemented similar changes to our credit underwriting criteria.

We believe these changes will enable us to maintain a robust credit originations process in 2008. However, if the asset-backed securities market suffers from further deterioration, or the credit markets do not begin to stabilize and rebound, we may have to make further adjustments to our targeted origination volumes.

Our ability to execute securitization transactions, and the cost of and liquidity obtained from them, is dependent on our ability to obtain financial guaranty insurance policies to support these transactions.

Since 2002, all of our securitizations have utilized credit enhancement in the form of financial guaranty insurance policies provided by Guarantee Insurance Providers. Under these insurance policies, if the securitization trust fails to pay principal or interest on the insured securities when due, then the Guarantee Insurance Providers will be required to pay such amounts. We obtain these insurance policies in order to achieve ratings ranging from A-1+/Prime-1/F1+ to AAA/Aaa/AAA on the insured securities issued in the securitization transactions. These ratings may reduce the costs of securitizations relative to alternative forms of financing available to us and enhance the marketability of these transactions to investors in asset-backed securities. If our future securitizations are not similarly rated our funding costs may be higher. Our insurance providers are not required to insure our future securitizations and their willingness to do so is subject to many factors beyond our control, including concentrations of risk with any given insurance provider, the insurance providers’ own rating considerations, their ability to cede this risk to reinsurers and the performance of the portion of our portfolio for which the insurers have provided insurance.

We anticipate that credit enhancement requirements for future securitizations will be at least equal to our current levels requiring the use of additional liquidity to support our securitization program. A downgrade in any of our Guarantee Insurance Provider’s credit ratings, their withdrawal of credit enhancement, an increase in required credit enhancement levels or the lack of availability of alternative credit enhancements, such as reinsurance or senior subordinated structures, for our securitization program could result in higher interest costs for our future securitizations and larger initial cash deposit requirements. The absence of a financial guaranty insurance policy may also impair the marketability of our securitizations. These events could have a material adverse effect on our financial position, liquidity and results of operations.

We believe that we may be required to utilize securitization structures involving the purchase of a financial guaranty insurance policy in order to execute securitization transactions based on current market conditions. If we are unable to obtain financial guaranty insurance at all or on terms acceptable to us and, as a result, are unable to execute securitization transactions on a regular basis, we would not have sufficient funds to meet our liquidity needs and, in such event, we would be required to revise the scale of our business, including the possible discontinuation of contract origination activities, which would have a material adverse effect on our ability to achieve our business and financial objectives.

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A loss of contractual servicing rights could have a material adverse effect on our business.

As servicer of all our securitized automobile contracts, we are entitled to receive contractual servicing fees. Our base servicing fees are earned at 2.25% per annum on the outstanding balance of contracts securitized and our supplemental servicing fees include fees and charges paid by obligors, such as late fees and extension fees. Each Guarantee Insurance Provider, as guarantor, can terminate our right to act as servicer for the securitizations it has guaranteed upon the occurrence of events defined in the sale and servicing agreements for securitized contracts, such as our bankruptcy or material breach of warranties or covenants, including covenants to maintain a specified level of delinquency, default or loss rate with respect to the receivables included in the applicable securitization trust. At December 31, 2007, no such termination events had occurred with respect to any of the trusts formed by us. We also are entitled to receive servicing fees under our warehouse facilities. The lenders under our warehouse facilities can terminate our right to act as servicer under these facilities upon the occurrence of specified servicer termination events similar to the servicer termination provisions of our securitizations. The termination of any or all of our servicing rights under our securitizations or the warehouse facilities would have a material adverse effect on our financial position, liquidity and results of operations by reducing our pre-tax income by the amount of our servicing fee income. For the year ended December 31, 2007, we received $6.2 million in base servicing fee income and $1.6 million in supplemental servicing fee income from our securitization trusts.

We may not be able to generate sufficient operating cash flows to meet our operating expenses.

Our automobile finance operations require substantial operating cash flows. Operating cash requirements include premiums paid to dealers for acquisition of retail installment contracts, premiums paid to our business partners for referring direct loans to us, expenses incurred in connection with the securitization of receivables, capital expenditures for new technologies, debt service and ongoing operating costs. Our primary sources of operating cash are the excess cash flows received from securitizations, servicing fee income and contracts held by us prior to their securitization. The timing and amount of excess cash flows from securitizations and contracts varies based on a number of factors, including:

•  the rates and amounts of contract delinquencies, defaults and net credit losses;

•  how quickly and at what price repossessed vehicles can be resold;

•  the ages of the contracts in the portfolio;

•  levels of voluntary prepayments; and

•  the terms of our securitizations, which include performance based triggers requiring higher levels of credit enhancements to the extent credit losses or delinquencies exceed certain thresholds.

Any adverse change in these factors could reduce or eliminate excess cash flows to us. Although we currently have positive operating cash flows, we may not continue to generate positive cash flows in the future. Our inability to do so could have a material adverse effect on our financial position, liquidity and results of operations.

Defaults and prepayments on contracts purchased or originated by us could adversely affect our results of operations and cash flows.

Our results of operations, financial condition and liquidity depend, to a material extent, on the performance of contracts purchased and held by us as well as the subsequent performance of receivables sold to securitization trusts. Obligors under contracts acquired or originated by us may default or prepay on the contracts at any time. We bear the full risk of losses resulting from defaults that occur while we own the contracts.

In the event of a default under the contracts we hold, the collateral value of the financed vehicle usually does not cover the outstanding contract balance and costs of recovery. We maintain an allowance for credit losses on contracts held for investment by us, which reflects management’s estimates of inherent losses for these contracts. If the allowance is inadequate, we would recognize as an expense the losses in excess of that

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allowance, and our results of operations could be adversely affected. Under the terms of the securitizations, we are not able to securitize defaulted contracts and contracts greater than 30 days delinquent held by us. Under the terms of our warehouse facilities, we are able to borrow, subject to specified limitations, against contracts greater than 30 days delinquent, but at a lower advance rate.

We also retain a substantial portion of the default and prepayment risk associated with the receivables that were sold pursuant to our securitizations. A large component of the gain historically recognized on these sales and the corresponding assets recorded on our balance sheet are credit enhancement assets which consist of investments in trust receivables and restricted cash. Credit enhancement assets are calculated on the basis of management’s assumptions concerning, among other things, defaults. Actual defaults may vary from management’s assumptions, possibly to a material degree, which could adversely affect the value of our credit enhancement assets, which totaled $27.0 million at December 31, 2007. If the change in assumptions and the impact of the change on the value of the credit enhancement assets were deemed other than temporary, we would record a charge to income. In addition, an increase in defaults would reduce the size of our servicing portfolio, which would reduce our servicing fee income and adversely affect our results of operations and cash flow. Although we believe that we have made reasonable assumptions as to the future cash flows of the various pools of receivables that have been sold in securitization transactions, actual rates of default may differ from those assumed, and other assumptions may be required to be revised upon future events.

Generally, the form of credit enhancement agreement we enter into with Guarantee Insurance Providers in connection with securitization transactions contains specified limits on the delinquency and loss rates on the receivables included in each securitization trust. If, at any measurement date, the delinquency, default or loss rate with respect to any trust were to exceed the specified limits, provisions of the credit enhancement agreement would automatically increase the level of credit enhancement required for that trust, if a waiver were not obtained. During the period in which the specified delinquency and loss rates were exceeded, excess cash flow, if any, from the trust would be used to fund the increased credit enhancement levels instead of being distributed to us, which would have an adverse effect on our cash flow.

At December 31, 2007, the cumulative net loss ratio for the Company’s 2006-C securitization trust exceeded one of its target ratios. As a result, the credit enhancement requirement to maintain cash reserves as a percentage of the portfolio immediately increased from 2% to 3%, resulting in a delay in cash distributions to the Company. This requirement will remain at 3% until the trust is back in compliance with its target for three consecutive months. At January 31, 2008, the cumulative net loss ratio for the Company’s 2006-B securitization trust exceeded one of its target ratios as well. That credit enhancement requirement also immediately increased from 2% to 3%, where it will remain until the trust is back in compliance with its target for three consecutive months. We estimate that $5 million to $20 million of cash otherwise distributable from the trusts will be used to increase credit enhancements for the insurer rather than being released to us. It is possible that the net loss ratios on other securitization trusts may exceed targeted levels, which would result in increased credit enhancement levels on those trusts as well. If this were to occur, and although we believe we have sufficient liquidity, we may be required to decrease contract origination activities, and implement other expense reductions, if securitization distributions are materially decreased for a prolonged period of time.

Failure to implement our business strategy could adversely affect our operations.

Our financial position and results of operations depend on our management’s ability to execute our business strategy. Key factors involved in the execution of our business strategy include:

•  achieving the desired contract purchase volume;

•  continued and successful use of proprietary scoring models for risk assessment and risk-based pricing;

•  the use of sophisticated risk management techniques;

•  continued investment in technology to support operating efficiency and growth; and

•  continued access to significant funding and liquidity sources.

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Our failure or inability to execute any element of our business strategy could materially adversely affect our financial position, liquidity and results of operations.

There is a high degree of risk associated with non-prime borrowers.

We specialize in purchasing and servicing non-prime automobile receivables. Non-prime borrowers are associated with higher-than-average delinquency and default rates. While we believe that we effectively manage these risks with our proprietary credit scoring system, risk-based contract pricing and other underwriting policies and collection methods, these criteria or methods may be ineffective in the future in reducing default risk or properly pricing contracts. In the event that we underestimate the default risk or under-price contracts that we purchase, our financial position, liquidity and results of operations may be adversely affected, possibly to a material degree. While we employ a credit scoring system in the credit approval process, credit scoring does not eliminate credit risk. Adverse determinations in evaluating contracts for purchase could negatively affect the credit quality of our receivables portfolio.

We are subject to general economic conditions beyond our control. Adverse general economic events, including periods of economic weakness, could have a material adverse impact on our business.

During periods of economic slowdown or recession, delinquencies, defaults, repossessions and losses generally increase. These periods also may be accompanied by decreased consumer demand for automobiles and declining values of automobiles securing outstanding contracts, which weakens collateral coverage and increases the amount of a loss in the event of default. Significant increases in the inventory of used automobiles during periods of economic recession may also depress the prices at which repossessed automobiles may be sold or delay the timing of these sales. Because we focus on non-prime borrowers, the actual rates of delinquencies, defaults, repossessions and losses on these contracts are higher than those experienced in the general automobile finance industry and could be more dramatically affected by a general economic downturn. In addition, during an economic slowdown or recession, our servicing costs may increase without a corresponding increase in our servicing fee income. While we seek to manage the higher risk inherent in contracts made to non-prime borrowers through the underwriting criteria and collection methods we employ, these criteria or methods may not afford adequate protection against these risks. Any sustained period of increased delinquencies, defaults, repossessions or losses or increased servicing costs could also adversely affect our financial position, liquidity and results of operations and our ability to enter into future securitizations.

Geographic concentrations of our contracts may adversely affect payments on the contracts.

Adverse economic conditions, natural disasters or other factors affecting any state or region where a high concentration of obligors resides could adversely affect collections on the contracts and increase the delinquency or credit loss rates of our contracts. At December 31, 2007, obligors with respect to approximately 20.3%, 12.8%, 8.0%, 5.5% and 4.9% of our total managed receivables based on the contracts’ remaining principal balances were located in Texas, California, Florida, Georgia, and Illinois respectively. If adverse economic conditions, natural disasters or other factors occur that affect these regions, or if obligors in these regions experience financial difficulties, a significant number of obligors may not be able to pay, may not make timely payments or may be more prone to filing for bankruptcy protection.

In our direct channel, we depend on a number of third parties and the Internet to provide us with applications, and a decline in applications from these sources could result in a decrease in contract originations.

In our direct channel, in addition to originations through our RoadLoans website, we rely on third-party business partners to refer customers to us. Our top three third-party relationships in our direct channel generate approximately 43% of our direct contract originations based on both the number of contracts originated and the dollar amount of contracts originated. Our current business partners may not continue to refer customers to us on current terms or at all, and we may not be able to establish relationships with new business partners on terms acceptable to us. Our inability to maintain our current relationships with these companies or the loss of

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one or more these relationships and our failure or inability to replace those which are lost may result in a decrease in contract originations in our direct channel.

In addition, because of our reliance on the internet to provide us with credit applicants, if the internet were to become less accessible due to increased access fees or concerns about privacy, credit applicants could cease to use it as a source for their automobile financing needs.

Our business is highly seasonal which may cause our results of operations and cash flows to fluctuate from quarter to quarter.

We historically have experienced and expect to continue to experience quarterly fluctuations in our net income and cash flows. We generally experience a decrease in collections in the last two to three months of each year due to consumers’ spending in anticipation of the holiday months and in the first month of the following year due to consumer spending in the previous holiday period. Collections generally tend to increase after income tax refunds are received by our customers. We expect this trend to continue for the foreseeable future. Any decrease in our collections, whether because of general economic conditions, a slowdown in the economy, increased unemployment or other factors, could have a material adverse effect on our business, financial condition and results of operations for the entire year.

Wholesale auction values may impact our profitability.

We sell repossessed automobiles at wholesale auction markets located throughout the United States. Auction proceeds from the sale of repossessed vehicles and other recoveries are usually not sufficient to cover the outstanding balance of the contract, and the resulting deficiency is charged off. Decreased auction proceeds resulting from the depressed prices at which used automobiles may be sold during periods of economic slowdown or recession will result in higher credit losses for us. Furthermore, depressed wholesale prices for used automobiles may result from significant liquidations of rental or fleet inventories or from increased volume of trade-ins due to promotional financing programs offered by new vehicle manufacturers. Our recoveries as a percentage of net charge-offs were 43.2%, 46.7% and 44.6% in 2007, 2006 and 2005, respectively. Our recovery rates may be lower in the future, which could result in higher charge-offs and losses for us.

Our customers may not maintain adequate insurance on our collateral, which could lead to greater losses.

All of our borrowers are required to maintain insurance on their vehicles, either as a matter of state law or pursuant to their contracts, or both. Some borrowers will allow their insurance to lapse from time to time. We have not historically obtained collateral protection insurance on these vehicles, even though most states allow creditors to do so. We have not done this because the cost of such coverage is difficult to recoup from the customers, and the litigation risks involved in maintaining such a program can be significant. Our losses attributable to lapses in insurance coverage have not been material in nature, but there can be no assurance that such losses will remain immaterial.

Our profitability may be directly affected by the level of and fluctuations in interest rates.

Our profitability may be directly affected by the level of and fluctuations in interest rates, which affects the gross interest rate spread we earn on our receivables. As the level of interest rates increases, our gross interest rate spread on new originations will generally decline because the rates charged on the contracts originated are limited by statutory maximums, restricting our opportunity to pass on increased interest costs to consumers. We believe that our profitability and liquidity could be adversely affected during any period of higher interest rates, possibly to a material degree. Fed funds rates decreased during 2007 to 4.25%, a decrease of 1.0% as compared to 2006. The Federal Reserve reduced rates an additional 1.25% in January 2008 and 0.75% in March 2008 pushing the fed funds rate to 2.25%. We monitor the interest rate environment and may employ pre-funding and other hedging strategies, such as interest rate swap agreements, designed to mitigate

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the impact of changes in interest rates. However, pre-funding or other hedging strategies may not mitigate the impact of changes in interest rates.

Our inability to recruit or retain senior management or other qualified personnel could have an adverse impact on our operations.

We depend on the continued services of our senior executive officers. The loss of any key officer could have a material adverse effect on our business, financial condition and results of operations. We do not carry key man insurance for any of our management executives.

Competition to hire personnel possessing the skills and experience we require could contribute to an increase in our employee turnover rate. High turnover or an inability to attract and retain qualified replacement personnel could have an adverse effect on our delinquency, default and net loss rates and, ultimately, our financial condition, results of operations and liquidity.

The auto finance business is highly competitive.

The auto finance business is highly competitive. The automobile finance market is highly fragmented and is served by a variety of financial entities including thrifts, captive auto finance companies owned by major automobile manufacturers, banks, credit unions, savings associations and independent consumer finance companies that conduct business in the geographic regions in which we operate. Many of these competitors have greater financial and marketing resources than we have. On occasion, the captive finance companies provide financing on terms significantly more favorable to auto purchasers than we can offer. For example, the captive finance companies can offer special low interest loan programs as incentives to purchasers of selected models of automobiles manufactured by their respective affiliated manufacturers.

Many of our competitors also have long-standing relationships with automobile dealers and may offer dealers or their customers other forms of financing, including dealer floor plan financing and leasing, which we do not provide. Providers of automobile financing have traditionally competed on the basis of interest rates charged, the quality of credit accepted, the flexibility of contract terms offered and the quality of service provided to dealers and customers. In seeking to establish our position as one of the principal financing sources of the dealers we serve and a leading direct lender, we compete predominantly on the basis of our high level of dealer service and strong dealer and business partner relationships and by offering flexible contract terms. If we are unable to compete successfully in this market or against these competitors our business would be affected adversely.

Regulatory requirements may have a material adverse effect on our business, financial condition or operating results.

Our operations are subject to regulation, supervision and licensing under various federal, state and local statutes, ordinances and regulations.

In most states in which we operate, a consumer credit regulatory agency regulates and enforces laws relating to consumer lenders and sales finance agencies such as us. These rules and regulations generally provide for licensing of sales finance agencies and direct lenders, limitations on the amount, duration and charges, including interest rates, for various categories of contracts, requirements as to the form and content of finance contracts and other documentation, and restrictions on collection practices and creditors’ rights. In certain states, we are subject to periodic examination by state regulatory authorities.

We are also subject to extensive federal regulation, including the Truth in Lending Act, the Equal Credit Opportunity Act and the Fair Credit Reporting Act. These laws require us to provide certain disclosures to prospective borrowers and protect against discriminatory lending practices and unfair credit practices. The principal disclosures required under the Truth in Lending Act include the terms of repayment, the total finance charge and the annual percentage rate charged on each contract. The Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants on the basis of race, color, sex, age or marital status. Pursuant to Regulation B promulgated under the Equal Credit Opportunity Act, creditors are required to make

19

certain disclosures regarding consumer rights and advise consumers whose credit applications are not approved of the reasons for the rejection. In addition, the credit scoring system we use must comply with the requirements for such a system as set forth in the Equal Credit Opportunity Act and Regulation B. The Fair Credit Reporting Act requires us to provide certain information to consumers whose credit applications are not approved on the basis of a report obtained from a consumer reporting agency. Additionally, we are subject to the Gramm-Leach-Bliley Act, which requires us to maintain privacy with respect to certain consumer data in our possession and to periodically communicate with consumers on privacy matters. We are also subject to the Servicemembers Civil Relief Act, and similar state legislation, which require us to reduce the interest rate charged on contracts to customers who have subsequently enlisted, been inducted or called to active military duty and may restrict the exercise of remedies against such customers.

The dealers who originate automobile finance contracts that we purchase also must comply with both state and federal credit and trade practice statutes and regulations. Failure of the dealers to comply with these statutes and regulations could result in consumers having rights of rescission and other remedies that could have an adverse effect on us.

We believe that we maintain all material licenses and permits required for our current operations and are in substantial compliance with all applicable local, state and federal regulations. There can be no assurance; however, that we will be able to maintain all requisite licenses and permits, and the failure to satisfy those and other regulatory requirements could have a material adverse effect on our operations. Further, the adoption of additional, or the revision of existing, rules and regulations could have a material adverse effect on our business.

Various laws and other factors may limit the collection of payments on our contracts and repossession of the vehicles.

State and federal laws, including consumer bankruptcy laws, may prohibit, limit or delay repossession and sale of the vehicles to recover on defaulted automobile contracts. As a result, we may experience delays in receiving payments and suffer losses. Additional factors that may affect our ability to recoup the full amount due on an automobile contract include:

•  our failure to file amendments to or receive certificates of title relating to the vehicles;

•  depreciation of the financed vehicles;

•  damage or loss of any financed vehicle; and

•  the application of federal and state bankruptcy and insolvency laws.

We are parties to litigation matters that could adversely affect our financial condition, results of operations and cash flows.

As a consumer finance company, we are subject to various consumer claims and litigation seeking damages and statutory penalties, based upon, among other things, usury, disclosure inaccuracies, wrongful repossession, wrongful collection procedures, violations of bankruptcy stay provisions, certificate of title disputes, fraud and breach of contract. Some litigation against us could take the form of class action lawsuits by consumers. As the assignee of finance contracts originated by dealers, we may also be named as a co-defendant in lawsuits filed by consumers principally against dealers. The damages and penalties claimed by consumers in these types of matters can be substantial. The relief requested by the plaintiffs varies, but includes requests for compensatory, statutory and punitive damages.

Any adverse resolution of the litigation pending or threatened against us could have a material adverse effect on our financial condition, results of operations or cash flows.

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We may pursue strategic acquisitions and expansion opportunities, which could have an adverse impact on our business.

We may, from time to time, consider acquiring complementary companies or businesses. To do so, we would need to identify suitable acquisition candidates, negotiate acceptable acquisition terms and obtain appropriate financing. Any acquisition that we pursue, whether or not successfully completed, may involve risks, including:

•  the diversion of our capital and our management’s attention from other business issues and opportunities;

•  difficulties in successfully integrating companies that we acquire, including personnel, financial systems and operations;

•  material adverse effects on our operating results, particularly in the fiscal quarters immediately following the acquisition as it is integrated into our operations; and

•  the incurrence of debt and contingent liabilities and impairment charges related to goodwill and other intangible assets, any of which could harm our business and financial condition.

Further, we will need to continue to effectively manage the expansion of our existing operations in order to execute our growth strategy of entering into new markets and expanding in existing markets. Growth may strain our existing resources. It is possible that our management, employees, systems and facilities currently in place may not be adequate to accommodate future growth. In this situation, we will have to improve our operational, financial and management controls, reporting systems and procedures. If we are unable to effectively manage our growth, our operations and financial results may be adversely affected.

Our financial products and services are complex, depend on a myriad of complex networks and technologies and may be subject to software or hardware errors or failures that could lead to an increase in our costs, reduction of our revenues or damage to our reputation.

Our products and services, and the networks and third-party services upon which our financial products and services are based, are complex and may contain undetected errors or may suffer unexpected failures. We are exposed to the risk of failure of our proprietary computer systems, some of which are deployed, operated, monitored and supported by third parties, whom we do not control. We rely on third parties to detect and respond to errors and failures in our proprietary computer systems. We also rely on third parties for software development and system support. We are exposed to the risk of failure of the computer systems that are owned, operated and managed by third parties, whom we do not control.

If we are unable to protect our intellectual property adequately, we may lose a valuable competitive advantage or be forced to incur costly litigation to protect our rights.

Our success depends on developing and protecting our intellectual property, including our proprietary scorecards. We rely on the terms of license agreements, as well as copyright, patent, trademark and trade secret laws to protect our intellectual property. We also rely on other confidentiality and contractual agreements and arrangements with our employees, affiliates, business partners and customers to establish and protect our intellectual property and similar proprietary rights. If we are unable to protect our intellectual property, our operations and financial results may be adversely affected.

Our substantial indebtedness could adversely affect our business and results of operations.

We have a significant amount of indebtedness. At December 31, 2007, we had on a consolidated basis outstanding indebtedness of $3,679.1 million. This level of indebtedness could:

•  make it more difficult for us to meet all our obligations to creditors, who could then require us to, among other things, restructure our indebtedness, sell assets or raise additional debt or equity capital;

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•  require us to dedicate a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for operations and future business opportunities;

•  limit our ability to borrow additional amounts for working capital, capital expenditures, debt service requirements, execution of our growth strategy or general corporate purposes;

•  limit our flexibility in planning for, and reacting to, changes in our business and in our industry, which could make us more vulnerable to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;

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

•  make it more difficult for us to satisfy the obligations of our notes.

Any of the above listed factors could materially adversely affect our business and results of operations.

Our indenture governing our notes and our warehouse and residual facilities restricts our operations.

Our indenture governing our notes restricts our ability to, among other things:

•  sell or transfer assets, other than through warehousing and securitization activities;

•  incur additional debt;

•  repay other debt;

•  pay dividends;

•  make certain investments or acquisitions;

•  repurchase or redeem capital stock;

•  engage in mergers or consolidations; and

•  engage in certain transactions with subsidiaries and affiliates.

Our warehouse and residual facilities and our indenture governing our notes require us to comply with certain financial ratios, covenants and asset quality maintenance requirements. These restrictions may interfere with our ability to obtain financing or to engage in other necessary or desirable business activities.

If we cannot comply with the requirements of our indenture governing our notes and our warehouse and residual facilities, we may be required to repay immediately all of the outstanding debt under them. If our debt payments were accelerated, our assets might not be sufficient to fully repay our debt. These lenders may require us to use all of our available cash to repay our debt, foreclose upon their collateral or prevent us from making payments to other creditors on certain portions of our outstanding debt.

We may not be able to obtain a waiver of these provisions or refinance our debt, if needed. In such a case, our financial condition, liquidity and results of operations would suffer.

We will continue to require significant amounts of cash to fund our operations.

We require substantial amounts of cash to fund our contract purchases and originations and securitization activities, including credit enhancement obligations. We expect to continue to require substantial amounts of cash to fund our operations.

In addition to requiring cash to fund contract purchases pending their securitization, we will also require cash to fund:

•  credit enhancement requirements in connection with the securitization of the receivables;

•  interest and principal payments under our warehouse and residual facilities, our notes and other indebtedness;

•  fees and expenses incurred in connection with the servicing of securitized receivables;

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•  capital expenditures for technology and facilities;

•  ongoing operating expenses; and

•  income tax payments.

Our primary sources of liquidity in the future are expected to be:

•  borrowings under our warehouse and residual facilities;

•  securitizations of receivables;

•  cash flow received from securitization trusts;

•  cash flow from operating activities other than securitizations of receivables;

•  servicing fees from securitization trusts and our warehouse facilities; and

•  further issuances of debt or equity securities, depending on capital market conditions.

We believe that we will continue to require the execution of securitization transactions and the renewal of our warehouse and residual facilities in order to fund our future liquidity needs. If these sources of funding are unavailable to us on a regular basis or are only available on terms unacceptable to us, we will be required to significantly decrease contract origination activities and implement expense reductions, all of which may have a material adverse affect on our ability to achieve our business and financial objectives.

Our change from gain-on-sale to on-balance sheet accounting for our securitization transactions will significantly impact our future results of operations compared to our historical results.

Historically, we have structured our securitization transactions to meet the criteria for sales of auto receivables under generally accepted accounting principles in the United States of America, or “GAAP.” Thus, for all securitizations completed prior to April 29, 2005, we recorded a gain-on-sale of receivables when we sold the auto receivables to a securitization trust based on the net present value of expected excess cash flows from the securitized receivables. Following the Acquisition, we altered the accounting of our future securitization transactions to meet the criteria for on-balance sheet reporting. This change will significantly impact our future results of operations compared to our historical results. In particular, as a result of this change, our provision for credit losses and our net margin have increased significantly, with our provision for credit losses increasing initially at a greater rate than our net margin. In addition, our securitization income and net income have decreased, with no change to our cash flows, as a result of this accounting change. Accordingly, our historical results may not be indicative of our future results. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

ITEM 1B.   UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 2.   PROPERTIES

Our executive offices are located at 7711 Center Ave., Suite 200, Huntington Beach, California 92647 in a 28,186 square foot office space lease that expires in 2011.

We also lease 164,812 square feet of office space in North Richland Hills, Texas under a lease that expires in 2012.

During 2007, the Company moved its loss recovery, remarketing, risk management, human resources and corporate legal functions to North Richland Hills, Texas. The Company is currently in the process of designating North Richland Hills, Texas as its corporate headquarters.

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ITEM 3.   LEGAL PROCEEDINGS

As a consumer finance company, we are subject to various consumer claims and litigation seeking damages and statutory penalties, based upon, among other things, usury, disclosure inaccuracies, wrongful repossession, wrongful collection procedures, violations of bankruptcy stay provisions, certificate of title disputes, fraud and breach of contract. Some litigation against us may take the form of class action lawsuits by consumers. As the assignee of finance contracts originated by dealers, we may also be named as a co-defendant in lawsuits filed by consumers principally against dealers. The damages and penalties claimed by consumers in these types of matters can be substantial. The relief requested by the plaintiffs varies, but includes requests for compensatory, statutory and punitive damages.

We believe that we have taken prudent steps to address the litigation risks associated with our business activities. We are vigorously defending the litigation against us and, while we are unable to estimate a range of possible losses with respect to our pending litigation due to the preliminary stages of most of our proceedings, we do not believe that the outcome of these proceedings, individually or in the aggregate, will have a material effect on our financial condition, results of operations or cash flows.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

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PART II

ITEM 5.   MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

There is no trading market for our common stock. All of the outstanding shares of our common stock are held by Triad Holdings Inc.

ITEM 6.   SELECTED FINANCIAL DATA

Set forth below is selected historical consolidated financial data. We derived the historical statement of income and balance sheet data for the periods indicated from our consolidated financial statements. We have derived the selected historical consolidated financial data at December 31, 2007, 2006 and 2005, for the years ended December 31, 2007 and 2006 and for the period April 30, 2005 through December 31, 2005 from our audited financial statements. We have derived the selected historical financial data at December 31, 2004 and 2003, for the period January 1, 2005 through April 29, 2005 and for the years ended December 31, 2004 and 2003 from the predecessor’s audited financial statements. The information presented below should be read in conjunction with, and qualified by reference to, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our audited historical consolidated financial statements and related notes and other financial information appearing elsewhere in this document.

	Successor									Predecessor
	Year			Year			April 30,			January 1,
	Ended			Ended			2005 to			2005 to
	December 31,			December 31,			December 31,			April 29,			For the Year Ended December 31,
	2007			2006			2005			2005			2004			2003
	(Dollars in thousands)
Statement of Operations Data:
Financing and other interest income	$	629,898		$	577,340		$	215,114		$	127,243		$	302,715		$	278,499
Interest expense		218,668			202,929			85,958			21,440			38,793			50,799
Net interest margin		411,230			374,411			129,156			105,803			263,922			227,700
Provision for credit losses on owned finance receivables		284,457			256,762			58,909			—			1,135			49,016
Net interest margin after provision for credit losses		126,773			117,649			70,247			105,803			262,787			178,684
Securitization and servicing income		7,824			21,966			19,275			16,597			82,579			107,599
Other income (expense)		(3,942	)		21,602			12,803			9,512			8,825			9,716
Total other revenues		3,882			43,568			32,078			26,109			91,404			117,315
Operating expenses		146,753			138,605			85,889			39,857			123,894			156,348
Other expenses		—			—			—			30,505			73,713			60,402
Impairment charge on goodwill(1)		—			—			—			—			61,192			—
Total expenses		146,753			138,605			85,889			70,362			258,799			216,750
Income (loss) before income taxes		(16,098	)		22,612			16,436			61,550			95,392			79,249
Benefit (provision) for income taxes		5,520			(8,945	)		(6,453	)		(23,208	)		(43,503	)		(29,877	)
Net income (loss)	$	(10,578	)	$	13,667		$	9,983		$	38,342		$	51,889		$	49,372
Cash Flow Data:
Cash flows provided by (used in) operating activities		285,399			252,389			170,541			(383,565	)		(1,048,224	)		(555,878	)
Cash flows provided by (used in) investing activities		(1,083	)		(1,485,481	)		(1,295,832	)		117,879			419,272			1,385,164
Cash flows provided by (used in) financing activities		(292,178	)		1,248,164			1,146,942			263,546			640,082			(823,094	)
Net increase (decrease) in cash	$	(7,862	)	$	15,072		$	21,651		$	(2,140	)	$	11,130		$	6,192

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	Successor							Predecessor
	At and for the Year Ended December 31,
	2007		2006		2005			2004		2003
	(Dollars in thousands)
Balance Sheet Data (at end of period):
Cash	$	52,505	$	60,367	$	45,295		$	25,784	$	14,654
Cash-restricted		295,786		274,059		153,231			—		—
Finance receivables, net		3,514,979		3,781,469		2,596,809			1,721,334		865,417
Retained interest in securitized assets		10,916		102,531		216,952			355,081		447,758
Total assets		4,107,552		4,418,535		3,138,156			2,162,314		1,446,408
Total debt		3,679,135		3,936,513		2,709,518			1,603,510		963,428
Total stockholder’s equity		356,591		406,159		356,832			458,713		424,229
						(Unaudited	)
Other Data(2):
Contract originations		1,346,490		2,650,257		1,880,230			2,056,195		1,676,818
Contracts securitized		1,517,520		3,052,914		2,184,026			736,545		2,025,850
Average Receivables(2):
Held for sale		N/A		N/A		N/A			912,497		799,861
Held for investment		3,844,915		3,498,717		2,221,927			284,536		593,871
Average owned receivables, carrying value		3,844,915		3,498,717		2,221,927			1,197,033		1,393,732
Sold		274,668		765,416		1,573,103			2,532,340		1,942,090
Average total managed receivables(3)	$	4,119,583	$	4,264,133	$	3,795,030		$	3,729,373	$	3,335,822

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	Successor(2)									Predecessor
	At and for the Year Ended December 31,
	2007			2006			2005			2004			2003
	(Dollars in thousands)
	(Unaudited)
Owned Data:
Net margin(4)	$	411,230		$	374,411		$	234,959		$	263,922		$	227,700
Net charge-offs(5)		309,492			192,513			95,617			99,966			153,217
Owned receivables, unpaid principal balance (at end of period)		3,774,481			4,032,551			2,736,183			1,762,669			951,438
Owned receivables greater than 60 days delinquent (at end of period)		156,036			97,332			44,079			30,432			80,126
Owned Ratios:
Ratio of earnings to fixed charges(6)		—			1.1	x		1.7	x		3.4	x		2.5	x
Annualized net margin as a percentage of average owned receivables(4)		10.7	%		10.7	%		8.2	%		13.4	%		12.5	%
Annualized net charge-offs as a percentage of average owned receivables(5)		8.0	%		5.5	%		4.3	%		8.4	%		11.0	%
Owned receivables greater than 60 days delinquent as a percentage of owned receivables (at end of period)		4.1	%		2.4	%		1.6	%		1.7	%		8.4	%
Total Managed Data:
Net margin(4)(7)	$	441,940		$	519,978		$	504,720		$	522,232		$	482,418
Net charge-offs(5)		327,674			246,392			231,653			280,333			278,830
Total managed receivables (at end of period)		3,868,578			4,517,369			3,866,535			3,844,771			3,487,513
Average principal amount per total managed contracts outstanding (in dollars)		13,657			14,101			13,382			13,316			13,010
Total managed receivables greater than 60 days delinquent (at end of period)		161,203			115,302			81,319			90,416			140,926
Total Managed Ratios:
Annualized net margin as a percentage of average total managed receivables		11.0	%		12.2	%		13.3	%		14.0	%		14.5	%
Annualized net charge-offs as a percentage of average total managed receivables(5)		8.0	%		5.8	%		6.1	%		7.5	%		8.4	%
Annualized operating expenses as percentage of average total managed receivables		3.6	%		3.3	%		3.3	%		3.3	%		4.7	%
Receivables greater than 60 days delinquent as a percentage of total managed receivables (at end of period)		4.2	%		2.6	%		2.1	%		2.4	%		4.0	%

(1)	As a result of the terms of the Acquisition, we determined that there was an impairment of goodwill and recorded a $61.2 million pre-tax charge to earnings in 2004.
(2)	To assist in the evaluation of our financial results and to make it easier to understand our results of operations, the “predecessor” period (January 1 through April 29, 2005) and the “successor” period (April 30 through December 31, 2005) have been combined for the year ended December 31, 2005. These combined results should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing elsewhere in this document for information on items impacting the comparability of predecessor and successor periods.
(3)	Total managed receivables consist of our total owned receivables and our total sold receivables in securitization transactions.
(4)	Net margin as reflected on the consolidated statements of income for the successor period (years ended December 31, 2007 and 2006 and the period April 30, 2005 through December 31, 2005) includes $29.4 million, $56.4 million and $83.6 million, respectively, of premium amortization related to our predecessor finance receivables held for investment and our receivables repurchased from gain on sale trusts. Excluding the $29.4 million, $56.4 million and $83.6 million of premium amortization, owned net margin as a percentage of average owned receivables would have been 11.5%, 12.3% and 14.3%, respectively.
(5)	In April 2004, we changed our charge-off policy such that all owned contracts which are more than 120 days delinquent are charged off, regardless of whether an obligor under the owned contract has filed for bankruptcy. Previously, we charged-off owned contracts with bankrupt obligors upon resolution of their bankruptcy cases. As a result of this change, net charge-offs for the year ended December 31, 2004 included a one-time charge-off of $32.6 million for contracts over 120 days delinquent with obligors who had filed for bankruptcy but whose bankruptcy cases had not yet been resolved. Excluding this one-time charge-off, our net charge-offs as a percentage of average owned and average total managed receivables would have been 5.6% and 6.6%, respectively, for the year ended December 31, 2004.

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(6)

For purposes of calculating the ratio of earnings to fixed charges, earnings represent income (loss) before income taxes plus fixed charges. Fixed charges consist of total interest expense and one-third of rental expenses, which management believes are representative of the interest component of all operating leases. Earnings, as defined, were insufficient to cover our fixed charges for 2007 by $16.1 million.

(7)

Total managed net interest margin is the difference between (a) financing revenue, fee and other income earned on our total managed receivables and (b) the cost to fund the receivables and the cost of debt incurred for general corporate purposes. Total managed net interest margin is a calculation that assumes that securitized receivables have not been sold and are still on our consolidated balance sheet. Total managed net interest margin is not a measurement of financial performance determined under generally accepted accounting principles and should not be considered as an alternative to any other measures of performance determined under generally accepted accounting principles. We evaluate the profitability of our financing activities based partly upon the net margin related to our total managed receivables, including owned receivables and sold receivables. We use this information to analyze trends in the components of the profitability of our total managed receivables portfolio. Analysis of net margin on a total managed basis helps us to determine which origination channels and finance products are most profitable, guide us in making pricing decisions for finance products and indicates if sufficient spreads exist between our revenues and cost of funds to cover operating expenses and achieve corporate profitability objectives. Additionally, net interest margin on a total managed basis facilitates comparisons of our results with other finance companies that do not securitize their receivables and in the future will assist in comparisons of our results with other finance companies that, due to the structure of their securitization transactions, are not required to account for the securitization of their receivables as sales.

The following is a reconciliation of net interest margin as reflected on our consolidated statements of income to our total managed net interest margin:

	For the Years Ended December 31,
	2007			2006			2005			2004			2003
	(Dollars in thousands)
Net interest margin as reflected on the consolidated statements of income	$	411,230		$	374,411		$	234,959		$	263,922		$	227,700
Less: other interest income		(35,847	)		(34,875	)		(53,784	)		(103,959	)		(53,895	)
Financing revenue on sold receivables		43,322			128,039			262,691			422,866			348,424
Interest expense on sold receivables		(7,507	)		(24,627	)		(43,462	)		(67,961	)		(48,082	)
Gain (losses) on forward-starting swap agreements		(7,808	)		691			7,432			24			—
Premium amortization(4)		29,379			56,378			83,562			—			—
Customer fees		18,856			19,961			13,322			7,340			8,271
Total managed net interest margin	$	451,625		$	519,978		$	504,720		$	522,232		$	482,418

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ITEM 7.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our historical consolidated financial statements covers periods before the consummation of the Transactions. From June 1999 through April 29, 2005, the Company was a wholly owned subsidiary of Fairlane Credit, LLC, a wholly-owned subsidiary of Ford Motor Credit Company, or “Ford Credit”. On April 29, 2005, a newly formed entity, Triad Holdings Inc. and its wholly-owned subsidiary, Triad Acquisition Corp., acquired all of the outstanding capital stock of the Company from Fairlane Credit, LLC, or the “Acquisition”. As part of the Acquisition, Triad Acquisition Corp. was merged with and into Triad Financial Corporation with the Company being the surviving corporation.

In accordance with the guidelines for accounting for business combinations, the purchase price paid by Triad Holdings Inc. plus related purchase accounting adjustments have been pushed-down and recorded in our financial statements for the period subsequent to April 29, 2005. This has resulted in a new basis of accounting reflecting the fair market value of our assets and liabilities for the “successor” period beginning April 30, 2005. Information for all “predecessor” periods prior to the Acquisition are presented using our historical basis of accounting.

To assist in the evaluation of our financial results and to make it easier to understand our results of operations, the “predecessor” period (January 1 through April 29, 2005) and the “successor” period (April 30 through December 31, 2005) have been combined for the year ended December 31, 2005. The following discussion and analysis of results of operations contains information on items impacting the comparability of the predecessor and successor periods.

The statements in the discussion and analysis regarding our expectations regarding the performance of our business, our liquidity and capital resources and other non-historical statements are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in “Risk Factors.” Our actual results may differ materially from those contained in or implied by any of these forward-looking statements.

General

Historically, we have generated earnings and cash flow primarily from the purchase, origination, retention, subsequent securitization and servicing of retail installment contracts and loans secured by automobiles. We purchase retail installment contracts from franchised and select independent automobile dealerships and originate auto loans directly to consumers. As used in this document, “contracts” include retail installment contracts originated by dealers and purchased by us and note and security agreements evidencing loans made directly by us to consumers. To fund the purchase and origination of receivables, we rely upon warehouse and residual credit facilities. During the period from June 1999 through July 2002, we did not securitize any auto receivables and held all auto receivables in our portfolio. Since August 2002, we have completed twelve securitizations of auto receivables. Prior to our May 2005 securitization transaction, all of our securitizations were accounted for as sales in accordance with accounting principles generally accepted in the United States of America, or “GAAP”.

We periodically sell receivables to securitization trusts, or “Trusts,” that, in turn, sell asset-backed securities to investors. Beginning with our May 2005 securitization, we made a decision to alter the structure of our securitization transactions to no longer meet the criteria for sales of auto receivables, but instead to meet the criteria for on-balance sheet reporting. Accordingly, following a securitization accounted for as a secured financing, the receivables and the related securitization indebtedness will remain on our balance sheet. We recognize finance revenue and fee income on the receivables and interest expense on the securities issued in the securitization and record a provision for credit losses over the life of the securitization. The principal changes to our securitization structures that result in the differing accounting treatment include the right of the trust to enter into interest rate derivative contracts with respect to retained interests and also allows the servicer to sell charged-off finance receivable contracts. Provisions such as these preclude the use of sale treatment in accordance with Statement of Financial Accounting Standards, or “SFAS”, No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities.

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For all securitizations accounted for as sales, we recognized a gain upon the sale of receivables to the Trusts, which represented the difference between the sale proceeds to us, net of transaction costs, and our net carrying value of the receivables, plus the present value of the estimated future excess cash flows to be received by us over the life of the securitization. Excess cash flows result from the difference between the interest received from the obligors on the receivables and the interest paid to investors in the asset-backed securities, net of credit losses and expenses. Excess cash flows from the Trusts are initially utilized to fund credit enhancement requirements in order to attain specific credit ratings for the asset-backed securities issued by the Trusts. Once predetermined credit enhancement requirements are reached and maintained, excess cash flows are distributed to us. In addition to excess cash flows, we earn monthly base servicing fee income of 2.25% per annum on the outstanding principal balance of receivables securitized, or “sold receivables,” and collect other fees such as late charges and extension fees as servicer for those Trusts.

Critical Accounting Policies and Use of Estimates

We prepare our financial statements in conformity with generally accepted accounting principles, which require management to make certain estimates that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Due to the inherent uncertainty involved in determining these estimates, actual results reported in future periods may differ from these estimates and could therefore affect the value of our assets and liabilities.

Critical estimates inherent within our financial statements include the carrying value of predecessor finance receivables held for investment and the allowance for credit losses.

Predecessor Finance Receivables Held For Investment

The carrying value of our finance receivables owned as of the acquisition date was adjusted to fair market value taking into account future expected credit losses, projected prepayments, and a required rate of return commensurate with the associated risk. Expected credit losses were based on factors such as historical credit loss trends, the credit quality of the acquired portfolio, trends in historical and projected used vehicle values and general economic measures. The expected credit loss assumptions are reviewed periodically, and should it be determined that actual losses are exceeding expected losses, we may be required to increase our estimate of expected losses, which would reduce the carrying value in the consolidated balance sheet and record an impairment charge to earnings in the consolidated statements of operations. A premium resulting from the revaluation of our predecessor finance receivables held for investment to fair market value in connection with the purchase transaction is being amortized against owned net interest margin over the remaining life of the receivables.

Allowance For Credit Losses

The allowance for credit losses is maintained at a level adequate to cover probable incurred credit losses related to impaired receivables originated subsequent to April 29, 2005 and classified as held for investment as of the date of the financial statements, taking into account the credit quality of the portfolio, historical credit loss trends, trends in projected used car values and general economic factors. We continuously evaluate actual portfolio performance of our finance receivables as compared to our assumptions. Should we determine that the portfolio performance, including delinquencies, defaults and net charge-offs, is worse than expected, we may be required to increase our allowance for credit losses. This increase in our allowance for credit losses would reduce the carrying value of our finance receivables held for investment and would also result in a higher provision for credit losses in the consolidated statements of operations.

Components of Revenues and Expenses

Most of our revenues are generated from the purchase and origination of receivables, other interest income, and securitization and servicing of our automobile installment contracts. Our revenues include financing revenue, other interest income, income related to sales of receivables and other income. We earn financing revenue from contracts we purchase and originate. Other interest income includes: (1) residual

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interest income on the retained interest in securitized assets we retain from securitization transactions; and (2) income on our restricted cash accounts. Our servicing income includes: (1) the base servicing fee income we receive from the Trusts for servicing the receivables in those Trusts; and (2) the supplemental servicing fee income we receive from servicing the receivables in those Trusts. Our other income includes fees we collect on receivables, such as late charges, extension fees, proceeds from sales of gap insurance and extended service contracts, referral fees received from other lenders and payment convenience fees. Our other income also includes gains and losses on our interest rate swap agreements and gains and losses related to the repurchase of receivables from gain on sale trusts.

Our costs and expenses consist of interest expense, operating expenses, provision for credit losses and provision for income taxes. Our interest expense is the amount of interest and fees we pay on borrowings used to finance our purchase and origination of receivables and working capital needs. Our operating expenses represent costs associated with operating our dealer and direct channels and servicing our receivables, including rent and occupancy expense, compensation expense and servicing costs and prior to April 30, 2005, repossession and remarketing fees. Our provision for credit losses represents the charge necessary to maintain our allowance for credit losses at a level considered adequate to cover probable credit losses on receivables that are held for investment and originated subsequent to April 29, 2005.

Results of Operations

Year Ended December 31, 2007 as Compared to Year Ended December 31, 2006

Our net loss was $10.6 million for the year ended December 31, 2007 as compared to net income of $13.7 million for 2006. The decrease in net income was primarily due to a higher provision for credit losses, a decline in revenue from other sources and higher operating expenses partially offset by higher net interest margin. Our 2007 results included $17.5 million in losses on our derivative financial instruments and $5.3 million in expenses related to the transition of certain functions to our North Richland Hills, Texas facility.

Net Interest Margin

Our revenues are primarily generated from the purchase, origination, retention, subsequent securitization and servicing of auto receivables. Our average owned finance receivables outstanding are summarized as follows:

	For the Years Ended
	December 31,
	2007		2006
	(Dollars in thousands)
Average owned finance receivables, carrying value	$	3,844,915	$	3,498,717

Average owned finance receivables increased by 9.9% for the year ended December 31, 2007 as compared to 2006. This increase was primarily attributable to an increased level of loan originations during 2006. We purchased and originated $1,346.5 million of contracts during the year ended December 31, 2007 as compared to $2,650.3 million during 2006. This decrease in originations was primarily due to lower levels of originations in our dealer channel. In response to higher than expected losses on receivables originated during 2006, we modified our contract origination strategy to better manage our credit risk, which resulted in lower volume levels during the last quarter of 2006 and 2007.

The average new contract size was $18,793 for the year ended December 31, 2007 as compared to $18,619 for the year ended December 31, 2006. The average annual percentage rate on contracts purchased and originated was 14.7% and 17.2% during the years ended December 31, 2007 and 2006, respectively. This decrease was due to an increased concentration of contracts from our direct channel during 2007, which had a lower weighted-average coupon. Our yields were also impacted by the implementation of new proprietary scorecards for the direct channel during the first quarter of 2007, combined with new pricing strategies within the direct channel designed to attract customers with higher expected credit quality.

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Net interest margin on our owned finance receivables is summarized as follows:

	For the Years Ended
	December 31,
	2007			2006
	(Dollars in thousands)
Financing income	$	594,051		$	542,465
Other interest income		35,847			34,875
Interest expense		(218,668	)		(202,929	)
Net interest margin	$	411,230		$	374,411
Financing income as a percentage of average owned finance receivables		15.5	%		15.5	%

The 9.8% increase in net interest margin for the year ended December 31, 2007 as compared to 2006 was due to an increase in financing income and other interest income, partially offset by an increase in interest expense.

The increase in financing income was due to increase in our average owned receivables and a lower level of premium amortization, partially offset by a decrease in yields on new contract originations. Effective April 30, 2005, we adjusted predecessor finance receivables held for investment to fair market value taking into account future expected credit losses and a required rate of return commensurate with the associated risk in connection with the purchase transaction. Financing income was reduced by $29.4 million and $56.4 million of premium amortization for the year ended December 31, 2007 and 2006, respectively, related to these receivables and receivables repurchased from gain on sale trusts. Excluding the premium amortization, the average yield on receivables for the years ended December 31, 2007 and 2006 would have been 16.2% and 17.1%, respectively.

During 2007 and 2006, expected cash flows from predecessor finance receivables held for investment and receivables repurchases from gain on sale trusts were reevaluated and determined to be greater than originally expected. This resulted in a reclassification of cash flows from nonaccretable discount to accretable discount. This also resulted in a higher net yield being recognized on these receivables which is expected to continue in future periods.

Other interest income increased to $35.8 million for the year ended December 31, 2007 as compared to $34.9 million for 2006. This increase was mainly due to the realization of $14.2 million in previously unrealized gains on our retained interest in securitized assets, combined with an increase in interest income received on restricted cash accounts, partially offset by a decrease in residual interest income caused by lower retained interest in securitized asset balances.

The increase in interest expense was due to both a higher cost of funds and higher average debt levels. Our effective cost of funds was 5.8% for the year ended December 31, 2007 as compared to 5.7% for the year ended December 31, 2006. This increase in our effective cost of funds was primarily due to higher interest rates on our 2006 and 2007 securitization transactions. Average debt outstanding was $3,777.3 million and $3,559.2 million for 2007 and 2006, respectively.

Provision for Credit Losses

Our provision for credit losses was $284.5 million for the year ended December 31, 2007 as compared to $256.8 million for 2006. Our provision for credit losses increased as a result of the increase in size of the portfolio of finance receivables originated subsequent to the Acquisition, an increase in the average age of the portfolio and higher net charge-offs, partially offset by lower net charge-offs on our recent direct channel originations with higher expected credit quality. The increase in net charge-offs is attributable to a number of factors including higher than expected losses on receivables originated during 2006, the impact of a larger percentage of those 2006 receivables reaching the age at which higher delinquencies and losses are more likely to occur and higher mandatory charge-offs.

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Servicing Income

Servicing income decreased to $7.8 million for the year ended December 31, 2007 as compared to $22.0 million for the year ended December 31, 2006. Servicing income represents servicing fees and late fees collected on sold receivables. The decrease in servicing income for the year ended December 31, 2007 as compared to the year ended December 31, 2006 was primarily attributable to the declining balance of our sold receivables.

Other Income (Expense)

Other income (expense) is summarized as follows:

	For the Years Ended
	December 31,
	2007			2006
	(Dollars in thousands)
Customer fees	$	18,856		$	19,961
Gains (losses) on derivative financial instruments		(17,493	)		691
Other		(5,305	)		950
Other income (expense)	$	(3,942	)	$	21,602

Our other income (expense) includes customer fees we collect on owned finance receivables, such as late charges and extension fees, proceeds from sales of gap insurance and extended service contracts, referral fees received from other lenders, payment convenience fees, gains and losses on our derivative financial instruments and losses related to the repurchase of receivables from gain on sale trusts.

Customer fees decreased to $18.9 million for year ended December 31, 2007 as compared to $20.0 million for the year ended December 31, 2006 primarily due to a decrease in late charges collected attributable to rising delinquencies.

Our derivative financial instruments are recognized on our consolidated balance sheet at fair value with changes in the value recorded in earnings as a component of other income (expense). Our derivative financial instruments include forward-starting swap agreements utilized to lock in the cost of funds on outstanding notional amounts of receivables prior to their securitization. During 2007, our derivative financial instruments also included interest rate swap agreements utilized to convert variable rate exposure on our 2007 securitization transactions to fixed rates. For the year ended December 31, 2007, our $17.5 million in losses on derivative financial instruments was comprised of $9.7 million in losses on our interest rate swap agreements and $7.8 million in losses on our forward-starting swap agreements. These losses were a result of a declining interest rate environment throughout the latter half of the year. For the year ended December 31, 2006, our $0.7 million in gains on derivative financial instruments were comprised entirely of gains on our forward-starting swap agreements.

Other decreased to an expense of $5.3 million for the year ended December 31, 2007 as compared to income of $1.0 million for the year ended December 31 2006 primarily due to a $7.0 million loss recorded on the repurchase of receivables from gain on sale trusts during 2007.

Expenses

Operating expenses were $146.8 million for the year ended December 31, 2007 as compared to $138.6 million for the year ended December 31, 2006. The $8.2 million increase in operating expenses for the year ended December 31, 2007 as compared to 2006 was due to higher levels of compensation and employee benefits and advertising expenses, partially offset by a decrease in system and data processing expenses. Additionally, operating expenses for the year ended December 31, 2007 included $5.3 million in expenses related to the transition of certain functions to our North Richland Hills, Texas facility and a $1.6 million payment to a former chief executive officer for the repurchase of his option shares vested as of his July 2005 termination date. Operating expenses for the year ended December 31, 2006 included a $2.0 million charge

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associated with sale of extended service contracts. Annualized operating expenses as a percentage of average total managed receivables were 3.6% for the year ended December 31, 2007 as compared to 3.3% for the year ended December 31, 2006.

Income Taxes

We recognized an income tax benefit of $5.5 million for the year ended December 31, 2007 as compared to tax expense of $8.9 million for the year ended December 31, 2006. Our effective income tax rate was 34.3% and 39.6% for the year ended December 31, 2007 and 2006, respectively. Our income tax benefit for the year ended December 31, 2007 was partially offset by $0.7 million recognized for the potential payment of interest.

Credit Quality

We provide financing in relatively high-risk markets, and, therefore, anticipate a corresponding higher level of delinquencies and charge-offs.

Provisions for credit losses are charged to operations in amounts sufficient to maintain the allowance for credit losses on the balance sheet at a level considered adequate to cover our probable incurred credit losses related to impaired held for investment receivables as of the date of the balance sheet. Receivables held for investment are charged-off to the allowance for credit losses at the earlier of repossession of the collateral or when the account is otherwise deemed uncollectable. Predecessor finance receivables held for investment were adjusted to fair market value in connection with the purchase transaction taking into account future expected credit losses and a required rate of return commensurate with the associated risk.

The following table presents certain data related to our owned finance receivables:

	At December 31,
	2007			2006
	(Dollars in thousands)
Finance receivables held for investment	$	3,124,036		$	3,045,938
Allowance for credit losses		(230,500	)		(195,000	)
Finance receivables held for investment, net of allowance		2,893,536			2,850,938
Allowance for credit losses as a percentage of receivables		7.4	%		6.4	%
Predecessor finance receivables held for investment, net		475,296			849,246
Finance receivables repurchased from gain on sale trusts, net		123,972			62,659
Total owned finance receivables held for investment, net	$	3,492,804		$	3,762,843

The increase in the allowance for credit losses as a percentage of receivables at December 31, 2007 as compared to December 31, 2006 was due to the continued aging of our owned finance receivables held for investment. As of December 31, 2007 and 2006, the finance receivables held for investment are aged, on a weighted average basis, 14.2 months and 8.0 months, respectively.

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Finance receivables that are (1) more than 30 days delinquent, but not yet in repossession, and (2) in repossession are summarized as follows:

	At December 31,
	2007					2006
	Amount		Percent			Amount		Percent
	(Dollars in thousands)
Delinquent contracts:
31 to 60 days	$	377,862		10.0	%	$	269,861		6.7	%
Greater than 60 days		156,036		4.1			97,332		2.4
		533,898		14.1			367,193		9.1
In repossession		29,383		0.8			17,072		0.4
	$	563,281		14.9	%	$	384,265		9.5	%

Delinquencies in our receivables portfolio may vary from period to period based upon credit quality, the average age of the portfolio, seasonality within the calendar year and economic factors. Due to our target customer base, a relatively high percentage of accounts become delinquent at some point in the life of a contract and there is a fairly high rate of account movement between current and delinquent status in the portfolio. Total delinquencies were higher at December 31, 2007 as compared to December 31, 2006 due, in part, to an increase in the average age of our portfolio. Specifically, as the receivables originated in 2006 increase in age, a larger percentage of that vintage is reaching the stage at which higher delinquencies and losses are more likely to occur. Additional reasons for the rising delinquencies include macroeconomic factors, servicing practices and credit characteristics of the portfolio.

We at times offer payment extensions, in accordance with our policies and guidelines, to consumers to assist them when temporary financial difficulties interfere with their ability to make scheduled payments. Our policies and guidelines, as well as certain contractual restrictions in our securitization transactions, limit the number and frequency of extensions that may be granted. An account for which all delinquent payments are extended is classified as current at the time the extension is granted, resulting in lower delinquencies. Thereafter, such account’s delinquency status is determined in the same manner as any other account.

We evaluate the results of our extension strategies based upon the portfolio performance on accounts that have been extended versus accounts that have not been extended over the same period of time and as a result of that evaluation, we make periodic adjustments to our extension strategy. We believe that payment extensions granted according to our policies and guidelines are an effective portfolio management technique and result in higher ultimate cash collections from the portfolio.

Payment extensions as a percentage of owned finance receivables outstanding are summarized as follows:

	At December 31,
	2007			2006
	Percent			Percent
Never extended		73.2	%		83.3	%
Extended:
1-2 times		26.1	%		16.4	%
3-4 times		0.7	%		0.3	%
Total extended		26.8	%		16.7	%
Total		100.0	%		100.0	%

As the finance receivables portfolio ages, more accounts become eligible for extensions. Payment extensions as a percentage of total owned finance receivables increased to 26.8% at December 31, 2007 as compared with 16.7% at December 31, 2006, mainly driven by an increase in 1-2 times payment extensions, which increased to 26.1% at December 31, 2007 as compared to 16.4% at December 31, 2006. We have

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guidelines concerning when accounts become eligible for extensions, including a requirement that the borrower has made a minimum of six installment payments. At December 31, 2007, nearly all of the finance receivable accounts originated during 2006 were extension-eligible. As a result, a greater proportion of extensions were granted on accounts originated in 2006 than to those accounts originated in other years. This factor, as well as the increase in the average age of the overall portfolio, contributed to the increase in the number of extensions granted. In addition, we adopted a strategy to increase the number of extensions granted as our historical data indicated that contracts extended are more likely than not to result in additional collections over the life of the contract. We continue to monitor our extension strategy, and we believe that the judicious use of payment extensions is an effective portfolio management technique.

Payment extensions do not have a direct impact on the amount of our finance receivables charged-off and the corresponding credit quality ratios. Payment extensions may, however, impact the timing of these charge-offs in the event a previously extended account is ultimately charged-off. Additionally, the impact of payment extensions is considered in determining the allowance for credit losses and the resulting provision for credit losses.

Charge-off data with respect to our average owned finance receivables is summarized as follows:

	For the Years Ended
	December 31,
	2007			2006
	(Dollars in thousands)
Repossession charge-offs	$	392,026		$	269,935
Less: Sale Proceeds and recoveries		(229,206	)		(160,422	)
Mandatory charge-offs(1)		146,672			83,000
Net charge-offs(2)	$	309,492		$	192,513
Net charge-offs as a percentage of average total owned receivables outstanding		8.0	%		5.5	%
Sales proceeds and recoveries as a percentage of charge-offs		42.5	%		45.5	%

(1)	Mandatory charge-offs represent accounts charged-off in full with no recovery amounts realized at time of charge-off.
(2)	Net charge-offs for our owned portfolio include charge-offs from our finance receivables held for investment, our predecessor finance receivables held for investment and our finance receivables repurchased from gain on sale trusts.

Annualized net charge-offs as a percentage of our average owned finance receivables outstanding may vary from period to period based upon the credit quality of the portfolio, average age of the portfolio and economic factors. The increase in annualized net charge-offs as a percentage of average owned finance receivables to 8.0% for the year ended December 31, 2007 as compared to 5.5% for the year ended December 31, 2006 was due to higher charge-offs and a decrease in recoveries as a percentage of charge-offs. The increase in charge-offs was due to an increase in the average age of our portfolio, higher than expected credit losses on receivables originated in 2006 and higher mandatory charge-offs. The increase in mandatory charge-offs was due to, among other things, an increase in the average days to repossess, which resulted in a greater percentage of accounts reaching 120 days’ delinquency prior to the recovery of the collateral. The decrease in recoveries as a percentage of charge-offs was primarily due to a higher level of mandatory charge-offs.

Total Managed Information

We evaluate the profitability of our lending activities based partly upon our total managed auto finance receivables portfolio, including both owned finance receivables and sold finance receivables. We have historically securitized our receivables in transactions that met the criteria for a sale of such receivables. The net margin and credit quality information presented below on a total managed basis assumes that securitized and sold receivables had not been sold and are still on our consolidated balance sheet. Accordingly, no gain on

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sale or servicing fee income would have been recognized. Instead, finance charge and fee income would be recognized over the life of the securitized receivables as accrued, and interest expense and other costs related to the asset-backed securities would be recognized as incurred.

We use this information to analyze trends in the components of the profitability of our total managed receivables portfolio. Analysis of this data on a total managed basis helps us to determine which origination channels and finance products are most profitable, guide us in making pricing decisions for finance products and indicates if sufficient spreads exist between our revenues and cost of funds to cover operating expenses and achieve corporate profitability objectives. Additionally, total managed information facilitates comparisons of our results with other finance companies that do not securitize their receivables or other finance companies that securitize their receivables in securitization transactions that do not meet the criteria for sales of receivables. Total managed information is not a measurement of financial performance under GAAP and should not be considered as an alternative to any other measures of performance determined under GAAP.

Beginning with our May 2005 securitization transaction, we altered the structure of our securitization transactions to no longer meet the criteria for sales of auto receivables, but instead to meet the criteria for on-balance sheet reporting. Accordingly, following a securitization accounted for as a secured financing, the receivables and the related securitization indebtedness will remain on our balance sheet. Additionally, we will recognize finance revenue and fee income on the receivables and interest expense on the securities issued in the securitization and record a provision for credit losses over the life of the securitization. As a result of this change, our provision for credit losses and our net margin increased significantly, with our provision for credit losses increasing initially at a greater rate than our net margin because we began recording a provision for credit losses upon the purchase of each contract. In addition, our securitization income decreased and net income initially decreased, with no change to our cash flows, as a result of this accounting change.

Our average total managed finance receivables outstanding are summarized as follows:

	For the Years Ended
	December 31,
	2007		2006
	(Dollars in thousands)
Average owned finance receivables, carrying value	$	3,844,915	$	3,498,717
Average sold finance receivables		274,668		765,416
Average total managed finance receivables	$	4,119,583	$	4,264,133

Total Managed Net Interest Margin

Net interest margin for our total managed receivables portfolio are summarized as follows:

	For the Years Ended
	December 31,
	2007			2006
	(Dollars in thousands)
Financing income and customer fees	$	685,608		$	746,843
Interest expense		(233,983	)		(226,865	)
Net interest margin	$	451,625		$	519,978

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Reconciliation of net interest margin as reflected in our consolidated statements of income to total managed net interest margin is summarized as follows:

	For the Years Ended
	December 31,
	2007			2006
	(Dollars in thousands)
Net margin as reflected on the consolidated statements of income	$	411,230		$	374,411
Other interest income		(35,847	)		(34,875	)
Financing revenue on sold receivables		43,322			128,039
Interest expense on sold receivables		(7,507	)		(24,627	)
Gain (losses) on forward-starting swap agreements		(7,808	)		691
Premium amortization		29,379			56,378
Customer fees		18,856			19,961
Total managed net interest margin	$	451,625		$	519,978

Net interest margin as a percentage of average total managed receivables is summarized as follows:

	For the Years Ended
	December 31,
	2007			2006
Financing income and customer fees		16.7	%		17.5	%
Interest expense		(5.7	)		(5.3	)
Net interest margin as a percentage of average total managed receivables		11.0	%		12.2	%

Net interest margin as a percentage of average total managed receivables decreased to 11.0% for the year ended December 31, 2007 as compared to 12.2% for the year ended December 31, 2006. This decrease in net interest margin was due to a decrease in yield on receivables combined with an increase in average cost of funds. The decrease in yield was mainly due to a greater volume of loans in our direct channel to customers with higher expected credit quality. The increase in our cost of funds was primarily due to higher interest rates on our 2006 and 2007 securitization transactions and higher losses on our interest rate swaps. Excluding gain (losses) on our forward- starting swap agreements, annualized net interest margin as a percentage of average total managed receivables would have been 11.2% for the year ended December 31, 2007 as compared to 12.2% for the year ended December 31, 2006.

Total Managed Credit Quality

We have periodically sold receivables in securitization transactions to Trusts and retained an interest in the receivables sold in the form of retained interest in securitized assets. Retained interests in securitized assets are reflected on our balance sheet at fair value, calculated based upon the present value of estimated excess future cash flows from the Trusts using, among other assumptions, probable future cumulative credit losses on the receivables sold. Charge-offs of receivables that have been sold to Trusts decrease the amount of excess future cash flows from the Trusts. If such charge-offs are expected to exceed our original probable cumulative credit losses, the fair value of retained interest in securitized assets could be written down through an impairment charge to earnings.

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Certain data related to our total managed receivables finance receivable portfolio are summarized as follows:

	At December 31, 2007
	Owned		Sold		Total Managed
	(Dollars in thousands)
Owned finance receivables, unpaid principal balance	$	3,774,481	$	—	$	3,774,481
Sold finance receivables		—		94,097		94,097
Total managed finance receivables	$	3,774,481	$	94,097	$	3,868,578
Number of outstanding contracts		271,384		11,886		283,270
Average principal amount of outstanding contracts (in dollars)	$	13,908	$	7,917	$	13,657

	At December 31, 2006
	Owned		Sold		Total Managed
	(Dollars in thousands)
Owned finance receivables, unpaid principal balance	$	4,032,551	$	—	$	4,032,551
Sold finance receivables		—		484,818		484,818
Total managed finance receivables	$	4,032,551	$	484,818	$	4,517,369
Number of outstanding contracts		264,559		55,802		320,361
Average principal amount of outstanding contracts (in dollars)	$	15,243	$	8,688	$	14,101

Receivables that are (1) more than 30 days delinquent, but not yet in repossession, and (2) in repossession are summarized as follows:

	At December 31, 2007
	Owned					Sold					Total Managed
Delinquent contracts:	Amount		Percent			Amount		Percent			Amount		Percent
	(Dollars in thousands)
31 to 60 days	$	377,862		10.0	%	$	12,599		13.4	%	$	390,461		10.1	%
Greater than 60 days		156,036		4.1			5,168		5.5			161,204		4.2
		533,898		14.1			17,767		18.9			551,665		14.3
In repossession		29,383		0.8			1,768		1.9			31,151		0.8
	$	563,281		14.9	%	$	19,535		20.8	%	$	582,816		15.1	%

	At December 31, 2006
	Owned					Sold					Total Managed
Delinquent contracts:	Amount		Percent			Amount		Percent			Amount		Percent
	(Dollars in thousands)
31 to 60 days	$	269,861		6.7	%	$	51,827		10.7	%	$	321,688		7.1	%
Greater than 60 days		97,332		2.4			17,970		3.7			115,302		2.6
		367,193		9.1			69,797		14.4			436,990		9.7
In repossession		17,072		0.4			4,819		1.0			21,891		0.5
	$	384,265		9.5	%	$	74,616		15.4	%	$	458,881		10.2	%

Delinquencies in our total managed receivables portfolio may vary from period to period based upon credit quality, the average age of the portfolio, seasonality within the calendar year and economic factors. Delinquencies for our total managed portfolio were higher at December 31, 2007 as compared to December 31,

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2006 due, in part, to an increase in the average age of our portfolio. Specifically, as the receivables originated in 2006 increase in age, a larger percentage of that vintage is reaching the stage at which higher delinquencies and losses are more likely to occur. Additional reasons for the rising delinquencies include macroeconomic factors, servicing practices and credit characteristics of the portfolio.

We at times offer payment extensions, in accordance with our policies and guidelines, to consumers to assist them when temporary financial difficulties interfere with their ability to make scheduled payments. Our policies and guidelines, as well as certain contractual restrictions in our securitization transactions, limit the number and frequency of extensions that may be granted. An account for which all delinquent payments are extended is classified as current at the time the extension is granted. Thereafter, such account is aged based on the timely payment of future installments in the same manner as any other account, resulting in lower delinquencies.

We evaluate the results of our extension strategies based upon the portfolio performance on accounts that have been extended versus accounts that have not been extended over the same period of time and as a result of that evaluation, we make periodic adjustments to our extension strategy. We believe that payment extensions granted according to our policies and guidelines are an effective portfolio management technique and result in higher ultimate cash collections from the portfolio.

The following is a summary of payment extensions as a percentage of owned, sold and total managed receivables outstanding:

	At December 31, 2007
	Owned			Sold			Total Managed
Never extended		73.2	%		46.1	%		72.6	%
Extended:
1-2 times		26.1	%		47.3	%		26.6	%
3-4 times		0.7	%		6.6	%		0.8	%
Total extended		26.8	%		53.9	%		27.4	%
Total		100.0	%		100.0	%		100.0	%

	At December 31, 2006
	Owned			Sold			Total Managed
Never extended		83.3	%		53.1	%		80.1	%
Extended:
1-2 times		16.4	%		43.8	%		19.3	%
3-4 times		0.3	%		3.1	%		0.6	%
Total extended		16.7	%		46.9	%		19.9	%
Total		100.0	%		100.0	%		100.0	%

As of December 31, 2007 and 2006, the total managed finance receivables are aged, on a weighted average basis, 19.4 months and 15.6 months, respectively. As the total managed finance receivables portfolio ages, more accounts become eligible for extensions. We have guidelines concerning when accounts become eligible for extensions, including a requirement that the borrower has made a minimum of six installment payments. At December 31, 2007, nearly all of the finance receivable accounts originated during 2006 were extension-eligible. As a result, a greater proportion of extensions were granted on accounts originated in 2006 than to those accounts originated in other years. This factor, as well as the increase in the average age of the overall portfolio, contributed to the increase in the number of extensions granted. In addition, we adopted a strategy to increase the number of extensions granted as our historical data indicated that contracts extended are more likely than not to result in additional collections over the life of the contract. At December 31, 2007 and December 31, 2006, our sold receivables portfolio was more seasoned than our owned receivables and

40

therefore, had a higher level of extensions. We continue to monitor our extension strategy, and we believe that the judicious use of payment extensions is an effective portfolio management technique.

Payment extensions do not have a direct impact on the amount of our finance receivables charged-off and the corresponding credit quality ratios. Payment extensions may, however, impact the timing of these charge-offs in the event a previously extended account is ultimately charged-off. Additionally, the impact of payment extensions is considered in determining the allowance for credit losses and the resulting provision for credit losses.

Charge-off data with respect to our finance receivables portfolio is summarized as follows:

	For the Years Ended
	December 31,
	2007			2006
	(Dollars in thousands)
Owned:
Repossession charge-offs	$	392,026		$	269,935
Less: Sale Proceeds and recoveries		(229,206	)		(160,422	)
Mandatory charge-offs(1)		146,672			83,000
Net charge-offs(2)	$	309,492		$	192,513
Sold:
Charge-offs	$	38,471		$	109,092
Less: Sale Proceeds and recoveries		(20,289	)		(55,213	)
Mandatory charge-offs(1)		—			—
Net charge-offs	$	18,182		$	53,879
Total Managed:
Repossession charge-offs	$	430,497		$	379,027
Less: Sale Proceeds and recoveries		(249,495	)		(215,635	)
Mandatory charge-offs(1)		146,672			83,000
Net charge-offs	$	327,674		$	246,392
Net charge-offs as a percentage of average total managed receivables outstanding		8.0	%		5.8	%
Sale proceeds and recoveries as a percentage of charge-offs		43.2	%		46.7	%

(1)	Mandatory charge-offs represent accounts charged-off in full with no recovery amounts realized at time of charge-off.
(2)	Net charge-offs for our owned portfolio include charge-offs from our finance receivables held for investment, our predecessor finance receivables held for investment and our finance receivables repurchased from gain on sale trusts.

Net charge-offs as a percentage of our average total managed finance receivables outstanding may vary from period to period based upon the credit quality of the portfolio, average age of the portfolio and economic factors. The increase in annualized net charge-offs as a percentage of average total managed finance receivables to 8.0% for the year ended December 31, 2007 as compared to 5.8% for the year ended December 31, 2006 was due to higher charge-offs and a decrease in recoveries as a percentage of charge-offs. The increase in charge-offs was due to an increase in the average age of our portfolio, higher than expected credit losses on receivables originated in 2006 and higher mandatory charge-offs. The increase in mandatory charge-offs was due to, among other things, an increase in the average days to repossess which resulted in a greater percentage of accounts reaching 120 days’ delinquency prior to the recovery of the collateral. The decrease in recoveries as a percentage of charge-offs was primarily due to a higher level of mandatory charge-offs.

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Year Ended December 31, 2006 as Compared to Year Ended December 31, 2005

Our net income was $13.7 million for the year ended December 31, 2006, compared to $48.3 million for 2005. The decrease in net income was primarily due to higher provision for credit losses and lower other revenues, partially offset by higher net interest margin and lower expenses.

Net Interest Margin

Our revenues are primarily generated from the purchase, origination, retention, subsequent securitization and servicing of auto receivables. Our average owned finance receivables outstanding are summarized as follows:

	For the Years Ended
	December 31,
	2006		2005
	(Dollars in thousands)
Average owned finance receivables, carrying value	$	3,498,717	$	2,221,927

Average owned finance receivables increased by 57.5% for the year ended December 31, 2006 as compared to 2005. This increase was primarily attributable to an increase in new loan originations. We purchased and originated $2,650.3 million of contracts during 2006, compared to $1,880.2 million during 2005. This increase was due to a higher level of originations in our dealer channel resulting from increased efforts to sign up new dealers combined with the introduction of our third generation scorecard in December 2005.

The average new contract size was $18,619 for the year ended December 31, 2006, compared to $18,066 for 2005. The average annual percentage rate on contracts purchased and originated was 17.2% and 16.1% during the years ended December 31, 2006 and 2005, respectively.

Net interest margin on our owned finance receivables is summarized as follows:

	For the Years Ended
	December 31,
	2006			2005
	(Dollars in thousands)
Financing income	$	542,465		$	288,572
Other interest income		34,875			53,785
Interest expense		(202,929	)		(107,398	)
Net interest margin	$	374,411		$	234,959
Financing income as a percentage of average owned finance receivables		15.5	%		13.0	%

The 59.4% increase in net interest margin for the year ended December 31, 2006 as compared to 2005 was due to an increase in financing income partially offset by an increase in interest expense combined with a decrease in other interest income. Net interest margin included $56.4 million and $83.6 million of premium amortization for the year ended December 31, 2006 and for the period April 30, 2005 through December 31, 2005, respectively, related to our predecessor finance receivables held for investment and our receivables repurchased from gain on sale trusts.

The increase in financing income was due to both an increase in our average owned receivables and an increase in our average yield on receivables. The increase in our average yield on receivables to 15.5% for the year ended December 31, 2006 from 13.0% in 2005 was due in part to an increase in pricing, together with a shift to an increased concentration of contracts with a higher weighted-average coupon due to higher credit risk, combined with lower net premium amortization. Effective April 30, 2005, we adjusted predecessor finance receivables held for investment to fair market value taking into account future expected credit losses and a required rate of return commensurate with the associated risk in connection with the purchase transaction. Financing income was reduced by $56.4 million and $83.6 million of premium amortization for the year ended December 31, 2006 and 2005, respectively, related to these receivables and receivables

42

repurchased from gain on sale trusts. Excluding the premium amortization, the average yield on receivables for the years ended December 31, 2006 and 2005 would have been 17.1% and 16.7%, respectively.

During 2006, expected cash flows from predecessor finance receivables held for investment were reevaluated and determined to be greater than originally expected. This resulted in a reclassification of cash flows from nonaccretable discount to accretable discount. This also resulted in a higher net yield being recognized on these receivables during 2006 which is expected to continue in future periods.

Other interest income decreased to $34.9 million for the year ended December 31, 2006, compared to $53.8 million for 2005. This decrease was mainly due to a decrease in residual interest income caused by lower retained interest in securitized asset balances, partially offset by an increase in interest income received on restricted cash accounts.

The increase in interest expense was due to both a higher cost of funds and higher average debt levels. Our effective cost of funds was 5.7% for the year ended December 31, 2006, as compared to 4.7% for the year ended December 31, 2005, due to both higher interest rates and a greater concentration of higher-cost forms of borrowing, including our warehouse and residual loan facilities, securitization notes payable and senior notes payable. Average debt outstanding was $3,559.2 million and $2,280.7 million for 2006 and 2005, respectively.

Provision for Credit Losses

Our provision for credit losses was $256.8 million for the year ended December 31, 2006 as compared to $58.9 million for 2005. Our provision for credit losses increased significantly as a result of the increase in size of the portfolio as well as an increase in the average age, or seasoning, of the portfolio and higher net charge-offs. In addition, we experienced higher than expected losses on receivables originated after the Acquisition.

Servicing Income

Servicing income is summarized as follows:

	For the Years Ended
	December 31,
	2006		2005
	(Dollars in thousands)
Servicing fee income	$	21,966	$	42,961
Impairment charge on retained interest		—		(7,089	)
Securitization and servicing income	$	21,966	$	35,872

Servicing income decreased to $22.0 million for the year ended December 31, 2006, compared to $35.9 million for the year ended December 31, 2005. Servicing income represents servicing fees and late fees collected on sold receivables and is partially offset by impairment charges on our retained interest. The decrease in servicing income for the year ended December 31, 2006 as compared to 2005 was primarily related to a decrease in servicing fee income caused by lower average sold receivable balances. There were no impairment charges on our retained interest in securitized assets during the year ended December 31, 2006.

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Other Income

Other income is summarized as follows:

	For the Years
	Ended
	December 31,
	2006		2005
	(Dollars in thousands)
Customer fees	$	19,961	$	13,322
Gains on derivative financial instruments		691		7,432
Other		950		1,561
Other income	$	21,602	$	22,315

Our other income includes customer fees we collect on owned finance receivables, such as late charges and extension fees, proceeds from sales of gap and warranty insurance policies and payment convenience fees, and gains on derivative financial instruments. Excluding gains on derivative financial instruments, the increase in other income for the year ended December 31, 2006 as compared to 2005 was primarily due to higher customer fees attributable to higher owned receivable balances. Our derivative financial instruments are recognized on our consolidated balance sheet at fair value with changes in the value recorded in earnings as a component of other income.

Expenses

Operating expenses were $138.6 million for the year ended December 31, 2006, compared to $125.7 million for the year ended December 31, 2005. The $12.9 million increase in operating expenses for the year ended December 31, 2006 as compared to 2005 was due in part to a $2.0 million charge related to the sale of extended service contracts combined with higher costs associated with increased loan application volume, increased servicing costs related to portfolio growth and our decision to maintain lower account-to-collector ratios, together with higher compensation expense, higher outside contractor fees and higher data processing expenses. By comparison, 2005 expenses were higher due to $7.4 million in one-time charges attributable to relocation, severance and litigation settlement expenses and an additional $6.5 million incurred for the period January 1, 2005 through April 29, 2005 due to our decision to treat repossession and remarketing expenses as a component of credit losses rather than as operating expense. Annualized operating expenses as a percentage of average total managed receivables remained unchanged at 3.3% for the years ended December 31, 2006 and 2005.

Other expenses were $0 and $30.5 million for the years ended December 31, 2006 and 2005, respectively. Prior to April 30, 2005, other expenses represented write-downs to market value on loans that no longer met our securitization and sale criteria and that were subsequently transferred from our held for sale portfolio to our held for investment portfolio. In connection with our April 29, 2005 acquisition, all finance receivables were classified as held for investment, as we have the ability and intent to hold these receivables until maturity.

Income Taxes

Income tax expense was $8.9 million for the year ended December 31, 2006, as compared to $29.7 million in 2005. Our effective income tax rate was 39.6% for 2006 and 39.3% for the period April 30, 2005 through December 31, 2005. Prior to April 30, 2005, our effective income tax rate was 37.7% and was based on our intercompany tax sharing agreement with Ford Credit. The rate differential was due to an increase in the state tax rate as a result of the Acquisition.

Credit Quality

We provide financing in relatively high-risk markets, and, therefore, anticipate a corresponding higher level of delinquencies and charge-offs.

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Provisions for credit losses are charged to operations in amounts sufficient to maintain the allowance for credit losses on the balance sheet at a level considered adequate to cover our probable incurred credit losses related to impaired held for investment receivables as of the date of the balance sheet. Receivables held for investment are charged-off to the allowance for credit losses at the earlier of repossession of the collateral or when the account is otherwise deemed uncollectable. Predecessor finance receivables held for investment were adjusted to fair market value in connection with the purchase transaction taking into account future expected credit losses and a required rate of return commensurate with the associated risk.

Certain data related to our owned finance receivables are summarized as follows:

	At December 31,
	2006			2005
	(Dollars in thousands)
Finance receivables held for investment	$	3,045,938		$	1,174,775
Allowance for credit losses		(195,000	)		(51,259	)
Finance receivables held for investment, net of allowance		2,850,938			1,123,516
Allowance for credit losses as a percentage of receivables		6.4	%		4.4	%
Predecessor finance receivables held for investment, net		849,246			1,468,410
Finance receivables repurchased from gain on sale trusts, net		62,659			—
Total owned finance receivables held for investment, net	$	3,762,843		$	2,591,926

The increase in the allowance for credit losses as a percentage of receivables at December 31, 2006 as compared to December 31, 2005 was due to the continued aging of our owned finance receivables held for investment. As of December 31, 2006 and 2005, the finance receivables held for investment are aged, on a weighted average basis, 8.0 months and 3.3 months, respectively.

Finance receivables that are (1) more than 30 days delinquent, but not yet in repossession, and (2) in repossession are summarized as follows:

	At December 31,
	2006					2005
	Amount		Percent			Amount		Percent
	(Dollars in thousands)
Delinquent contracts:
31 to 60 days	$	269,861		6.7	%	$	155,009		5.7	%
Greater than 60 days		97,332		2.4			44,079		1.6
		367,193		9.1			199,088		7.3
In repossession		17,072		0.4			8,158		0.3
	$	384,265		9.5	%	$	207,246		7.6	%

Delinquencies in our receivables portfolio may vary from period to period based upon credit quality, the average age of the portfolio, seasonality within the calendar year and economic factors. Due to our target customer base, a relatively high percentage of accounts become delinquent at some point in the life of a contract and there is a fairly high rate of account movement between current and delinquent status in the portfolio. Total delinquencies, including repossessions, were higher at December 31, 2006 as compared to December 31, 2005, due to an increase in the average age, or seasoning, of our owned portfolio combined with a higher delinquency trend in the contracts originated subsequent to the Acquisition and the strategic decision to allow our pool of receivables greater than 60 days delinquent more time to make payments prior to repossession.

We at times offer payment extensions, in accordance with our policies and guidelines, to consumers to assist them when temporary financial difficulties interfere with their ability to make scheduled payments. Our policies and guidelines, as well as certain contractual restrictions in our securitization transactions, limit the

45

number and frequency of extensions that may be granted. An account for which all delinquent payments are extended is classified as current at the time the extension is granted resulting in lower delinquencies. Thereafter, such account’s delinquency status is determined in the same manner as any other account.

We evaluate the results of our extension strategies based upon the portfolio performance on accounts that have been extended versus accounts that have not been extended over the same period of time. We believe that payment extensions granted according to our policies and guidelines are an effective portfolio management technique and result in higher ultimate cash collections from the portfolio.

Payment extensions as a percentage of owned finance receivables outstanding is summarized as follows:

	At December 31,
	2006			2005
	Percent			Percent
Never extended		83.3	%		89.1	%
Extended:
1-2 times		16.4	%		10.6	%
3-4 times		0.3	%		0.3	%
Total extended		16.7	%		10.9	%
Total		100.0	%		100.0	%

Payment extensions as a percentage of total owned finance receivables increased to 16.7% at December 31, 2006 compared with 10.9% in 2005, mainly driven by an increase in 1-2 times payment extensions which increased to 16.4% at December 31, 2006 as compared to 10.6% in same period last year. The increase in payment extensions is primarily due to an increase in the average age, or seasoning, of our portfolio. In addition, we adopted a strategy to increase the number of extensions granted on a seasonal basis, as our historical data indicated that contracts extended are more likely than not to result in additional collections over the life of the contract. We continue to monitor our extension strategy, and we believe that the judicious use of payment extensions is an effective portfolio management technique.

Payment extensions do not have a direct impact on the amount of our finance receivables charged-off and the corresponding credit quality ratios. Payment extensions may, however, impact the timing of these charge-offs in the event a previously extended account is ultimately charged-off. Additionally, the impact of payment extensions is considered in determining the allowance for credit losses and the resulting provision for credit losses.

Charge-off data with respect to our average owned finance receivables is summarized as follows:

	For the Years Ended
	December 31,
	2006			2005
	(Dollars in thousands)
Repossession charge-offs	$	269,935		$	143,669
Less: Sale proceeds and recoveries		(160,422	)		(91,868	)
Mandatory charge-offs(1)		83,000			43,816
Net charge-offs(2)	$	192,513		$	95,617
Net charge-offs as a percentage of average total owned receivables outstanding		5.5	%		4.3	%
Sale proceeds and recoveries as a percentage of charge-offs		45.5	%		49.0	%

(1) Mandatory charge-offs represent accounts charged-off in full with no recovery amounts realized at time of charge-off.

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(2) Net charge-offs for our owned portfolio include charge-offs from our finance receivables held for investment, our predecessor finance receivables held for investment and our finance receivables repurchased from gain on sale trusts.

Net charge-offs as a percentage of our average owned finance receivables outstanding may vary from period to period based upon the credit quality of the portfolio, average age or seasoning of the portfolio and economic factors. The increase in net charge-offs as a percentage of average owned finance receivables to 5.5% for the year ended December 31, 2006 as compared to 4.3% for 2005 was primarily due to higher charge-offs. The increase in charge-offs was due to an increase in the average age, or seasoning, of our portfolio combined with the inclusion of repossession and remarketing expenses as a component of credit losses as well as higher than expected credit losses on receivables originated after the Acquisition. Subsequent to April 29, 2005, repossession and remarketing expenses on our owned finance receivables are no longer classified as operating expenses, but rather a component of credit losses on charged-off receivable balances. The decrease in recoveries as a percentage of charge-offs were primarily attributable to the inclusion of repossession and remarketing expenses as a component of credit losses beginning April 30, 2005.

Total Managed Information

We evaluate the profitability of our lending activities based partly upon our total managed auto finance receivables portfolio, including both owned finance receivables and sold finance receivables. We have historically securitized our receivables in transactions that met the criteria for a sale of such receivables. The net margin and credit quality information presented below on a total managed basis assumes that securitized and sold receivables had not been sold and are still on our consolidated balance sheet. Accordingly, no gain on sale or servicing fee income would have been recognized. Instead, finance charge and fee income would be recognized over the life of the securitized receivables as accrued, and interest expense and other costs related to the asset-backed securities would be recognized as incurred.

We use this information to analyze trends in the components of the profitability of our total managed receivables portfolio. Analysis of this data on a total managed basis helps us to determine which origination channels and finance products are most profitable, guide us in making pricing decisions for finance products and indicates if sufficient spreads exist between our revenues and cost of funds to cover operating expenses and achieve corporate profitability objectives. Additionally, total managed information facilitates comparisons of our results with other finance companies that do not securitize their receivables or other finance companies that securitize their receivables in securitization transactions that do not meet the criteria for sales of receivables. Total managed information is not a measurement of financial performance under GAAP and should not be considered as an alternative to any other measures of performance determined under GAAP.

Beginning with our May 2005 securitization transaction, we altered the structure of our securitization transactions to no longer meet the criteria for sales of auto receivables, but instead to meet the criteria for on-balance sheet reporting. Accordingly, following a securitization accounted for as a secured financing, the receivables and the related securitization indebtedness will remain on our balance sheet. Additionally, we will recognize finance revenue and fee income on the receivables and interest expense on the securities issued in the securitization and record a provision for credit losses over the life of the securitization. As a result of this change, our provision for credit losses and our net margin have increased significantly, with our provision for credit losses increasing initially at a greater rate than our net margin because we began recording a provision for credit losses upon the purchase of each contract. In addition, our securitization income and net income have decreased, with no change to our cash flows, as a result of this accounting change.

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Our average total managed finance receivables outstanding are summarized as follows:

	For the Years Ended
	December 31,
	2006		2005
	(Dollars in thousands)
Average owned finance receivables, carrying value	$	3,498,717	$	2,221,927
Average sold finance receivables		765,416		1,573,103
Average total managed finance receivables	$	4,264,133	$	3,795,030

Total Managed Net Interest Margin

Net interest margin for our total managed receivables portfolio are summarized as follows:

	For the Years Ended
	December 31,
	2006			2005
	(Dollars in thousands)
Financing income and customer fees	$	746,843		$	646,148
Interest expense		(226,865	)		(143,428	)
Net interest margin	$	519,978		$	504,720

Reconciliation of net interest margin as reflected in our consolidated statements of income to total managed net interest margin is summarized as follows:

	For the Years Ended
	December 31,
	2006			2005
	(Dollars in thousands)
Net margin as reflected on the consolidated statements of income	$	374,411		$	234,959
Other interest income		(34,875	)		(53,784	)
Financing revenue on sold receivables		128,039			262,691
Interest expense on sold receivables		(24,627	)		(43,462	)
Gain (losses) on forward-starting swap agreements		691			7,432
Premium amortization		56,378			83,562
Customer fees		19,961			13,322
Total managed net interest margin	$	519,978		$	504,720

Net interest margin as a percentage of average total managed receivables is summarized as follows:

	For the Years Ended
	December 31,
	2006			2005
Finance income and customer fees		17.5	%		17.1	%
Interest expense		(5.3	)		(3.8	)
Net interest margin as a percentage of average total managed receivables		12.2	%		13.3	%

Net interest margin as a percentage of average total managed receivables decreased to 12.2.% for the year ended December 31, 2006 as compared to 13.3% for the same period last year. This decrease was mainly due to higher interest expense. The increase in interest expense was due to higher interest rates, the impact of lower gains on interest rate swaps, and higher cost forms of borrowing. Excluding gain (losses) on interest rate swaps, annualized net interest margin as a percentage of average total managed receivables would have been 12.2% and 13.1%, respectively, for the year ended December 31, 2006 and 2005.

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Total Managed Credit Quality

We have periodically sold receivables in securitization transactions to Trusts and retained an interest in the receivables sold in the form of retained interests in securitized assets. Retained interests in securitized assets are reflected on our balance sheet at fair value, calculated based upon the present value of estimated excess future cash flows from the Trusts using, among other assumptions, probable future cumulative credit losses on the receivables sold. Charge-offs of receivables that have been sold to Trusts decrease the amount of excess future cash flows from the Trusts. If such charge-offs are expected to exceed our original probable cumulative credit losses, the fair value of retained interest in securitized assets could be written down through an impairment charge to earnings.

Certain data related to our total managed receivables finance receivable portfolio are summarized as follows:

	At December 31, 2006
	Owned		Sold		Total Managed
	(Dollars in thousands)
Owned finance receivables, unpaid principal balance	$	4,032,551	$	—	$	4,032,551
Sold finance receivables		—		484,818		484,818
Total managed finance receivables	$	4,032,551	$	484,818	$	4,517,369
Number of outstanding contracts		264,559		55,802		320,361
Average principal amount of outstanding contracts (in dollars)	$	15,243	$	8,688	$	14,101

	At December 31, 2005
	Owned		Sold		Total Managed
	(Dollars in thousands)
Owned finance receivables, unpaid principal balance	$	2,736,183	$	—	$	2,736,183
Sold finance receivables		—		1,130,352		1,130,352
Total managed finance receivables	$	2,736,183	$	1,130,352	$	3,866,535
Number of outstanding contracts		176,617		112,317		288,934
Average principal amount of outstanding contracts (in dollars)	$	15,492	$	10,064	$	13,382

Receivables that are (1) more than 30 days delinquent, but not yet in repossession, and (2) in repossession are summarized as follows:

	At December 31, 2006
	Owned					Sold					Total Managed
	Amount		Percent			Amount		Percent			Amount		Percent
	(Dollars in thousands)
Delinquent contracts:
31 to 60 days	$	269,861		6.7	%	$	51,827		10.7	%	$	321,688		7.1	%
Greater than 60 days		97,332		2.4			17,970		3.7			115,302		2.6
		367,193		9.1			69,797		14.4			436,990		9.7
In repossession		17,072		0.4			4,819		1.0			21,891		0.5
	$	384,265		9.5	%	$	74,616		15.4	%	$	458,881		10.2	%

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	At December 31, 2005
	Owned					Sold					Total Managed
	Amount		Percent			Amount		Percent			Amount		Percent
	(Dollars in thousands)
Delinquent contracts:
31 to 60 days	$	155,009		5.7	%	$	120,474		10.7	%	$	275,483		7.1	%
Greater than 60 days		44,079		1.6			37,240		3.3			81,319		2.1
		199,088		7.3			157,714		14.0			356,802		9.2
In repossession		8,158		0.3			13,476		1.2			21,634		0.6
	$	207,246		7.6	%	$	171,190		15.2	%	$	378,436		9.8	%

Delinquencies in our total managed receivables portfolio may vary from period to period based upon credit quality, the average age or seasoning of the portfolio, seasonality within the calendar year and economic factors. Delinquencies for our total managed portfolio were higher at December 31, 2006 compared to 2005 due to a higher delinquency trend in the contracts originated subsequent to the Acquisition and the strategic decision to allow our pool of receivables greater than 60 days delinquent more time to make payments prior to repossession.

We at times offer payment extensions, in accordance with our policies and guidelines, to consumers to assist them when temporary financial difficulties interfere with their ability to make scheduled payments. Our policies and guidelines, as well as certain contractual restrictions in our securitization transactions, limit the number and frequency of extensions that may be granted. An account for which all delinquent payments are extended is classified as current at the time the extension is granted resulting in lower delinquencies. Thereafter, such account’s delinquency status is determined in the same manner as any other account.

We evaluate the results of our extension strategies based upon the portfolio performance on accounts that have been extended versus accounts that have not been extended over the same period of time. We believe that payment extensions granted according to our policies and guidelines are an effective portfolio management technique and result in higher ultimate cash collections from the portfolio.

The following is a summary of payment extensions as a percentage of owned, sold and total managed receivables outstanding:

	At December 31, 2006
	Owned			Sold			Total Managed
Never extended		83.3	%		53.1	%		80.1	%
Extended:
1-2 times		16.4	%		43.8	%		19.3	%
3-4 times		0.3	%		3.1	%		0.6	%
Total extended		16.7	%		46.9	%		19.9	%
Total		100.0	%		100.0	%		100.0	%

	At December 31, 2005
	Owned			Sold			Total Managed
Never extended		89.1	%		60.8	%		80.8	%
Extended:
1-2 times		10.6	%		37.7	%		18.5	%
3-4 times		0.3	%		1.5	%		0.7	%
Total extended		10.9	%		39.2	%		19.2	%
Total		100.0	%		100.0	%		100.0	%

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The increase in payment extensions is primarily due to an increase in the average age, or seasoning, of our portfolio. At December 31, 2006 and 2005, our sold receivables portfolio was more seasoned than our owned receivables and therefore, had a higher level of extensions. In addition, we adopted a strategy to increase the number of extensions granted on a seasonal basis, as our historical data indicated that contracts extended are more likely than not to result in additional collections over the life of the contract. We continue to monitor our extension strategy, and we believe that the judicious use of payment extensions is an effective portfolio management technique.

Payment extensions do not have a direct impact on the amount of our finance receivables charged-off and the corresponding credit quality ratios. Payment extensions may, however, impact the timing of these charge-offs in the event a previously extended account is ultimately charged-off. Additionally, the impact of payment extensions is considered in determining the allowance for credit losses and the resulting provision for credit losses.

Charge-off data with respect to our finance receivables portfolio is summarized as follows:

	For the Years Ended
	December 31,
	2006			2005
	(Dollars in thousands)
Owned:
Repossession charge-offs	$	269,935		$	143,669
Less: Sale proceeds and recoveries		(160,422	)		(91,868	)
Mandatory charge-offs(1)		83,000			43,816
Net charge-offs(2)	$	192,513		$	95,617
Sold:
Charge-offs	$	109,092		$	231,026
Less: Sale proceeds and recoveries		(55,213	)		(94,990	)
Mandatory charge-offs(1)		—			—
Net charge-offs	$	53,879		$	136,036
Total Managed:
Repossession charge-offs	$	379,027		$	374,695
Less: Sale proceeds and recoveries		(215,635	)		(186,858	)
Mandatory charge-offs(1)		83,000			43,816
Net charge-offs	$	246,392		$	231,653
Net charge-offs as a percentage of average total managed receivables outstanding		5.8	%		6.1	%
Sale proceeds and recoveries as a percentage of charge-offs		46.7	%		44.6	%

(1)	Mandatory charge-offs represent accounts charged-off in full with no recovery amounts realized at time of charge-off.
(2)	Net charge-offs for our owned portfolio include charge-offs from our finance receivables held for investment, our predecessor finance receivables held for investment and our finance receivables repurchased from gain on sale trusts.

Net charge-offs as a percentage of average total managed receivables outstanding may vary from period to period based upon credit quality, the average age or seasoning of the portfolio and economic factors. Net charge-offs as a percentage of average total managed receivables were 5.8% for the year ended December 31, 2006 as compared to 6.1% for 2005.

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The decrease in annualized net charge-offs as a percentage of average total managed finance receivables was primarily due to increases in recoveries as a percentage of charge-offs partially offset by higher charge-offs in the owned portfolio. The increase in recoveries as a percentage of charge-offs was primarily due to increases in recovery rates from auction sales.

Liquidity and Capital Resources

General

Our primary sources of cash are borrowings on our warehouse and residual loan facilities, securitization notes payable and senior notes payable. Prior to April 30, 2005, our primary source of cash had been advances from Ford Credit and sales of auto receivables to Trusts in securitization transactions. Our primary uses of cash have been purchases of receivables, operating costs and expenses and funding credit enhancement requirements for securitization transactions and debt service requirements.

Net cash provided by (used in) operating activities was $285.4 million, $252.4 million and $(213.0) million during 2007, 2006 and 2005, respectively. Cash flows from operating activities are affected by net income (loss) as adjusted for non-cash items, including depreciation and amortization, provisions for credit losses, deferred income taxes, accretion of present value discount, amortization of purchase premiums, impairment charges and gains and losses. The $285.4 million of cash flows provided by operating activities for the year ended December 31, 2007 was primarily due to $284.5 million of provision for credit losses partially offset by $10.6 million of net loss. The $252.4 million of cash flows provided by operating activities for the year ended December 31, 2006 was primarily due to $13.7 million of net income combined with $256.8 million of provision for credit losses. The $213.0 million of cash flows used in operating activities for the year ended December 31, 2005 was primarily due to $627.4 million in purchases of receivables held for sale for the year ended December 31, 2005 partially offset by $215.3 million in collections on finance receivables held for sale and $48.3 million in net income.

Net cash used in investing activities was $1.1 million, $1,485.5 million and $1,178.0 million in 2007, 2006 and 2005, respectively. Cash flows from investing activities are highly dependent upon purchases of and collections on finance receivables held for investment. The $1,484.4 million decrease in cash flows used in investing activities for the year ended December 31, 2007 as compared to 2006 was primarily due to a $1,302.4 million decrease in purchases of finance receivables held for investment. The $307.5 million increase in cash flows used in investing activities for the year ended December 31, 2006 as compared to 2005 was primarily due to a $1,402.4 million increase in purchases of finance receivables held for investment and a $131.0 million increase in repurchases from gain on sale trusts, partially offset by a $666.1 million increase in collections on finance receivables held for investment. Additionally, cash flows used in investing activities for the year ended December 31, 2005 included $553.5 million related to the acquisition of Triad Financial Corporation

Net cash (used in) provided by financing activities was $(292.2) million, $1,248.2 million and $1,410.5 million in 2007, 2006 and 2005, respectively. Cash flows from financing activities reflect the net change in amounts required to be borrowed under our various revolving and term borrowing facilities. The $292.2 million of cash used in financing activities for the year ended December 31, 2007 was due to $1,436.1 million in payments on securitization notes, $194.7 million in net change in warehouse and residual credit facilities and $30.0 million in redemption of preferred stock, partially offset by $1,373.4 million in proceeds from issuance of securitization notes. The $1,248.2 million of cash provided by financing activities for the year ended December 31, 2006 was due to $2,830.0 million in proceeds from issuance of securitization notes and $30.0 million in proceeds from issuance of preferred stock, partially offset by $1,144.0 million in payments on securitization notes and $406.7 million in net change in warehouse and residual credit facilities. The $1,410.5 million of cash provided by financing activities for the year ended December 31, 2005 was due to $2,009.2 million in proceeds from issuance of securitization notes and $935.8 million in net change in warehouse and residual credit facilities, partially offset by $1,564.6 million in net change in due to Ford Credit.

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Prior to the Acquisition, we had an agreement with Ford Credit that provided us with advances to purchase retail installment sale contracts from dealers, to originate loans directly to consumers and to supply our working capital. Our agreement with Ford Credit had been in effect since March 5, 2003, was automatically extended on March 15 of each year and had a maturity date of March 15, 2006. The agreement provided for a maximum of $3.0 billion of advances to us. The agreement provided for payment of a fixed interest rate for the existing term loan and a variable interest rate derived from published market indices for the existing revolving loan. These agreements were terminated in connection with the Acquisition and all amounts due to Ford Credit thereunder were repaid.

Throughout most of 2007, we had two warehouse lending facilities and two residual facilities. We used borrowings under these facilities initially to fund a portion of the purchase price of the Acquisition and to repay amounts due to Ford Credit. The warehouse facilities funded most of our ongoing origination and acquisition of contracts, and the residual facilities provided us with working capital. Special purpose subsidiaries are the borrowers under these facilities.

The Company’s warehouse and residual loan facilities with Goldman Sachs Mortgage Company, due October 2007, were paid off on October 26, 2007. The funds necessary to pay off the facilities were obtained through the transfer of collateral to, and simultaneous additional advances on the Company’s other warehouse and residual facilities, due April 2009 with Citigroup Global Markets Realty Corp.

On January 10, 2008, we entered into a warehouse facility with Barclays Bank PLC. This facility provides up to $500.0 million of funding for automobile retail installment sales contract receivables originated or purchased by us. The facility has a two year commitment but may expire after 364 days if the liquidity facility is not renewed. The Company will provide a guarantee under the warehouse facility equal to 10% of the amount outstanding at the time the guarantee is drawn.

Based on our anticipated level of originations, we believe our cash flow from operations, available cash and available borrowings under our warehouse and residual facilities will provide us with sufficient liquidity to fund originations on an interim basis until a sufficient amount of receivables can be pooled together for subsequent securitizations. In anticipation of continued uncertainty in the securitization markets in the near term, we have taken steps to adjust our origination targets by, among other things, reducing the number of dealers from whom we buy contracts, and discontinuing or modifying our relationships with companies that provide us with direct loan applications. We believe the steps we have taken to adjust our origination targets are sufficient to address the problems currently being experienced in the asset-backed securitization market for non-prime loan originations. In the event that the securitization market does not become more conducive to transactions, we may be forced to take further steps to further reduce our loan originations. Subject to these market conditions, we plan to continue to access the securitization market throughout the year in order to obtain additional liquidity.

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Contractual and Long-Term Debt Obligations

The following table summarizes the scheduled payments under our contractual long-term debt obligations at December 31, 2007:

	Payments Due by Period
	Less than		1 to		3 to		More than
	1 Year		3 Years		5 Years		5 Years		Total
	(Dollars in thousands)
Operating leases	$	3,322	$	6,800	$	4,676	$	—	$	14,798
Warehouse payable		280,390		—		—		—		280,390
Residual financing		54,000		—		—		—		54,000
Securitization notes payable		1,417,483		1,778,006		—		—		3,195,489
Senior notes		—		—		—		149,256		149,256
Estimated interest payments on debt		164,046		104,019		33,750		7,031		308,846
Total	$	1,919,241	$	1,888,825	$	38,426	$	156,287	$	4,002,779

Securitizations

We completed twelve auto receivables securitization transactions from August 2002 through December 31, 2007. In these transactions, we securitized approximately $10.9 billion of automobile receivables, issuing $9.9 billion of class A notes. The proceeds from the transactions were primarily used to repay borrowings outstanding under our previous intercompany credit facility with Ford Credit and our warehouse facilities.

We have pursued a strategy of securitizing our receivables to diversify our funding, improve liquidity and obtain a cost-effective source of funds for the purchase of additional automobile finance contracts. In general, we believe that the securitization program provides us with necessary working capital at rates that are much lower than we could obtain through our own unsecured or secured corporate debt obligations.

At December 31, 2007, the cumulative net loss ratio for the Company’s 2006-C securitization trust exceeded one of its target ratios. As a result, the credit enhancement requirement to maintain cash reserves as a percentage of the portfolio immediately increased from 2% to 3%, resulting in a delay in cash distributions to the Company. This requirement will remain at 3% until the trust is back in compliance with its target for three consecutive months. At January 31, 2008, the cumulative net loss ratio for the Company’s 2006-B securitization trust exceeded one of its target ratios as well. That credit enhancement requirement also immediately increased from 2% to 3%, where it will remain until the trust is back in compliance with its target for three consecutive months.

Deterioration in the economy could cause one or more of the ratios to exceed the targeted levels, resulting in stress on our liquidity position. If that occurred, we could be required to significantly decrease contract origination activities, and implement other significant expense reductions, if securitization distributions to us are materially decreased for a prolonged period of time.

The past several months have seen unprecedented turmoil in the global credit markets in general, and the asset-backed securitization markets in particular. The Company executed an insured securitization in November 2007, and there have been no subsequent insured, non-prime automobile asset-backed securities issued publicly as of February 29, 2008.

The well-publicized problems involving credit insurance providers may also have an impact on our ability to execute securitizations. Recently, AMBAC, Inc., which has provided credit enhancement insurance on three of our securitization transactions since May 2005, announced that they would not provide such insurance on automobile securitizations in the future. Those companies that continue to provide credit enhancement insurance may be less likely to do so at the rates and on the terms at which prior transactions were executed in 2006 and early 2007.

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Anticipating the possibility that there will be limited access to the securitization markets, we have continued to revise our credit origination strategies. We have continued to selectively reduce the number of dealers from which we purchase contracts. We have also reduced staff among our sales and underwriting departments, and have made changes to our credit underwriting criteria. In our direct channel, we have ceased accepting on-line applications from some sources, and have implemented similar changes to our credit underwriting criteria.

We believe these changes will enable us to maintain a robust credit originations process in 2008. However, if the asset-backed securities market suffers from further deterioration, or the credit markets do not begin to stabilize and rebound, we may have to make further adjustments to our targeted origination volumes.

We believe that we will continue to require the execution of securitization transactions, along with borrowings under our warehouse and residual facilities, in order to fund our future liquidity needs. There can be no assurance that funding will be available to us through these sources or, if available, that it will be on terms acceptable to us. If these sources of funding are unavailable to us on a regular basis, we may be required to significantly decrease contract origination activities and implement significant expense reductions, all of which may have a material adverse affect on our ability to achieve our business and financial objectives.

During 2005, 2006 and 2007 we completed two, three and two securitizations, respectively. Our last securitization was in November 2007. Subject to market conditions and origination volume, we expect that we will continue to access the securitization markets.

Off-Balance Sheet Arrangements

Prior to our May 2005 securitization transaction, we structured our securitization transactions to meet the criteria for sales of finance receivables. Under this structure, notes issued by our unconsolidated qualified special purpose finance subsidiaries are not recorded as a liability on our consolidated balance sheets. Beginning with the securitization completed in May 2005, our securitization transactions are being structured to meet the criteria for on-balance sheet reporting.

Recent Accounting Pronouncements

In February 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities including an amendment of FASB Statement No. 115” (“SFAS 159”) which provides companies with an option to report selected financial assets and liabilities at fair value. The standard’s objective is to reduce both complexity in accounting for financial instruments and the volatility in earnings caused by measuring related assets and liabilities differently. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year beginning after November 15, 2007. The Company has elected not to report any assets or liabilities at fair value in accordance with SFAS No. 159.

In September 2006, FASB issued SFAS No. 157, “Fair Value Measurements” which provides enhanced guidance for using fair value to measure assets and liabilities. The standard applies whenever other standards require or permit assets or liabilities to be measured at fair value. The standard does not expand the use of fair value in any new circumstances. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. Early adoption is permitted. The Company does not anticipate the adoption of SFAS No. 157 to have a material impact on its statement of financial condition, its statement of operations or its cash flows.

ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

General

Our earnings are affected by changes in interest rates as a result of our dependence upon the issuance of fixed and variable rate securities and the incurrence of variable rate debt to fund the purchase of auto finance

55

contracts. Fluctuations in market interest rates impact the interest payments required under our warehouse and residual facilities, as well as the interest to be paid in future securitization transactions. We may utilize several strategies to minimize the impact of interest rate fluctuations on our net interest income, including the use of derivative financial instruments and the regular securitization of auto finance contracts.

Warehouse and Residual Facilities

In our contract origination process, we purchase auto finance contracts and make loans that bear fixed interest rates and are pledged to secure borrowings under our warehouse facilities. Amounts borrowed under our warehouse facilities will bear variable interest rates. We intend to utilize our warehouse facilities to fund receivables until we accumulate a portfolio of sufficient size to securitize. To mitigate the risk of fluctuations in interest rates prior to a securitization, we have utilized forward-starting swap agreements on a periodic basis. If interest rates are above the forward-starting swap rate on the pricing date of a securitization, the purchaser of the forward-starting swap agreement will pay us for the increase in interest rates. Likewise, if interest rates are below the locked rate on the pricing date of a securitization, we will pay the purchaser of the forward-starting swap agreement for the decrease in interest rates. Therefore, regardless of whether interest rates increase or decrease between the date auto finance contracts are originated and the date these contracts are securitized, we will have locked in the cost of funds on outstanding notional amounts and the gross interest rate spread of our auto finance contracts. Unlike traditional swaps, a forward-starting swap has only one cash exchange at settlement. We may also utilize a swaption collar strategy. In this strategy, we buy a payer swaption and sell a receiver swaption, thereby limiting our cost of funds to an upper and lower bound, or strike level. We will make payment if interest rates fall below the lower strike rate and receive a payment if interest rates rise above the higher strike rate. If rates remain between the upper and lower strike rates, then no payment is made. Other derivative financial instruments may be utilized if considered advantageous by us in managing the risk of interest rate fluctuations.

Our derivative financial instruments are recognized on our consolidated balance sheet at fair value with changes in the value recorded in earnings as a component of other income. Our derivative financial instruments include forward-starting swap agreements utilized to lock in the cost of funds on outstanding notional amounts of receivables prior to their securitization. During 2007, our derivative financial instruments also included interest rate swap agreements utilized to convert variable rate exposure on our 2007 securitization transactions to fixed rates. For the year ended December 31, 2007, our $17.5 million in losses on derivative financial instruments was comprised of $9.7 million in losses on our interest rate swap agreements and $7.8 million in losses on our forward-starting swap agreements. These losses were a result of a declining interest rate environment throughout the latter half of the year. For the year ended December 31, 2006, our $0.7 million in gains on derivative financial instruments were comprised entirely of gains on forward-starting swap agreements.

Throughout 2005, 2006 and 2007, we utilized forward-starting swap agreements to lock in the cost of funds on outstanding notional amounts of receivables prior to their securitization. We have entered into only one forward- starting swap agreement since October 2007 due to the uncertainty in the interest rate environment. We continue to evaluate this strategy and may resume the use of forward-starting swap agreements in the future.

Our residual credit facility is indexed to the one-month London Interbank Offered Rate (“LIBOR”) and is secured by residual assets pledged to the facility. Additionally, the residual facility bears a varying spread to LIBOR depending upon the amount advanced in the residual facility and the value of the pledged residual assets. The value of the pledged residual assets will be regularly assessed based on expected future cash flows. Changes in market interest rates could change the discount rate used to value the pledged residual assets and alter the value of the residual assets and cause the agreed upon spread to LIBOR to increase or decrease. We intend to utilize the residual facility to provide credit enhancements and support our working capital needs and may utilize derivative financial instruments to minimize the risk of interest rate fluctuations if deemed appropriate.

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Securitizations

We plan to access the securitization market to provide for long-term funding of our contracts. The interest rates demanded by investors in our future securitization transactions will depend on prevailing market interest rates for comparable transactions and the general interest rate environment. We may utilize several strategies to minimize the impact of interest rate fluctuations on our net interest income, including the use of derivative financial instruments, the regular securitization of contracts and pre-funding securitizations.

In our securitization transactions, we sell fixed rate contracts to Trusts that then issue either fixed rate or floating rate securities to investors. The fixed rates on securities issued by the Trusts are indexed to market interest rate swap spreads for transactions of similar duration and do not fluctuate during the term of the securitization. The floating rates on securities issued by the Trusts are indexed to LIBOR and fluctuate periodically based on movements in LIBOR. We have utilized derivative financial instruments, such as interest rate swap agreements, to convert variable rate exposures of the Trusts on these floating rate securities to fixed rates, thereby locking in the gross interest rate spread to be earned by the Trusts over the life of each securitization. Derivative financial instruments purchased by us do not impact the amount of cash flows to be received by holders of the asset-backed securities issued by the Trusts. These instruments serve to offset the impact of increased or decreased interest paid by the Trusts on floating rate asset-backed securities and, therefore, the cash flows to be received by us from the Trusts.

We may also pre-fund securitizations, thereby allowing us to lock in borrowing costs with respect to auto finance contracts subsequently delivered to the Trusts. To pre-fund a securitization, we will issue more asset-backed securities than necessary to cover contracts initially sold or pledged to the Trust. The proceeds from the pre-funded portion are held in an escrow account until additional contracts are delivered to the Trust in amounts up to the pre-funded balance held in the escrow account. We will incur an expense in pre-funded securitizations during the period between the initial securitization and the subsequent delivery of contracts equal to the difference between the interest earned on the proceeds held in the escrow account and the interest rate paid on the asset-backed securities outstanding.

Interest Rate Swap Agreements

We periodically enter into interest rate swap agreements whereby we pay a fixed interest rate and receive a variable interest rate. If interest rates increase and are above the starting-swap rate on the settlement date, the market value of the forward-starting swap is positive, and we will receive an amount from the counterparty equal to such market value. Likewise, if the market value is negative on the settlement date, we will pay an amount to the counterparty equal to such market value. These agreements are intended to ensure the economics of future securitization transactions and minimize the risk of interest rate fluctuations on our gross interest rate margin prior to the execution of securitization transactions.

Interest Rate Sensitivity

The following tables provide information about our financial assets and liabilities, as well as our existing derivative financial instruments that are sensitive to changes in interest rates at December 31, 2007 and 2006. For contracts and liabilities with contractual maturities secured by contracts, the table presents principal cash flows and related weighted average interest rates by contractual maturities, as well as our historical experience of the impact of interest rate fluctuations on the credit loss and prepayment of contracts. For our existing forward-starting and interest rate swap agreements, the table presents the notional amount and weighted average interest rate by contractual maturity date. The notional amount is used to calculate the contractual payment to be exchanged under the contract.

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The following table provides information about our interest rate-sensitive financial instruments by expected maturity as of December 31, 2007.

	For the Year Ending December 31,
	2008			2009			2010			2011			2012			Thereafter			Total
	(Dollars in thousands)
Rate Sensitive Assets:
Finance receivables held for investment	$	1,199,677		$	882,239		$	561,094		$	327,851		$	127,206		$	25,969		$	3,124,036
Average interest rate		16.19	%		15.91	%		15.60	%		14.81	%		12.20	%		12.20	%		15.90	%
Predecessor finance receivables held for investment, net		280,319			165,537			29,440			—			—		$	—			475,296
Average interest rate		12.91	%		12.91	%		12.91	%		—			—			—			12.91	%
Finance receivables repurchased from gain on sale trusts, net		110,995			12,977			—			—			—			—			123,972
Average interest rate		12.50	%		12.50	%		—			—			—			—			12.50	%
Retained interest in securitized assets		10,916			—			—			—			—			—			10,916
Average interest rate		16.00	%		—			—			—			—			—			16.00	%
Rate Sensitive Liabilities:
Warehouse payable		280,390			—			—			—			—			—			280,390
Average interest rate		5.05	%		—			—			—			—			—			5.05	%
Residual financing		54,000			—			—			—			—			—			54,000
Average interest rate		7.10	%		—			—			—			—			—			7.10	%
Securitization notes payable		1,417,483			1,013,272			764,734			—			—			—			3,195,489
Average interest rate		5.11	%		5.33	%		5.49	%		—			—			—			5.27	%
Senior notes		—			—			—			—			—			149,256			149,256
Average interest rate		—			—			—			—			—			11.25	%		11.25	%
Interest Rate Swaps and Derivatives:
Forward-starting swap agreements Notional amount		75,908			—			—			—			—			—			75,908
Average pay rate		4.38	%		—			—			—			—			—			4.38	%
Average receive rate		4.78	%		—			—			—			—			—			4.78	%
Interest rate swap agreements Notional amount		—			—			—			1,125,310			216,000			300,000			1,641,310
Average pay rate		—			—			—			4.65	%		4.65	%		4.65	%		4.65	%
Average receive rate		—			—			—			4.60	%		4.60	%		4.60	%		4.60	%

58

The following table provides information about our interest rate-sensitive financial instruments by expected maturity as of December 31, 2006.

	For the Year Ending December 31,
	2007			2008			2009			2010			2011			Thereafter			Total
	(Dollars in thousands)
Rate Sensitive Assets:
Finance receivables held for investment	$	1,035,241		$	845,155		$	610,323		$	149,173		$	267,990		$	138,056		$	3,045,938
Average interest rate		17.20	%		17.20	%		17.20	%		17.20	%		17.20	%		17.20	%		17.20	%
Predecessor finance receivables held for investment, net		407,957			241,639			138,276			58,129			3,245			—			849,246
Average interest rate		12.64	%		12.64	%		12.64	%		12.64	%		12.64	%		—			12.64	%
Finance receivables repurchased from gain on sale trusts, net		62,659			—			—			—			—			—			62,659
Average interest rate		17.00	%		—			—			—			—			—			17.00	%
Retained interest in securitized assets		97,647			4,884			—			—			—			—			102,531
Average interest rate		16.00	%		16.00	%		—			—			—			—			16.00	%
Rate Sensitive Liabilities:
Warehouse payable		434,131			—			—			—			—			—			434,131
Average interest rate		5.83	%		—			—			—			—			—			5.83	%
Residual financing		95,000			—			—			—			—			—			95,000
Average interest rate		7.88	%		—			—			—			—			—			7.88	%
Securitization notes payable		1,256,724			1,048,672			522,838			429,981			—			—			3,258,215
Average interest rate		4.90	%		4.85	%		5.26	%		5.37	%		—			—			5.00	%
Senior notes		—			—			—			—			—			149,167			149,167
Average interest rate		—			—			—			—			—			11.25	%		11.25	%
Interest Rate Derivatives:
Interest rate swap agreements Notional amount		403,703			—			—			—			—			—			403,703
Average pay rate		4.73	%		—			—			—			—			—			4.73	%
Average receive rate		5.16	%		—			—			—			—			—			5.16	%

Our existing receivables held for sale were reclassified as held for investment as we ceased using gain-on-sale accounting as of the close of the Acquisition. With respect to held for investment receivables, credit loss and prepayment assumptions are consistent with our historical experience. Our residual assets are estimated to be realized in future periods using discount rate, prepayment and credit loss assumptions consistent with our historical experience. The principal amounts of the warehouse and residual facilities have been classified based on their expected payoff. We expect to replace the funding of the held for investment receivables pledged to the warehouse facilities with future securitization transactions.

The notional amount on the forward-starting swap agreement is based on contractual terms. The notional amount does not represent amounts exchanged by parties and, thus, is not a measure of our exposure to loss through this agreement.

Management monitors the interest rate environment and may employ pre-funding and other hedging strategies designed to mitigate the impact of changes in interest rates. However, we can provide no assurance that pre-funding or other hedging strategies will mitigate the impact of changes in interest rates. Our profitability may be directly affected by the level of and fluctuations in interest rates, which affects the gross interest rate spread we earn on our receivables. As the level of interest rates increases, our gross interest rate spread on new originations will generally decline because the rates charged on the contracts we originated or purchased from dealers are limited by statutory maximums, restricting our opportunity to pass on increased interest costs to consumers. We believe that our profitability and liquidity could be adversely affected during any period of higher interest rates, possibly to a material degree. Fed funds rates decreased during 2007 to 4.25%, a decrease of 1.0% as compared to 2006. The Federal Reserve reduced rates an additional 1.25% in January 2008 and 0.75% in March 2008 pushing the fed funds rate to 2.25%.

59

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

The following financial statements and reports of independent registered public accounting firm are included herein:

	Page
Audited Consolidated Financial Statements:
Report of Management on Internal Control Over Financial Reporting		61
Reports of Independent Registered Public Accounting Firm		62-63
Consolidated Balance Sheets		64
Consolidated Statements of Operations		65
Consolidated Statements of Stockholder’s Equity		66
Consolidated Statements of Cash Flows		67
Notes to Consolidated Financial Statements		68

60

Report of Management on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of the Company’s internal control over financial reporting. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2007. In making its assessment of the effectiveness of the Company’s internal control over financial reporting, management of the Company has utilized the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on management’s assessment, we concluded that, as of December 31, 2007, the Company’s internal control over financial reporting is effective based on those criteria.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

/s/  Daniel D. Leonard

Daniel D. Leonard

President & Chief Executive Officer

Date: March 28, 2008

/s/  Mike L. Wilhelms

Mike L. Wilhelms

Senior Vice President & Chief Financial Officer

Date: March 28, 2008

61

Report of Independent Registered Public Accounting Firm

To The Board of Directors and Stockholder

of Triad Financial Corporation:

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, stockholder’s equity and cash flows present fairly, in all material respects, the financial position of Triad Financial Corporation (the “Successor Company”) and its subsidiaries at December 31, 2007 and 2006, and the results of their operations and their cash flows for the years ended December 31, 2007 and 2006 and the period from April 30, 2005 through December 31, 2005 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/  PricewaterhouseCoopers LLP

Dallas, Texas

March 28, 2008

62

Report of Independent Registered Public Accounting Firm

To The Board of Directors and Stockholder
of Triad Financial Corporation:

In our opinion, the accompanying consolidated statements of operations, stockholder’s equity and cash flows present fairly, in all material respects, the results of the operations and cash flows of Triad Financial Corporation (the “Predecessor Company”) and its subsidiaries for the period from January 1, 2005 through April 29, 2005 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

/s/  PricewaterhouseCoopers LLP

Dallas, Texas
March 28, 2008

63

TRIAD FINANCIAL CORPORATION

Consolidated Balance Sheets

	Successor
	December 31, 2007		December 31, 2006
	(Note 1)		(Note 1)
	(Dollars in thousands)
ASSETS
Cash and cash equivalents	$	52,505	$	60,367
Cash — restricted		295,786		274,059
Finance receivables held for investment, net		3,514,979		3,781,469
Retained interest in securitized assets		10,916		102,531
Accounts receivable, net		46,965		50,918
Fixed assets, net of accumulated depreciation of $23,235 in 2007 and $13,913 in 2006		15,222		19,294
Collateral held for resale		29,383		17,072
Capitalized financing costs, net of accumulated amortization of $13,369 in 2007 and $20,826 in 2006		11,532		15,031
Deferred tax asset, net		89,028		63,731
Goodwill		30,446		30,446
Taxes receivable		8,054		—
Other assets		2,736		3,617
Total assets	$	4,107,552	$	4,418,535
LIABILITIES AND STOCKHOLDER’S EQUITY
LIABILITIES
Revolving credit facilities	$	334,390	$	529,131
Securitization notes payable		3,195,489		3,258,215
Senior notes payable		149,256		149,167
Taxes payable		—		3,499
Other liabilities		71,826		72,364
Total liabilities		3,750,961		4,012,376
Commitments and contingencies (Note 12)
Stockholder’s Equity
Preferred stock, no par value; authorized 3,000,000 shares; issued and outstanding none at December 31, 2007 and 1,500,000 shares at December 31, 2006		—		30,000
Common stock, no par value; authorized 9,069 shares; issued and outstanding 9,069 shares at December 31, 2007 and 2006		—		—
Additional paid in capital		345,000		345,000
Retained earnings		9,690		22,075
Accumulated other comprehensive income		1,901		9,084
Total stockholder’s equity		356,591		406,159
Total liabilities and stockholder’s equity	$	4,107,552	$	4,418,535

The accompanying notes are an integral part of these consolidated financial statements.

64

TRIAD FINANCIAL CORPORATION

Consolidated Statements of Operations

	Successor						Predecessor
	Year			Year			April 30, 2005			January 1, 2005
	Ended			Ended			Through			Through
	December 31, 2007			December 31, 2006			December 31, 2005			April 29, 2005
	(Note 1)			(Note 1)			(Note 1)			(Note 1)
	(Dollars in thousands)
Financing and other interest income	$	629,898		$	577,340		$	215,114		$	127,243
Interest expense		218,668			202,929			85,958			21,440
Net interest margin		411,230			374,411			129,156			105,803
Provision for credit losses		284,457			256,762			58,909			—
Net interest margin after provision for credit losses		126,773			117,649			70,247			105,803
Servicing income		7,824			21,966			19,275			16,597
Other income (expense)		(3,942	)		21,602			12,803			9,512
Total other revenues		3,882			43,568			32,078			26,109
Operating expenses
Compensation and employee benefits		87,318			78,685			47,447			22,944
Occupancy and equipment		16,231			15,501			10,359			4,921
System and data processing		13,235			14,570			8,075			6,729
Professional services		6,887			7,632			5,482			1,185
Advertising		3,997			1,627			925			171
Telecommunications		3,649			3,315			2,088			1,016
Other		15,436			17,275			11,513			2,891
Total operating expenses		146,753			138,605			85,889			39,857
Other expenses		—			—			—			30,505
Total expenses		146,753			138,605			85,889			70,362
Income (loss) before income taxes		(16,098	)		22,612			16,436			61,550
Benefit (provision) for income taxes		5,520			(8,945	)		(6,453	)		(23,208	)
Net income (loss)	$	(10,578	)	$	13,667		$	9,983		$	38,342

The accompanying notes are an integral part of these consolidated financial statements.

65

TRIAD FINANCIAL CORPORATION

Consolidated Statements of Stockholder’s Equity

													Accumulated
							Additional						Other
	Preferred			Common			Paid-In			Retained			Comprehensive
	Stock			Stock			Capital			Earnings			Income			Total
							(Dollars in thousands)
(Predecessor, Note 1)
Balance, December 31, 2004	$	—		$	5,047		$	342,703		$	88,346		$	22,617		$	458,713
Comprehensive income
Net income		—			—			—			38,342			—			38,342
Net unrealized loss on retained interest in securitized assets (net of tax of $2,875)		—			—			—			—			(4,750	)		(4,750	)
Total comprehensive income, net of tax		—			—			—			38,342			(4,750	)		33,592
Balance, April 29, 2005	$	—		$	5,047		$	342,703		$	126,688		$	17,867		$	492,305
(Successor, Note 1)
Purchase accounting adjustments		—			(5,047	)		(342,703	)		(126,688	)		(17,867	)		(492,305	)
Issuance of common stock		—			—			345,000			—			—			345,000
Comprehensive income
Net income		—			—			—			9,983			—			9,983
Net unrealized gain on retained interest in securitized assets (net of tax of $1,207)		—			—			—			—			1,849			1,849
Total comprehensive income, net of tax		—			—			—			9,983			1,849			11,832
Balance, December 31, 2005	$	—		$	—		$	345,000		$	9,983		$	1,849		$	356,832
Issuance of preferred stock		30,000			—			—			—			—			30,000
Preferred stock dividends declared		—			—			—			(1,575	)		—			(1,575	)
Comprehensive income
Net income		—			—			—			13,667			—			13,667
Net unrealized gain on retained interest in securitized assets (net of tax of $4,724)		—			—			—			—			7,235			7,235
Total comprehensive income, net of tax		—			—			—			13,667			7,235			20,902
Balance, December 31, 2006	$	30,000		$	—		$	345,000		$	22,075		$	9,084		$	406,159
Redemption of preferred stock		(30,000	)		—			—			—			—			(30,000	)
Preferred stock dividends declared		—			—			—			(788	)		—			(788	)
Common stock dividends declared		—			—			—			(1,019	)		—			(1,019	)
Comprehensive income (loss)
Net loss		—			—			—			(10,578	)		—			(10,578	)
Net unrealized loss on retained interest in securitized assets (net of tax of $4,691)		—			—			—			—			(7,183	)		(7,183	)
Total comprehensive loss, net of tax		—			—			—			(10,578	)		(7,183	)		(17,761	)
Balance, December 31, 2007	$	—		$	—		$	345,000		$	9,690		$	1,901		$	356,591

The accompanying notes are an integral part of these consolidated financial statements.

66

TRIAD FINANCIAL CORPORATION

Consolidated Statements of Cash Flows

	Successor						Predecessor
	Year			Year			April 30, 2005			January 1, 2005
	Ended			Ended			Through			Through
	December 31, 2007			December 31, 2006			December 31, 2005			April 29, 2005
	(Note 1)			(Note 1)			(Note 1)			(Note 1)
	(Dollars in thousands)
Cash flows from operating activities
Net (loss) income	$	(10,578	)	$	13,667		$	9,983		$	38,342
Adjustments to reconcile net income(loss) to net cash provided by (used in) operating activities:
Purchases of finance receivables held for sale		—			—			—			(627,399	)
Collections on finance receivables held for sale		—			—			—			215,322
Depreciation and amortization		27,425			20,624			12,417			2,714
Provision for credit losses		284,457			256,762			58,909			—
Deferred income tax benefit		(20,606	)		(55,379	)		(14,283	)		—
Accretion of present value discount		(22,593	)		(24,803	)		(28,953	)		(22,046	)
Amortization of purchase premium		29,379			56,378			83,563			—
Impairment charges on retained interest on securitizations		—			—			4,098			490
Loss on repurchase of receivables from gain on sale trusts		7,016			—			—			—
Loss on write-down of fixed assets		1,014			—			—			—
Changes in operating assets and liabilities
Accounts receivable		3,953			(19,480	)		9,733			(3,711	)
Other assets		(926	)		563			(3,393	)		(375	)
Other liabilities		(1,589	)		7,481			31,544			(8,161	)
Current tax receivable/payable		(11,553	)		(3,424	)		6,923			21,259
Net cash provided by (used in) operating activities		285,399			252,389			170,541			(383,565	)
Cash flows from investing activities
Acquisition of Triad Financial Corporation (Note 1)		—			—			(553,548	)		—
Distributions from gain on sale trusts		111,972			150,331			99,255			75,675
Payments to Ford Motor Credit		(9,801	)		—			—			—
Repurchases from gain on sale trusts		(195,569	)		(131,005	)		—			—
Purchases of finance receivables held for investment		(1,359,842	)		(2,662,201	)		(1,259,827	)		—
Collections on finance receivables held for investment		1,479,097			1,289,143			579,290			43,760
Change in restricted cash		(21,727	)		(120,828	)		(153,231	)		—
Purchases of fixed assets		(5,213	)		(10,921	)		(7,771	)		(1,556	)
Net cash (used in) provided by investing activities		(1,083	)		(1,485,481	)		(1,295,832	)		117,879
Cash flows from financing activities
Net change in warehouse credit facilities		(153,741	)		(396,717	)		830,848			—
Net change in residual credit facilities		(41,000	)		(10,000	)		105,000			—
Net change in due to Ford Motor Credit Company		—			(52,323	)		(1,828,126	)		263,546
Issuance of securitization notes		1,373,410			2,829,995			2,009,168			—
Payment on securitization notes		(1,436,136	)		(1,144,048	)		(436,900	)		—
Issuance of senior notes		—			—			149,066			—
Capitalized finance costs		(4,711	)		(8,743	)		(27,114	)		—
Issuance of preferred stock		—			30,000			—			—
Redemption of preferred stock		(30,000	)		—			—			—
Issuance of common stock		—			—			345,000			—
Net cash (used in) provided by financing activities		(292,178	)		1,248,164			1,146,942			263,546
Net (decrease) increase in cash		(7,862	)		15,072			21,651			(2,140	)
Cash
Beginning of period		60,367			45,295			23,644			25,784
End of period	$	52,505		$	60,367		$	45,295		$	23,644
Non-cash activity
Goodwill generated from acquisition of Triad Financial Corporation (Note 1)	$	—		$	—		$	30,446		$	—
Transfer of finance receivable from held for sale to held for investment	$	—		$	—		$	—		$	41,894
Preferred stock dividends declared	$	788		$	1,575		$	—		$	—
Common stock dividends declared	$	1,019		$	—		$	—		$	—
Supplemental Disclosure
Interest paid	$	219,482		$	199,217		$	81,756		$	—
Income taxes paid	$	26,855		$	69,078		$	13,813		$	—

The accompanying notes are an integral part of these consolidated financial statements.

67

Triad Financial Corporation

Notes to Consolidated Financial Statements

1.   Organization and Nature of Business

Triad Financial Corporation (the “Company”) was incorporated as a California corporation on May 19, 1989. The Company engages primarily in the business of purchasing and servicing automobile retail installment sales contracts (“Contracts”) originated by automobile dealers located throughout the United States. The Company also originates automobile loans directly to consumers. The Company specializes in providing financing to consumers with limited credit histories, modest incomes or those who have experienced prior credit difficulties, generally referred to as “non-prime” borrowers.

From June 1999 through April 29, 2005, the Company was a wholly-owned subsidiary of Fairlane Credit, LLC, a wholly-owned subsidiary of Ford Motor Credit Company (“Ford Credit”).

On April 29, 2005, a newly formed entity, Triad Holdings Inc. (“Triad Holdings”) and its wholly-owned subsidiary, Triad Acquisition Corp., acquired all of the outstanding capital stock of the Company from Fairlane Credit, LLC (the “Acquisition”). As part of the Acquisition, Triad Acquisition Corp. was merged with and into Triad Financial Corporation with the Company being the surviving corporation. Triad Holdings is beneficially owned by Hunter’s Glen/Ford Ltd. and affiliates of Goldman, Sachs & Co. and GTCR Golder Rauner, L.L.C.

In accordance with the guidelines for accounting for business combinations, the purchase price paid by Triad Holdings, plus related purchase accounting adjustments, have been recorded in our consolidated financial statements for the period subsequent to April 29, 2005. This has resulted in a new basis of accounting reflecting the fair market value of our assets and liabilities for the successor period beginning April 30, 2005.

As of the acquisition date, we recorded our assets and liabilities at their estimated fair values. The purchase price paid by Triad Holdings plus acquisition and closing costs, exceeded the fair value of net assets acquired, resulting in approximately $30.4 million of goodwill.

2.   Accounting Policies

Basis of Presentation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, all of which are Delaware corporations, Triad Financial Special Purpose Corporation, Triad Financial Special Purpose LLC, Triad Financial Residual Special Purpose LLC, and Triad Financial Warehouse Special Purpose LLC (the “Subsidiaries”). Triad Financial Warehouse Special Purpose LLC includes its wholly-owned subsidiary, Triad Automobile Receivables Warehouse Trust, a Delaware trust.

Certain reclassifications have been made to prior period amounts to conform to the current period presentation.

Cash Equivalents

Investments in highly liquid securities with original maturities of 90 days or less are included in cash and cash equivalents.

Restricted Cash

Cash pledged to support securitization transactions and warehouse loan facilities is deposited into restricted accounts and recorded on the Company’s consolidated balance sheets as restricted cash.

68

Triad Financial Corporation

Notes to Consolidated Financial Statements — (Continued)

Finance Receivables

Finance receivables are classified as held for investment and carried at amortized cost, net of an allowance for credit losses, as the Company has the ability and intent to hold these receivables until maturity. Financing income for finance receivables originated and purchased subsequent to the Acquisition is recognized using the interest method based on contractual cash flows. Premiums and discounts and origination costs are deferred and amortized as adjustments to financing income over the estimated life of the related receivables.

In connection with the Acquisition, the carrying value of our predecessor finance receivables held for investment owned as of the Acquisition was adjusted to fair market value taking into account future expected credit losses and a required rate of return commensurate with the associated risk. The carrying value of our finance receivables repurchased from gain on sale trusts was recorded at fair market value upon repurchase, taking into account future expected credit losses and a required rate of return commensurate with the associated risk. Financing income on these receivables includes interest income recognized using the interest method based on contractual cash flows and taking into account expected prepayments and is net of premium amortization.

The accrual of financing income is suspended on accounts when they are deemed impaired. Accounts are generally deemed impaired when they are 30 days past due. We generally recognize interest income on impaired contracts on a cash basis when received.

Prior to April 30, 2005, finance receivables that we originated were classified as held for sale and recorded at cost including any premiums and net of any non-refundable acquisition fees paid by the seller and deferred origination costs. Thereafter, these held for sale receivables were carried at the lower of cost or market on an aggregate basis with any write-downs to market recorded as a charge to earnings and reflected in other expenses. Market value for these receivables was based on prices for similar receivables in the securitization markets.

Sale of Receivables

All securitization transactions executed by the Company subsequent to April 29, 2005 have been accounted for as secured financings in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These transaction structures allow the trust to enter into interest rate derivative contracts with respect to retained interests and also allow the servicer the discretion to sell charged-off finance receivable contracts. No charged-off receivables were sold in 2007, 2006 or 2005.

Prior to April 30, 2005, finance receivables were sold in securitization transactions that were accounted for as sales of finance receivables in accordance with GAAP. These transaction structures involved the Company surrendering control over these assets by selling finance receivables to off-balance sheet securitization entities. The securitization entities issued interest-bearing securities collateralized by future collections on the sold receivables.

Estimated gains or losses from the sale of finance receivables were recognized in the period in which the sale occurred. In determining the gain or loss on each qualifying sale of finance receivables, the investment in the sold receivables pool was allocated between the portions sold and the portions retained based on their relative fair values at the date of sale. The Company retained certain interests in the sold receivables. These retained interests included subordinated certificates, restricted cash and interest-only strips held for the benefit of securitization entities. These retained interests are classified as securities available for sale and are reported at fair value. If there is a decline in fair value and it is judged to be other than temporary, the individual security is written down to fair value and the amount of the write-down is included in earnings. If there is a change in fair value and it is judged to be temporary, the securities are recorded at fair value with unrealized gains and losses recorded, net of tax, as a separate component of accumulated other comprehensive income in stockholder’s equity. In securitization transactions accounted for as a sale of receivables, the Company retains

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Notes to Consolidated Financial Statements — (Continued)

the servicing rights and receives a servicing fee. Since the servicing fee adequately compensates us for retaining the servicing rights, no servicing asset or liability is recorded and the fee is recognized as collected over the remaining term of the related sold finance receivables.

Allowance for Credit Losses

The allowance for credit losses is our estimate of incurred credit losses related to held for investment receivables as of the date of the financial statements. This allowance is based on such factors as the credit quality of the portfolio, historical credit loss trends, trends in projected used car values and general economic factors. Finance receivables are charged to the allowance for credit losses when an account is deemed to be uncollectible. This charge takes into account the estimated value of any collateral. Recoveries on finance receivables previously charged off as uncollectible are credited to the allowance for credit losses.

Charge-offs on predecessor finance receivables held for investment and finance receivables repurchased from gain on sale trusts are charged against the Company’s probable future expected credit losses established as a component of the asset’s net carrying value.

Charge-Off Policy

Our policy is to charge off owned receivables in the month in which the borrowers become 120 days contractually delinquent if we have not previously repossessed the related vehicle. If a vehicle has been repossessed, and the underlying contract is an owned receivable, we charge off the underlying receivable upon repossession, taking into account the estimated value of our collateral, with a reconciliation upon liquidation. For sold receivables, the debt is charged off upon liquidation of the collateral. The net charge-off represents the difference between the actual net sales proceeds and the amount of the delinquent contract, including accrued interest, on our owned receivables. Accrual of finance charge income is suspended on accounts that are more than 30 days contractually delinquent.

Derivative Financial Instruments

In accordance with Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities”, our interest rate swap agreements outstanding are recognized on our consolidated balance sheet at fair value with changes in the value recorded in earnings as a component of other income. Fair value is calculated using current market values for similar instruments with the same remaining maturities.

Fixed Assets

Fixed assets are carried at cost less accumulated depreciation. Fixed assets owned as of the acquisition date were adjusted to fair market value and are being depreciated over their remaining useful lives.

Depreciation is calculated principally on the straight-line method over their remaining useful lives of the assets as follows:

Equipment	3-5 years
Software	3-5 years
Furniture and fixtures	5 years

Depreciation expense totaled $9.3 million for the year ended December 31, 2007. Depreciation expense totaled $8.4 million for the year ended December 31, 2006, $2.7 million for the period January 1, 2005 through April 29, 2005 and $5.6 million for the period April 30, 2005 through December 31, 2005.

Leasehold improvements are stated at cost and depreciated over the useful lives of the improvements or term of the lease, whichever is less.

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Triad Financial Corporation

Notes to Consolidated Financial Statements — (Continued)

Upon sale or retirement, the cost of assets and related accumulated depreciation is eliminated from the respective accounts, and the resulting gain or loss is included in operations. Repairs and maintenance expenses are charged to operations as incurred.

Goodwill

In accordance with Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets”, the Company reviews its goodwill for impairment annually and when events or changes in circumstances indicate the carrying amount may not be recoverable. Management evaluates the recoverability of goodwill by comparing the carrying value of the Company’s only reporting unit to its fair value.

Income Taxes

The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109, “Accounting for Income Taxes”, resulting in two components of income tax expense; current and deferred. Current income tax expense approximates taxes to be paid or refunded for the current period. Deferred income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred income taxes are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years which those temporary differences are expected to be recovered or settled.

Effective January 1, 2007, the Company accounts for uncertainty in income taxes recognized in the financial statements in accordance with Financial Accounting Standards Board (“FASB”) Interpretation No. 48, “Accounting for Uncertainty in Income Taxes”, an interpretation of FASB Statement No. 109 (“FIN 48”). FIN 48 requires that a more likely than not threshold be met before the benefit of a tax position may be recognized in the financial statements and prescribes how such benefit should be measured. It also provides guidance on derecognition, measurement, classification, interest and penalties, interim accounting periods, disclosure and transition. FIN 48 requires that the new standard be applied to the balances of the assets and liabilities as of the beginning of the period of adoption and that any corresponding adjustment be made to the opening balance of retained earnings. The Company’s adoption of FIN 48 is further described in Note 10.

Stock-Based Compensation

Effective July 1, 2005, the Company adopted Statement of Financial Accounting Standards No. 123(R), “Share-Based Payment”, revised 2004, (“SFAS 123R”) prospectively for all awards granted, modified or settled after June 30, 2005. The Company adopted the standard by using the modified prospective method which is one of the adoption methods provided for under SFAS 123R. SFAS 123R, which revised Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation”, requires that the cost resulting from all share-based payment transactions be measured at fair value and recognized in the financial statements. Additionally, on July 1, 2005, the Company adopted Staff Accounting Bulletin No. 107 “Share-Based Payment”, which the SEC issued in March 2005 to provide its view on the valuation of share-based payment arrangements for public companies.

Use of Estimates

The preparation of the financial statements, in conformity with generally accepted accounting principles, requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be based upon amounts that differ from those estimates. The primary estimates inherent within

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Triad Financial Corporation

Notes to Consolidated Financial Statements — (Continued)

these financial statements include the market value adjustments recorded in connection with purchase accounting, the allowance for credit losses and the fair value of retained interests in securitized assets.

3.   Finance Receivables

Finance receivables at December 31, 2007 and 2006 are summarized as follows:

	2007			2006
	(Dollars in thousands)
Finance receivables held for investment	$	3,124,036		$	3,045,938
Premiums and discounts, net		(3,592	)		(7,699	)
Deferred costs, net		25,767			26,325
Finance receivables held for investment, gross		3,146,211			3,064,564
Allowance for credit losses		(230,500	)		(195,000	)
Finance receivables held for investment, net		2,915,711			2,869,564
Predecessor finance receivables held for investment, net		475,296			849,246
Finance receivables repurchased from gain on sale trusts, net		123,972			62,659
Finance receivables, net	$	3,514,979		$	3,781,469

Prior to April 30, 2005, finance receivables that we originated were classified as held for sale and carried at the lower of cost or market on an aggregate basis with any write-downs to market recorded as a charge to earnings and reflected in other expenses. The amount of write-downs to market value charged to earnings and reflected in other expenses totaled $30.5 million for the period January 1, 2005 through April 29, 2005.

The aggregate unpaid principal balances of finance receivables more than 60 days past due were $156.0 million at December 31, 2007 and $97.3 million at December 31, 2006.

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Triad Financial Corporation

Notes to Consolidated Financial Statements — (Continued)

The activity in the predecessor finance receivables held for investment for the periods indicated is summarized as follows:

	Contractual			Nonaccretable			Expected			Accretable			Carrying
	Payments			Discount			Payments			Discount			Value
				(Dollars in thousands)
Balance, December 31, 2006	$	1,246,836		$	(253,238	)	$	993,598		$	(144,352	)	$	849,246
Interest income		(111,258	)		—			(111,258	)		85,202			(26,056	)
Principal collections		(347,894	)		—			(347,894	)		—			(347,894	)
Charge-offs, net of sales proceeds and recoveries		(55,292	)		55,292			—			—			—
Reclassifications		—			17			17			(17	)		—
Change in cash flows		(92,538	)		92,538			—			—			—
Balance, December 31, 2007	$	639,854		$	(105,391	)	$	534,463		$	(59,167	)	$	475,296

	Contractual			Nonaccretable			Expected			Accretable			Carrying
	Payments			Discount			Payments			Discount			Value
				(Dollars in thousands)
Balance, December 31, 2005	$	2,220,192		$	(524,710	)	$	1,695,482		$	(227,072	)	$	1,468,410
Interest income		(193,929	)		—			(193,929	)		140,836			(53,093	)
Principal collections		(566,071	)		—			(566,071	)		—			(566,071	)
Charge-offs, net of sales proceeds and recoveries		(74,005	)		74,005			—			—			—
Reclassifications		—			58,116			58,116			(58,116	)		—
Change in cash flows		(139,351	)		139,351			—			—			—
Balance, December 31, 2006	$	1,246,836		$	(253,238	)	$	993,598		$	(144,352	)	$	849,246

	Contractual			Nonaccretable			Expected			Accretable			Carrying
	Payments			Discount			Payments			Discount			Value
				(Dollars in thousands)
Balance, April 29, 2005	$	3,163,361		$	(735,613	)	$	2,427,748		$	(365,383	)	$	2,062,365
Interest income		(198,730	)		—			(198,730	)		115,167			(83,563	)
Principal collections		(510,392	)		—			(510,392	)		—			(510,392	)
Charge-offs		(68,659	)		68,659			—			—			—
Reclassifications		—			(23,144	)		(23,144	)		23,144			—
Change in cash flows		(165,388	)		165,388			—			—			—
Balance, December 31, 2005	$	2,220,192		$	(524,710	)	$	1,695,482		$	(227,072	)	$	1,468,410

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Triad Financial Corporation

Notes to Consolidated Financial Statements — (Continued)

The activity in the finance receivables repurchased from gain on sale trusts for the years ended December 31, 2007 and 2006 is summarized as follows:

	Contractual			Nonaccretable			Expected			Accretable			Carrying
	Payments			Discount			Payments			Discount			Value
				(Dollars in thousands)
Balance, December 31, 2006	$	70,453		$	(4,137	)	$	66,316		$	(3,657	)	$	62,659
Finance receivables repurchased		216,159			(17,862	)		198,297			(12,631	)		185,666
Interest income		(17,563	)		—			(17,563	)		14,239			(3,324	)
Principal collections		(121,029	)		—			(121,029	)		—			(121,029	)
Charge-offs		(5,243	)		5,243			—			—			—
Reclassifications		—			6,252			6,252			(6,252	)		—
Change in cash flows		2,348			(2,348	)		—			—			—
Balance, December 31, 2007	$	145,125		$	(12,852	)	$	132,273		$	(8,301	)	$	123,972

	Contractual			Nonaccretable			Expected			Accretable			Carrying
	Payments			Discount			Payments			Discount			Value
				(Dollars in thousands)
Balance, December 31, 2005	$	—		$	—		$	—		$	—		$	—
Finance receivables repurchased		145,203			(12,018	)		133,185			(7,662	)		125,523
Interest income		(9,810	)		—			(9,810	)		6,525			(3,285	)
Principal collections		(59,579	)		—			(59,579	)		—			(59,579	)
Charge-offs		(5,486	)		5,486			—			—			—
Reclassifications		—			2,520			2,520			(2,520	)		—
Change in cash flows		125			(125	)		—			—			—
Balance, December 31, 2006	$	70,453		$	(4,137	)	$	66,316		$	(3,657	)	$	62,659

During 2007 and 2006 expected cash flows from predecessor finance receivables held for investment and receivables repurchased from gain on sale trusts were reevaluated and determined to be greater than originally expected. This resulted in a reclassification of cash flows from nonaccretable discount to accretable discount. This also resulted in a higher net yield being recognized on these receivables, which is expected to continue in future periods.

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Triad Financial Corporation

Notes to Consolidated Financial Statements — (Continued)

4.   Allowance For Credit Losses

The changes in the allowance for credit losses for the periods indicated are summarized as follows:

	Successor									Predecessor
							April 30,			January 1,
							2005			2005
	Year Ended			Year Ended			Through			Through
	December 31,			December 31,			December 31,			April 29,
	2007			2006			2005			2005
				(Dollars in thousands)
Balance, beginning of period	$	195,000		$	51,259		$	—		$	16,081
Provision for credit losses		284,457			256,762			58,909			—
Charge-offs		(274,553	)		(118,089	)		(7,729	)		(7,465	)
Recoveries		25,596			5,068			79			6,447
Balance, end of period	$	230,500		$	195,000		$	51,259		$	15,063

The allowance for credit losses is maintained at a level adequate to cover incurred credit losses related to receivables originated subsequent to April 29, 2005 and classified as held for investment as of the date of the financial statements, taking into account the credit quality of the portfolio, historical credit loss trends, trends in projected used car values and general economic factors.

The carrying value of predecessor finance receivables held for investment was adjusted to fair market value taking into account future expected credit losses and a required rate of return commensurate with the associated risk.

5.   Sales of Receivables

Servicing Portfolio

The Company retains servicing rights for receivables sold in securitization transactions meeting the criteria for sales of receivables. The activity in the servicing portfolio for the periods indicated are summarized as follows:

	Successor									Predecessor
							April 30,			January 1,
							2005			2005
	Year Ended			Year Ended			Through			Through
	December 31,			December 31,			December 31,			April 29,
	2007			2006			2005			2005
				(Dollars in thousands)
Balance, beginning of period	$	484,818		$	1,130,352		$	1,719,178		$	2,082,102
Called receivables		(195,569	)		(131,005	)		—			—
Collections and charge-offs		(195,152	)		(514,529	)		(588,826	)		(362,924	)
Balance, end of period	$	94,097		$	484,818		$	1,130,352		$	1,719,178

The aggregate unpaid principal balances of sold finance receivables more than 60 days past due were $5.2 million at December 31, 2007 and $18.0 million at December 31, 2006. Credit losses, net of recoveries, totaled $18.2 million and $53.9 million for the years ended December 31, 2007 and 2006, respectively, $49.0 million for the period January 1, 2005 through April 29, 2005 and $87.0 million for the period April 30, 2005 through December 31, 2005.

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Triad Financial Corporation

Notes to Consolidated Financial Statements — (Continued)

Retained Interest in Securitized Assets

The components of the retained interest in securitized assets, carried at fair value, at December 31, 2007 and 2006 are summarized as follows:

	2007			2006
	(Dollars in thousands)
Restricted cash held for the benefit of securitizations	$	14,731		$	57,751
Overcollaterization receivable		12,233			63,026
Interest-only		(447	)		2,257
Retained interest in securitized assets, gross		26,517			123,034
Payable to Ford Credit		(15,601	)		(20,503	)
Retained interest in securitized assets, net	$	10,916		$	102,531

The Company’s retained interests in securitization transactions includes the value associated with future cash flows generated from overcollateralization and any excess spread amounts. Overcollateralization receivable represents the difference between securitized receivables outstanding and notes outstanding.

Retained interests in securitized assets are recorded at fair value. The fair value of retained interests is determined based on calculating the present value of the projected cash flows to be received using management’s best estimates of key assumptions, including discount rate, prepayment rate and credit losses.

Retained interests in securitized assets are net of an estimated amount owed to Ford Credit pursuant to a contractual agreement entered into with Ford Credit at the closing of the Acquisition. We made payments to Ford Credit totaling $9.8 million during the year ended December 31, 2007 pursuant to the agreement. The estimated present value of the remaining payments that will be due to Ford Credit pursuant to the agreement is approximately $15.6 million. The exact amount of these remaining payments will not be known until the last of five securitizations entered into by the Company prior to the Acquisition are called. The Company anticipates that these payments will continue through the second quarter of 2008 when the last of the five securitizations is expected to be called. The exact amount of the remaining payments to Ford Credit will be dependent upon, among other things, the performance of the contracts and loans in the respective pools and the net collections ultimately received on those loans.

Accrued servicing fees due from the securitization trusts are included in accounts receivable in our consolidated balance sheets. The amount of accounts receivable representing receivables from securitization trusts totaled $8.6 million at December 31, 2007 and $9.7 million at December 31, 2006.

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Triad Financial Corporation

Notes to Consolidated Financial Statements — (Continued)

The activity in the retained interest in securitized assets for the periods indicated is summarized as follows:

													Retained						Retained
													Interest in						Interest in
	Subordinated			Restricted			Over-			Interest-			Securitized			Payable to			Securitized
	Certificates			Cash			Collateralization			Only			Assets, Gross			Ford Credit			Assets, Net
	(Dollars in thousands)
(Predecessor, Note 1)
Balance, December 31, 2004	$	26,934		$	82,225		$	254,445		$	(8,523	)	$	355,081		$	—		$	355,081
Distributions		(21,827	)		(1,927	)		(28,464	)		(23,457	)		(75,675	)		—			(75,675	)
Residual interest income		—			—			—			22,046			22,046			—			22,046
Impairment charge		—			—			—			(490	)		(490	)		—			(490	)
Unrealized gains (losses)		—			—			—			(7,625	)		(7,625	)		—			(7,625	)
Balance, April 29, 2005	$	5,107		$	80,298		$	225,981		$	(18,049	)	$	293,337		$	—		$	293,337
(Successor, Note 1)
Purchase accounting adjustments		—			—			—			—			—			(5,040	)		(5,040	)
Distributions		(5,107	)		—			(75,698	)		(18,450	)		(99,255	)		—			(99,255	)
Residual interest income		—			—			—			29,605			29,605			(652	)		28,953
Impairment charge		—			—			—			(8,197	)		(8,197	)		4,099			(4,098	)
Unrealized gains (losses)		—			—			—			7,536			7,536			(4,481	)		3,055
Balance, December 31, 2005	$	—		$	80,298		$	150,283		$	(7,555	)	$	223,026		$	(6,074	)	$	216,952
Distributions		—			(22,547	)		(87,257	)		(41,456	)		(151,260	)		—			(151,260	)
Residual interest income		—			—			—			26,696			26,696			(1,893	)		24,803
Realized losses		—			—			—			152			152			(76	)		76
Unrealized gains (losses)		—			—			—			24,420			24,420			(12,460	)		11,960
Balance, December 31, 2006	$	—		$	57,751		$	63,026		$	2,257		$	123,034		$	(20,503	)	$	102,531
Distributions		—			(43,020	)		(50,793	)		(18,159	)		(111,972	)		—			(111,972	)
Residual interest income		—			—			—			25,374			25,374			(2,781	)		22,593
Realized gain (losses)		—			—			—			(325	)		(325	)		164			(161	)
Unrealized gains (losses)		—			—			—			(9,594	)		(9,594	)		(2,282	)		(11,876	)
Payment to Ford Credit )		—			—			—			—			—			9,801			9,801
Balance, December 31, 2007	$	—		$	14,731		$	12,233		$	(447	)	$	26,517		$	(15,601	)	$	10,916

At December 31, 2007, the key assumptions utilized in determining fair value of our retained interest in securitized assets include a discount rate of 16%, an ABS rate of 1.40 and an expected cumulative lifetime loss of 11.3%.

The Company has not presented the expected weighted-average life assumption used in determining the gain on sale and in measuring the fair value of retained interest in securitized assets due to the stability of this attribute over time. A significant portion of the Company’s prepayment experience relates to defaults that are considered in the cumulative lifetime loss assumption. The Company’s voluntary prepayment experience on its gain on sale receivables portfolio typically has not fluctuated significantly with changes in market interest rates or other economic or market factors.

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Triad Financial Corporation

Notes to Consolidated Financial Statements — (Continued)

At December 31, 2007, the estimated decreases in fair value of our retained interests in securitized assets as a result of an immediate 10% and 20% adverse change in key assumptions utilized in determining fair value are as follows:

	(Dollars in thousands)
Decrease in fair value from 10% adverse change in discount rate	$	(129	)
Decrease in fair value from 20% adverse change in discount rate	$	(257	)
Decrease in fair value from 10% adverse change in prepayment rate	$	(237	)
Decrease in fair value from 20% adverse change in prepayment rate	$	(694	)
Decrease in fair value from 10% adverse change in cumulative lifetime loss	$	(3,630	)
Decrease in fair value from 20% adverse change in cumulative lifetime loss	$	(6,239	)

The effect of a variation in a particular assumption on the fair value of retained interests in securitized assets was calculated without changing any other assumptions and changes in one factor may result in changes in another.

Expected static pool credit losses related to outstanding securitized receivables were 11.3% at December 31, 2007. To calculate the static pool credit losses, actual and projected future credit losses are added together and divided by the original balance of each pool of assets.

6.   Revolving Credit Facilities

Amounts outstanding under our warehouse and residual loan facilities at December 31, 2007 and 2006 are summarized as follows:

	2007		2006
	(Dollars in thousands)
Warehouse loan facilities	$	280,390	$	434,131
Residual loan facilities		54,000		95,000
Total revolving credit facilities	$	334,390	$	529,131

Facility amount advances outstanding and collateral pledged under our warehouse and residual loan facilities at December 31, 2007 are summarized as follows:

	Facility		Advances		Collateral
	Amount		Outstanding		Pledged
	(Dollars in thousands)
Warehouse loan facility, due April 2009	$	625,000	$	280,390	$	328,343
Residual loan facility, due April 2009		125,000		54,000		391,922

Our warehouse loan facility with Citibank Global Markets Realty Corp. provides for borrowings up to $750.0 million less amounts drawn on our corresponding residual facility. Our residual loan facility provides for borrowings up to $125.0 million. Our warehouse and residual loan facilities bear interest at a floating rate. At December 31, 2007, the interest rate on our warehouse loan facility was 5.05% and the interest rate on our residual loan facility was 7.10%.

The Company’s warehouse and residual loan facilities with Goldman Sachs Mortgage Company, due October 2007, were paid off on October 26, 2007. The funds necessary to pay off these facilities were obtained through the transfer of collateral to, and simultaneous additional advances on the Company’s other warehouse and residual facilities, due April 2009.

On January 10, 2008, we entered into a warehouse facility with Barclays Bank PLC. This facility provides up to $500.0 million of funding for automobile retail installment sales contract receivables originated

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Notes to Consolidated Financial Statements — (Continued)

or purchased by us. The facility has a two year commitment but may expire after 364 days if the liquidity facility is not renewed.

The Company will provide a guarantee under each warehouse facility equal to 10% of the amount outstanding at the time the guarantee is drawn on by the lender.

Under the terms of our revolving credit facilities, the Company transfers eligible collateral, including finance receivables and retained interests in securitized assets, to special purpose finance subsidiaries of the Company. These subsidiaries pledge collateral to secure advances under the facilities, pursuant to advance formulas and available credit. These subsidiaries then forward funds to the Company in consideration for the transfer of eligible collateral. While these subsidiaries are included in the Company’s consolidated financial statements, they are separate legal entities and the collateral and other assets they hold are legally owned by these subsidiaries and are not available to creditors of the Company or its other subsidiaries.

The Company’s warehouse and residual loan facility agreements also contain various covenants requiring minimum financial ratios, asset quality and portfolio performance ratios, including net loss, delinquency and repossession ratios. Failure to meet any of these covenants could result in an event of default under these agreements. If an event of default occurs under these agreements, the lenders could elect to declare all amounts outstanding under these agreements to be immediately due and payable, enforce their interest against collateral pledged under these agreements or restrict the Company’s ability to obtain additional borrowings under these agreements. As of December 31, 2007, the Company was in compliance with all covenants under its warehouse and residual loan facility agreements.

Interest expense for the years ended December 31, 2007 and 2006 includes $14.4 million and $17.7 million, respectively, of expense incurred to Goldman Sachs Mortgage Company. Interest expense for the period April 30, 2005 through December 31, 2005 includes $12.1 million of expense incurred to Goldman Sachs Mortgage Company.

7.   Securitization Notes Payable

Securitization notes payable represent debt issued by the Company in securitization transactions accounted for as secured financings. Securitization notes payable outstanding at December 31, 2007 are summarized as follows:

			Original
			Weighted			Collateral
	Original		Average			Pledged at		Note
	Note		Interest			December 31,		Balance at
Transaction	Amount		Rate			2007		December 31, 2007
			(Dollars in thousands)
2005-A, due June 12, 2012(a)	$	1,104,000		4.09	%	$	320,405	$	300,670
2005-B, due April 12, 2013(a)	$	905,303		4.32	%	$	293,925	$	272,080
2006-A, due April 12, 2013(a)	$	822,500		4.88	%	$	378,646	$	344,384
2006-B, due November 12, 2012(a)	$	915,500		5.50	%	$	496,052	$	459,257
2006-C, due May 13, 2013(a)	$	1,092,200		5.37	%	$	704,076	$	644,588
2007-A, due February 12, 2014(a)	$	775,110		5.34	%	$	657,395	$	593,694
2007-B, due July 14, 2014(a)	$	598,330		5.70	%	$	643,204	$	580,816
								$	3,195,489

(a) Maturity date represents final legal maturity of securitization notes payable. Securitization notes payable are expected to be paid based on amortization of the finance receivables pledged to the Trusts.

79

Triad Financial Corporation

Notes to Consolidated Financial Statements — (Continued)

Under the terms of our securitization transactions, the Company transfers finance receivables to special purpose finance subsidiaries of the Company. While these subsidiaries are included in the Company’s consolidated financial statements, these subsidiaries are separate legal entities and the collateral and other assets held by these subsidiaries are legally owned by these subsidiaries and are not available to creditors of the Company or its other subsidiaries.

Capitalized financing costs with an unamortized balance of $7.5 million at December 31, 2007 are being amortized over the expected term of the securitization transactions. Capitalized financing costs include $1.5 million in remaining unamortized underwriting fees paid to Goldman, Sachs & Co., an affiliate of one of our equity investors.

All of the Company’s securitization transactions are covered by financial guaranty insurance policies, which agreements provide that if certain portfolio performance ratios (delinquency or cumulative net loss triggers) in a Trust’s pool of receivables exceeded certain targets, the specified credit enhancement levels would be increased by increasing the required spread account level. At December 31, 2007, the cumulative net loss ratio for the Company’s 2006-C securitization trust exceeded one of its target ratios. As a result, the credit enhancement requirement to maintain cash reserves as a percentage of the portfolio immediately increased from 2% to 3%, resulting in a delay in cash distributions to the Company. This requirement will remain at 3% until the trust is back in compliance with its target for three consecutive months. At January 31, 2008, the cumulative net loss ratio for the Company’s 2006-B securitization trust exceeded one of its target ratios as well. That credit enhancement requirement also immediately increased from 2% to 3%, where it will remain until the trust is back in compliance with its spread cap target for three consecutive months.

Agreements with the Company’s guarantee insurance providers contain additional specified targeted portfolio performance ratios. If, at any measurement date, the targeted portfolio performance ratios with respect to any insured Trust were to exceed these additional levels, provisions of the agreements permit the Company’s guaranty insurance providers to terminate the Company’s servicing rights to the receivables sold to that Trust. These financial guaranty insurance policies also contain minimum financial ratio requirements. Except as discussed above, the Company was in compliance with its agreements with its guarantee insurance providers at December 31, 2007.

8.   Senior Notes Payable

On April 29, 2005, Triad Acquisition Corp. issued $150.0 million of Senior Notes in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act, to certain accredited investors pursuant to Rule 501 under the Securities Act, and to non-U.S. persons in reliance on Regulation S under the Securities Act. The Notes also included a registration rights agreement requiring the Company to file a registration statement under the Securities Act and to consummate an exchange offer after the effective date of the registration statement. The exchange offer was consummated on January 9, 2006. In connection with the Acquisition, Triad Acquisition Corp. was merged with and into Triad Financial Corporation.

The Notes have a stated coupon of 11.125% and were issued at a discount to yield 11.25%. The Notes mature on May 1, 2013 but can be redeemed, in whole or in part, on or after May 1, 2010, at specified redemption prices, and on or after May 1, 2012, at par value.

Capitalized financing costs with an unamortized balance of $4.0 million at December 31, 2007 are being amortized over the contractual term of the notes. Capitalized financing costs include $2.8 million in remaining unamortized fees paid to Goldman, Sachs & Co., an affiliate of one of our equity investors.

9.   Preferred Stock

On June 30, 2006, the Company sold 1,500,000 shares of Non-Voting Preferred Stock to Triad Holdings for an aggregate purchase price of $30,000,000 in cash. No underwriting discounts or commissions were paid.

80

Triad Financial Corporation

Notes to Consolidated Financial Statements — (Continued)

The Non-Voting Preferred Stock was issued without registration under the Securities Act in reliance on Section 4(2) of the Securities Act based on Triad Holdings investment intent, financial and business matters sophistication and other typical investment representations. To the extent declared by the board of directors of the Company, quarterly dividends were payable at an annual rate of 10.5%. Triad Holdings pledged its Non-Voting Preferred Stock of Triad Financial Corporation to secure its loan with Citigroup Global Markets Realty Corp. The Non-Voting Preferred Stock was redeemed at par on April 27, 2007.

For the year ended December 31, 2007, the Company declared and settled through intercompany transactions dividends of $787,500 based on an annual rate of 10.5% to Triad Holdings.

10.   Income Taxes

The provision for income taxes and the reconciliation between the federal statutory income tax rate and the effective income tax rate for the periods indicated are summarized as follows:

	Successor									Predecessor
							April 30,			January 1,
							2005			2005
	Year Ended			Year Ended			Through			Through
	December 31,			December 31,			December 31,			April 29,
	2007			2006			2005			2005
	(Dollars in thousands)
Current:
Federal	$	12,436		$	54,208		$	17,702		$	20,650
State		2,650			10,116			3,034			2,558
Total current expense		15,086			64,324			20,736			23,208
Deferred:
Federal		(16,997	)		(46,704	)		(12,244	)		—
State		(3,609	)		(8,675	)		(2,039	)		—
Total deferred benefit		(20,606	)		(55,379	)		(14,283	)		—
Total:
Federal		(4,561	)		7,504			5,458			20,650
State		(959	)		1,441			995			2,558
(Benefit) provision for income taxes	$	(5,520	)	$	8,945		$	6,453		$	23,208
Expected federal income tax at 35%	$	(5,634	)	$	7,914		$	5,752		$	21,543
State taxes, net of federal tax		(689	)		926			641			1,665
Accrued interest		679			—			—			—
Other		124			105			60			—
(Benefit) provision for income taxes	$	(5,520	)	$	8,945		$	6,453		$	23,208
Effective income tax rate		(34.3	)%		39.6	%		39.3	%		37.7	%

81

Triad Financial Corporation

Notes to Consolidated Financial Statements — (Continued)

The tax effect of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at December 31, 2007 and 2006 are summarized as follows:

	2007			2006
	(Dollars in thousands)
Deferred tax assets:
Allowance for credit losses	$	56,715		$	39,524
Goodwill		45,545			59,899
Securitizations		2,934			7,570
Other		6,549			4,994
Gross deferred tax assets		111,743			111,987
Deferred tax liabilities:
Discount on predecessor finance receivables held for investment		(11,354	)		(32,033	)
Deferred loan origination costs		(10,121	)		(10,292	)
Other comprehensive income		(1,240	)		(5,931	)
Other		—			—
Gross deferred tax liabilities		(22,715	)		(48,256	)
Net deferred tax asset	$	89,028		$	63,731

On January 1, 2007, the Company adopted the provisions of FIN 48. Upon adoption of FIN 48, the Company identified certain tax positions for which deductibility is highly certain, but for which there is uncertainty as to the timing of such deductibility. As a result, the Company reclassified approximately $3.4 million of tax benefit from its deferred tax liability to its FIN 48 current tax liability.

The changes in the Company’s gross unrecognized tax benefits are summarized as follows:

	Gross Unrecognized
	Tax Benefits
	(Dollars in thousands)
Balance, January 1, 2007	$	3,407
Additions (reductions) for tax positions of prior periods		418
Additions (reductions) for tax positions relating to the current period		—
Settlements		—
Lapses in statutes of limitations		—
Balance, December 31, 2007	$	3,825

If recognized, the $3.8 million unrecognized tax benefit would have no impact on the Company’s effective tax rate.

The Company’s policy is to recognize interest and/or penalties related to income tax matters as a component of income tax expense. At December 31, 2007, the Company had accrued $0.7 million net of tax benefit recognized for the potential payment of interest.

The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. All tax periods subsequent to the Acquisition are open to examination by the Internal Revenue Service and the states to which we are subject to tax

82

Triad Financial Corporation

Notes to Consolidated Financial Statements — (Continued)

11.   Derivative Financial Instruments

At December 31, 2007, the Company had interest rate swap agreements with external third parties with underlying notional amounts of $1.7 billion. These agreements were valued at a loss of $10.5 million at December 31, 2007. Other income (expense) for the year ended December 31, 2007 included $17.5 million in losses on our interest rate swap agreements. Other income (expense) for the year ended December 31, 2006 included $0.7 million in gains on our interest rate swap agreements. Other income (expense) included gains on our interest rate swap agreements of $5.2 million for the period January 1, 2005 through April 29, 2005 and $2.2 million for the period April 30, 2005 through December 31, 2005.

12.   Commitments and Contingencies

Various legal actions, governmental proceedings and other claims are pending or may be instituted or asserted in the future against the Company and its subsidiaries. As a consumer finance company, the Company is subject to various consumer claims and litigation seeking damages and statutory penalties, based upon, among other things, usury, disclosure inaccuracies, wrongful repossession, violations of bankruptcy stay provisions, certificate of title disputes, fraud, breach of contract and discriminatory treatment of credit applicants. Some litigation against the Company could take the form of class action complaints by consumers. As the assignee of finance contracts originated by dealers, the Company may also be named as a co-defendant in lawsuits filed by consumers principally against dealers. The damages and penalties claimed by consumers in these types of matters can be substantial. The relief requested by the plaintiffs varies but can include requests for compensatory, statutory and punitive damages.

Litigation is subject to many uncertainties, the outcome of individual litigated matters is not predictable with assurance and it is reasonably possible that some of the foregoing matters could be decided unfavorably to the Company or the subsidiary involved. Although the amount of liability at December 31, 2007 with respect to these matters cannot be ascertained, the Company believes that any resulting liability would not materially affect the consolidated financial position, results of operations or cash flows of the Company and its subsidiaries.

Under the management agreement among the Company, Triad Holdings LLC (98.9% owner of Triad Holdings), Triad Holdings and Hunter’s Glen/Ford Ltd., the parties engaged Hunter’s Glen/Ford as a financial and management consultant. During the term of the engagement, Hunter’s Glen/Ford will provide Gerald J. Ford to serve as the chief executive officer of Triad LLC and executive chairman of the Company as specified in the agreement and will provide Carl B. Webb and J. Randy Staff, or similarly qualified individuals, to furnish a portion of the services required by the management agreement. The Company agreed to pay Hunter’s Glen/Ford Ltd a management fee of $1.5 million per annum for the services described above.

During the third quarter of 2007, the Company entered into a consulting agreement with Carl B. Webb. Under the terms of the agreement, Mr. Webb will provide consulting services to the Company in return for a fee of $250,000 per annum. This consulting agreement was amended in the first quarter of 2008 to change the annual fee to $500,000.

In July 2007, the Company announced that it would be transitioning certain functions from its Huntington Beach, California facility to its North Richland Hills, Texas facility. These functions include loss recovery, remarketing, risk management, human resources and corporate legal. The Company also announced that it would be designating North Richland Hills, Texas as its corporate headquarters. This transition was substantially completed by the end of 2007. During 2007, the Company recorded charges totaling $5.3 million related to the transition, of which $1.5 million was accrued at December 31, 2007.

In December 2007, the Company entered into an agreement with Kevin Harvick, Inc. regarding the sponsorship of a NASCAR team for the 2008 racing season. Under the terms of that agreement, the Company will pay $2.8 million in sponsorship fees in 2008.

83

Triad Financial Corporation

Notes to Consolidated Financial Statements — (Continued)

The Company’s operations are conducted from leased facilities under noncancellable lease agreements accounted for as operating leases. The Company also leases certain equipment. Rental expense charged to operations amounted to $4.2 and $4.1 million for the years ended December 31, 2007 and 2006, respectively. Rental expense charged to operations totaled $1.4 million for the period January 1, 2005 through April 29, 2005 and $3.0 million for the period April 30, 2005 through December 31, 2005.

Future minimum rental commitments under all noncancellable leases at December 31, 2007 are summarized as follows:

	(Dollars in thousands)
Year ending December 31,
2008	$	3,322
2009	$	3,351
2010	$	3,449
2011	$	2,528
2012	$	2,148

13.   Stock-Based Compensation

Following the closing of the Acquisition, Triad Holdings adopted a stock plan under which employees, officers, directors and consultants of the Company could be granted options to purchase shares of Triad Holdings’ common stock. The maximum number of shares available for grant is equal to approximately 8% of the fully diluted shares of Triad Holdings. The stock options vest annually, generally at the rate of 20% per year, provided the grantees continue to provide services to the Company. All options not exercised expire ten years after the date of grant.

Because the Company is considered to be nonpublic under SFAS 123R, the Company elected to use the formula value (book value) method to calculate compensation expense, in which the Company remeasures its liability each period. The awards are liability-classified based on a repurchase feature of the option agreements. The Company has elected to use a straight-line vesting attribution method for awards granted upon its adoption of SFAS 123R.

The Company recorded compensation expense of $2.1 million and $0.9 million for stock-based employee compensation for the years ended December 31, 2007 and 2006, respectively. Compensation expense for the year ended December 31, 2007 included a $1.6 million payment to a former chief executive officer for the repurchase of his option shares vested as of his July 2005 termination date. The Company granted 366,000 options during the year ended December 31, 2007. The Company granted 1.0 million and 4.0 million options during years ended December 31, 2006 and 2005, respectively. Since the inception of the plan, no options have been exercised.

84

Triad Financial Corporation

Notes to Consolidated Financial Statements — (Continued)

A summary of stock option activity under the Company’s stock option plan is summarized as follows:

				Weighted
				Average
				Exercise
	Shares			Price
	(Amounts in thousands except weighted- average exercise price)
Outstanding at December 31, 2004	$	—		$	—
Granted		4,000			7.50
Canceled		(480	)		7.50
Forfeited		(1,520	)		7.50
Outstanding at December 31, 2005		2,000		$	7.50
Granted		1,000		$	7.73
Canceled		(2	)	$	7.73
Forfeited		(10	)	$	7.73
Outstanding at December 31, 2006		2,988		$	7.58
Granted		366		$	8.37
Canceled		(220	)	$	7.54
Forfeited		(267	)	$	7.58
Outstanding at December 31, 2007		2,867		$	7.68
Exercisable at December 31, 2007		1,404		$	7.60
Weighted average remaining contractual life in years					8.07

14.   Fair Value of Financial Instruments

The following disclosure of the estimated fair value of financial instruments is made in accordance with the requirements of Statement of Financial Accounting Standards No. 107, “Disclosure about Fair Value of Financial Instruments” (“SFAS 107”). Fair value estimates methods and assumptions, set forth below for our financial instruments, are made solely to comply with requirements of SFAS 107 and should be read in conjunction with our consolidated financial statement and related notes.

The estimated fair value of financial instruments has been determined by the Company using available market information and appropriate valuation methodologies available to management at December 31, 2007 and 2006. However, considerable judgment is required to interpret market data in order to develop estimates of fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts. Furthermore, fair values disclosed hereinafter do not reflect any premium or discount that could result from offering the instruments for sale. Potential taxes and other expenses that would be incurred in an actual sale or settlement are not reflected in amounts disclosed.

85

Triad Financial Corporation

Notes to Consolidated Financial Statements — (Continued)

The estimated fair values and related carrying amounts of the Company’s financial instruments are as follows:

	Successor
	December 31, 2007						December 31, 2006
	Carrying or						Carrying or
	Contract			Estimated			Contract		Estimated
	Amount			Fair Value			Amount		Fair Value
	(Dollars in thousands)
Assets:
Cash and cash equivalents	$	52,505		$	52,505		$	60,367	$	60,367
Cash — restricted		295,786			295,786			274,059		274,059
Finance receivables held for investment, net		3,514,979			3,520,556			3,781,469		4,023,873
Retained interest in securitized assets		10,916			10,916			102,531		102,531
Interest rate swap agreements		(10,548	)		(10,548	)		340		340
Liabilities:
Revolving credit facilities	$	334,390		$	334,390		$	529,131	$	529,131
Securitization notes payable		3,195,489			2,884,285			3,258,215		2,919,444
Senior notes payable		149,256			149,256			149,167		149,167

The methods and assumptions used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value are explained below:

Cash and Cash Equivalents — The carrying amounts are considered to be a reasonable estimate of fair value since these investments bear interest at market rates and have maturities of less than 90 days.

Cash Restricted — The carrying amounts are considered to be a reasonable estimate of fair value.

Finance Receivables Held For Investment — The fair value of finance receivables is estimated by discounting future net cash flows expected to be collected using a current risk-adjusted rate.

Retained Interest in Securitized Assets — The fair value of retained interest in securitized assets is estimated by discounting the associated future net cash flows using discount rate, prepayment and credit loss assumptions similar to the Company’s experience.

Interest Rate Swap Agreements — The fair value is based on quoted market prices.

Revolving Credit Facilities — Revolving credit facilities have variable rates of interest and maturities of three years or less. Therefore, the carrying value is considered to be a reasonable estimate of fair value.

Securitization Notes Payable — The fair value is based on quoted market prices, when available. If quoted market prices are not available, the market value is estimated by discounting future net cash flows expected to be settled using a current risk-adjusted rate.

Senior Notes Payable — The fair value of senior notes is estimated based on rates currently available for debt with similar terms and remaining maturities.

86

Triad Financial Corporation

Notes to Consolidated Financial Statements — (Continued)

15.   Quarterly Financial Data (unaudited)

The following table summarizes quarterly financial results :

			(Revised)		(Revised)
	First		Second		Third			Fourth
	Quarter		Quarter		Quarter			Quarter
	(Dollars in thousands)
Year ended December 31, 2007:
Total revenues	$	167,166	$	167,138	$	153,973		$	145,503
Income (loss) before income taxes		14,703		14,966		(7,625	)		(38,142	)
Net income (loss)		8,934		8,695		(4,673	)		(23,534	)

	First		Second		Third		Fourth
	Quarter		Quarter		Quarter		Quarter
	(Dollars in thousands)
Year ended December 31, 2006:
Total revenues	$	125,433	$	153,388	$	163,536	$	178,551
Income (loss) before income taxes		10,768		16,353		4,022		(8,531	)
Net income (loss)		6,558		9,966		2,434		(5,291	)

We have revised certain amounts previously reported in our unaudited interim consolidated financial statements for the second and third quarters of 2007 to correct errors related to the accounting for interest rate derivative contracts entered into in the second quarter of 2007. During the fourth quarter of 2007, the Company discovered that its gains (losses) on its interest rate swap agreements previously reported in its unaudited interim consolidated financial statements for the second and third quarters of 2007 were incorrect because the effect of one of its interest rate swap agreements was omitted. As a result of the errors, the Company’s other income was understated by $1.0 million for the three months ended June 30, 2007 and overstated by $3.6 million for the three months ended September 30, 2007. The Company’s net cash flows were not impacted by these errors.

87

Triad Financial Corporation

Notes to Consolidated Financial Statements — (Continued)

The impact of the revisions is summarized as follows:

	Three Months Ended June 30, 2007									Six Months Ended June 30, 2007
	Reported			Adjustment			Revised			Reported			Adjustment			Revised
	(Dollars in thousands)
Financing and other interest income	$	158,174		$	—		$	158,174		$	319,704		$	—		$	319,704
Interest expense		55,711			—			55,711			110,574			—			110,574
Net interest margin		102,463			—			102,463			209,130			—			209,130
Provision for credit losses		60,225			—			60,225			122,855			—			122,855
Net interest margin after provision for credit losses		42,238			—			42,238			86,275			—			86,275
Servicing income		2,071			—			2,071			5,048			—			5,048
Other income		5,937			956			6,893			8,596			956			9,552
Total other revenues		8,008			956			8,964			13,644			956			14,600
Operating expenses
Compensation and employee benefits		22,905			—			22,905			43,657			—			43,657
Occupancy and equipment		3,907			—			3,907			8,049			—			8,049
System and data processing		3,291			—			3,291			6,628			—			6,628
Professional services		1,073			—			1,073			2,607			—			2,607
Telecommunications		872			—			872			1,818			—			1,818
Advertising		1,143			—			1,143			1,922			—			1,922
Other		3,045			—			3,045			6,525			—			6,525
Total operating expenses		36,236			—			36,236			71,206			—			71,206
Income before income taxes		14,010			956			14,966			28,713			956			29,669
Provision for income taxes		(5,897	)		(374	)		(6,271	)		(11,666	)		(374	)		(12,040	)
Net income	$	8,113		$	582		$	8,695		$	17,047		$	582		$	17,629

88

Triad Financial Corporation

Notes to Consolidated Financial Statements — (Continued)

	Three Months Ended									Nine Months Ended
	September 30, 2007									September 30, 2007
	Reported			Adjustment			Revised			Reported			Adjustment			Revised
	(Dollars in thousands)
Financing and other interest income	$	155,264		$	—		$	155,264		$	474,968		$	—		$	474,968
Interest expense		54,771			—			54,771			165,345			—			165,345
Net interest margin		100,493			—			100,493			309,623			—			309,623
Provision for credit losses		70,146			—			70,146			193,001			—			193,001
Net interest margin after provision for credit losses		30,347			—			30,347			116,622			—			116,622
Servicing income		1,754			—			1,754			6,802			—			6,802
Other income (expense)		573			(3,618	)		(3,045	)		9,169			(2,662	)		6,507
Total other revenues		2,327			(3,618	)		(1,291	)		15,971			(2,662	)		13,309
Operating expenses
Compensation and employee benefits		21,487			—			21,487			65,144			—			65,144
Occupancy and equipment		4,081			—			4,081			12,130			—			12,130
System and data processing		3,333			—			3,333			9,961			—			9,961
Professional services		2,020			—			2,020			4,627			—			4,627
Telecommunications		954			—			954			2,772			—			2,772
Advertising		1,106			—			1,106			3,028			—			3,028
Other		3,700			—			3,700			10,225			—			10,225
Total operating expenses	$	36,681		$	—		$	36,681		$	107,887		$	—		$	107,887
Income (loss) before income taxes		(4,007	)		(3,618	)		(7,625	)		24,706			(2,662	)		22,044
Benefit (provision) for income taxes		1,538			1,414			2,952			(10,128	)		1,040			(9,088	)
Net income (loss)	$	(2,469	)	$	(2,204	)	$	(4,673	)	$	14,578		$	(1,622	)	$	12,956

89

Triad Financial Corporation

Notes to Consolidated Financial Statements — (Continued)

	At June 30, 2007							At September 30, 2007
	Reported		Adjustment			Revised		Reported		Adjustment			Revised
	(Dollars in thousands)
Assets
Cash and cash equivalents	$	62,297	$	—		$	62,297	$	55,954	$	—		$	55,954
Cash — restricted		310,828		—			310,828		285,336		—			285,336
Finance receivables held for investment, net		3,634,730		—			3,634,730		3,570,251		—			3,570,251
Retained interest in securitized assets, net		47,545		—			47,545		40,586		—			40,586
Account receivable, net		43,846		—			43,846		44,999		—			44,999
Fixed assets, net of accumulated depreciation		15,948		—			15,948		14,803		—			14,803
Collateral held for resale		15,275		—			15,275		19,148		—			19,148
Capitalized financing costs, net of accumulated amortization		13,549		—			13,549		11,094		—			11,094
Deferred tax assets, net		81,798		(374	)		81,424		84,315		1,040			85,355
Goodwill		30,446		—			30,446		30,446		—			30,446
Other assets		4,066		956			5,022		3,483		—			3,483
Total assets	$	4,260,328	$	582		$	4,260,910	$	4,160,415	$	1,040		$	4,161,455
Liabilities
Revolving credit facilities		302,553		—			302,553		599,959		—			599,959
Securitization notes payable		3,336,163		—			3,336,163		2,948,636		—			2,948,636
Senior notes payable		149,210		—			149,210		149,233		—			149,233
Taxes payable		9,458		—			9,458		5,310		—			5,310
Other liabilities		72,529		—			72,529		70,846		2,662			73,508
Total liabilities		3,869,913		—			3,869,913		3,773,984		2,662			3,776,646
Stockholder’s Equity
Common stock		—		—			—		—		—			—
Additional paid-in-capital		345,000		—			345,000		345,000		—			345,000
Retained earnings		38,334		582			38,916		35,866		(1,622	)		34,244
Accumulated other comprehensive earnings		7,081		—			7,081		5,565		—			5,565
Total stockholder’s equity		390,415		582			390,997		386,431		(1,622	)		384,809
Total liabilities and stockholder’s equity	$	4,260,328	$	582		$	4,260,910	$	4,160,415	$	1,040		$	4,161,455

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ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

ITEM 9A.   CONTROLS AND PROCEDURES

I.   Revised Quarterly Consolidated Financial Statements

As discussed in Note 15 to the consolidated financial statements contained in Item 8 of this Annual Report on Form 10-K, we have revised our unaudited consolidated interim financial information for the second and third quarters of 2007 to correct errors related to interest rate swap gains (losses) in such consolidated financial statements and financial information. As a result of these corrections, we have made appropriate changes to the design and maintenance of adequate controls over the preparation, review, presentation and disclosure of amounts related to our derivative financial instruments.

II.   Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, management of the Company has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of December 31, 2007 (“Evaluation Date”). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures are effective (i) to ensure that information required to be disclosed in reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms; and (ii) to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.

The Report of Management on Internal Control Over Financial Reporting is included in Item 8 of this Annual Report on Form 10-K. There was no change in the Company’s internal control over financial reporting during the quarter ended December 31, 2007, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

The Company’s management, including its Chief Executive Officer and Chief Financial Officer, does not expect that the Company’s disclosure controls and procedures or internal controls will prevent all possible error and fraud. The Company’s disclosure controls and procedures are, however, designed to provide reasonable assurance of achieving their objectives, and the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s financial controls and procedures are effective at that reasonable assurance level.

ITEM 9B.   OTHER INFORMATION

None.

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PART III

ITEM 10.   DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The directors and principal officers of Triad, and their positions and ages at February 28, 2008, are as follows:

Name	Age		Position
Daniel D. Leonard		59	President, CEO and Director
Mike L. Wilhelms		38	Senior Vice President and Chief Financial Officer
Paul E. Dacus		41	Senior Vice President — Risk Management
Scott A. France		45	Senior Vice President — Portfolio Management
Chris A. Goodman		42	Senior Vice President — Direct Channel Originations
Mark A. Kelly		39	Senior Vice President — Director of Risk Management and Product Development
Timothy M. O’Connor		52	Senior Vice President — General Counsel
David L. Satterfield		49	Senior Vice President — Dealer Channel Originations
Gerald J. Ford		63	Co-Chairman of the Board of Directors
Carl B. Webb		58	Co-Chairman of the Board of Directors
Peter C. Aberg		48	Director
Philip A. Canfield		40	Director
Aaron D. Cohen		31	Director
David A. Donnini		42	Director
Donald J. Edwards		42	Director
Stuart A. Katz		38	Director
Gaurav Seth(1)		32	Director
J. Randy Staff		60	Director

(1) Appointed as a Director in November 2007 to replace Jonathan D. Fiorello who was appointed as a director in February 2007 and resigned as a director in November 2007.

The present principal occupations and recent employment history of each of our executive officers and directors listed above is as follows:

Daniel D. Leonard currently serves as our President and Chief Executive Officer, which positions he assumed in June 2007. Prior to his appointment as President and CEO, Mr. Leonard served as our Senior Vice President — Portfolio Management, a position he held since May 2003. He has over 30 years experience in the finance industry. Prior to joining Triad, Mr. Leonard served from 1991 in several positions with California Federal Bank, including as its Senior Vice President — Consumer and Business Banking, Senior Vice President — Retail Distribution, and most recently as President of its subsidiary, Auto One Acceptance Corp., an auto loan financing company. Prior to joining California Federal Bank, Mr. Leonard served in several senior management positions with BankAmerica Corp.

Mike L. Wilhelms currently serves as our Senior Vice President and Chief Financial Officer and joined Triad in September 1997 as Controller. Prior to joining Triad, Mr. Wilhelms served from 1993 to 1997 as an Assurance Manager at KPMG Peat Marwick LLP, during which time he specialized in the non-prime finance industry with auto and mortgage finance companies and worked on several auto and mortgage asset-backed securitizations. Mr. Wilhelms is also a certified public accountant.

Paul E. Dacus has served as our Senior Vice President — Risk Management since February 2005. Prior to joining Triad, Mr. Dacus served from April 2004 with Centrix Financial where he was the Manager of the Risk Management Department. Prior to Centrix, Mr. Dacus was the Senior Vice President for Risk Management at Auto One Acceptance Corporation from January 1996 to August 2003. Mr. Dacus has

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extensive background in risk analysis, score card development, portfolio analysis and statistical modeling. Mr. Dacus is also a Chartered Financial Analyst.

Scott A. France currently serves as our SVP — Portfolio Management and joined Triad in August 2007. Prior to joining Triad, Mr. France served for 11 years as Senior Vice President Call Center Operations and Executive Vice President Portfolio Services at AmeriCredit where he was responsible for Collections, Loss Recovery, Asset Remarketing, Bankruptcy Management. Prior to AmeriCredit, Mr. France worked for World Omni Financial Corp. for 12 years in Credit, Collections and Portfolio Servicing.

Chris A. Goodman currently serves as our Senior Vice President — Direct Originations and has been with Triad since September 2001. He has over 17 years of automotive and leadership experience. Prior to joining Triad, Mr. Goodman served from 1995 in several roles with TranSouth Financial, a consumer finance company, including as its National Sales Manager and as the head of its Direct Lending Division. Prior to joining TranSouth Financial, Mr. Goodman spent five years as a consultant training finance managers, worked on the retail side of an auto dealership and owned a regional finance company that originated and sold loans to other lending institutions.

Mark A. Kelly currently serves as our Senior Vice President — Director of Risk Management and Product Development and joined Triad in June 2007 as Senior Vice President. Prior to joining Triad, Mr. Kelly was with Hunter’s Glen Ford, Ltd. in the acquisition group. Previously, Mr. Kelly served as an executive vice president and chief financial officer of Auto One Acceptance Corporation, where he was responsible for financial accounting, risk management, and regulatory compliance.

Timothy M. O’Connor has served as our General Counsel since May 2005. Prior to joining Triad, Mr. O’Connor served as Vice President in the Legal Department of CitiFinancial Auto from 2002 to 2005. He also served as General Counsel for Auto One Acceptance Corporation from 1998 to 2002 and was a Senior Vice President of California Federal Bank from 1994 to 2002. He has more than 20 years experience representing financial institutions as both in-house and outside counsel.

David L. Satterfield currently serves as our Senior Vice President — Dealer Channel Originations and joined Triad in February 2007 as Senior Vice President. Prior to joining Triad, Mr. Satterfield served for four years as a Senior Vice President and director of the Strategic Business Group for CitiFinancial Auto. Previously, Mr. Satterfield served as executive vice president and chief credit officer of Auto One Acceptance Corporation, where he was responsible for sub-prime originations, and director of Operations for Auto One Houston Credit Center. Mr. Satterfield also served as vice president and regional manager of Bank of America’s Dealer Financial Services group.

Gerald J. Ford is currently Chairman of the Board of Directors of First Acceptance Corporation and has been since 1996. Mr. Ford was Chairman of the Board of Directors and Chief Executive Officer of Golden State Bancorp and its predecessors from 1994 to 2002. During that period, Mr. Ford also served as Chairman of the Board of Directors and Chief Executive Officer of Golden State Bancorp’s wholly-owned subsidiary, California Federal Bank, FSB. Additionally, Mr. Ford served as a Director of Auto One Acceptance Corporation, a wholly-owned auto finance subsidiary of California Federal Bank, FSB. Mr. Ford was Chairman of the Board of Directors and Chief Executive Officer of First Gibraltar Bank, FSB from 1988 to 1993. Mr. Ford was the principal shareholder, Chairman of the Board of Directors and Chief Executive Officer of First United Bank Group, Inc. and its predecessors from 1975 to 1994. Mr. Ford is currently a Director of Hilltop Holdings, Inc., Scientific Games Corporation, Freeport-McMoRan Copper & Gold Co. and McMoRan Exploration Co. Mr. Ford also served as a Director of AmeriCredit Corp. from June 2003 until he resigned in August 2004. Mr. Ford currently is on the Board of Trustees of Southern Methodist University and was formerly the Chairman of the Board.

Carl B. Webb resigned as President and Chief Executive Officer in June 2007, and now serves as Co-Chairman of the Board of Directors of the Company. Mr. Webb has served as a director since April 29, 2005. He was President and Chief Operating Officer of Golden State Bancorp and its predecessors from 1994 to 2002. During that period, Mr. Webb also served as President and Chief Operating Officer of Golden State Bancorp’s wholly-owned subsidiary, California Federal Bank, FSB. Additionally, Mr. Webb served as a

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Director of Auto One Acceptance Corporation, a wholly-owned auto finance subsidiary of California Federal Bank, FSB. Prior to Golden State Bancorp, Mr. Webb was the President and Chief Operating Officer of First Gibraltar Bank, FSB from 1988 to 1993. Mr. Webb was the President of the First National Bank of Lubbock, Texas from 1983 to 1989. Mr. Webb is currently a Director of Hilltop Holdings, Inc., MacAndrews & Forbes Worldwide Corp., and AMB Property Corporation.

Peter C. Aberg is head of FICC-Advisory in the Mortgage Department of Goldman, Sachs & Co., a leading global investment banking, securities and investment management firm. He joined Goldman Sachs in 1985 as an Associate in debt capital markets. Mr. Aberg became a Vice President in 1986 and worked in structured finance from 1987 to 1997. He became a Managing Director in 1998 and a Partner in 2002.

Philip A. Canfield is a Principal of GTCR Golder Rauner, L.L.C. and has worked at GTCR since 1992. His primary area of focus is information technology investments. In addition, Mr. Canfield is experienced in general business services investments. Mr. Canfield serves on the board of Solera Holdings, Inc. and several private companies in GTCR’s portfolio. Prior to joining GTCR, Mr. Canfield was employed in the corporate finance department of Kidder, Peabody & Co. Incorporated where he focused on public offerings and merger and acquisitions.

Aaron D. Cohen is a Vice President with GTCR Golder Rauner, L.L.C. and has been with GTCR since April 2003. Prior to joining GTCR, Mr. Cohen worked as an analyst at the private equity firm of Hicks, Muse, Tate & Furst from 2000. He worked as an analyst in the Mergers & Acquisitions Group of Salomon Smith Barney from 1998 to 2000. Mr. Cohen is currently a director of Wilton Products, Inc., a GTCR private portfolio company.

David A. Donnini is a Principal of GTCR Golder Rauner, L.L.C., which he joined in 1991. Prior to joining GTCR, he worked as a management consultant at Bain & Company. He received a BA in Economics from Yale University. He also holds an MBA from Stanford University. In addition to his service on the board of Triad, Mr. Donnini serves on the boards of Coinmach Service Corp., Prestige Brands Holdings, Inc., Syniverse Technologies, Inc. and several private GTCR portfolio companies.

Donald J. Edwards is Managing Principal of Flexpoint Partners, LLC, an equity investment firm. From July 2002 to April 2004, Mr. Edwards served as President and Chief Executive Officer of First Acceptance Corporation, formerly known as Liberté Investors Inc. From 1994 to 2002, Mr. Edwards was a Principal at GTCR Golder Rauner, L.L.C., where he headed the firm’s healthcare investment effort. Prior to joining GTCR, Mr. Edwards was an Associate at Lazard Frères & Co. LLC. Mr. Edwards is a Director of First Acceptance Corporation.

Stuart A. Katz is a Managing Director of Goldman, Sachs & Co. in the Principal Investment Area and Co-Head of its financial services investment activities. Mr. Katz is a Managing Director of the general partners of the GS Funds (and certain successor funds), the primary vehicles through which The Goldman Sachs Group, Inc. conducts its privately negotiated equity investment activities. Mr. Katz joined Goldman Sachs in 1996 and worked in the London office of the Principal Investment Area during the period from 1997 to 1999 and serves on the boards of various GS Fund private companies. Mr. Katz is a member of the board of directors of Validus Holdings, Ltd. and Capmark Financial Group, Inc.

Gaurav Seth is a Vice President of Goldman, Sachs & Co. in its Americas Special Situations Group (AmSSG) and is head of AmSSG’s Asset Investing business, focused primarily on the financial services, real estate and leasing sectors. Mr. Seth joined Goldman Sachs in 1998 and serves on the boards of various private companies in which AmSSG has invested.

J. Randy Staff was Executive Vice President and Chief Financial Advisor of Golden State Bancorp and its predecessors from 1994 to 2002, where Mr. Staff was primarily responsible for mergers and acquisitions. During that period, Mr. Staff also served as Executive Vice President and Chief Financial Advisor of Golden State Bancorp’s wholly-owned subsidiary, California Federal Bank, FSB. Additionally, Mr. Staff served as a Director and an interim President of Auto One Acceptance Corporation, a wholly-owned auto finance subsidiary of California Federal Bank, FSB. From 1973 to 1994, Mr. Staff was a Partner specializing in financial services at KPMG. Mr. Staff currently serves as a director of Hilltop Holdings, Inc., and is Chairman

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of the Board of Directors and the majority shareholder of the American Bank, N.A., Dallas, Texas and the Citizens State Bank, Jackson County, Texas and has been since 1987 and 1985, respectively.

Family Relationships

There are no family relationships between any of our executive officers or directors.

Code of Ethics

Our Corporate Governance Committee reviewed and approved the Company’s Business Conduct Manual and Ethics Code, or the “Ethics Code”, which provides, among other things, an employee hotline to report suspected violations of our policies in this regard. The program is monitored by the Office of General Counsel. There have been no reports received either through this hotline number of by any other medium since the Ethics Code was introduced. Those who wish to review a copy of the Ethics Code can do so by contacting the Office of General Counsel at Triad Financial Corporation, 5201 Rufe Snow Drive, North Richland Hills, Texas, 76180.

Board Meetings

The Board of Directors convenes quarterly and will conduct other meetings from time to time in order to address issues that arise which require board approval. In addition to full board meetings, the following committees made up board members meet as needed to address the items delegated to them by the full board:

Audit Committee

The Audit Committee of the company meets no less frequently than quarterly to discuss, among other things, audit results presented by the company’s independent auditors and filings required to be made by the company from time to time. In addition to the members of the committee, the outside auditors, the Director of Internal Audit, the Chief Financial Officer and others may be asked to join and make presentations at such meetings. Mr. J. Randy Staff, who serves as Chairman of the Audit Committee, has been designated as the financial expert. He is joined on the Committee by Mr. David A. Donnini, Mr. Donald J. Edwards and Mr. Aaron D, Cohen. Mr. Staff is not independent as defined in Rule 4200(a)(15) of the Nasdaq Marketplace Rules.

Nominating and Corporate Governance Committee

The Nominating and Governance Committee of the company meets periodically to, among other things, approve the slate of officers for the Company and, if applicable, establish approval and contracting authority for such officers. Mr. Peter C. Aberg serves as chairman of this committee, and Mr. Gerald J. Ford, Mr. Philip A. Canfield and Mr. Carl B. Webb serve on the committee as well.

All committees are authorized to meet telephonically in order to conduct the tasks required of them.

ITEM 11.   EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

In this Compensation Discussion and Analysis, we address the compensation paid to our executive officers listed in the Summary Compensation Table that immediately follows this discussion. We refer to these executives as the “Senior Executive Officers.”

Since the Acquisition, the Compensation Committee has, upon consideration of the recommendations of the Co-Chairmen of the Board and/or the CEO, determined the salary component for Senior Executive compensation. The Compensation Committee, also based on the recommendations of the Co-Chairmen of the Board and the CEO, sets the performance criteria and target levels for Senior Executive Officers (other than the CEO) with respect to potential annual incentive payments for the upcoming year. Our process begins with establishing corporate performance objectives for the year. The Compensation Committee and our Co-

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Chairmen of the Board discuss strategic objectives and performance targets. We review the appropriateness of the financial measures used in our incentive plan and the degree of difficulty in achieving specific performance targets.

The recommendations to the Compensation Committee for Senior Executive Officer’s compensation, and the Compensation Committee’s review of those recommendations, are based primarily upon an assessment of corporate performance and potential to enhance long-term stockholder value in determining the amount and mix of compensation elements, and whether each particular payment or award provides an appropriate incentive and reward for performance that sustains and enhances long-term shareholder value. Key factors affecting our judgment include: (1) performance compared to the financial, operational and strategic goals established at the beginning of the year; (2) nature, scope and level of responsibilities; (3) achievement of our financial results, particularly with respect to key metrics such as credit quality, revenue, earnings and return on equity; (4) effectiveness in leading our initiatives to increase productivity and stockholder value; and (5) contribution to our commitment to corporate responsibility, including success in creating a culture of compliance with both applicable laws and our ethics policies.

We may also consider each Senior Executive Officer’s current salary and the appropriate balance between incentives for long-term and short-term performance.

Since the Acquisition in April 2005, we have used three categories of eligible compensation for the Senior Executives: base salary, annual incentive payments and stock option grants. As a privately held corporation, the Board of Directors sought to align the interests of the Senior Executives with those of the investors. In that regard, the board, in 2005, adopted the 2005 Long Term Incentive Plan for Triad Holdings Inc., or the “2005 Plan” for the Senior Executive Officers of the Company. Grants were made to the Senior Executive Officers under the 2005 Plan shortly after its adoption. Additional grants were made in 2006 to certain Senior Executive Officers, and the Compensation Committee also approved the award of grants to other key employees, to be based upon recommendations from their supervisors, subject to the approval of the President and CEO. No grants were made to the existing Senior Executive Officers in 2007, although two of the Senior Executive Officers who joined the Company in 2007 were awarded stock option grants at the time they joined the Company.

Compensation Consultant

Neither the Company nor the Compensation Committee retained any compensation consultants during 2007. In 2005, we established compensation levels using a limited benchmarking survey, relying on data provided to us by our independent compensation consultant, Towers Perrin. During 2007, the Compensation Committee reviewed the compensation packages of the Senior Executive Officers, and approved changes to the base salary of a number of those individuals. We will continue to monitor the compensation practices of our competitors and similarly situated financial institutions to ensure that our salary structure and benefits offered to our Senior Executive Officers remains competitive, so that we may attract and retain talented and experienced leaders.

Overview of Compensation Philosophy and Program

The Compensation Committee believes that the most effective executive compensation program is one that is designed to reward the achievement of specific annual, long-term and strategic goals by the Company, and which aligns the executives’ interests with those of the shareholders by rewarding performance above established goals, with the ultimate objective of improving shareholder value. The Compensation Committee evaluates both performance and compensation to ensure that the Company maintains its ability to attract and retain superior employees in key positions and that compensation provided to the Senior Executive Officers remains competitive relative to the compensation paid to similarly situated executives in our industry. To that end, the Compensation Committee believes executive compensation packages provided by the Company to its Senior Executive Officers should include both cash and stock-based compensation that reward performance as measured against established goals.

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The following compensation objectives are considered in setting the compensation programs for our Senior Executive Officers:

•  drive and reward performance which supports our core values;

•  provide a significant percentage of total compensation that is “at-risk,” or variable, based on predetermined performance criteria;

•  design competitive total compensation and rewards programs to enhance our ability to attract and retain knowledgeable and experienced Senior Executive Officers; and

•  set compensation and incentive levels that reward significant achievement.

We believe the adjustments made to the salaries of our Senior Executive Officers in 2007 achieved the goal of providing competitive salaries, but we will continue to informally monitor the compensation practices in the financial services industry.

Role of Senior Executives in Compensation Decisions

The Co-Chairmen of the Board, or the “Co-Chairmen”, annually review the performance of the Senior Executive Officers, including the Chief Executive Officer. The conclusions resulting from their recommendations, including proposed salary adjustments and annual award amounts, are then presented to the Compensation Committee for consideration and approval. The Compensation Committee can exercise its discretion in modifying those recommendations.

Compensation Elements and Rationale for Pay Mix Decisions

To reward both short and long-term performance in the compensation program and in furtherance of our compensation objectives noted above, the compensation philosophy for our Senior Executive Officers includes the following four principles:

(1) Compensation should be related to the Company’s performance

We believe that a significant portion of a Senior Executive Officer’s compensation should be tied to the overall Company performance measured against our financial goals and objectives. During periods when performance meets or exceeds the established objectives, Senior Executive Officers should be paid at or more than expected levels, respectively. When our performance does not meet key objectives, incentive award payments, if any, should be less than such levels.

(2) Incentive compensation should represent a large portion of a Senior Executive’s total compensation

We intend to minimize the amount of fixed compensation paid to Senior Executive Officers in order to minimize costs when our performance is not optimal. A significant portion of compensation should be paid in the form of short-term and long-term incentives, which are calculated and paid based primarily on financial measures of profitability and shareholder value creation. Senior Executive Officers are incented to increase our profitability and shareholder return in order to earn the major portion of their compensation.

(3) Compensation levels should be competitive

The Compensation Committee believes that a competitive compensation program enhances our ability to attract and retain Senior Executive Officers. They have been empowered by the board with the flexibility to ensure that the compensation program is competitive with that provided by comparable firms.

(4) Incentive compensation should balance short-term and long-term performance

The Compensation Committee seeks to achieve a balance between encouraging strong short-term annual results and ensuring our long-term viability and success. To reinforce the importance of balancing these perspectives, Senior Executive Officers will be provided both short and long term incentives. Short term

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incentives are embodied in our annual incentive plans, while, for the longer term, we provide Senior Executive Officers and a number of key employees with the opportunity to become indirect shareholders of Triad.

Metrics Used in Compensation Programs

The Compensation Committee, working with the CEO in the first quarter of 2007, adopted a general outline of performance-based metrics for defining Senior Executive Officer incentive compensation during 2007. These metrics (the “Performance Metrics”) are defined, and their use in Senior Executive Officer’s annual compensation is described below:

Credit Quality:  While there is a loss expectation inherent in the loans we originate and the contracts we purchase, we seek to manage the credit quality of the overall portfolio through prudent servicing practices with respect to the loans and contracts already booked, and through sound underwriting practices across all channels.

Profit Before Taxes:  This measurement takes into account overall earnings, whether they came from the pool of receivables acquired at the closing of the Acquisition, or from the contracts originated since that time.

Operating Costs:  This final financial metric is based on a targeted percentage set at the beginning of the fiscal year. The Senior Executive Officers are encouraged to control expenditures in order to meet or exceed the established goals.

For the 2007 Fiscal Year, the Compensation Committee approved the inclusion of a discretionary aspect to the Incentive Compensation of the Senior Executive Officers. These performance metrics were adopted again by the Compensation Committee for the 2008 Fiscal Year.

Review of Senior Executive Officer Performance

In addition to considering the recommendations made by the Co- Chairmen, the Compensation Committee has the opportunity to meet with the Senior Executive Officers at various times during the year, which allows them to consider and independently assess each individual’s performance and contribution.

Components of the Executive Compensation Program

We believe the total compensation and benefits program for the Senior Executive Officers should consist of the following:

•  base salaries;

•  annual incentive payment;

•  long-term incentive compensation, through stock option grants; and

•  other customary health and welfare benefits.

Base Salaries

During 2007, several changes were made among the Senior Executive Officers, including the promotion of Mr. Leonard to the position of President and Chief Executive Officer, and the hiring of a new Director of Dealer Channel Originations, a new Director of Portfolio Servicing and a new Director of Risk Management and Product Development. Senior Executive Officers’ base salaries had remained virtually unchanged since the Acquisition. Base salaries are determined by evaluating the level of responsibility and experience of the Senior Executive Officers, together with the Company’s performance.

When considering the base salary of the Senior Executive Officers for fiscal year 2007, the Co-Chairmen and the Compensation Committee took into account our 2006 performance, the changes to the composition of the Senior Executive team, as well as long and short-term goals, such as:

•  meeting pre-tax income goals;

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•  successful management of portfolio and institutional risk;

•  maintenance of overall credit quality with respect to both existing and newly originated loans; and

•  the adherence to the cost structure.

The Compensation Committee, together with the Co-Chairmen, may adjust base salaries when, among other factors:

•  the current compensation demonstrates a significant deviation from the market data;

•  it wishes to recognize outstanding individual performance; and

•  it wishes to recognize an increase in responsibility.

Annual Incentive Compensation

The incentive compensation awarded annually provides Senior Executive Officers with the opportunity to earn cash bonuses based on the achievement of specific Company goals. The CEO, together with the Compensation Committee, designs the annual incentive component of our compensation program to align Senior Executive Officers’ pay with our annual (short term) performance. Incentive bonuses are generally paid in the first quarter of each year for the prior fiscal year’s performance.

The Compensation Committee approves a target incentive payout as a percentage of the base salary earned during the incentive period for each Senior Executive Officer. The incentive target percentage represents the Senior Executive Officer’s annual bonus opportunity if the annual performance goals of the incentive plan are achieved.

For 2007, the Compensation Committee approved the Performance Metrics. Each Performance Metric has a weight within the plan.

Performance targets are established at levels that are achievable, but require better than expected planned performance. Each of the Senior Executive Officers received an annual bonus based on our overall performance.

The amount to be paid to each Senior Executive Officer as an annual incentive for 2007 is determined by analyzing our results with respect to the Performance Metrics previously discussed. The Compensation Committee analyzes the Senior Executive Officers’ performance for the year and then determines the incentive level based upon the analysis with target awards that are based upon a percentage of base salary. The Compensation Committee, on the recommendation of the Co-Chairmen, sets minimum, target and maximum levels for each component of the Performance Metrics for the annual cash incentive compensation. Payments of annual incentive compensation are based upon the achievement of such objectives for the current year.

Stock Options

Grants of stock options to Senior Executive Officers, employees and others who provide services to the Company have been made under the 2005 Plan. We believe that grants of stock options serve as effective long- term incentives for Senior Executives that encourage them to remain with the Company and continue to excel in their performance.

Each stock option permits the Grantee, generally for a period of ten years, to purchase one share of stock of Triad Holdings Inc., or Holdings, at the exercise price, which is the book value per share of the stock as of the most recently reported quarter on the date of grant. Since the stock of Holdings is not publicly traded, we believe this method of valuation is an appropriate reflection of the true value of the unexercised vested option shares as a particular date. Stock options granted initially to the Senior Executives in 2005 were based on the value per share of Holdings as of the closing of the Acquisition. Stock options have value only to the extent the value of Holdings stock on the date of exercise exceeds the exercise price. Options are generally exercisable in five equal installments beginning the date of the grant date and continue annually thereafter on the anniversary of the grant date, or the month ending immediately prior to the anniversary of the grant date.

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The number of stock options granted to Senior Executive Officers is shown on the Grant of Plan-Based Awards Table below. Additional information on these grants, including the number of shares subject to each grant, is also shown in the Grant of Plan-Based Awards Table. The Outstanding Equity Awards at Fiscal Year End Table below shows the value of these awards at December 31, 2007.

Our stock option program is a vital element of our drive to develop and motivate the leaders who will sustain our performance as we continue to expand the business. It also provides real incentives for our key employees to sustain and enhance our long-term performance, because it links the potential financial gain for these employees to the long term value of Holding’s stock price. Both the Co-Chairmen and the Compensation Committee believe that the superior performance of these individuals will contribute significantly to our future success.

Various persons are involved in the stock option granting process. Upon consideration of the recommendation of the Co-Chairmen, the Compensation Committee approves stock option grants to Senior Executive Officers and others who provide vital services to the Company. Option grants to other key employees are made from time to time with the approval of the President and CEO, on the recommendation of the Senior Executive Officers to whom they report. Our General Counsel and the Vice President of Human Resources oversee the stock option practices and administration of the 2005 Plan. The Chief Financial Officer has established procedures that provide for consistency and accuracy in determining the fair market value of options and the expense regarding the stock option grants in compliance with FAS 123(R).

An important objective of the 2005 Plan is to strengthen the relationship between the long-term value of Holding’s stock price and the potential financial gain for the Senior Executive Officers, key employees and other beneficiaries of the 2005 Plan. Stock options provide Senior Executive Officers (as well as employees and others providing services to the Company) with the opportunity to purchase Holdings’ stock at a price fixed on the grant date regardless of future market price. Accordingly, a stock option becomes valuable only if Holdings’ stock price increases above the option exercise price and the holder of the option remains employed by the Company. In addition, stock options link a portion of the recipient’s compensation to shareholders’ interests by providing an incentive to increase the value of the Company.

Option holders generally forfeit any unvested options if their employment with us terminates. In such event, their right to exercise vested option shares terminates on the date of termination. To the extent that the book value of the most recently completed quarter exceeds the strike price, they will be paid the difference for each vested option share. All granted options will vest upon a change in control of the Company.

Options Exercised — 2007

None of the Senior Executive Officers exercised any of the Vested Option Shares available for exercise during 2007.

Other Equity Incentive Plans

The 2005 Plan only authorizes the grant of stock options in Holdings. Neither the Company nor Holdings offers any stock appreciation rights, Employee Stock Purchase Plans, restricted stock plans, or other plans providing for equity or equity-based compensation.

Retirement, Health and Welfare Benefits

We offer a variety of health and welfare programs to all eligible employees. The Senior Executive Officers generally are eligible for the same benefit programs on the same basis as the rest of the Company’s employees. The health and welfare programs are intended to protect employees against catastrophic loss and encourage a healthy lifestyle. Our health and welfare programs include medical, prescription drug, dental, vision, life insurance and accidental death and disability. We provide short-term disability, long-term disability and basic life insurance at no cost to the employees who qualify for such benefits. We offer a qualified 401(k) savings plan. All Company employees, including Senior Executive Officers, are generally eligible to participate in the 401(k) plan. We do not offer any pension plans or similar benefits to our employees.

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Employment Agreements and Arrangements

We entered into an employment agreement, or the “Goodman Agreement” with Mr. Chris Goodman in 2005. The Agreement provides for a minimum annual salary of $255,000. The Goodman Agreement provides that he will serve as Director of the RoadLoans Division of the Company for a three-year period or until the earlier to occur (if at all) of his termination or resignation. The Agreement provides that Mr. Goodman is eligible for our employee benefit plans and other benefits provided in the same manner and to the same extent as our other employees. The Goodman Agreement also contains confidentiality provisions and a covenant not to solicit employees or clients during his employment term and for three years following the termination of his employment. In August 2007, the Company and Mr. Goodman entered into an amended and Restated Employment Agreement, under the terms of which Mr. Goodman’s salary was increased to $270,000. The amended agreement has an initial term of three years, and contains an annual renewal provision unless either party seeks to terminate it.

In February 2007, we hired Mr. David Satterfield as Senior Vice President and Director of Dealer Channel Originations. In connection with his joining the Company, we entered into an employment agreement, or the Satterfield Agreement” with Mr. Satterfield. The Satterfield Agreement provides for a minimum annual salary of $270,000. It also provides that he will serve in that capacity for an initial term of three years, and contains an automatic renewal provision on the anniversary of his hire date.

No other Senior Executive Officers or other employees of the Company had contracts of employment as of the end of 2006. The Company had an employment agreement with Mr. James M. Landy, the former president of the Company. Mr. Landy’s agreement was dated April 29, 2005, and was terminated when he was terminated in July 2005. Mr. Landy continued to receive periodic payments under the terms of that employment agreement through June 2007.

During the third quarter of 2007, the Company entered into a consulting agreement with Carl B. Webb. Under the terms of the agreement, Mr. Webb will provide consulting services to the Company in return for a fee of $250,000 per annum. In the first quarter of 2008, the consulting agreement was amended to change the annual fee to $500,000.

Non-Qualified Deferred Compensation Plans

We do not have any Non-Qualified Deferred Compensation Plans.

Change in Control Agreements

We have no Change in Control Agreements with any of the Senior Executive Officers of the Company or with any other employee as of the end of 2007, although both the Goodman and the Satterfield Agreements contain provisions that allow for either agreement to be terminated upon a change in control. Under the 2005 Plan, all options granted will vest upon a change in control.

Indemnification of Officers and Directors of Triad

We have no indemnification agreements with any of our Senior Executive Officers or with any other employee. However, our articles of incorporation and bylaws provide that all our officers and directors will be indemnified by us to the fullest extent permissible under the California Corporations Code from and against all expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with such person’s status as our agent. We have purchased and maintain insurance on behalf of our agents, including our officers and directors, against any liability asserted against them in such capacity or arising out of such agents’ status as officers or directors.

Stock Ownership Guidelines

We have not adopted at this time any guidelines that address the ownership of our stock or that of Holdings.

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Tax Implications of Executive Compensation

Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”) places a limit of $1,000,000 on the amount of compensation that may be deducted by the Company in any year with respect to the CEO or any other Senior Executive unless the compensation is performance-based compensation as described in Section 162(m) and the related regulations. At the present time, we do not pay any compensation to our Senior Executives that may not be deductible, including discretionary bonuses or other types of compensation.

Compensation Committee

The Compensation Committee of the company meets from time to time to discuss matters pertaining to the salaries, wages and benefits to be paid to employees. While there is no fixed schedule for these meetings, there will generally be a meeting in the first quarter of each year to ratify bonus pools for the previous year, and to approve the compensation plan proposed by management for the new year. This Committee is chaired by Mr. David A. Donnini, and the other members are Mr. Gerald J. Ford, Mr. Stuart A. Katz, Mr. Gaurav Seth and Mr. Donald J. Edwards.

Compensation Committee Report

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis for the 2007 fiscal year with the Company’s management. Based on the review and discussions, the Compensation Committee recommended to the Company’s Board of Directors that the Compensation Discussion and Analysis be included in this annual report on Form 10-K.

David A. Donnini (Chairman)

Gerald J. Ford

Stuart A. Katz

Guarav Seth

Donald J. Edwards

Compensation Committee Interlocks and Insider Participation

For a description of the transactions between us and our directors and entities affiliated with such directors, see “Certain Relationships and Related Transactions and Director Independence.” None of our executive officers has served as a member of the board of directors or compensation committee of another entity that had one or more of its executive officer that had one or more of its executive officers servicing as a member of our board of directors.

Compensation of Directors

We do not compensate the directors currently serving on our board of directors, although we entered into a consulting agreement with Mr. Webb at the time he resigned as President and CEO and became the Co-Chairman of the Board. To the extent any future directors are neither our employees nor our principal equity sponsors, such directors may receive fees. We expect the amount of such fees will be commensurate with amounts offered to directors of companies similar to ours.

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Summary Compensation Table

The following table sets forth services rendered in all capacities to us for the year ended December 31, 2007 for our President and Chief Executive Officer, our Chief Financial Officer, and the three most highly compensated executive officers as of December 31, 2007:

													Change in
													Pension
											Non-		Value and
											Equity		Nonqualified
											Incentive		Deferred
							Stock		Option		Plan		Compensation		All Other
Name and Principal							Awards		Awards		Compensation		Earnings		Compensation			Total
Position	Year		Salary($)		Bonus($)		($)		($)(1)		($)		($)		($)			($)
Carl B Webb		2007	$	307,692	$	—		—	$	84,500		—		—	$	3,846	(2)	$	396,038
President and Chief		2006	$	500,000	$	158,000		—	$	99,750		—		—	$	—		$	757,750
Executive Officer
Daniel D. Leonard		2007	$	304,423	$	64,844		—	$	67,500		—		—	$	24,000	(3)	$	460,767
President and Chief		2006	$	225,000	$	35,550		—	$	90,000		—		—	$	23,800	(3)	$	374,350
Executive Officer
Mike L. Wilhelms		2007	$	262,500	$	30,375		—	$	94,500		—		—	$	24,000	(4)	$	411,375
Senior Vice President		2006	$	255,000	$	40,290		—	$	126,000		—		—	$	22,936	(4)	$	444,226
and Chief Financial Officer
David L. Satterfield		2007	$	238,846	$	250,625		—	$	7,000		—		—	$	—		$	496,471
Senior Vice President — Dealer Channel Originations
Chris A. Goodman		2007	$	260,769	$	50,625		—	$	94,500		—		—	$	24,000	(3)	$	429,894
Senior Vice President —		2006	$	255,000	$	40,290		—	$	126,000		—		—	$	23,800	(3)	$	445,090
Direct Channel Originations
Paul E. Dacus		2007	$	249,038	$	37,500		—	$	67,500		—		—	$	23,930	(6)	$	377,968
Senior Vice President —		2006	$	237,019	$	39,500		—	$	90,000		—		—	$	22,044	(6)	$	388,563
Risk Management

(1)	For each of the stock option grants, the value shown is what is also included in the Company’s financial statements per FAS 123(R). See footnote 14 to the Company’s consolidated financial statements included in this annual report for a complete description of the FAS 123(R) valuation. The actual number of awards granted in 2007 is shown in the “Grants of Plan Based Awards” table included in this filing.
(2)	Mr. Webb stepped down as President and CEO in June 2007. Effective August 1, 2007, he entered into a Consulting Agreement with the Company that will pay him $250,000 annually. He received $3,846 as the Company contribution to his 401(k) Plan.
(3)	Includes $9,000 and $8,800 in 2007 and 2006, respectively, Company contribution to 401(k) Plan and $15,000 in car allowance in 2007 and 2006.
(4)	Includes $9,000 and $7,936 in 2007 and 2006, respectively, Company contribution to 401(k) Plan and $15,000 in car allowance in 2007 and 2006.
(5)	Mr. Satterfield joined the Company in February 2007 and received a signing bonus of $200,000.
(6)	Includes $8,930 and $7,044 in 2007 and 2006, respectively, Company contribution to 401(k) Plan and $15,000 in car allowance in 2007 and 2006.

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Grant of Plan-Based Awards Table

The following table summarizes information regarding awards granted under the 2005 Plan during 2007 to our Senior Executives:

																	All Other
															All Other		Option
															Stock Awards:		Awards:		Exercise
			Estimated Future Payouts												Number of		Number of		or Base
			Under Non-Equity Incentive						Estimated Future Payouts Under						Shares of		Securities		Price of
			Plan Awards						Equity Incentive Plan Awards						Stock or		Underlying		Option
			Threshold		Target		Maximum		Threshold		Target		Maximum		Units		Options		Awards
Name	Grant Date		($)		($)		($)		(#)		(#)		(#)		(#)		(#)		($/Sh)
Carl B Webb(1)		—		—		—		—		—		—		—		—		—		—
President and Chief Executive Officer
Daniel D. Leonard		—		—		—		—		—		—		—		—		—		—
President and Chief Executive Officer
Mike L. Wilhelms		—		—		—		—		—		—		—		—		—		—
Senior Vice President and Chief Financial Officer
David L. Satterfield		01/27/2007		—		—		—		—		—		—		—		200,000	$	8.30
Senior Vice President — Dealer Channel Originations
Chris A. Goodman		—		—		—		—		—		—		—		—		—		—
Senior Vice President — Direct Channel Originations
Paul E. Dacus		—		—		—		—		—		—		—		—		—		—
Senior Vice President — Risk Management

(1) Mr. Webb stepped down as President and CEO in June 2007.

The exercise price is the book value per share of the stock as of the most recently reported quarter prior to the date of grant. Since the stock of Holdings is not publicly traded, we believe this method of valuation is an appropriate reflection of the true value of the unexercised vested option shares as of a particular date.

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Outstanding Equity Awards at Fiscal Year-End

Option Awards

Stock Awards

Equity

Incentive

Equity

Plan

Equity

Incentive

Awards:

Incentive

Plan

Market

Plan

Market

Awards:

or Payout

Awards:

Number

Value of

Number of

Value of

Number of

Number of

Number of

of Shares

Shares or

Unearned

Unearned

Securities

Securities

Securities

or Units

Units

Shares,

Shares,

Underlying

Underlying

Underlying

of Stock

of Stock

Units or

Units or

Unexercised

Unexercised

Unexercised

Option

That Have

That Have

Other Rights

Other Rights

Options

Options

Unearned

Exercise

Option

Not

Not

That Have

That Have

(#)

(#)

Options

Price

Expiration

Vested

Vested

Not Vested

Not Vested

Name

(Exercisable)

(Unexercisable)

(#)

($)

Date

(#)

($)

(#)

($)

Carl B Webb(1)

200,000

300,000

—

$

7.73

3/23/16

—

—

—

—

President and Chief Executive Officer

Daniel D. Leonard

150,000

100,000

—

$

7.50

8/10/15

—

—

—

—

President and Chief Executive Officer

Mike L. Wilhelms

210,000

140,000

—

$

7.50

8/10/15

—

—

—

—

Senior Vice President and Chief Financial Officer

David L. Satterfield

40,000

160,000

—

$

8.30

2/02/17

—

—

—

—

Senior Vice President — Dealer Channel Originations

Chris A. Goodman

210,000

140,000

—

$

7.50

8/10/15

—

—

—

—

Senior Vice President — Direct Channel Originations

Paul E. Dacus

150,000

100,000

—

$

7.50

8/10/15

—

—

—

—

Senior Vice President — Risk Management

(1) Mr. Webb stepped down as President and CEO in June 2007.

Options Exercised and Stock Vested in Fiscal 2007

No stock options were exercised in fiscal year 2007.

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ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

PRINCIPAL STOCKHOLDERS

Triad is a wholly-owned subsidiary of Triad Holdings Inc., which we refer to as “Triad Holdings.” The following table sets forth certain information as of March 14, 2008, regarding the beneficial ownership of common stock of Triad Holdings by (i) each person we know to be the beneficial owner of more than 5% of its outstanding common stock, (ii) each member of the board of directors of Triad Holdings (which is identical to the board of directors of Triad) and our Named Executive Officers, and (iii) each of our directors and executive officers as a group. To our knowledge, each such stockholder has sole voting and investment power as to the common stock shown unless otherwise noted. Beneficial ownership of the common stock listed in the table has been determined in accordance with the applicable rules and regulations promulgated under the Exchange Act.

	Number of Shares
Name and Address of Beneficial Owner	Beneficially Owned		Percent of Class
Principal Stockholders:
GS Entities(1),(2)		14,288,889		30.1	%
GTCR Funds(1),(3)		14,288,889		30.1	%
Hunter’s Glen/Ford Ltd.(1),(4)		14,039,561		29.5	%
Directors and Named Executive Officers:
Mike L. Wilhelms(5)		210,000		*
Chris A. Goodman(6)		210,000		*
Paul E. Dacus(7)		150,000		*
David L. Satterfield(8)		80,000		*
Daniel D. Leonard(9)		150,000		*
Gerald J. Ford(4)		14,789,561		31.1	%
Carl B. Webb(10)		1,174,664		2.5	%
J. Randy Staff		874,664		1.8	%
Donald J. Edwards		750,000		1.6	%
Philip A. Canfield(3)		14,288,889		30.1	%
David A. Donnini(3)		14,288,889		30.1	%
Aaron D. Cohen		—		—
Peter C. Aberg(2)		14,288,889		30.1	%
Stuart A. Katz(2)		14,288,889		30.1	%
Gaurav Seth(2)		—		—
All directors and executive officers as a group (19 persons)(1),(2),(3),(4),(11)		47,540,000		100.0	%

*	Represents less than 1%
(1)	Each of the principal stockholders holds ownership interests directly in Triad Holdings, LLC, or “Triad LLC,” and none of the principal stockholders hold any common stock of Triad Holdings directly. Triad Holdings is controlled by Triad LLC, which owns approximately 98.9% of the common stock of Triad Holdings directly. Amounts shown reflect the beneficial ownership of the principal stockholders in Triad Holdings through their ownership in Triad LLC. The ownership interests in Triad LLC consist of preferred units and common units. See “Certain Relationships and Related Transactions and Director Independence — Limited Liability Company Agreement of Triad Holdings, LLC” for more information.
(2)	Amounts shown reflect the aggregate interest held by MTGLQ Investors, L.P., which is a wholly-owned subsidiary of The Goldman Sachs Group, Inc. (“GS Group”), and investment partnerships, of which

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	affiliates of GS Group are the general partner or managing general partner. These investment partnerships, which we refer to as the “GS Funds” (together with MTGLQ Investors, L.P., the “GS Entities”), are GS Capital Partners 2000, L.P., GS Capital Partners 2000 Offshore, L.P., GS Capital Partners 2000 GmbH & Co. Beteiligungs KG, GS Capital Partners 2000 Employee Fund, L.P. and Goldman Sachs Direct Investment Fund 2000, L.P. Each of Peter Aberg and Stuart Katz is a managing director of Goldman, Sachs & Co., an affiliate of GS Group and the investment manager of certain of the GS Funds. Mr. Aberg, Mr. Katz, Goldman, Sachs & Co. and GS Group each disclaims beneficial ownership of the shares owned directly or indirectly by the GS Funds, except to the extent of their pecuniary interest therein, if any. Mr. Aberg, Mr. Katz and Goldman, Sachs & Co. each disclaims beneficial ownership of the shares owned by MTGLQ Investors, L.P., except to the extent of their pecuniary interest therein, if any. The shares are included four times in the table under the beneficial ownership of each of Mr. Aberg, Mr. Katz, the GS Entities and all directors and executive officers as a group. The address for each of these beneficial owners is c/o Goldman, Sachs & Co., 85 Broad Street, New York, New York 10004.
(3)	Amounts shown reflect the aggregate interest held by GTCR Fund VIII, L.P., GTCR Fund VIII/B, L.P. and GTCR Co-Invest II, L.P., which we collectively refer to as the “GTCR Funds.” Messrs. Donnini and Canfield are each principals and/or members of GTCR Golder Rauner II, L.L.C. (“GTCR II”). GTCR II is the general partner of GTCR Co-Invest II, L.P. and GTCR Partners VIII, L.P., which is the general partner of GTCR Fund VIII, L.P. and GTCR Fund VIII/B, L.P. Accordingly, Messrs. Donnini and Canfield may be deemed to beneficially own the shares owned by the GTCR Funds. Each such person disclaims beneficial ownership of any such shares in which he does not have a pecuniary interest. The address of each such person and the GTCR Funds is c/o GTCR Golder Rauner, L.L.C., 6100 Sears Tower, Chicago, IL 60606. The shares are included four times in the table under the beneficial ownership of each of Mr. Canfield, Mr. Donnini, the GTCR Funds and all directors and executive officers as a group.
(4)	Amounts shown include shares owned through Hunter’s Glen/Ford. Because Gerald J. Ford is one of two general partners of Hunter’s Glen/Ford, and the sole stockholder of Ford Diamond Corporation, a Texas corporation, and the other general partner of Hunter’s Glen/Ford, Gerald J. Ford is considered the beneficial owner of the shares of Triad owned by Hunter’s Glen/Ford. The address of each such person is c/o Hunter’s Glen/Ford Ltd., 200 Crescent Court, Suite 1350, Dallas, TX 75201.
(5)	Represents options to acquire 210,000 shares of common stock of Triad Holdings.
(6)	Represents options to acquire 210,000 shares of common stock of Triad Holdings.
(7)	Represents options to acquire 150,000 shares of common stock of Triad Holdings.
(8)	Represents options to acquire 80,000 shares of common stock of Triad Holdings.
(9)	Represents options to acquire 150,000 shares of common stock of Triad Holdings.
(10)	Includes options to acquire 300,000 shares of common stock of Triad Holdings.
(11)	Includes options to acquire 1,540,000 shares of common stock of Triad Holdings.

ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

In connection with the Transactions, we entered into a unit purchase agreement, stockholders agreement, registration rights agreement, management agreement and stock purchase agreement and our principal stockholders entered into a limited liability company agreement, all as further described below.

Relationship with Ford Credit

Prior to the Transactions, Triad was a wholly-owned subsidiary of Fairlane Credit LLC. Fairlane Credit is a wholly-owned subsidiary of Ford Credit. When we were a subsidiary of Ford Credit, we received financing support and technical and administrative advice and services from Ford Credit. At December 31, 2005, we owed Ford Credit $52.3 million. This note payable was repaid during 2006.

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Unit Purchase Agreement

In connection with the closing of the Transactions, Triad Holdings, LLC, or “Triad LLC,” entered into a unit purchase agreement with the GTCR Funds, the GS Entities and Hunter’s Glen/Ford pursuant to which the GTCR Funds, the GS Entities and Hunter’s Glen/Ford acquired a strip of preferred units and common units of Triad LLC for an aggregate purchase price of $114.8 million.

Limited Liability Company Agreement of Triad Holdings, LLC

Capitalization.  Triad is indirectly controlled by Triad LLC. Triad LLC has authorized preferred units and common units under the terms of its limited liability company agreement. Each class of units represents a fractional part of the membership interests of Triad LLC.

The preferred units of Triad LLC accrue dividends at a rate of 6% per annum, compounded annually. Upon any liquidation or other distribution by Triad LLC, holders of preferred units will be entitled to an amount equal to the original investment in such preferred units, plus any accrued and unpaid preferred yield, before any payments may be made to holders of common units. The common units represent the common equity of Triad LLC. After payment of (1) the accrued and unpaid preferred yield on the preferred units and (2) the return of the invested capital by the preferred unitholders, the holders of common units will be entitled to any remaining proceeds of any liquidation or other distribution by Triad LLC pro rata according to the number of common units held by such holder.

The indenture governing the notes generally limits the ability of Triad to pay cash distributions to its equityholders, other than distributions in amounts approximately equal to the tax liability of members of Triad LLC, unless certain conditions are satisfied. Because Triad LLC’s only significant assets will be the equity securities of its subsidiaries, it likely will not have sufficient funds to make distributions to its members, other than quarterly tax distributions.

Board of Managers.  The board of managers generally has the exclusive authority to manage and control the business and affairs of Triad LLC. Under the terms of the limited liability company agreement, the board is initially composed of the following ten members:

•  three representatives designated by the GS Entities, who initially were Peter C. Aberg, Stuart A. Katz and Lance West. Mr. West resigned in April 2006 and was replaced by Daniel J. Pillemer, who in turn was replaced by Jonathon D. Fiorello in February 2007, who in turn was replaced by Gaurav Seth in November 2007;

•  three representatives designated by the GTCR Funds, who initially were Philip A. Canfield, David A. Donnini and David I. Trujillo. Mr. Trujillo resigned in March 2006, and was replaced by Aaron D. Cohen;

•  three representatives designated by Hunter’s Glen/Ford, who initially were Donald J. Edwards, J. Randy Staff and Carl B. Webb; and

•  the LLC’s chief executive officer, who initially was Gerald J. Ford.

With respect to each of the foregoing equity sponsors (that is, the GS Entities, the GTCR Funds and Hunter’s Glen/Ford), so long as it and its respective affiliates continue to hold at least 50%, 25% and one of the common units purchased by it and its affiliates under the unit purchase agreement, it will have the right to designate three, two and one representative(s) to the board of Triad LLC, respectively. However, if the GS Entities and their affiliates continue to hold at least 50% of the common units purchased by them and their affiliates under the unit purchase agreement, which we refer to as the “Goldman Common Units,” and the GTCR Funds and their affiliates no longer hold any of the common units purchased by them and their affiliates under the unit purchase agreement, which we refer to as the “GTCR Common Units,” then the GS Entities will have the right to designate one additional representative (for a total of four representatives) so long as the GS Entities and their affiliates continue to hold at least 50% of the Goldman Common Units. Similarly, if the GTCR Funds and their affiliates continue to hold at least 50% of the GTCR Common Units and the GS Entities and their affiliates no longer hold any Goldman Common Units, then GTCR will have the

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right to designate one additional representative (for a total of four representatives) so long as GTCR and its affiliates continue to hold at least 50% of the GTCR Common Units.

Restrictions on Transfer.  The limited liability company agreement provides for customary rights of first offer, tag-along rights, drag-along rights and other restrictions on transfer similar to those set forth in the stockholders agreement (described below under the caption “— Stockholders Agreement”).

Buy/Sell Right.  Upon a triggering event (defined below), Hunter’s Glen/Ford will have the right to make a fully financed offer to purchase all of the units and other interests in Triad LLC from the other equity sponsors and their respective affiliates at a price specified by Hunter’s Glen/Ford, which we refer to as “Buy/Sell Right.” Upon exercise of the Buy/Sell Right by Hunter’s Glen/Ford, the other equity sponsors will each have the right to either accept Hunter’s Glen/Ford’s offer and sell its units or elect to purchase the units and other interests of Triad LLC held by Hunter’s Glen/Ford at the same price and on the same other customary terms as offered by Hunter’s Glen/Ford. If both of the other equity sponsors elect to sell, then Hunter’s Glen/Ford must purchase the units of the other equity sponsors and their respective affiliates. If both of the other equity sponsors elect to purchase the units of Hunter’s Glen/Ford, then Hunter’s Glen/Ford must sell its units to the other equity sponsors and their respective affiliates. If either of the other equity sponsors elects to sell and the other elects to purchase, then the other equity sponsor electing to purchase will have the right to decide whether to purchase both Hunter’s Glen/Ford’s and the other equity sponsor’s entire interest in the Triad LLC or change its election and sell its interests to Hunter’s Glen/Ford. A “triggering event” may occur if, without the prior written consent of Hunter’s Glen/Ford, either the board of managers of Triad LLC or the other equity sponsors cause the management agreement (described below under the caption “— Management Agreement”) to be terminated other than for cause, fail to pay any amount owed to Hunter’s Glen/Ford under the management agreement when due, remove Gerald J. Ford as chief executive officer of Triad LLC or as executive chairman of Triad Holdings other than for cause, or eliminate or materially reduce Hunter’s Glen/Ford’s or Mr. Ford’s responsibilities with respect to Triad LLC or Triad Holdings other than for cause.

Stockholders Agreement

Concurrently with the closing of the Transactions, Triad Holdings entered into a stockholders agreement with Triad LLC and James M. Landy. The stockholders agreement provides that:

•  the board of directors of Triad Holdings will have the same composition as the board of managers of Triad LLC described above plus one additional director who will be the chief executive officer of Triad Holdings;

•  the stockholders of Triad Holdings will have customary rights of first offer with respect to specified transfers of shares of Triad Holdings by other stockholders, which would allow the other stockholders to purchase a pro rata portion of the shares proposed to be transferred in proportion to the number of shares held by such other stockholders participating in such purchase on a fully diluted basis;

•  the stockholders of Triad Holdings, other than Triad LLC, will have customary tag-along rights with respect to specified transfers by Triad LLC of shares of Triad Holdings, which would enable them to transfer their shares on the same terms and conditions as Triad LLC;

•  Triad LLC will have drag-along rights with respect to Triad Holdings shares owned by the other stockholders of Triad Holdings, which would require the other stockholders to sell their units in connection with a sale of Triad Holdings that is approved by the board of directors of Triad Holdings and the board of managers of Triad LLC;

•  the stockholders of Triad Holdings will not transfer their shares of Triad Holdings without the prior written consent of Triad LLC, except as specified in the stockholders agreement; and

•  Triad Holdings must obtain the prior written consent of Triad LLC before taking specified actions.

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Registration Rights Agreement

Under the registration rights agreement entered into in connection with the closing of the Transactions, the holders of a majority of the Goldman registrable securities, the holders of a majority of the GTCR registrable securities and the holders of a majority of the Hunter’s Glen/Ford registrable securities, each as defined in the registration rights agreement, each have the right at any time after an underwritten initial public offering of the common stock of Triad Holdings with gross proceeds of at least $50.0 million, subject to specified conditions, to request Triad Holdings or any subsidiary to register any or all of their securities under the Securities Act on Form S-1, which we refer to as a “long-form registration,” at the expense of Triad Holdings, or on Form S-2 or Form S-3, which we refer to as a “short-form registration,” at the expense of Triad Holdings provided that the aggregate offering value of registrable securities to be registered in a short-form registration must equal at least $10.0 million. Triad Holdings is not required, however, to effect any long-form registration within 90 days after the effective date of a previous long-form registration or a previous registration in which the holders of registrable securities were given the piggyback rights in the following sentence (without any reduction). At the expense of Triad Holdings, all holders of registrable securities are entitled to the inclusion of such securities in any registration statement used by Triad Holdings to register any offering of its equity securities (other than pursuant to a demand registration or in connection with an initial public offering of the common stock of Triad Holdings or a registration on Form S-4 or Form S-8). Each security holder of Triad Holdings will be a party to the registration rights agreement.

Management Agreement

Under the management agreement among Triad, Triad LLC, Triad Holdings and Hunter’s Glen/Ford, Triad LLC and Triad engaged Hunter’s Glen/Ford as a financial and management consultant. During the term of the engagement, Hunter’s Glen/Ford will provide Gerald J. Ford to serve as the chief executive officer of Triad LLC and executive chairman of Triad as specified in the agreement and will provide Carl Webb and J. Randy Staff or similarly qualified individuals to furnish a portion of the services required by the management agreement. Mr. Ford’s responsibilities include setting corporate strategy, overseeing the performance of the chief executive officer of Triad and Triad Holdings, naming senior executives of Triad and Triad Holdings (other than the chief executive officer and chief financial officer, who will be named and approved by the boards of directors of Triad and Triad Holdings), and recommending compensation of such executives to the boards. The management agreement also contains standard indemnification provisions whereby Triad and Triad Holdings will indemnify Hunter’s Glen/Ford against specified claims relating to specified actions taken by Hunter’s Glen/Ford under the management agreement.

We agreed to pay Hunter’s Glen/Ford a management fee of $1.5 million per annum for the services described above. This management fee is payable monthly in arrears on the last day of each month. The management fee is payable starting on the closing date of the Transactions, continuing during the service period of the management agreement and, upon termination of the service period for specified reasons (other than for cause), through the fifth anniversary of the closing of the Transactions or through the first anniversary of the termination of the service period, if later. If the service period is terminated by Triad LLC for cause, we will continue to pay the management fee through the first anniversary of the termination of the service period. Our obligation to pay the management fee will also cease upon a sale of Triad or Triad Holdings or upon the consummation of an underwritten initial public offering of the common stock of Triad Holdings with gross proceeds of at least $50.0 million. The service period will end on the earlier of (1) termination by Hunter’s Glen/Ford or Triad LLC upon at least 90 days prior notice and (2) upon a closing of the Buy/Sell Right in which Hunter’s Glen/Ford sells all of its units in Triad LLC.

The management agreement also provides for the purchase by Hunter’s Glen/Ford and its co-investors of common units of Triad LLC for a nominal purchase price, which we refer to as the “carried common units.” The carried common units will be subject to quarterly vesting over a five-year period. Upon the occurrence of a sale of Triad or Triad Holdings, the consummation of an underwritten initial public offering of the common stock of Triad Holdings with gross proceeds of at least $50.0 million or a termination of the service period for any reason (other than voluntary termination by Hunter’s Glen/Ford or a termination by Triad LLC for cause), all unvested carried common units will become vested. Upon a voluntary termination of the service period by

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Hunter’s Glen/Ford, all further vesting of unvested carried common units will cease and such units will be subject to repurchase by Triad LLC at their original cost. Upon termination of the service period by Triad LLC for cause, vesting will be accelerated by one year and all remaining unvested carried common units will cease vesting and will be subject to repurchase by Triad LLC at their original cost.

Stock Purchase Agreement

On December 23, 2004, Triad Holdings and its wholly-owned subsidiary, Triad Acquisition Corp., entered into a stock purchase agreement pursuant to which Triad Acquisition Corp. agreed to acquire all of the outstanding capital stock of Triad Financial Corporation from Fairlane Credit LLC, a wholly-owned subsidiary of Ford Motor Credit Company. We refer to this transaction as the “Acquisition.” Triad Holdings and Triad Acquisition were newly formed holding companies beneficially owned by affiliates of Goldman, Sachs & Co., GTCR Golder Rauner, L.L.C. and Hunter’s Glen/Ford.

The stock purchase agreement also contains customary indemnification provisions. As provided in the stock purchase agreement, you are not entitled to rely on any of the provisions of the stock purchase agreement, including the representations and warranties contained in the stock purchase agreement.

Our Warehouse and Residual Facilities

As part of the Transactions, an affiliate of Goldman, Sachs & Co. and an affiliate of Citigroup each provided a warehouse lending facility and a residual facility to us. Affiliates of Goldman, Sachs & Co. and Citigroup also acted as the initial purchasers of the outstanding notes and affiliates of Goldman, Sachs & Co. are equity sponsors of our company. See “Principal Stockholders” for more information on our equity ownership.

The Company’s warehouse and residual loan facilities with Goldman Sachs Mortgage Company, due October 2007, were paid off on October 26, 2007. The funds necessary to pay off these facilities were obtained through the transfer of collateral to, and a simultaneous additional advance on the Company’s other warehouse and residual facilities, due April 2009.

On January 10, 2008, we entered into a warehouse facility with Barclays Bank PLC. This facility provides up to $500 million of funding for automobile retail installment sales contract receivables originated or purchased by us. The facility has a two year commitment but may expire after 364 days if the liquidity facility is not renewed.

Interest expense for the warehouse and residual loan facilities for the years ended December 31, 2007 and 2006 and for the period April 30, 2005 through December 31, 2005 includes $12.7 million, $17.7 million and $12.1 million, respectively, of expense incurred to Goldman Sachs Mortgage Company.

Capitalized financing costs with an unamortized balance of $7.5 million at December 31, 2007 are being amortized over the expected term of the securitization transactions. Capitalized financing costs include $1.5 million in remaining unamortized underwriting fees paid to Goldman, Sachs & Co., an affiliate of one of our equity investors.

Capitalized financing costs with an unamortized balance of $4.0 million at December 31, 2007 are being amortized over the contractual term of the notes. Capitalized financing costs include $2.8 million in remaining unamortized fees paid to Goldman, Sachs & Co., an affiliate of one of our equity investors.

Warehouse Facilities

Each of the two initial warehouse facilities initially provided a maximum of $975.0 million of committed funding. Each warehouse facility maximum commitment was reduced to $750.0 million upon completion of our first term securitization on May 26, 2005. The available amount of the commitment under each warehouse facility at any time will be reduced by the amount drawn on the related residual facility at such time.

The Company’s warehouse and residual loan facilities with Goldman Sachs Mortgage Company, due October 2007, were paid off on October 26, 2007. The funds necessary to pay off these facilities were

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obtained through the transfer of collateral to, and simultaneous additional advance on the Company’s other warehouse and residual facilities, due April 2009.

On January 10, 2008, we entered into a warehouse facility with Barclays Bank PLC. This facility provides up to $500 million of funding for automobile retail installment sales contract receivables originated or purchased by us. The facility has a two year commitment but may expire after 364 days if the liquidity facility is not renewed.

The collateral of each warehouse facility includes the pool of contracts pledged on a first priority basis to the related lender, along with related assets and proceeds, including funds in accounts. Under each warehouse facility, the other lender receives a subordinated security interest in the collateral. In addition, the cash flows from the collateral on a warehouse facility are available to support repayment of the amounts owing to the applicable lender under its residual facility and the other lender’s warehouse facilities.

Triad provided a guarantee under each of the warehouse facilities equal to 10% of the amount outstanding on each facility at the time a guarantee is drawn, if at all. If Triad is required to fund any portion of a guarantee, Triad will be reimbursed for such payment prior to any required cross- collateralization payments to the lenders under any of the warehouse or residual facilities.

Each warehouse facility has a borrowing base, which determines the maximum amount available to be borrowed. The advance rate used to establish each borrowing base, for contracts that are current or not more than 30 days delinquent, is the lower of (1) an agreed percentage of the face amount of the contracts and (2) the net amount of proceeds that is estimated to be receivable upon a securitization of those contracts. The advance rate decreases as the delinquency on the contracts increases.

Collections on contracts in each warehouse facility are set aside in a collection account. On a monthly basis, these collections will be applied to pay interest and fees owing to the applicable warehouse lender, servicing fees, amounts owing on interest rate hedges, backup servicer expenses, and reduction of principal in an amount sufficient to maintain compliance with the borrowing base. If any amounts are unpaid under the residual facility, those amounts will be paid to the extent of available remaining cash flow. The warehouse Special Purpose Entity, or SPE, will be entitled to retain, and to distribute to Triad, any remaining amounts.

A warehouse facility cannot be drawn unless all conditions precedent are met. Material conditions include:

•  the amount outstanding on the warehouse facility after the draw cannot exceed the borrowing base under that warehouse facility;

•  no material adverse change; and

•  no default or event of default.

Triad is the servicer for the collateral pledged to the warehouse facilities. Servicer termination events under the warehouse facilities include a change of control of Triad, a payment default or acceleration on other Triad debt and an event of default under the warehouse facility.

Under the warehouse facilities, events of default, many of which are subject to grace periods, include:

•  failure to pay principal or interest when due;

•  breaches of representations, warranties and covenants;

•  a payment default under any of our other debt or securitizations or the acceleration of any other debt or any securitization;

•  a change of control;

•  a failure of the lenders to have a first priority perfected security interest in any material portion of the collateral;

•  unsatisfied judgments against us in excess of $1.0 million;

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•  a bankruptcy of warehouse borrower, servicer or residual borrower;

•  servicer termination;

•  failure to maintain a satisfactory interest rate hedging program; and

•  a material adverse change.

The warehouse facilities contain a covenant that no event of default or similar event relating to the delinquency rate or cumulative loss rate of the contracts relating to our term securitizations shall occur. The warehouse facilities also contain several financial covenants, including a minimum net worth requirement. Negative covenants of the warehouse facilities include restrictions on:

•  entering into any transaction that adversely affects the collateral or the lenders;

•  investments not in the ordinary course of business;

•  loans or other advances by borrower; and

•  selling a material portion of its contracts if, following such sale, the total outstanding principal amount would exceed the borrowing base, after giving effect to the application of proceeds from such sale.

Residual Facility

Our residual facility provides a maximum of $125.0 million of funding. We established a SPE as the borrower under the residual facility. The residual SPE acquired the residual interests in the term securitizations currently held by another SPE, which includes class B notes, certificates and the interests in the spread accounts. Interest under the residual facility accrues at a margin over LIBOR. The interest margin increases as the amount outstanding the residual facility, as a percentage of the borrowing base, increases. The interest margin under the residual facility is significantly higher than the interest margin under the warehouse facility as of December 31, 2007.

The advance rates under the residual facility are an agreed upon percentage of the market value determined by the lender for the subordinated note collateral, such as the Class B notes, and the other collateral, such as our other residual interests in securitizations.

The collateral of the residual facility includes the pool of residual assets pledged along with related assets and proceeds, including funds in accounts. In addition, the cash flows from the collateral on a residual facility are available to support repayment of the amounts owing to the lender under its warehouse facility.

Triad provided a guarantee under its residual facility equal to 10% of the amount outstanding on the facility at the time a guarantee is drawn, if at all. If Triad is required to fund any portion of a guarantee, Triad will be reimbursed for such payment prior to any required cross- collateralization payments to the lenders under any of the warehouse or residual facilities.

The residual SPE cannot draw on a residual facility unless all conditions precedent are met. Material conditions include:

•  compliance with the borrowing base;

•  no material adverse change; and

•  no default or event of default.

Collections on residual interests will be set aside in a collection account. On a monthly basis, these collections will be applied to pay interest and fees owing to the residual lender, and to reductions of principal in an amount sufficient to maintain compliance with the borrowing base. If any amounts are unpaid under the lender’s warehouse facility, those amounts will be paid to the extent of available remaining cash flow. The residual SPE will be entitled to retain, and to distribute to Triad, any remaining amounts.

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Under the residual facility, events of default, many of which are subject to grace periods, include:

•  failure to pay principal or interest when due;

•  breach of a covenant or term;

•  any false representation or warranty;

•  impermissible liens on the collateral;

•  the bankruptcy of Triad or an affiliate;

•  the lender ceasing to have a first priority perfected security interest;

•  a payment default under any of our other debt or securitizations or the acceleration of any other debt or any securitization;

•  a material adverse change;

•  a servicer default; and

•  a change of control.

Board of Directors

The board is currently comprised of ten directors, none of whom qualifies as an independent director set forth in Rule 4200(a)(15) of the Nasdaq Marketplace rules. Because affiliates of our equity sponsors indirectly own approximately 100% of the voting common stock of Triad Holdings, we would be a “controlled company” within the meaning of Rule 4350(c)(5) of the Nasdaq Marketplace rules, which would qualify for exemptions from certain corporate governance rules of The Nasdaq Stock Market LLC, including that the board of directors be composed of a majority of independent directors.

Policies and Procedures for Related Party Transactions

As a private company, our board of directors generally reviews our related party transactions, although we have not historically had formal policies and procedures regarding the review and approval of related party transactions.

ITEM 14.   PRINCIPAL ACCOUNTING FEES AND SERVICES.

The following table presents fees for professional services rendered by PricewaterhouseCoopers LLP for the audit of the Company’s annual financial statements for fiscal 2007 and 2006 and fees billed for audit-related services, tax services and all other services rendered to the Company by PricewaterhouseCoopers LLP for fiscal 2007 and 2006.

	2007		2006
Audit Fees	$	515,000	$	513,500
Audit-Related Fees	$	—	$	—
Tax Fees	$	—	$	—
All Other Fees	$	236,719	$	286,256

The Audit Committee has established a policy to pre-approve all audit and non-audit services performed by the independent registered public accounting firm (“independent auditor”) in order to assure that the provision of such services does not impair the auditor’s independence. Based on the information presented to the Audit Committee by PricewaterhouseCoopers LLP and the Company’s management, the Audit Committee has pre-approved defined audit, audit-related, tax and other services for fiscal year 2007 up to specific cost

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levels. Any proposed services exceeding pre-approved cost levels require specific pre-approval by the Audit Committee. The policy provides that the Audit Committee review, at each regularly scheduled meeting, a report summarizing the services provided by the independent auditor and all fees relating thereto. The policy also prohibits the independent auditor from providing services that are prohibited under the Sarbanes-Oxley Act of 2002.

All fees reported under the headings Audit-Related Fees, Tax Fees, and All Other Fees for 2007 were pre-approved by the Audit Committee, which concluded that the provision of such services by PricewaterhouseCoopers LLP was compatible with the maintenance of that firm’s independence in the conduct of its auditing functions. Accordingly, none of these fees reported under the headings were approved by the Audit Committee pursuant to federal regulations that permit the Audit Committee to waive its pre-approval requirement under certain circumstances.

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PART IV

ITEM 15.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES

EXHIBIT INDEX

Exhibit
No.			Description
	2	.1	Stock Purchase Agreement, dated as of December 23, 2004, among Triad Holdings Inc., Triad Acquisition Corp. and Fairlane Credit LLC (incorporated herein by reference to Exhibit 2.1 to the Registration Statement on Form S-4/A of Triad Financial Corporation, filed on November 15, 2005 (File No. 333-126538)).
	3	.1	Third Amended and Restated Articles of Incorporation of Triad Financial Corporation. (incorporated herein by reference to Exhibit 3.1 on Form 10-Q of Triad Financial Corporation, filed on August 11, 2006 (File No. 333-65107)).
	3	.2	Third Amended and Restated Bylaws of Triad Financial Corporation (incorporated herein by reference to Exhibit 3.2 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	4	.1	Indenture, dated as of April 29, 2005, among Triad Acquisition Corp. and JPMorgan Chase Bank, N.A., as Trustee (incorporated herein by reference to Exhibit 4.1 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	4	.2	Supplemental Indenture, dated as of April 29, 2005, among Triad Financial Corporation and JPMorgan Chase Bank, N.A., as Trustee (incorporated herein by reference to Exhibit 4.2 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	4	.3	Exchange and Registration Rights Agreement, dated as of April 29, 2005, among Triad Acquisition Corp. and Goldman, Sachs & Co., and Citigroup Global Markets Inc., as representatives of the several Purchasers (incorporated herein by reference to Exhibit 4.3 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	4	.4	Form of Senior Note (attached as exhibit to Exhibit 4.1).
	10	.1	Employment Agreement, dated as of April 29, 2005, between the Company and James M. Landy (incorporated herein by reference to Exhibit 10.1 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).*
	10	.2	Employment Agreement, dated as of November 11, 2005, between the Company and Chris A. Goodman (incorporated herein by reference to Exhibit 10.2 on Form 10-K of Triad Financial Corporation, filed on March 31, 2006 (File No. 333-126538)) and Amended and Restated Employment Agreement, dated as of August 1, 2007, between the Company and Chris A. Goodman.*+
	10	.3	Employment Agreement, dated as of February 15, 2007, between the Company and David A. Satterfield.*+
	10	.4	Consulting Agreement dated as of July 31, 2007, between the Company and Carl B. Webb (incorporated herein by reference to Exhibit 10.15 on Form 10-Q of Triad Financial Corporation, filed on November 9, 2007 (File No. 333-65107)) and the First Amendment to the Consulting Agreement, dated as of February   , 2008, between the Company and Carl B. Webb.*+
	10	.5	Management Agreement, dated as of April 29, 2005, among the Company, Triad Holdings, LLC, Triad Holdings Inc. and Hunter’s Glen/Ford Ltd (incorporated herein by reference to Exhibit 10.2 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	10	.6	Warehouse Lending Agreement, dated as of April 29, 2005, among the Company, Triad Financial Warehouse Special Purpose LLC, Triad Automobile Receivables Warehouse Trust, JPMorgan Chase Bank, as Collection Account Bank and Citigroup Global Markets Realty Corp., as lender (incorporated herein by reference to Exhibit 10.3 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).

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Exhibit
No.			Description
	10	.7	Warehouse Lending Agreement, dated as of April 29, 2005, among the Company, Triad Financial Warehouse Special Purpose LLC, Triad Automobile Receivables Warehouse Trust, JPMorgan Chase Bank, as Collection Account Bank and Goldman Sachs Mortgage Company, as lender (incorporated herein by reference to Exhibit 10.4 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	10	.8	Warehouse Lending Agreement, dated as of January 10, 2008, among the Company, Triad Financial Warehouse Special Purpose LLC, Triad Automobile Receivables Warehouse Trust, The Bank of New York, as Collection Account Bank, Sheffield Receivables Corporation, as Class A Lender, and Barclays Bank PLC, as Class B Lender and Agent.+
	10	.9	Master Residual Loan Agreement, dated as of April 29, 2005, among Triad Financial Residual Special Purpose LLC, JPMorgan Chase Bank, N.A., as Collection Account Bank and Citigroup Global Markets Realty Corp (incorporated herein by reference to Exhibit 10.5 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	10	.10	Master Residual Loan Agreement, dated as of April 29, 2005, among Triad Financial Residual Special Purpose LLC, JPMorgan Chase Bank, N.A., as Collection Account Bank and Goldman Sachs Mortgage Company (incorporated herein by reference to Exhibit 10.6 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	10	.11	Registration Rights Agreement dated as of April 29, 2005 among Triad Holdings Inc. and certain holders of common stock (incorporated herein by reference to Exhibit 10.7 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	10	.12	Stockholders Agreement, dated as of April 29, 2005, among Triad Holdings Inc., Triad Holdings, LLC and James M. Landy (incorporated herein by reference to Exhibit 10.8 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	10	.13	Limited Liability Company Agreement of Triad Holdings, LLC (incorporated herein by reference to Exhibit 10.9 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	10	.14	HFI Loan and Security Agreement, dated as of April 29, 2005, between the Company and Ford Motor Credit Company (incorporated herein by reference to Exhibit 10.10 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	10	.15	Carl B. Webb Compensation Arrangement (incorporated herein by reference to Exhibit 10.11 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).*
	10	.16	Amendment No. 2, dated as of March 15, 2007, to the Warehouse Lending Agreement, dated as of April 29, 2005, among the Company, Triad Financial Warehouse Special Purpose LLC, Triad Automobile Receivables Warehouse Trust, The Bank of New York (as successor-in-interest to JPMorgan Chase Bank, N.A.), as Collection Account Bank, and Citigroup Global Markets Realty Corp., as lender (incorporated herein by reference to Exhibit 10.1 on Form 8-K of Triad Financial Corporation, filed on March 20, 2007 (File No. 333-65107)).
	10	.17	Amendment No. 1, dated as of March 15, 2007, to the Master Residual Loan Agreement, dated as of April 29, 2005, among Triad Financial Residual Special Purpose LLC, The Bank of New York (as successor-in-interest to JPMorgan Chase Bank, N.A.), as Collection Account Bank, and Citigroup Global Markets Realty Corp (incorporated herein by reference to Exhibit 10.2 on Form 8-K of Triad Financial Corporation, filed on March 20, 2007 (File No. 333-65107)).
	21	.1	Subsidiaries of the Company (incorporated herein by reference to Exhibit 21.1 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	31	.1	Certification of Chief Executive Officer (Section 302 Certification)+
	31	.2	Certification of Principal Financial Officer (Section 302 Certification)+
	32	.	Certification of Periodic Financial Report (Section 906 Certification)+

*	Management contract or compensatory plan or arrangement.
+	Filed herewith

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SIGNATURES

Pursuant to the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized:

Date: March 28, 2008	/s/  Daniel D. Leonard Daniel D. Leonard President & Chief Executive Officer
Date: March 28, 2008	/s/  Mike L. Wilhelms Mike L. Wilhelms Senior Vice President & Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons in the capacities and on the dates indicated below.

Signature	Capacity	Date
/s/  Daniel D. Leonard Daniel D. Leonard	President, Chief Executive Officer (principal executive officer)	March 28, 2008
/s/  Mike L. Wilhelms Mike L. Wilhelms	Senior Vice President and Chief Financial Officer (principal financial officer)	March 28, 2008
/s/  Peter C. Aberg Peter C. Aberg	Director	March 28, 2008
/s/  Philip A. Canfield Philip A. Canfield	Director	March 28, 2008
/s/  Aaron D. Cohen Aaron D. Cohen	Director	March 28, 2008
/s/  David A. Donnini David A. Donnini	Director	March 28, 2008
/s/  Donald J. Edwards Donald J. Edwards	Director	March 28, 2008
/s/  Gerald J. Ford Gerald J. Ford	Director	March 28, 2008
/s/  Stuart A. Katz Stuart A. Katz	Director	March 28, 2008
/s/  Gaurav Seth Gaurav Seth	Director	March 28, 2008
/s/  J. Randy Staff J. Randy Staff	Director	March 28, 2008

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Signature	Capacity	Date
/s/  Carl B. Webb Carl B. Webb	Director	March 28, 2008
/s/  Jeffrey O. Butcher Jeffrey O. Butcher	Corporate Controller (principal accounting officer)	March 28, 2008

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EXHIBIT INDEX

Exhibit
No.			Description
	2	.1	Stock Purchase Agreement, dated as of December 23, 2004, among Triad Holdings Inc., Triad Acquisition Corp. and Fairlane Credit LLC (incorporated herein by reference to Exhibit 2.1 to the Registration Statement on Form S-4/A of Triad Financial Corporation, filed on November 15, 2005 (File No. 333-126538)).
	3	.1	Third Amended and Restated Articles of Incorporation of Triad Financial Corporation. (incorporated herein by reference to Exhibit 3.1 on Form 10-Q of Triad Financial Corporation, filed on August 11, 2006 (File No. 333-65107)).
	3	.2	Third Amended and Restated Bylaws of Triad Financial Corporation (incorporated herein by reference to Exhibit 3.2 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	4	.1	Indenture, dated as of April 29, 2005, among Triad Acquisition Corp. and JPMorgan Chase Bank, N.A., as Trustee (incorporated herein by reference to Exhibit 4.1 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	4	.2	Supplemental Indenture, dated as of April 29, 2005, among Triad Financial Corporation and JPMorgan Chase Bank, N.A., as Trustee (incorporated herein by reference to Exhibit 4.2 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	4	.3	Exchange and Registration Rights Agreement, dated as of April 29, 2005, among Triad Acquisition Corp. and Goldman, Sachs & Co., and Citigroup Global Markets Inc., as representatives of the several Purchasers (incorporated herein by reference to Exhibit 4.3 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	4	.4	Form of Senior Note (attached as exhibit to Exhibit 4.1).
	10	.1	Employment Agreement, dated as of April 29, 2005, between the Company and James M. Landy (incorporated herein by reference to Exhibit 10.1 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).*
	10	.2	Employment Agreement, dated as of November 11, 2005, between the Company and Chris A. Goodman (incorporated herein by reference to Exhibit 10.2 on Form 10-K of Triad Financial Corporation, filed on March 31, 2006 (File No. 333-126538)) and Amended and Restated Employment Agreement, dated as of August 1, 2007, between the Company and Chris A. Goodman.*+
	10	.3	Employment Agreement, dated as of February 15, 2007, between the Company and David A. Satterfield.*+
	10	.4	Consulting Agreement dated as of July 31, 2007, between the Company and Carl B. Webb (incorporated herein by reference to Exhibit 10.15 on Form 10-Q of Triad Financial Corporation, filed on November 9, 2007 (File No. 333-65107)) and the First Amendment to the Consulting Agreement, dated as of February   , 2008, between the Company and Carl B. Webb.*+
	10	.5	Management Agreement, dated as of April 29, 2005, among the Company, Triad Holdings, LLC, Triad Holdings Inc. and Hunter’s Glen/Ford Ltd (incorporated herein by reference to Exhibit 10.2 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	10	.6	Warehouse Lending Agreement, dated as of April 29, 2005, among the Company, Triad Financial Warehouse Special Purpose LLC, Triad Automobile Receivables Warehouse Trust, JPMorgan Chase Bank, as Collection Account Bank and Citigroup Global Markets Realty Corp., as lender (incorporated herein by reference to Exhibit 10.3 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	10	.7	Warehouse Lending Agreement, dated as of April 29, 2005, among the Company, Triad Financial Warehouse Special Purpose LLC, Triad Automobile Receivables Warehouse Trust, JPMorgan Chase Bank, as Collection Account Bank and Goldman Sachs Mortgage Company, as lender (incorporated herein by reference to Exhibit 10.4 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	10	.8	Warehouse Lending Agreement, dated as of January 10, 2008, among the Company, Triad Financial Warehouse Special Purpose LLC, Triad Automobile Receivables Warehouse Trust, The Bank of New York, as Collection Account Bank, Sheffield Receivables Corporation, as Class A Lender, and Barclays Bank PLC, as Class B Lender and Agent.+

Exhibit
No.			Description
	10	.9	Master Residual Loan Agreement, dated as of April 29, 2005, among Triad Financial Residual Special Purpose LLC, JPMorgan Chase Bank, N.A., as Collection Account Bank and Citigroup Global Markets Realty Corp (incorporated herein by reference to Exhibit 10.5 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	10	.10	Master Residual Loan Agreement, dated as of April 29, 2005, among Triad Financial Residual Special Purpose LLC, JPMorgan Chase Bank, N.A., as Collection Account Bank and Goldman Sachs Mortgage Company (incorporated herein by reference to Exhibit 10.6 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	10	.11	Registration Rights Agreement dated as of April 29, 2005 among Triad Holdings Inc. and certain holders of common stock (incorporated herein by reference to Exhibit 10.7 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	10	.12	Stockholders Agreement, dated as of April 29, 2005, among Triad Holdings Inc., Triad Holdings, LLC and James M. Landy (incorporated herein by reference to Exhibit 10.8 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	10	.13	Limited Liability Company Agreement of Triad Holdings, LLC (incorporated herein by reference to Exhibit 10.9 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	10	.14	HFI Loan and Security Agreement, dated as of April 29, 2005, between the Company and Ford Motor Credit Company (incorporated herein by reference to Exhibit 10.10 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	10	.15	Carl B. Webb Compensation Arrangement (incorporated herein by reference to Exhibit 10.11 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).*
	10	.16	Amendment No. 2, dated as of March 15, 2007, to the Warehouse Lending Agreement, dated as of April 29, 2005, among the Company, Triad Financial Warehouse Special Purpose LLC, Triad Automobile Receivables Warehouse Trust, The Bank of New York (as successor-in-interest to JPMorgan Chase Bank, N.A.), as Collection Account Bank, and Citigroup Global Markets Realty Corp., as lender (incorporated herein by reference to Exhibit 10.1 on Form 8-K of Triad Financial Corporation, filed on March 20, 2007 (File No. 333-65107)).
	10	.17	Amendment No. 1, dated as of March 15, 2007, to the Master Residual Loan Agreement, dated as of April 29, 2005, among Triad Financial Residual Special Purpose LLC, The Bank of New York (as successor-in-interest to JPMorgan Chase Bank, N.A.), as Collection Account Bank, and Citigroup Global Markets Realty Corp (incorporated herein by reference to Exhibit 10.2 on Form 8-K of Triad Financial Corporation, filed on March 20, 2007 (File No. 333-65107)).
	21	.1	Subsidiaries of the Company (incorporated herein by reference to Exhibit 21.1 to the Registration Statement on Form S-4 of Triad Financial Corporation, filed on July 12, 2005 (File No. 333-126538)).
	31	.1	Certification of Chief Executive Officer (Section 302 Certification)+
	31	.2	Certification of Principal Financial Officer (Section 302 Certification)+
	32	.	Certification of Periodic Financial Report (Section 906 Certification)+

*	Management contract or compensatory plan or arrangement.
+	Filed herewith

EX-10.2

     EXHIBIT 10.2

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into by and between Triad Financial Corporation, a California corporation (the “Company”), with offices at 5201 Rufe Snow Drive, North Richland Hills, Texas, and Chris A. Goodman, (the “Executive”), 5201 Rufe Snow Drive, North Richland Hills, Texas, 76180.

RECITALS

A.	The Executive currently serves as a Senior Vice President of the Company, and, along with the Company, is currently a party to that certain Employment Agreement (the “Existing Agreement”) dated as of July 1, 2005.
B.	The Executive and the Company have determined that it is in their mutual interests to modify the Existing Agreement in certain respects, all as more specifically set forth herein.
C.	The Executive and the Company intend for this Agreement to supersede and replace the Existing Agreement, together with any and all prior employment agreements the Executive may at any time have had with the Company or any predecessor of the Company.

AGREEMENT

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

     1. Employment.

          (a) Service to the Company. Executive shall devote all of his professional time, energy, skill and efforts to the performance of his duties hereunder and to the business of the Company, and shall perform his duties in a diligent, trustworthy, and business-like manner, all for the purpose of advancing the business of the Company. Executive shall be primarily responsible for the operation of the Direct Lending Program offered by the Company, in addition to such other duties as may be delegated to him from time to time. Executive shall report directly to the President and Chief Executive Officer of the Company, and shall be subject to the policies and procedures adopted by the Company from time to time.

          (b) Other Commitments. Notwithstanding the commitment of the Executive’s professional time, energy, skill and efforts to the Company as set forth in this Section 1(a) above, Executive may serve on corporate, civic, or charitable boards or committees, provided that such service does not interfere with the performance of the Executive’s duties under this Agreement, and provided the Executive keeps the Company reasonably informed of such commitments. If the Company determines that any such commitments conflict with or interfere with the performance of the Executive’s duties to the Company, the Company shall give written notice of such conflict or interference to the Executive, who then shall be given thirty days in which to remedy the conflict.

     2. Employment Term.

          (a) Initial Term. Subject to the terms and conditions hereof, the Executive’s term of employment under this Agreement (the “Employment Term”) shall commence effective as of August  ,, 2007 (the “Effective Date”), and continue through July 31, 2010 (the “Initial Term”), subject to the extension provisions of Section 2(b), unless terminated earlier in accordance with the provisions contained herein.

          (b)  Renewal. Provided the Executive remains in the employ of the Company, this Agreement will be automatically renewed and extended for an additional one-year term, to be effective August 1 of each subsequent year (the “Anniversary Date”), unless either party provides the other with written notice that they do not wish to extend the Agreement on or before the 1^st day of July immediately preceding the Anniversary Date. . If neither party provides the other with notice of non-renewal, then the Agreement will be extended for an additional year on the same terms and conditions as set forth above. If the Agreement is not renewed, then the contractual obligations of the parties will survive the Agreement, and the parties will be obligated to adhere to all performance and payment obligations contained herein.

          (c) Effect of Non-Renewal. A notice of non-renewal of the Agreement pursuant to Section 2 (b) shall not be deemed to be a termination of the Executive’s employment with the Company, but either party may terminate at any time after the receipt of such notice. In the event of a termination by either party following a notice of non-renewal, the Executive shall be treated as having remained employed through the end of the term (except with respect to any benefit, benefit plan, bonus or incentive plan that requires active employment as a condition precedent for participation in such plan).

     3. Salary and Benefits.

          (a) Salary. During his employment pursuant to this Agreement, the Executive shall receive a total annual salary of Two Hundred Seventy Thousand U.S. Dollars (U.S. $270,000) as compensation for his services to the Company (the “Base Salary”), such compensation to be payable in regular installments in accordance with the Company’s policy for salaried employees.

          (b) Target Bonus. For each fiscal year of the Company ending during the term of this Agreement, the Executive shall be eligible to receive an annual incentive bonus with a target payout based on the Company’s performance for such fiscal year (the “Annual Bonus”), provided that the performance objectives established by the Board of Directors of the Company (the “Board”) for both the Company and the Executive for such fiscal year are attained and provided the Executive is serving as an employee of the Company as of the end of such fiscal year. Any Annual Bonus that is payable hereunder will be paid after the completion of the annual audit of the Company with respect to such fiscal year.

          (c) Benefit Plans. During his employment pursuant to this Agreement, subject to eligibility requirements, applicable employee contributions and the terms and conditions of the applicable plan, and except as otherwise expressly provided in this Agreement, the Executive shall be entitled to participate in the Company-sponsored employee benefit plans, medical benefit plans, group life insurance plans or other employee welfare plans that the Company may adopt for employees generally from time to time during the Executive’s employment pursuant to this Agreement, and as such plans may be modified, amended, terminated, or replaced from time to time.

          (d) Vacation. The Executive shall be entitled to four weeks of paid vacation each fiscal year of this Agreement, to be taken in accordance with the Company’s policy then in effect, and to the same paid Holidays provided to the other employees of the Company. The Executive’s vacation days

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will be pro-rated based on the number of full months, if less than twelve, that the Executive is employed hereunder in the applicable fiscal year.

          (e) Reimbursement of Expenses. The Company shall reimburse the Executive for all reasonable out-of-pocket expenses incurred by the Executive on behalf of the Company in the course of his duties, upon presentation of appropriate documentation of such costs as and when required by and to the satisfaction of the Company, on a basis that is consistent with the Company’s past practices. The Executive shall be entitled to fly Business Class on flights that have a scheduled flight time of two hours or more, to the extent a Business Class seat is available. All other flights shall be Economy Class or its equivalent.

          (g) Car Allowance. During his employment pursuant to this Agreement, the Executive shall be entitled to a vehicle allowance of One Thousand Two Hundred Fifty Dollars ($1,250) per month in addition to his salary and other benefits.

4. Non-solicitation/Covenant Not to Compete.

The Executive acknowledges that he is considered a key employee of the Company and agrees that he will work on a full-time basis to accomplish the Company’s business plan, and that he is being entrusted with certain Confidential Information (defined herein) in order to perform the tasks required of him. In consideration of the Company providing Executive access to new confidential and proprietary information and materials belonging to the Company to assist Executive in the performance of Executive’s duties and Executive agreeing to keep all such information strictly confidential, and as a means to aid in the performance and enforcement of the terms of the Confidential Information provisions in Section 5 herein, the Executive agrees that from the Effective Date and until the two-year anniversary of the termination of the Executive’s employment under this Agreement for any reason:

(a)

The Executive shall not, directly or indirectly, own, manage, operate, control, or participate in the ownership, management, operation or control of, or be connected as an officer, employee, partner, director, agent, representative of, or have any financial interest in, or aid or assist anyone else in the conduct of any business that involves the indirect financing of motor vehicle purchases by consumers, or the lending of money directly to consumers for the purpose of purchasing, financing or refinancing a motor vehicle (a “Competitive Operation”) which competes with any business conducted by the Company or by any group, division or subsidiary of the Company (a “Company Operation”) in any area where such Company Operation is being conducted at the time of the Executive’s termination.

(b)

The Executive shall not, directly or indirectly, use Confidential Information (defined below) that constitutes a protectable trade secret to solicit business from, attempt to do business with, or do business with any customers, lenders, suppliers, joint venturers or business referral sources, in each case which either: (1) the Executive contacted, called on, serviced, transacted business with or had significant contact with during the Executive’s employment with the Company or that the Executive attempted to contact, call on, service, or do business with during the Executive’s employment with the Company; or (2) the Executive became acquainted with as a result of the Executive’s employment with the Company. The restriction set forth in this Section 4 applies only to business that is in the scope of services or products provided by the Company during the term of the Executive’s employment hereunder.

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(c) The Executive shall not, directly or indirectly, on behalf of the Executive or any other person or entity, solicit, induce, encourage, attempt to solicit or induce, or assist another to induce or attempt to induce, any employee or independent contractor of the Company to terminate his or her employment or relationship with the Company.

     The Executive agrees that if a court of competent jurisdiction determines that the length of time or any other restriction, or portion thereof, set forth in this Section 4 is overly restrictive and unenforceable, the court may reduce or modify such restrictions to those which it deems reasonable and enforceable under the circumstances, and as so reduced or modified, the parties hereto agree that the restrictions of this Section 4 shall remain in full force and effect. The Executive further agrees that if a court of competent jurisdiction determines that any provision of this Section 4 is invalid or against public policy, the remaining provisions of this Section 4 and the remainder of this Agreement shall not be affected thereby, and shall remain in full force and effect.

     The Executive acknowledges that the scope and duration of the restrictions contained herein are reasonable in light of the business plan for the Company, the time that the Executive has been engaged in (and is expected to be engaged in) the business of the Company, the Executive’s reputation in the markets for the Company’s businesses and the Executive’s relationship with the Company’s actual and prospective lenders, clients, employees and management team.

     If the Executive violates any of the restrictions contained in Section 4 of this Agreement, the restrictive period will be suspended and will not begin to run again in favor of the Executive from the time of the commencement of any violation until the time when the Executive cures the violation to the Company’s satisfaction.

     5. Confidential Information.

          (a) Confidential Information. For purposes of this Agreement, the term “Confidential Information” means any trade secrets or confidential or proprietary information of the Company, including without limitation the following:

               (i) Information concerning the Company’s investor or prospective investor lists, lenders, customers, clients, marketing, business and operational methods of the Company and their customers or clients, contracts, financial or other data, technical data, e-mail and other correspondence or any other confidential or proprietary information possessed, owned or used by any of the Company;

               (ii) Business records, financial information, pricing, business strategies, marketing and promotional practices (including internet-related marketing) and management methods and information;

               (iii) Finances, strategies, systems, research, plans, reports, recommendations and conclusions;

               (iv) Names, arrangements with, or other information relating to, any of the Company’s investors, customers, clients, suppliers, financiers, owners, representatives and other persons who have business relationships with the Company or who are prospects for business relationships with the Company; and

               (v) Any matter or thing obtained or ascertained by Executive through Executive’s association with the Company, the use or disclosure of which might reasonably be construed to be contrary to the best interests of any the Company, its owners or employees.

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     Upon termination of the Executive’s employment under any circumstances, the Executive or his representatives, shall promptly return to the Company all property of the Company, including any and all Confidential Information, computers, hard-drives, papers, books, records, documents, memoranda, manuals, e-mail, electronic or magnetic recordings or data, electronic devices and related data storage devices, including all copies thereof, which belong to the Company or relate to the Company’s business and which are in Executive’s possession, custody or control, whether prepared by Executive or others, and shall destroy or erase any data that cannot be returned (with it being understood and agreed that subject to Section 5 hereof, the Executive shall be permitted to retain his own rolodex, calendars, appointment lists and other personal lists maintained during the course of his employment hereunder).

     If the Executive is subpoenaed, served with any legal process or notice or otherwise requested to produce or divulge, directly or indirectly, any Confidential Information by any entity, agency or person in any formal or informal proceeding, including without limitation any interview, deposition, administrative or judicial hearing and/or trial, then promptly after the Executive’s receipt of such subpoena, process, notice or request, the Executive shall notify the Company and shall reasonably cooperate with the Company’s efforts to obtain a protective order or other relief to protect the Company’s Confidential Information or to limit the scope of disclosure of such information in such interview, deposition, administrative or judicial hearing and/or trial.

          (b) Non-disparagement. During the term of this Agreement and continuing after termination of the Executive’s employment hereunder, the Executive shall not communicate or publish, directly or indirectly, any confidential, personal or disparaging information concerning the Company, any member of the Company, any director, officer or employee of any entity in the Company or any entity or individual who controls, directly or indirectly, any entity in the Company.

          (c) Works. Any works created during the term of this Agreement by the Executive shall be deemed work for hire to the extent permitted by law, and the Company shall have the sole right to any such works. In addition, the Executive hereby grants and shall grant to Company all his rights, title and interest including, without limitation, all intellectual property and proprietary rights, in all works developed or created by the Executive during the term of this Agreement. The Executive hereby waives for the benefit of the Company and its successors, assigns and licensees all moral rights that the Executive may have in such works. For greater clarity, the parties acknowledge and agree that such works include without limitation the Developments defined in Section 5(d) below.

          (d) Other Provisions/Exclusions. The Executive understands, acknowledges and agrees that all Developments (as hereinafter defined) shall be made for hire by the Executive for the Company. “Developments” means any idea, discovery, invention, design, method, technique, improvement, enhancement, development, computer program, machine, algorithm or other work or authorship that (i) relates to the business or operations of the Company, or (ii) results from or is suggested by any undertaking assigned to the Executive or work performed by the Executive for or on behalf of the Company, whether created alone or with others, during or after working hours. All confidential or proprietary information described in Section 5(a) above and all Developments shall remain the sole property of the Company. The Executive shall acquire no proprietary interest in any confidential or proprietary information described in Section 5(a) above or Developments developed or acquired while the Executive is required to provide services to the Company hereunder. To the extent the Executive may, by operation of law or otherwise, acquire any right, title or interest in or to any confidential or proprietary information described in Section 5(a) above or Development, the Executive hereby assigns to the Company all such intellectual property or proprietary rights. The Executive shall, both during the term of this Agreement and for two years thereafter, upon the Company’s request, promptly execute and deliver to the Company all such assignments, certificates and instruments, and shall promptly perform such other

5

acts as the Company may from time to time in its reasonable discretion deem necessary or desirable to evidence, establish, maintain, perfect, enforce or defend the Company’s rights in Developments and in the proprietary information, inventions, copyrights, and trademarks otherwise described in this Section 5.

     6. Termination.

          (a) By the Executive. The Executive may resign his employment at any time, for Good Reason (defined below) or without Good Reason, upon thirty days written notice to the Company. Upon receipt of written notice from the Executive of his voluntary resignation of employment, the Company may immediately terminate the Executive’s employment with the Company (which shall be deemed for all purposes an immediate voluntary resignation by the Executive, and not a termination by the Company) and require no further services from the Executive. The term “Good Reason” means (i) any material breach by the Company of any provision of this Agreement, after the Executive has given the Company thirty days written notice of such breach and the Company has not during such period cured the alleged breach, (ii) a reduction in the Executive’s Base Salary without the Executive’s consent, or (iii) the Company’s failure to continue any benefit or compensation plan in which the Executive is participating (other than an equal reduction in such benefits for all similarly-situated executives of the Company).

          (b) By the Company. The Company may terminate the Executive’s employment for any reason, at any time, upon written notice to the Executive, provided that the Company shall pay the Executive the amounts and benefits as set forth in Section 6(d) or Section 6(e) below, as applicable. The Company shall have the right to terminate the Executive’s employment with the Company under this Agreement with or without Cause. As used in this Agreement, the term “Cause” shall mean the Executive’s:

               (i) material fraud, embezzlement, theft or other act or omission involving material dishonesty, or a crime of moral turpitude, in each case relating to the Company’s business, or constituting information known within the Company’s industry or among the Company’s employees;

               (ii) intentional or reckless failure to abide in any material respect with reasonable rules and regulations governing the transaction of business of the Company as the Company may from time to time adopt or approve;

               (iii) failure to perform material duties or to follow material directions of the Board;

               (iv) intentional misappropriation of any corporate opportunity, or otherwise intentionally obtaining personal profit from any material transaction that is adverse to the interests of the Company or to the benefits to which the Company is entitled;

               (v) indictment for a felony (provided, however, that indictment for a felony involving only the use of a motor vehicle that does not cause material personal injury to any person shall not constitute Cause under this item (v)); or

               (vi) intentional or reckless conduct by the Executive that subjects the Company or any direct or indirect subsidiary, parent or other affiliated entity, to loss of any required license, permit or similar governmental authorization that is material to the Company’s or such entity’s business.

          (c) By Death or Disability. The Executive’s employment shall be terminated under

6

this Agreement in the event of the Executive’s death or Disability. For purposes of this Agreement, “Disability” means that for a period of at least 120 days during any twelve consecutive month period on account of a mental or physical condition, the Executive is unable to perform the essential functions of his job for the Company, with or without reasonable accommodation, as determined in good faith by the Company, based upon medical reports or other evidence satisfactory to the Company.

          (d) Obligations Where no Severance is Required. In the event that the Company terminates the Executive’s employment under this Agreement for Cause, the Executive’s employment terminates due to his death or Disability, or the Executive terminates his employment hereunder (other than for Good Reason), then in each such case the Company shall have no further obligation to the Executive under this Agreement except to pay his Base Salary earned through the date of termination of employment with the Company and a lump sum payment for any accrued and earned, but unused, vacation shall be paid to Executive on or before the next regularly scheduled pay day after the effective date of the termination; provided, however, that if the Executive’s date of termination occurs after the end of the Company’s fiscal year, but before payment of any applicable Annual Bonus actually earned by the Executive for such completed fiscal year, then the Company also shall pay such earned Annual Bonus in accordance with Section 6(e)(iii).

          (e) Severance Obligations. In the event the Company terminates the Executive’s employment without Cause, or Executive resigns for Good Reason, the Company’s obligations to the Executive shall be limited to the following:

               (i) Earned Salary. The Company shall pay Executive any Base Salary earned through the date of termination of employment with the Company and a lump sum payment for any accrued and earned, but unused, vacation; provided, however, that if the Executive’s date of termination occurs after the end of the Company’s fiscal year, but before payment of any applicable Annual Bonus actually earned by the Executive for such completed fiscal year, then the Company also shall pay such earned Annual Bonus in accordance with Section 6(e)(iii).

               (ii) Severance.

                    (A) Payment Terms. Subject to the last sentence of Section 6(f) below, if the Company terminates Executive’s employment without Cause or the Executive resigns for Good Reason prior to the expiration of the Initial Term of this Agreement, the Company shall pay Executive severance payments (“Severance”) in an amount equal to the total amount remaining to be paid under the terms of this Agreement, after taking into consideration the amount of salary and benefits previously paid to the Executive as of the date of termination of employment, reduced by any required payroll and tax withholdings. The Severance shall be payable in twelve equal installments on the first pay day of each month, beginning on the first pay day of the month following the month in which Executive’s Employment is terminated, provided that Executive has not revoked the Separation Agreement and Release.

                    (B) Forfeiture Upon Breach. If the Executive is eligible to receive severance payments under this Section 6(e)(ii), then in the event the Executive violates any of the provisions of Section 4 or Section 5 above, all remaining payments shall be forfeited and the Company shall be entitled to reimbursement from the Executive for any and all severance payments previously made to Executive during the period of such violation. If Executive or anyone acting on his behalf brings a claim against the Company seeking to declare any term of this Agreement void or unenforceable, including Section 4 and Section 5 of this Agreement, and if one or more material terms of this Agreement are ruled by a court or arbitrator to be void or unenforceable or subject to reduction or modification, then the Company shall be entitled to (i) refuse to make any severance payments, or any additional severance

7

payments, described in Section 6(e) of this Agreement; (ii) recover from Executive all Severance payments, as described in Section 6(e), already paid to Executive; and (iii) recover its attorneys’ fees incurred in defending such action and seeking recovery of such amounts.

                    (C) Acknowledgement. The Executive acknowledges and agrees that the severance compensation provided for in this Section 6(e)(ii) is fair and reasonable and is the result of negotiation between the parties.

               (iii) Completed Fiscal Year Earned Annual Bonus. If the Executive’s employment terminates after the end of a full fiscal year but prior to the payment of any Annual Bonus actually earned for such full fiscal year, the Company will pay such earned Annual Bonus as promptly as reasonably practicable after the completion of the audit for such fiscal year, and in any event not later than the payment of annual bonuses (if any) payable to other senior executive officers of the Company pursuant to the same or any substantially similar bonus program.

          (f) Sole Remedy; Release. The applicable payments provided in this Section 6 shall be the sole remedy for any claim the Executive may have arising out of termination of the Executive’s employment by the Company or the termination of this Agreement. Notwithstanding any provision of this Agreement to the contrary, the Company shall not be obligated to make any payment under Section 6(e)(ii) unless the Executive timely executes and delivers to the Company The Separation Agreement and Release, a copy of which is attached hereto, marked as Exhibit “A”, and incorporated herein by reference for all purposes.

     7. Breaches And Remedies. In the event of a breach or a threatened breach by the Executive of this Agreement, the Company shall be entitled to a temporary restraining order and injunctive relief restraining the Executive from the commission of any breach, and (if the Company obtains such relief) to recover the Company’s attorneys’ fees, costs and expenses related to the breach. Nothing contained in this Agreement shall be construed as prohibiting the Company from pursuing any other remedies available to it for any breach or threatened breach, including, without limitation, the recovery of money damages, attorneys’ fees, and costs. The Executive and the Company shall construe each of the restrictions in this Agreement as independent of any other provisions in this Agreement, and the existence of any claim or cause of action, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement of this Agreement. The Executive acknowledges and agrees that in the event that the Executive violates Section 4 or Section 5 hereof, in addition to any other rights or remedies to which it may be entitled under law or this Agreement, the Company shall, except as prohibited by applicable law, cease making any severance or other payments hereunder, shall be entitled to reimbursement from the Executive for any and all severance payments previously made to the Executive under this Agreement during the period of such violation and shall be entitled to enforce the provisions of Section 4 or Section 5 by injunction or other equitable relief, without having to prove irreparable harm or inadequacy of money damages.

     8. Dispute Resolution. Any dispute, controversy or claim arising out of or in relation to or in connection with this Agreement, including without limitation any dispute as to the construction, validity, interpretation, enforceability or breach of this Agreement, shall be exclusively and finally settled by arbitration, and any party may submit such dispute, controversy or claim, including a claim for indemnification under this Section 8, to arbitration. Notwithstanding the provisions of this Section 8 to the contrary, the Company shall be entitled to seek injunctive or other emergency relief in a court of law to enforce the provisions of Section 4 or Section 5.

          (a) Arbitrator. The arbitration shall be heard and determined by one arbitrator, who shall be impartial and who shall be selected by mutual agreement of the parties. If the parties cannot

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agree upon an arbitrator, then they shall submit the dispute to the American Arbitration Association, which shall appoint an impartial arbitrator to preside over the arbitration.

          (b) Proceedings. Unless otherwise expressly agreed in writing by the parties to the arbitration proceedings:

               (i) The arbitration proceedings shall be held in Tarrant County, Texas, at a site chosen by mutual agreement of the parties, or if the parties cannot reach agreement on a location within thirty (30) days of the appointment of the arbitrator, then at a site chosen by the arbitrator;

               (ii) The arbitrator shall be and remain at all times wholly independent and impartial;

               (iii) The arbitration proceedings shall be conducted in accordance with the Employment Dispute Rules of the American Arbitration Association, as amended from time to time;

               (iv) Any procedural issues not determined under the arbitral rules selected pursuant to item (iii) above shall be determined by the laws of the state of Texas, unless such laws would refer the matter to another jurisdiction;

               (v) The costs of the arbitration proceedings (including attorneys’ fees and costs) shall be borne in the manner determined by the arbitrator;

               (vi) The decision of the arbitrator shall be reduced to writing; final and binding without the right of appeal; the sole and exclusive remedy regarding any claims, counterclaims, issues or accounting presented to the arbitrator; made and promptly paid in United States dollars free of any deduction or offset; and any costs or fees incident to enforcing the award shall, to the maximum extent permitted by law, be charged against the party resisting such enforcement;

               (vii) The award shall include interest from the date of any breach or violation of this Agreement, as determined by the arbitral award, and from the date of the award until paid in full, at 6% per annum; and

               (viii) Judgment upon the award may be entered in any court having jurisdiction over the person or the assets of the party owing the judgment or application may be made to such court for a judicial acceptance of the award and an order of enforcement, as the case may be.

          (c) Acknowledgment of Parties. Each party acknowledges that such party has voluntarily and knowingly entered into an agreement to arbitrate under this Section 8 by executing this Agreement.

     9. Miscellaneous Provisions.

          (a) Successors of the Company. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance satisfactory to the Executive, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which executes and delivers the Agreement provided for in this

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Section 9 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

          (b) No Assignment or Delegation by the Executive. The Executive may not assign his rights or delegate his duties or obligations hereunder.

          (c) Notice. For the purposes of this Agreement, notices and all other communications provide for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by registered or certified mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth on the first page of this Agreement, or to such other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

          (d) Amendment; Waiver. No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by the Executive and such individual as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement.

          (e) Invalid Provisions. Should any portion of this Agreement be adjudged or held to be invalid, unenforceable or void, such holding shall not have the effect of invalidating or voiding the remainder of this Agreement and the parties hereby agree that the portion so held invalid, unenforceable or void shall, if possible, be deemed amended or reduced in scope, or otherwise be stricken from this Agreement to the extent required for the purposes of validity and enforcement thereof.

          (f) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

          (g) Governing Law. This Agreement shall be governed by and construed under the laws of the State of Texas.

          (h) Headings. The headings contained in this Agreement are for reference only and shall not affect the meaning or interpretation of any provision of this Agreement.

          (i) Prior Agreements. This Agreement supersedes in all respects all prior employment agreements between the parties, whether written or oral.

          (j) Captions and Gender; Mutual Drafting. The use of captions and Section headings herein is for purposes of convenience only and shall not affect the interpretation or substance of any provisions contained herein. Similarly, the use of the masculine gender with respect to pronouns in this Agreement is for purposes of convenience and includes either sex who may be a signatory. Each party has substantially participated in the preparation and drafting of this Agreement and there shall be no presumption against any party by virtue of any party’s preparation of any provision of this Agreement.

          (k) Survival. The covenants and provisions set forth in Sections 4, 5, 6, 7, 8 and 9 of this Agreement shall survive the termination of the Executive’s employment, and/or termination of this Agreement, in accordance with their respective terms.

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     IN WITNESS WHEREOF, the parties hereto have signed this Agreement effective as of the 1st day of August, 2007.

TRIAD FINANCIAL CORPORATION, a California corporation
By:	/s/ Daniel D. Leonard
	Name:	Daniel D. Leonard
	Title:	President, Chief Executive Officer

/s/ Chris A. Goodman  

Chris A. Goodman 

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EXHIBIT A

FORM OF SEPARATION AGREEMENT AND RELEASE

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SEPARATION AGREEMENT AND RELEASE

     This Separation Agreement and Release (“Agreement”) is entered into by Triad Financial Corporation (“Triad”) and Chris A. Goodman, (the “Executive”). Triad and Executive are referred to as the “Parties.” Because the Parties desire to enter into an agreement that amicably resolves the employment relationship between them and any disputes that now or may exist between them concerning Executive’s hiring, employment and termination from Triad including disputes regarding Executive’s compensation or benefits, the Parties are entering into this Agreement. Defined terms in this Agreement have the same meaning as defined in the Amended and Restated Employment Agreement between Triad and Executive, dated as of August 1, 2007 (“Employment Agreement”).

     1. End of Executive’s Employment. Executive’s last day of employment with Triad will be ________ (which is designated the “Separation Date”). All benefits and severance to be paid to Executive are set forth in Section 6(d) and (e) of the Employment Agreement. Except as stated in this Agreement and the Employment Agreement, or as required by law, all other benefits and pay which relate to Executive’s employment with Triad shall cease as of the Separation Date.

     2. Executive’s Participation in Company Benefit Plans. Following his termination of employment, Executive shall not be entitled to any additional payments or future grants under any benefit plan or bonus or incentive program established by Triad or any of its affiliates. Any vested interest held by Executive in Triad’s 401(k) and any other plans in which Executive participates shall be distributed in accordance with the terms of the plan and applicable law. Executive’s right to exercise vested options or grants after his termination of employment will be determined according to the provisions of his Employment Agreement and the applicable equity incentive plans and agreements governing the options or grants for stock in Triad, Triad Holdings, Inc. or their affiliates (the “Option Documents”). Executive agrees that the release in Paragraph 4 below, except as provided therein, covers any claims he might have regarding his bonuses, stock options or grants and any other benefits he may or may not have received during his employment with Triad. In addition, after the Separation Date, Executive and his dependents shall have the right to choose extension of applicable medical insurance coverage pursuant to COBRA. Triad shall provide Executive under separate cover at his home address, information necessary and as required by law to facilitate the transfer or rollover of his 401(k) account and information regarding COBRA election.

     3. Return of Triad Property. Executive shall promptly return all equipment and property in his possession which belongs to Triad, including all computer software, computer access codes, company laptops, personal data assistants, company credit cards, keys, access cards, and all original and copies of notes, documents, files or programs stored electronically or otherwise, that relate or refer to Triad, its customers, its financial statements, its business contacts, and sales. By signing this Agreement, Executive warrants that he has not retained and has returned all such equipment or property and that should he later discover additional Company equipment or property, he will promptly notify the Company and return it to the Company.

     4. Executive’s Release. In consideration of the benefits and severance pay described in Section 6(e) of the Employment Agreement, and the promises, covenants and other valuable consideration provided by Triad in this Agreement, and subject thereto, Executive releases Triad and any of its direct or indirect parents, predecessors, successors, subsidiaries, affiliates or related companies, and their respective officers, directors, shareholders, executives, attorneys, agents successors and assigns, (collectively referred to as “Releasees,”) from any and all claims, causes of action, losses, obligations, liabilities, damages, judgments, costs, expenses (including attorney’s fees) of any kind whatsoever, including, but not limited to, disputes or claims arising out of Executive’s hiring, employment or

termination of such employment with Triad, or arising out of any act committed or omitted during or after the existence of such employment relationship, including any disputes regarding compensation. This release includes, but is not limited to, all claims, whether arising in contract or allegations of tort, common law or assertion of federal or state statutory rights, including, but not limited to, Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Executive Retirement Income Security Act, claims for wrongful discharge, breach of express or implied contract or implied covenant of good faith and fair dealing, as well as any expenses, costs or attorney’s fees. Furthermore, Executive agrees and hereby relinquishes any right to re-employment with Triad. However, Executive does not release his right to enforce the terms of this Agreement, or the obligations to him under the Employment Agreement and Option Documents that by the terms thereof expressly continue after his employment ends (the “Continuing Obligations”).

Executive hereby expressly agrees that this Agreement shall extend and apply to all unknown, unsuspected and unanticipated injuries and damages as well as those that are now disclosed.

In exchange for the Severance benefits described in Section 6(e) of the Employment Agreement, Executive further agrees never to file a lawsuit asserting any claims that are released in this Agreement and further agrees not to accept any recoveries or benefits which may be obtained on his behalf by any other person or agency or in any class action; provided that nothing in this Agreement shall be construed to prohibit Executive from challenging the validity of this Agreement, enforcing the Continuing Obligations, filing a charge with the Equal Employment Opportunity Commission, or participating in any investigation or proceeding conducted by the Equal Employment Opportunity Commission.

     5. Non-Solicitation Agreement. Executive reaffirms his non-solicitation obligations set forth in Section 4 of his Employment Agreement; and agrees that nothing in this Agreement shall cause such obligations to cease.

     6. Not An Admission of Wrongdoing. This Agreement shall not in any way be construed as an admission by either Party of any acts of wrongdoing, violation of any statute, law or legal or contractual right.

     7. Voluntary Execution of the Agreement. Executive and Triad represent and agree that they have had an opportunity to review all aspects of this Agreement, and that they fully understand all the provisions of the Agreement and are voluntarily entering into this Separation Agreement and the General Release. Executive further represents that he has not transferred or assigned to any person or entity any claim involving Triad or any portion thereof or interest therein. To the extent that Executive has any remaining claims against Triad, such claims are hereby assigned to Triad.

     8. Binding Effect. This Agreement shall be binding upon Triad and upon Executive and his heirs, administrators, representatives, executors, successors and assigns.

     9. Enforceability. Should any provision of this Agreement be declared or determined to be illegal or invalid by any government agency or court of competent jurisdiction, the validity of the remaining parts, terms or provisions of this Agreement shall not be affected and such provisions shall remain in full force and effect.

     10. Entire Agreement. This Agreement and the Employment Agreement between Triad and Executive set forth the entire agreement between the parties, and fully supersedes any and all prior agreements (except the Employment Agreement and the Option Documents), understandings, or representations between the parties pertaining to Executive’s employment with Triad, the subject matter of this Agreement or any other term or condition of the relationship between Triad and Executive.

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Executive represents and acknowledges that in executing this Agreement, he does not rely, and has not relied, upon any representation(s) by Triad or its agents except as expressly contained in this Agreement.

     11. Time to Consider. Triad and Executive agree that Executive received this Agreement on ________ and has been told that he has twenty-one (21) days to consider this Agreement prior to signing. Executive is not required, however, to wait 21 days to execute this Agreement and may execute this Agreement at any time. Executive agrees that he has been given a sufficient period of time to review and consider this Agreement before signing it and is encouraged to consult with an attorney of his choosing before signing this Agreement. Executive understands that the decision to consult with an attorney is in his sole discretion. Executive understands and agrees that if he refuses to sign this Agreement, his employment will be immediately terminated and he will not be entitled to receive any payment pursuant to this Agreement or the Employment Agreement.

     12. Executive’s Right to Revoke the Agreement. Triad and Executive agree that Executive may revoke this Agreement at any time up to seven (7) days after signing.

     13. Governing Law. This Agreement shall be governed by the laws of the State of Texas without reference to its choice of law rules.

     14. Counterparts. This Agreement may be executed in counterparts, each of which when executed and delivered (which deliveries may be by facsimile) shall be deemed an original and all of which together shall constitute one and the same instrument.

* * * * *

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     I ACKNOWLEDGE THAT I HAVE CAREFULLY READ THE FOREGOING AGREEMENT, THAT I UNDERSTAND ALL OF ITS TERMS, AND THAT I AM ENTERING INTO IT VOLUNTARILY.

AGREED TO BY:
Name	Date
STATE OF TEXAS
COUNTY OF

     Before me, a Notary Public, on this day personally appeared ________________________, known to me to be the person whose name is subscribed to the foregoing instrument, and acknowledges to me that he has executed this Agreement on behalf of himself and his heirs, for the purposes and consideration therein expressed.

     Given under my hand and seal of office this ____ day of ____________, ________.

  Notary Public in and for the State of Texas 

(PERSONALIZED SEAL)

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TRIAD FINANCIAL CORPORATION
BY:	DATE:
TITLE:
STATE OF
COUNTY OF

     Before me, a Notary Public, on this day personally appeared ________________________, known to me to be the person and officer whose name is subscribed to the foregoing instrument and acknowledged to me that the same was the act of ____________________, and that he has executed the same on behalf of said corporation for the purposes and consideration therein expressed, and in the capacity therein stated.

     Given under my hand and seal of office this ____ day of ____________, ________.

Notary Public in and for
the State of  

(PERSONALIZED SEAL)

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EX-10.3

EXHIBIT 10.3

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into by and between Triad Financial Corporation, a California corporation (the “Company”), with offices at 5201 Rufe Snow Drive, North Richland Hills, Texas, and David A. Satterfield, (the “Executive”), 5201 Rufe Snow Drive, North Richland Hills, Texas, 76180.

RECITALS

A.	The Executive currently serves as a Senior Vice President of the Company.
B.	The Executive and the Company have determined that it is in their mutual interests to set forth certain terms relating to the Executive’s employment by the Company.
C.	The Executive and the Company intend for this Agreement to supersede and replace any and all prior employment agreements the Executive may at any time have had with the Company or any predecessor of the Company.

AGREEMENT

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

     1. Employment.

          (a) Service to the Company. Executive shall devote all of his professional time, energy, skill and efforts to the performance of his duties hereunder and to the business of the Company, and shall perform his duties in a diligent, trustworthy, and business-like manner, all for the purpose of advancing the business of the Company. Executive shall be primarily responsible for the operation of the Indirect Lending Program offered by the Company, in addition to such other duties as may be delegated to him from time to time. Executive shall report directly to the President and Chief Executive Officer of the Company, and shall be subject to the policies and procedures adopted by the Company from time to time.

          (b) Other Commitments. Notwithstanding the commitment of the Executive’s professional time, energy, skill and efforts to the Company as set forth in this Section 1(a) above, Executive may serve on corporate, civic, or charitable boards or committees, provided that such service does not interfere with the performance of the Executive’s duties under this Agreement, and provided the Executive keeps the Company reasonably informed of such commitments. If the Company determines that any such commitments conflict with or interfere with the performance of the Executive’s duties to the Company, the Company shall give written notice of such conflict or interference to the Executive, who then shall be given thirty days in which to remedy the conflict.

     2. Employment Term.

          (a) Initial Term. Subject to the terms and conditions hereof, the Executive’s term of employment under this Agreement (the “Employment Term”) shall commence effective as of February 15, 2007 (the “Effective Date”), and continue through February 14, 2010 (the “Initial Term”), subject to the renewal provisions of Section 2(b), unless terminated earlier in accordance with the provisions contained herein.

          (b) Renewal. Provided the Executive remains in the employ of the Company, and subject to Section (c) below, this Agreement will be automatically renewed and extended on an annual basis for an additional term of one year effective on the Anniversary Date.

          (c) Notice of Non-Renewal. Notwithstanding the renewal provision set forth above, Either party may choose not to renew the Agreement utilizing the process set forth below:

          (i) If the Company does not wish to extend the Agreement, they must provide the Executive with Notice of Non-Renewal of the Agreement on or before the January 1^st immediately preceding the Anniversary Date.

          (ii) Provided the Executive has Good Reason (as that term is defined in Section 6(a) herein), he may exercise his right not to renew the Agreement by providing the Company with a Notice of Non-Renewal on or before the January 1^st immediately preceding the Anniversary Date.

If the Agreement is not renewed, then the contractual obligations of the parties will survive the Agreement, and the parties will be obligated to adhere to all performance and payment obligations contained herein. A Notice of Non-Renewal shall not be deemed to be a termination of the Executive’s employment, but either party may terminate the employment relationship at any time after the receipt of such notice. In such event, the Executive shall be treated as having remained employed through the end of the Agreement (as extended, if at all), except with respect to any benefit, benefit plan, bonus or incentive plan that requires active employment as a condition precedent for participation in such plan.

     3. Salary and Benefits.

          (a) Salary. During his employment pursuant to this Agreement, the Executive shall receive a total annual salary of Two Hundred Seventy Thousand U.S. Dollars (U.S. $270,000) as compensation for his services to the Company (the “Base Salary”), such compensation to be payable in regular installments in accordance with the Company’s policy for salaried employees.

          (b) Target Bonus. For each fiscal year of the Company ending during the term of this Agreement, the Executive shall be eligible to receive an annual incentive bonus with a target payout based on the Company’s performance for such fiscal year (the “Annual Bonus”), provided that the performance objectives established by the Board of Directors of the Company (the “Board”) for both the Company and the Executive for such fiscal year are attained and provided the Executive is serving as an employee of the Company as of the end of such fiscal year. Any Annual Bonus that is payable hereunder will be paid after the completion of the annual audit of the Company with respect to such fiscal year. If the Executive is employed by the Company on December 31, 2007, and if the applicable performance objectives for fiscal year 2007 are accomplished, the Company will pay the Executive an Annual Bonus based on the Company’s full 2007 fiscal year, notwithstanding that the Executive’s employment under this Agreement did not commence until February 15, 2007.

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          (c) Benefit Plans. During his employment pursuant to this Agreement, subject to eligibility requirements, applicable employee contributions and the terms and conditions of the applicable plans, and except as otherwise expressly provided in this Agreement, the Executive shall be entitled to participate in the Company-sponsored employee benefit plans, medical benefit plans, group life insurance plans or other employee welfare plans that the Company may adopt for employees generally from time to time during the Executive’s employment pursuant to this Agreement, and as such plans may be modified, amended, terminated, or replaced from time to time. This Agreement shall supercede any severance plan currently used by, or subsequently adopted by, the Company with respect to the Executive.

          (d) Vacation. The Executive shall be entitled to four weeks of paid vacation each fiscal year of this Agreement, to be taken in accordance with the Company’s policy then in effect, and to the same paid Holidays provided to the other employees of the Company. The Executive’s vacation days will be pro-rated based on the number of full months, if less than twelve, that the Executive is employed hereunder in the applicable fiscal year.

          (e) Reimbursement of Expenses. The Company shall reimburse the Executive for all reasonable out-of-pocket expenses incurred by the Executive on behalf of the Company in the course of his duties, upon presentation of appropriate documentation of such costs as and when required by and to the satisfaction of the Company, on a basis that is consistent with the Company’s past practices. The Executive shall be entitled to fly Business Class on flights that have a scheduled flight time of two hours or more, to the extent a Business Class seat is available. All other flights shall be Economy Class or its equivalent.

          (f) Car Allowance. During his employment pursuant to this Agreement, the Executive shall be entitled to a vehicle allowance of One Thousand Two Hundred Fifty Dollars ($1,250) per month in addition to his salary and other benefits.

     4. Non-solicitation/Covenant Not to Compete.

The Executive acknowledges that he is considered a key employee of the Company and agrees that he will work on a full-time basis to accomplish the Company’s business plan, and that he is being entrusted with certain Confidential Information (defined herein) in order to perform the tasks required of him. In consideration of the Company providing Executive access to new confidential and proprietary information and materials belonging to the Company to assist Executive in the performance of Executive’s duties and Executive agreeing to keep all such information strictly confidential, and as a means to aid in the performance and enforcement of the terms of the Confidential Information provisions in Section 5 herein, the Executive agrees that from the Effective Date and until the two-year anniversary of the termination of the Executive’s employment under this Agreement for any reason:

(a)

The Executive shall not, directly or indirectly, own, manage, operate, control, or participate in the ownership, management, operation or control of, or be connected as an officer, employee, partner, director, agent, representative of, or have any financial interest in, or aid or assist anyone else in the conduct of any business that involves the indirect financing of motor vehicle purchases by consumers, or the lending of money directly to consumers for the purpose of purchasing, financing or refinancing a motor vehicle (a “Competitive Operation”) which competes with any business conducted by the Company or by any group, division or subsidiary of the Company (a “Company Operation”) in any area where such Company Operation is being conducted at the time of the Executive’s termination.

(b)

The Executive shall not, directly or indirectly, use Confidential Information (defined below) that constitutes a protectable trade secret to solicit business from, attempt to do

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business with, or do business with any customers, lenders, suppliers, joint venturers or business referral sources, in each case which either: (1) the Executive contacted, called on, serviced, transacted business with or had significant contact with during the Executive’s employment with the Company or that the Executive attempted to contact, call on, service, or do business with during the Executive’s employment with the Company; or (2) the Executive became acquainted with as a result of the Executive’s employment with the Company. The restriction set forth in this Section 4 applies only to business that is in the scope of services or products provided by the Company during the term of the Executive’s employment hereunder.

(c)

The Executive shall not, directly or indirectly, on behalf of the Executive or any other person or entity, solicit, induce, encourage, attempt to solicit or induce, or assist another to induce or attempt to induce, any employee or independent contractor of the Company to terminate his or her employment or relationship with the Company.

     The Executive agrees that if a court of competent jurisdiction determines that the length of time or any other restriction, or portion thereof, set forth in this Section 4 is overly restrictive and unenforceable, the court may reduce or modify such restrictions to those which it deems reasonable and enforceable under the circumstances, and as so reduced or modified, the parties hereto agree that the restrictions of this Section 4 shall remain in full force and effect. The Executive further agrees that if a court of competent jurisdiction determines that any provision of this Section 4 is invalid or against public policy, the remaining provisions of this Section 4 and the remainder of this Agreement shall not be affected thereby, and shall remain in full force and effect.

     The Executive acknowledges that the scope and duration of the restrictions contained herein are reasonable in light of the business plan for the Company, the time that the Executive has been engaged in (and is expected to be engaged in) the business of the Company, the Executive’s reputation in the markets for the Company’s businesses and the Executive’s relationship with the Company’s actual and prospective lenders, clients, employees and management team.

     If the Executive violates any of the restrictions contained in Section 4 of this Agreement, the restrictive period will be suspended and will not begin to run again in favor of the Executive from the time of the commencement of any violation until the time when the Executive cures the violation to the Company’s satisfaction.

     5. Confidential Information.

          (a) Confidential Information. For purposes of this Agreement, the term “Confidential Information” means any trade secrets or confidential or proprietary information of the Company, including without limitation the following:

               (i) Information concerning the Company’s investor or prospective investor lists, lenders, customers, clients, marketing, business and operational methods of the Company and their customers or clients, contracts, financial or other data, technical data, e-mail and other correspondence or any other confidential or proprietary information possessed, owned or used by any of the Company;

               (ii) Business records, financial information, pricing, business strategies, marketing and promotional practices (including internet-related marketing) and management methods and information;

               (iii) Finances, strategies, systems, research, plans, reports, recommendations

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and conclusions;

               (iv) Names, arrangements with, or other information relating to, any of the Company’s investors, customers, clients, suppliers, financiers, owners, representatives and other persons who have business relationships with the Company or who are prospects for business relationships with the Company; and

               (v) Any matter or thing obtained or ascertained by Executive through Executive’s association with the Company, the use or disclosure of which might reasonably be construed to be contrary to the best interests of any the Company, its owners or employees.

     Upon termination of the Executive’s employment under any circumstances, the Executive or his representatives, shall promptly return to the Company all property of the Company, including any and all Confidential Information, computers, hard-drives, papers, books, records, documents, memoranda, manuals, e-mail, electronic or magnetic recordings or data, electronic devices and related data storage devices, including all copies thereof, which belong to the Company or relate to the Company’s business and which are in Executive’s possession, custody or control, whether prepared by Executive or others, and shall destroy or erase any data that cannot be returned (with it being understood and agreed that subject to Section 5 hereof, the Executive shall be permitted to retain his own rolodex, calendars, appointment lists and other personal lists maintained during the course of his employment hereunder).

     If the Executive is subpoenaed, served with any legal process or notice or otherwise requested to produce or divulge, directly or indirectly, any Confidential Information by any entity, agency or person in any formal or informal proceeding, including without limitation any interview, deposition, administrative or judicial hearing and/or trial, then promptly after the Executive’s receipt of such subpoena, process, notice or request, the Executive shall notify the Company and shall reasonably cooperate with the Company’s efforts to obtain a protective order or other relief to protect the Company’s Confidential Information or to limit the scope of disclosure of such information in such interview, deposition, administrative or judicial hearing and/or trial.

          (b) Non-disparagement. During the term of this Agreement and continuing after termination of the Executive’s employment hereunder, the Executive shall not communicate or publish, directly or indirectly, any confidential, personal or disparaging information concerning any member of the Company, any director, officer or employee of any entity in the Company or any entity or individual who controls, directly or indirectly, any entity in the Company.

          (c) Works. Any works created during the term of this Agreement by the Executive shall be deemed work for hire to the extent permitted by law, and the Company shall have the sole right to any such works. In addition, the Executive hereby grants and shall grant to Company all his rights, title and interest including, without limitation, all intellectual property and proprietary rights, in all works developed or created by the Executive during the term of this Agreement. The Executive hereby waives for the benefit of the Company and its successors, assigns and licensees all moral rights that the Executive may have in such works. For greater clarity, the parties acknowledge and agree that such works include without limitation the Developments defined in Section 5(d) below.

          (d) Other Provisions/Exclusions. The Executive understands, acknowledges and agrees that all Developments (as hereinafter defined) shall be made for hire by the Executive for the Company. “Developments” means any idea, discovery, invention, design, method, technique, improvement, enhancement, development, computer program, machine, algorithm or other work or authorship that (i) relates to the business or operations of the Company, or (ii) results from or is suggested by any undertaking assigned to the Executive or work performed by the Executive for or on behalf of the

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Company, whether created alone or with others, during or after working hours. All confidential or proprietary information described in Section 5(a) above and all Developments shall remain the sole property of the Company. The Executive shall acquire no proprietary interest in any confidential or proprietary information described in Section 5(a) above or Developments developed or acquired while the Executive is required to provide services to the Company hereunder. To the extent the Executive may, by operation of law or otherwise, acquire any right, title or interest in or to any confidential or proprietary information described in Section 5(a) above or Development, the Executive hereby assigns to the Company all such intellectual property or proprietary rights. The Executive shall, both during the term of this Agreement and for two years thereafter, upon the Company’s request, promptly execute and deliver to the Company all such assignments, certificates and instruments, and shall promptly perform such other acts as the Company may from time to time in its reasonable discretion deem necessary or desirable to evidence, establish, maintain, perfect, enforce or defend the Company’s rights in Developments and in the proprietary information, inventions, copyrights, and trademarks otherwise described in this Section 5.

     6. Termination.

          (a) By the Executive. The Executive may resign his employment at any time, for Good Reason (defined below) or without Good Reason, upon thirty days written notice to the Company. Upon receipt of written notice from the Executive of his voluntary resignation of employment, the Company may immediately terminate the Executive’s employment with the Company (which shall be deemed for all purposes an immediate voluntary resignation by the Executive, and not a termination by the Company) and require no further services from the Executive. The term “Good Reason” means (i) any material breach by the Company of any provision of this Agreement, after the Executive has given the Company thirty days written notice of such breach and the Company has not during such period cured the alleged breach, (ii) a reduction in the Executive’s Base Salary without the Executive’s consent, (iii) the Company’s failure to continue any benefit or compensation plan in which the Executive is participating (other than an equal reduction in such benefits for all similarly-situated executives of the Company), or (iv) the occurrence of a Change in Control, as that term is defined in the Triad Holdings, Inc., 2005 Long Term Incentive Plan.

          (b) By the Company. The Company may terminate the Executive’s employment for any reason, at any time, upon written notice to the Executive, provided that the Company shall pay the Executive the amounts and benefits as set forth in Section 6(d) or Section 6(e) below, as applicable. The Company shall have the right to terminate the Executive’s employment with the Company under this Agreement with or without Cause. As used in this Agreement, the term “Cause” shall mean the Executive’s:

               (i) material fraud, embezzlement, theft or other act or omission involving material dishonesty, or a crime of moral turpitude, in each case relating to the Company’s business, or constituting information known within the Company’s industry or among the Company’s employees;

               (ii) intentional or reckless failure to abide in any material respect with reasonable rules and regulations governing the transaction of business of the Company as the Company may from time to time adopt or approve;

               (iii) failure to perform material duties or to follow material directions of the Board;

               (iv) intentional misappropriation of any corporate opportunity, or otherwise intentionally obtaining personal profit from any material transaction that is adverse to the interests of the Company or to the benefits to which the Company is entitled;

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               (v) indictment for a felony (provided, however, that indictment for a felony involving only the use of a motor vehicle that does not cause material personal injury to any person shall not constitute Cause under this item (v)); or

               (vi) intentional or reckless conduct by the Executive that subjects the Company or any direct or indirect subsidiary, parent or other affiliated entity, to loss of any required license, permit or similar governmental authorization that is material to the Company’s or such entity’s business.

          (c) By Death or Disability. The Executive’s employment shall be terminated under this Agreement in the event of the Executive’s death or Disability. For purposes of this Agreement, “Disability” means that for a period of at least 120 days during any twelve consecutive month period on account of a mental or physical condition, the Executive is unable to perform the essential functions of his job for the Company, with or without reasonable accommodation, as determined in good faith by the Company, based upon medical reports or other evidence satisfactory to the Company.

          (d) Obligations Where no Severance is Required. In the event that the Company terminates the Executive’s employment under this Agreement for Cause, the Executive’s employment terminates due to his death or Disability, or the Executive terminates his employment hereunder (other than for Good Reason), then in each such case the Company shall have no further obligation to the Executive under this Agreement except to pay his Base Salary earned through the date of termination of employment with the Company and a lump sum payment for any accrued and earned, but unused, vacation shall be paid to Executive on or before the next regularly scheduled pay day after the effective date of the termination; provided, however, that if the Executive’s date of termination occurs after the end of the Company’s fiscal year, but before payment of any applicable Annual Bonus actually earned by the Executive for such completed fiscal year, then the Company also shall pay such earned Annual Bonus in accordance with Section 6(e)(iii).

          (e) Severance Obligations. In the event the Company terminates the Executive’s employment without Cause, or Executive resigns for Good Reason, the Company’s obligations to the Executive shall be limited to the following:

               (i) Earned Salary. The Company shall pay Executive any Base Salary earned through the date of termination of employment with the Company and a lump sum payment for any accrued and earned, but unused, vacation; provided, however, that if the Executive’s date of termination occurs after the end of the Company’s fiscal year, but before payment of any applicable Annual Bonus actually earned by the Executive for such completed fiscal year, then the Company also shall pay such earned Annual Bonus in accordance with Section 6(e)(iii).

               (ii) Severance.

                    (A) Payment Terms. Subject to the last sentence of Section 6(f) below, if the Company terminates Executive’s employment without Cause or the Executive resigns for Good Reason, the Company shall pay Executive severance payments (“Severance”) in an amount equal to the total amount remaining to be paid under the terms of this Agreement, after taking into consideration the amount of salary and benefits previously paid to the Executive as of the date of termination of employment, reduced by any required payroll and tax withholdings. The Severance shall be payable in twelve equal installments on the first pay day of each month, beginning on the first pay day of the month following the month in which Executive’s Employment is terminated, provided that Executive has not revoked the Separation Agreement and Release.

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                    (B) Forfeiture Upon Breach. If the Executive is eligible to receive severance payments under this Section 6(e)(ii), then in the event the Executive violates any of the provisions of Section 4 or Section 5 above, all remaining payments shall be forfeited and the Company shall be entitled to reimbursement from the Executive for any and all severance payments previously made to Executive during the period of such violation. If Executive or anyone acting on his behalf brings a claim against the Company seeking to declare any term of this Agreement void or unenforceable, including Section 4 and Section 5 of this Agreement, and if one or more material terms of this Agreement are ruled by a court or arbitrator to be void or unenforceable or subject to reduction or modification, then the Company shall be entitled to (i) refuse to make any severance payments, or any additional severance payments, described in Section 6(e) of this Agreement; (ii) recover from Executive all Severance payments, as described in Section 6(e), already paid to Executive; and (iii) recover its attorneys’ fees incurred in defending such action and seeking recovery of such amounts.

                    (C) Acknowledgement. The Executive acknowledges and agrees that the severance compensation provided for in this Section 6(e)(ii) is fair and reasonable and is the result of negotiation between the parties.

               (iii) Completed Fiscal Year Earned Annual Bonus. If the Executive’s employment terminates after the end of a full fiscal year but prior to the payment of any Annual Bonus actually earned for such full fiscal year, the Company will pay such earned Annual Bonus as promptly as reasonably practicable after the completion of the audit for such fiscal year, and in any event not later than the payment of annual bonuses (if any) payable to other senior executive officers of the Company pursuant to the same or any substantially similar bonus program.

          (f) Sole Remedy; Release. The applicable payments provided in this Section 6 shall be the sole remedy for any claim the Executive may have arising out of termination of the Executive’s employment by the Company or the termination of this Agreement. Notwithstanding any provision of this Agreement to the contrary, the Company shall not be obligated to make any payment under Section 6(e)(ii) unless the Executive timely executes and delivers to the Company The Separation Agreement and Release, a copy of which is attached hereto, marked as Exhibit “A”, and incorporated herein by reference for all purposes.

     7. Breaches And Remedies. In the event of a breach or a threatened breach by the Executive of this Agreement, the Company shall be entitled to a temporary restraining order and injunctive relief restraining the Executive from the commission of any breach, and (if the Company obtains such relief) to recover the Company’s attorneys’ fees, costs and expenses related to the breach. Nothing contained in this Agreement shall be construed as prohibiting the Company from pursuing any other remedies available to it for any breach or threatened breach, including, without limitation, the recovery of money damages, attorneys’ fees, and costs. The Executive and the Company shall construe each of the restrictions in this Agreement as independent of any other provisions in this Agreement, and the existence of any claim or cause of action, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement of this Agreement. The Executive acknowledges and agrees that in the event that the Executive violates Section 4 or Section 5 hereof, in addition to any other rights or remedies to which it may be entitled under law or this Agreement, the Company shall, except as prohibited by applicable law, cease making any severance or other payments hereunder, shall be entitled to reimbursement from the Executive for any and all severance payments previously made to the Executive under this Agreement during the period of such violation and shall be entitled to enforce the provisions of Section 4 or Section 5 by injunction or other equitable relief, without having to prove irreparable harm or inadequacy of money damages.

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     8. Dispute Resolution. Any dispute, controversy or claim arising out of or in relation to or in connection with this Agreement, including without limitation any dispute as to the construction, validity, interpretation, enforceability or breach of this Agreement, shall be exclusively and finally settled by arbitration, and any party may submit such dispute, controversy or claim, including a claim for indemnification under this Section 8, to arbitration. Notwithstanding the provisions of this Section 8 to the contrary, the Company shall be entitled to seek injunctive or other emergency relief in a court of law to enforce the provisions of Section 4 or Section 5.

          (a) Arbitrator. The arbitration shall be heard and determined by one arbitrator, who shall be impartial and who shall be selected by mutual agreement of the parties. If the parties cannot agree upon an arbitrator, then they shall submit the dispute to the American Arbitration Association, which shall appoint an impartial arbitrator to preside over the arbitration.

          (b) Proceedings. Unless otherwise expressly agreed in writing by the parties to the arbitration proceedings:

               (i) The arbitration proceedings shall be held in Dallas County, Texas, at a site chosen by mutual agreement of the parties, or if the parties cannot reach agreement on a location within thirty (30) days of the appointment of the arbitrator, then at a site chosen by the arbitrator;

               (ii) The arbitrator shall be and remain at all times wholly independent and impartial;

               (iii) The arbitration proceedings shall be conducted in accordance with the Employment Dispute Rules of the American Arbitration Association, as amended from time to time;

               (iv) Any procedural issues not determined under the arbitral rules selected pursuant to item (iii) above shall be determined by the laws of the state of Texas, unless such laws would refer the matter to another jurisdiction;

               (v) The costs of the arbitration proceedings (including attorneys’ fees and costs) shall be borne in the manner determined by the arbitrator;

               (vi) The decision of the arbitrator shall be: reduced to writing; final and binding without the right of appeal; the sole and exclusive remedy regarding any claims, counterclaims, issues or accounting presented to the arbitrator; made and promptly paid in United States dollars free of any deduction or offset; and any costs or fees incident to enforcing the award shall, to the maximum extent permitted by law, be charged against the party resisting such enforcement;

               (vii) The award shall include interest from the date of any breach or violation of this Agreement, as determined by the arbitral award, and from the date of the award until paid in full, at 6% per annum; and

               (viii) Judgment upon the award may be entered in any court having jurisdiction over the person or the assets of the party owing the judgment or application may be made to such court for a judicial acceptance of the award and an order of enforcement, as the case may be.

          (c) Acknowledgment of Parties. Each party acknowledges that such party has voluntarily and knowingly entered into an agreement to arbitrate under this Section 8 by executing this Agreement.

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     9. Miscellaneous Provisions.

          (a) Successors of the Company. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance satisfactory to the Executive, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which executes and delivers the Agreement provided for in this Section 9 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law.

          (b) No Assignment or Delegation by the Executive. The Executive may not assign his rights or delegate his duties or obligations hereunder.

          (c) Notice. For the purposes of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when hand delivered or mailed by registered or certified mail, return receipt requested, postage prepaid, addressed to the respective addresses set forth on the first page of this Agreement, or to such other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

          (d) Amendment; Waiver. No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by the Executive and such individual as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement.

          (e) Invalid Provisions. Should any portion of this Agreement be adjudged or held to be invalid, unenforceable or void, such holding shall not have the effect of invalidating or voiding the remainder of this Agreement and the parties hereby agree that the portion so held invalid, unenforceable or void shall, if possible, be deemed amended or reduced in scope, or otherwise be stricken from this Agreement to the extent required for the purposes of validity and enforcement thereof.

          (f) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

          (g) Governing Law. This Agreement shall be governed by and construed under the laws of the State of Texas.

          (h) Headings. The headings contained in this Agreement are for reference only and shall not affect the meaning or interpretation of any provision of this Agreement.

          (i) Prior Agreements. This Agreement supersedes in all respects all prior employment agreements between the parties, whether written or oral.

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          (j) Captions and Gender; Mutual Drafting. The use of captions and Section headings herein is for purposes of convenience only and shall not affect the interpretation or substance of any provisions contained herein. Similarly, the use of the masculine gender with respect to pronouns in this Agreement is for purposes of convenience and includes either sex who may be a signatory. Each party has substantially participated in the preparation and drafting of this Agreement and there shall be no presumption against any party by virtue of any party’s preparation of any provision of this Agreement.

          (k) Survival. The covenants and provisions set forth in Sections 4, 5, 6, 7, 8 and 9 of this Agreement shall survive the termination of the Executive’s employment, and/or termination of this Agreement, in accordance with their respective terms.

     IN WITNESS WHEREOF, the parties hereto have signed this Agreement effective as of the 15^th day of February, 2007.

TRIAD FINANCIAL CORPORATION, a California corporation
By:	/s/ Carl B. Webb
	Name:	Carl B. Webb
	Title:	President, Chief Executive Officer
/s/ David A. Satterfield
David A. Satterfield

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EXHIBIT A

FORM OF SEPARATION AGREEMENT AND RELEASE

12

SEPARATION AGREEMENT AND RELEASE

     This Separation Agreement and Release (“Agreement”) is entered into by Triad Financial Corporation (“Triad”) and David A. Satterfield, (the “Executive”). Triad and Executive are referred to as the “Parties.” Because the Parties desire to enter into an agreement that amicably resolves the employment relationship between them and any disputes that now or may exist between them concerning Executive’s hiring, employment and termination from Triad including disputes regarding Executive’s compensation or benefits, the Parties are entering into this Agreement. Defined terms in this Agreement have the same meaning as defined in the Employment Agreement between Triad and Executive, dated as of February 15, 2007 (“Employment Agreement”).

     1. End of Executive’s Employment. Executive’s last day of employment with Triad will be                      (which is designated the “Separation Date”). All benefits and severance to be paid to Executive are set forth in Section 6(d) and (e) of the Employment Agreement. Except as stated in this Agreement and the Employment Agreement, or as required by law, all other benefits and pay which relate to Executive’s employment with Triad shall cease as of the Separation Date.

     2. Executive’s Participation in Company Benefit Plans. Following his termination of employment, Executive shall not be entitled to any additional payments or future grants under any benefit plan or bonus or incentive program established by Triad or any of its affiliates. Any vested interest held by Executive in Triad’s 401(k) and any other plans in which Executive participates shall be distributed in accordance with the terms of the plan and applicable law. Executive’s right to exercise vested options or grants after his termination of employment will be determined according to the provisions of his Employment Agreement and the applicable equity incentive plans and agreements governing the options or grants for stock in Triad, Triad Holdings, Inc. or their affiliates (the “Option Documents”). Executive agrees that the release in Paragraph 4 below, except as provided therein, covers any claims he might have regarding his bonuses, stock options or grants and any other benefits he may or may not have received during his employment with Triad. In addition, after the Separation Date, Executive and his dependents shall have the right to choose extension of applicable medical insurance coverage pursuant to COBRA. Triad shall provide Executive under separate cover at his home address, information necessary and as required by law to facilitate the transfer or rollover of his 401(k) account and information regarding COBRA election.

     3. Return of Triad Property. Executive shall promptly return all equipment and property in his possession which belongs to Triad, including all computer software, computer access codes, company laptops, personal data assistants, company credit cards, keys, access cards, and all original and copies of notes, documents, files or programs stored electronically or otherwise, that relate or refer to Triad, its customers, its financial statements, its business contacts, and sales. By signing this Agreement, Executive warrants that he has not retained and has returned all such equipment or property and that should he later discover additional Company equipment or property, he will promptly notify the Company and return it to the Company.

     4. Executive’s Release. In consideration of the benefits and severance pay described in Section 6(e) of the Employment Agreement, and the promises, covenants and other valuable consideration provided by Triad in this Agreement, and subject thereto, Executive releases Triad and any of its direct or indirect parents, predecessors, successors, subsidiaries, affiliates or related companies, and their respective officers, directors, shareholders, executives, attorneys, agents successors and assigns, (collectively referred to as “Releasees,”) from any and all claims, causes of action, losses, obligations, liabilities, damages, judgments, costs, expenses (including attorney’s fees) of any kind whatsoever, including, but not limited to, disputes or claims arising out of Executive’s hiring, employment or termination of such employment with Triad, or arising out of any act committed or omitted during or after

the existence of such employment relationship, including any disputes regarding compensation. This release includes, but is not limited to, all claims, whether arising in contract or allegations of tort, common law or assertion of federal or state statutory rights, including, but not limited to, Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Executive Retirement Income Security Act, claims for wrongful discharge, breach of express or implied contract or implied covenant of good faith and fair dealing, as well as any expenses, costs or attorney’s fees. Furthermore, Executive agrees and hereby relinquishes any right to re-employment with Triad. However, Executive does not release his right to enforce the terms of this Agreement, or the obligations to him under the Employment Agreement and Option Documents that by the terms thereof expressly continue after his employment ends (the “Continuing Obligations”).

Executive hereby expressly agrees that this Agreement shall extend and apply to all unknown, unsuspected and unanticipated injuries and damages as well as those that are now disclosed.

In exchange for the Severance benefits described in Section 6(e) of the Employment Agreement, Executive further agrees never to file a lawsuit asserting any claims that are released in this Agreement and further agrees not to accept any recoveries or benefits which may be obtained on his behalf by any other person or agency or in any class action; provided that nothing in this Agreement shall be construed to prohibit Executive from challenging the validity of this Agreement, enforcing the Continuing Obligations, filing a charge with the Equal Employment Opportunity Commission, or participating in any investigation or proceeding conducted by the Equal Employment Opportunity Commission.

     5. Non-Solicitation Agreement. Executive reaffirms his non-solicitation obligations set forth in Section 4 of his Employment Agreement; and agrees that nothing in this Agreement shall cause such obligations to cease.

     6. Not An Admission of Wrongdoing. This Agreement shall not in any way be construed as an admission by either Party of any acts of wrongdoing, violation of any statute, law or legal or contractual right.

     7. Voluntary Execution of the Agreement. Executive and Triad represent and agree that they have had an opportunity to review all aspects of this Agreement, and that they fully understand all the provisions of the Agreement and are voluntarily entering into this Separation Agreement and the General Release. Executive further represents that he has not transferred or assigned to any person or entity any claim involving Triad or any portion thereof or interest therein. To the extent that Executive has any remaining claims against Triad, such claims are hereby assigned to Triad.

     8. Binding Effect. This Agreement shall be binding upon Triad and upon Executive and his heirs, administrators, representatives, executors, successors and assigns.

     9. Enforceability. Should any provision of this Agreement be declared or determined to be illegal or invalid by any government agency or court of competent jurisdiction, the validity of the remaining parts, terms or provisions of this Agreement shall not be affected and such provisions shall remain in full force and effect.

     10. Entire Agreement. This Agreement and the Employment Agreement between Triad and Executive set forth the entire agreement between the parties, and fully supersedes any and all prior agreements (except the Employment Agreement and the Option Documents), understandings, or representations between the parties pertaining to Executive’s employment with Triad, the subject matter of this Agreement or any other term or condition of the relationship between Triad and Executive.

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Executive represents and acknowledges that in executing this Agreement, he does not rely, and has not relied, upon any representation(s) by Triad or its agents except as expressly contained in this Agreement.

     11. Time to Consider. Triad and Executive agree that Executive received this Agreement on                      and has been told that he has twenty-one (21) days to consider this Agreement prior to signing. Executive is not required, however, to wait 21 days to execute this Agreement and may execute this Agreement at any time. Executive agrees that he has been given a sufficient period of time to review and consider this Agreement before signing it and is encouraged to consult with an attorney of his choosing before signing this Agreement. Executive understands that the decision to consult with an attorney is in his sole discretion. Executive understands and agrees that if he refuses to sign this Agreement, his employment will be immediately terminated and he will not be entitled to receive any payment pursuant to this Agreement or the Employment Agreement.

     12. Executive’s Right to Revoke the Agreement. Triad and Executive agree that Executive may revoke this Agreement at any time up to seven (7) days after signing.

     13. Governing Law. This Agreement shall be governed by the laws of the State of Texas without reference to its choice of law rules.

     14. Counterparts. This Agreement may be executed in counterparts, each of which when executed and delivered (which deliveries may be by facsimile) shall be deemed an original and all of which together shall constitute one and the same instrument.

* * * * *

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     I ACKNOWLEDGE THAT I HAVE CAREFULLY READ THE FOREGOING AGREEMENT, THAT I UNDERSTAND ALL OF ITS TERMS, AND THAT I AM ENTERING INTO IT VOLUNTARILY.

AGREED TO BY:

  Name   Date

STATE OF TEXAS

COUNTY OF                               

     Before me, a Notary Public, on this day personally appeared                                                             , known to me to be the person whose name is subscribed to the foregoing instrument, and acknowledges to me that he has executed this Agreement on behalf of himself and his heirs, for the purposes and consideration therein expressed.

     Given under my hand and seal of office this            day of                     ,          .

Notary Public in and for the State of Texas

(PERSONALIZED SEAL)

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TRIAD FINANCIAL CORPORATION

BY:		DATE:
	TITLE:

STATE OF                                         

COUNTY OF                                         

     Before me, a Notary Public, on this day personally appeared                                         , known to me to be the person and officer whose name is subscribed to the foregoing instrument and acknowledged to me that the same was the act of                                         , and that he has executed the same on behalf of said corporation for the purposes and consideration therein expressed, and in the capacity therein stated.

     Given under my hand and seal of office this       day of                     ,           

Notary Public in and for
the State of                    

(PERSONALIZED SEAL)

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EX-10.4

EXHIBIT 10.4

First Amendment to Consulting Agreement

This First Amendment to Consulting Services Agreement (the “Amendment”) is entered into by and between Triad Financial Corporation, a California Corporation (“Company”) and Carl B. Webb (“Consultant”).

WHEREAS, Company and Consultant entered into that certain Consulting Agreement (herein so called) as of July 31, 2007; and

WHEREAS, the parties wish to amend the Consulting Agreement in accordance with the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the foregoing, and the mutual undertakings contained in this Agreement, the parties agree as follows:

1. DEFINITIONS. Capitalized terms used herein but not defined shall have the same meanings as given to them in the Consulting Agreement.

2. AMENDMENTS. Section 4 of the Consulting Agreement is hereby amended as follows:

          SECTION 4. CONSULTING COMPENSATION. For and in consideration of the consulting services to be performed by Consultant and the further covenants and agreements made by him under this Agreement, the Company shall, for the Term hereof, provided Consultant is not in default under this Agreement:

     (a) pay to Consultant from the effective date of this Amendment through July 31, 2010, basic monthly compensation of $41,666.66, to be paid monthly in arrears, on the last day of each month, commencing on January 31, 2008;

     (b) pay to Consultant such other and further compensation as the Compensation Committee of the Board of Directors of the Company may from time to time determine; and

     (c) reimburse Consultant for reasonable and necessary expenses incurred in connection with his consulting work.

3. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between the parties with respect to the subject matter to which it pertains. Any and all other agreements, representations and understandings of the parties shall be deemed merged into this Agreement.

4. GOVERNING LAW. This Agreement is made in and shall be governed, construed and enforced in accordance with the laws of the State of Texas.

          IN WITNESS WHEREOF, the parties have caused this Agreement to be executed this12th day of February, 2008.

TRIAD FINANCIAL CORPORATION
By:	/s/ Gerald J. Ford
	Title: Co-Chairman of the Board of Directors
/s/ Carl B. Webb
Carl B. Webb

EX-10.8

EXHIBIT 10.8

WAREHOUSE LENDING AGREEMENT

Dated as of January 10, 2008

among

TRIAD FINANCIAL CORPORATION,
as Originator and Servicer,

TRIAD FINANCIAL WAREHOUSE SPECIAL PURPOSE LLC,
as Seller

TRIAD AUTOMOBILE RECEIVABLES WAREHOUSE TRUST,
as Borrower

THE BANK OF NEW YORK,
as Collection Account Bank

SHEFFIELD RECEIVABLES CORPORATION,
as Class A Lender

BARCLAYS BANK PLC,
as Class B Lender

and

BARCLAYS BANK PLC,
as Agent

TABLE OF CONTENTS

		Page
	ARTICLE I.
	DEFINITIONS; CONSTRUCTION
Section 1.01.	Definitions		1
Section 1.02.	Accounting Terms and Determinations		28
Section 1.03.	Other Definitional Terms		28
	ARTICLE II.
	AMOUNT AND TERMS OF THE LOANS
Section 2.01.	The Loans.		29
Section 2.02.	The Notes		30
Section 2.03.	Making the Loans		30
Section 2.04.	[Reserved]		31
Section 2.05.	[Reserved]		31
Section 2.06.	Borrowings in Respect of Clean-up Call Contracts		31
Section 2.07.	[Reserved]		33
Section 2.08.	Notices of Net Securitization Percentage		34
	ARTICLE III.
	INTEREST, PAYMENTS, ETC.
Section 3.01.	Interest on the Loans		34
Section 3.02.	Optional Prepayments		34
Section 3.03.	Mandatory Repayments and Prepayments		35
Section 3.04.	Funds; Manner of Payment		37
Section 3.05.	Default Interest		37
Section 3.06.	Requirements of Law		38
Section 3.07.	Indemnity		39
Section 3.08.	[Reserved]		39
Section 3.09.	Application of Payments during Event of Default		39
Section 3.10.	Application of Payments, Establishment of Lockbox, Clearing Account, Concentration Account and Collection Account		41
Section 3.11.	Collections		43
Section 3.12.	Application of Collections by Borrower		43
Section 3.13.	[Reserved]		46
Section 3.14.	[Reserved]		46
Section 3.15.	[Reserved]		46
Section 3.16.	Taxes		46

-i-

		Page
	ARTICLE IV.
	CONDITIONS TO CLOSING AND THE LOANS
Section 4.01.	Conditions Precedent to the Closing		47
Section 4.02.	Conditions Precedent to All Loans		50
	ARTICLE V.
	REPRESENTATIONS AND WARRANTIES OF BORROWER
Section 5.01.	Organization and Good Standing		53
Section 5.02.	Due Qualification		53
Section 5.03.	Power and Authority		53
Section 5.04.	Binding Obligation		53
Section 5.05.	No Violation		54
Section 5.06.	Compliance with Law		54
Section 5.07.	No Consents		54
Section 5.08.	No Proceedings		54
Section 5.09.	No Adverse Selection		54
Section 5.10.	Other Obligations		55
Section 5.11.	Regulation U		55
Section 5.12.	Investment Company Act, Etc		55
Section 5.13.	[Reserved].		55
Section 5.14.	Collateral Security		55
Section 5.15.	Ownership of Properties		55
Section 5.16.	[Reserved].		56
Section 5.17.	[Reserved].		56
Section 5.18.	The Security Agreement		56
Section 5.19.	Eligible Contracts		56
Section 5.20.	Ownership of Borrower		56
Section 5.21.	No Other Business		56
Section 5.22.	No Indebtedness		56
Section 5.23.	No Fraudulent Conveyance		56
	ARTICLE VI.
	AFFIRMATIVE COVENANTS
Section 6.01.	Notice of Defaults, Other Commitment Termination Events, Litigation, Adverse Judgments, Etc		57
Section 6.02.	Taxes		58
Section 6.03.	Separate Existence; No Commingling		58
Section 6.04.	Financing Statements		59
Section 6.05.	Books and Records; Other Information		59
Section 6.06.	Payment of Fees and Expenses		60
Section 6.07.	Continuity of Business and Compliance With Agreement		60

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		Page
Section 6.08.	Ownership of Borrower		60
Section 6.09.	Shareholder Reports, Governmental Filings, Etc		60
Section 6.10.	Fulfillment of Obligations		60
Section 6.11.	Changes in Location, Name, Etc		60
Section 6.12.	Compliance with Laws, Etc		61
Section 6.13.	Borrowing Base Certificates		61
Section 6.14.	Collateral Statements		61
Section 6.15.	Actions to Preserve the Agent’s Security Interest		61
Section 6.16.	Actions to Enforce Rights under Contracts		61
Section 6.17.	Collateral Performance Tests		62
Section 6.18.	Hedging Strategy		62
Section 6.19.	Monthly Servicer’s Certificate		62
Section 6.20.	Notice to Agent of Amendments to Documentation Checklist, Program Guidelines, Servicing Policies and Procedures or Form-of-Contract Requirements		62
Section 6.21.	Conformity to Higher Standards That May Be Specified in Securitizations		63
	ARTICLE VII.
	NEGATIVE COVENANTS
Section 7.01.	Adverse Transactions		63
Section 7.02.	Guarantees		63
Section 7.03.	Dividends		63
Section 7.04.	Investments		63
Section 7.05.	[Reserved]		63
Section 7.06.	Limitations on Loans; Other Advances by Borrower		63
Section 7.07.	Changes in Capital Structure or Business Objectives		64
Section 7.08.	Limitation on Modifications, Etc		64
Section 7.09.	Asset Sales		64
Section 7.10.	No Liens on Equity Interests in Borrower		64
Section 7.11.	No Petition		64
Section 7.12.	Sale and Contribution Agreement and Receivables Purchase Agreement		65
Section 7.13.	No Indebtedness		65
Section 7.14.	No Other Business		65
	ARTICLE VIII.
	EVENTS OF DEFAULT
Section 8.01.	Events of Default		66
Section 8.02.	Remedies of Default		69

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		Page
	ARTICLE IX.
	REPRESENTATIONS, WARRANTIES AND COVENANTS OF TFC AND SELLER
Section 9.01.	Representations, Warranties and Covenants of TFC		70
Section 9.02.	Representations, Warranties and Covenants of Seller		70
	ARTICLE X.
	THE COLLECTION ACCOUNT BANK
Section 10.01.	Duties and Rights of Collection Account Bank		70
Section 10.02.	Individual Rights of Collection Account Bank		71
Section 10.03.	Collection Account Bank’s Fees and Expenses		71
Section 10.04.	Indemnity to Collection Account Bank		71
Section 10.05.	Replacement of Collection Account Bank		72
Section 10.06.	Successor Collection Account Bank		72
Section 10.07.	Waiver of Setoffs		72
Section 10.08.	No Petition		73
Section 10.09.	Representations and Warranties of the Collection Account Bank		73
	ARTICLE XI.
	MISCELLANEOUS
Section 11.01.	Set-off		74
Section 11.02.	Amendments, Waivers, etc		74
Section 11.03.	No Waiver; Remedies Cumulative		74
Section 11.04.	Payment of Expenses, Indemnity, etc		74
Section 11.05.	Headings Descriptive		75
Section 11.06.	Severability		75
Section 11.07.	Entire Agreement		75
Section 11.08.	Binding Effect		76
Section 11.09.	Survival		76
Section 11.10.	GOVERNING LAW, ETC., WAIVER OF TRIAL BY JURY		76
Section 11.11.	Notice		77
Section 11.12.	Counterparts		78
Section 11.13.	Third-Party Beneficiaries		78
Section 11.14.	Future Assurances		78
Section 11.15.	Assignments; Participations		78
Section 11.16.	Confidentiality of Information		79
Section 11.17.	Agent Consent to Transactions		80
Section 11.18.	Limitation of Liability of Owner Trustee		80
Section 11.19.	Appointment of Agent for the Lenders		80
Section 11.20.	Bankruptcy Petition Against Sheffield Receivables Corporation		82
Section 11.21.	Nonrecourse Nature of Transactions		83

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SCHEDULES

SCHEDULE I	Pricing Schedule
SCHEDULE A	Eligible State Schedule
SCHEDULE B	Representations and Warranties of Borrower with Respect to the Contracts
SCHEDULE C	Location of Contract Files and Legal Files
SCHEDULE D	Lockbox Schedule

EXHIBITS

EXHIBIT A	[RESERVED]
EXHIBIT B	FORM OF BORROWING BASE CERTIFICATE
EXHIBIT C	[RESERVED]
EXHIBIT D	FORMS OF DEALER AGREEMENT
EXHIBIT E	DOCUMENTATION CHECKLIST
EXHIBIT F	FORM-OF-CONTRACT REQUIREMENTS
EXHIBIT G	[RESERVED]
EXHIBIT H	SERVICING POLICIES AND PROCEDURES
EXHIBIT I	FORM OF SALE NOTICE
EXHIBIT J	PROGRAM GUIDELINES
EXHIBIT K	[RESERVED]
EXHIBIT L	SECURITY AGREEMENT
EXHIBIT M	[RESERVED]
EXHIBIT N-1	FORM OF CLASS A NOTE
EXHIBIT N-2	FORM OF CLASS B NOTE
EXHIBIT O	FORM OF NOTICE OF BORROWING
EXHIBIT P	[RESERVED]
EXHIBIT Q	[RESERVED]
EXHIBIT R	WIRE TRANSFER INSTRUCTIONS
EXHIBIT S	RECEIVABLES PURCHASE AGREEMENT
EXHIBIT T	SALE AND CONTRIBUTION AGREEMENT
EXHIBIT U	SERVICING AGREEMENT
EXHIBIT V	WAREHOUSE AFFILIATE GUARANTY

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     WAREHOUSE LENDING AGREEMENT, dated as of January 10, 2008, among TRIAD AUTOMOBILE RECEIVABLES WAREHOUSE TRUST (“Borrower”), TRIAD FINANCIAL WAREHOUSE SPECIAL PURPOSE LLC (“Seller”), TRIAD FINANCIAL CORPORATION (“TFC”), THE BANK OF NEW YORK, as successor to JPMorgan Chase Bank, National Association (the “Collection Account Bank”), SHEFFIELD RECEIVABLES CORPORATION (the “Class A Lender”), and BARCLAYS BANK PLC as the Class B Lender (in such capacity, the “Class B Lender”) and as the Agent (in such capacity, the “Agent”).

WITNESSETH:

     WHEREAS, Borrower wishes to borrow certain sums from Lenders hereunder in order to purchase certain motor vehicle retail installment sale contracts; and

     WHEREAS, Lenders are willing, upon the terms and conditions set forth below, to lend such sums to Borrower.

     NOW THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

ARTICLE I.

DEFINITIONS; CONSTRUCTION

     Section 1.01. Definitions. As used herein, the following terms shall have the meanings herein specified (to be equally applicable to both the singular and plural forms of the terms defined):

     “Adjusted Eurodollar Rate” shall mean, for any period or portion thereof, a rate per annum (rounded upwards, if necessary, to the nearest 1/100th of 1%) equivalent to the rate determined pursuant to the following formula:

Adjusted Eurodollar Rate	=	LIBOR Rate
		1-LIBOR Reserve Percentage.

     “Administration Fee” means the fee payable to the Administrator pursuant to the Trust Agreement.

     “Administrator” means TFC in its capacity as administrator under the Trust Agreement or any successor administrator under the Trust Agreement.

     “Advance Rate” means:

     (i) with respect to Class 1 Eligible Contracts, at any date of determination, the lowest of (A) the percentage specified as item 1 on Schedule I hereto, (B) the Net Securitization Proceeds Percentage for such date of determination, and (C) the excess of 100% over Class B Dynamic Overcollateralization Percentage for such date of determination;

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     (ii) with respect to any Ineligible Contract, at any date of determination, zero percent (0%); and

     (iii) with respect to Class 2 Eligible Contracts, at any date of determination, the following percentage, as applicable:

(a) with respect to Class 2 Eligible Contracts that are delinquent thirty-one (31) consecutive days or more, but not more than sixty (60) consecutive days as of the close of business on the last day of the Collection Period immediately preceding such date of determination (or, for any such date of determination made during the Collection Period in which the initial Cut-off Date occurs, as of such initial Cut-off Date), as of any date of determination, the lower of (A) the percentage specified as item 2 on Schedule I hereto and (B) the excess of 100% over Class B Dynamic Overcollateralization Percentage for such date of determination, subject to clause (x) of the definition of “Borrowing Base”;

(b) with respect to Class 2 Eligible Contracts that are delinquent sixty-one (61) consecutive days or more, but not more than ninety (90) consecutive days as of the close of business on the last day of the Collection Period immediately preceding such date of determination (or, for any such date of determination made during the Collection Period in which the initial Cut-off Date occurs, as of such initial Cut-off Date), the percentage specified as item 3 on Schedule I hereto; or

     (c) with respect to Class 2 Eligible Contracts that are delinquent ninety-one (91) consecutive days or more, but not more than one hundred twenty (120) consecutive days as of the close of business on the last day of the Collection Period immediately preceding such date of determination (or, for any such date of determination made during the Collection Period in which the initial Cut-off Date occurs, as of such initial Cut-off Date), the percentage specified as item 4 on Schedule I hereto.

     “Affected Person” means any Lender, the Agent, any Financial Institution or any corporation controlling any of the foregoing.

     “Affiliate” means, with respect to any Person, any other Person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such Person. For purposes of this definition, control of a Person means the power, direct or indirect, (i) to vote 20% or more of the securities having ordinary voting power for the election of directors of such Person or (ii) to direct or cause the direction of the management and policies of such Person whether by contract or otherwise; provided that, for the purposes hereof, each of the Equity Sponsors and its respective affiliates shall be deemed not to be “Affiliates” of any Triad Entity, and each Triad Entity shall be deemed not to be an Affiliate of any of the Equity Sponsors or any of their respective affiliates; provided further that the Equity Sponsors and the Triad Entities shall be deemed to be “Affiliates” hereunder solely for purposes of Sections 6.03(b), 6.03(c) and 7.06 hereunder.

     “Agent” shall have the meaning set forth in the preamble hereof.

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     “Agent Wire Transfer Instructions” means the wire transfer instructions attached hereto as Exhibit R, as such instructions may be amended from time to time by written notice from the Agent to Borrower and the Collection Account Bank.

     “Agreement” means this Warehouse Lending Agreement, as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof.

     “Alternative Rate” means, for any period (or portion thereof), an interest rate per annum equal to the Adjusted Eurodollar Rate for such period (or portion thereof) provided that (a) to the extent that the Alternative Rate is applicable, if it shall become illegal or unlawful for any Lender (or its applicable funding source) to obtain funds in the London interbank market in order to make, fund or maintain its interest in the related Loans hereunder for any period (or portion thereof), or deposits in Dollars (in the applicable amounts) are not being offered by such Lender (or its applicable funding source) in the London interbank market, or if such Lender shall have notified the Agent that the Adjusted Eurodollar Rate will not accurately reflect such Lender’s (or its applicable funding source’s) cost of funding the related Loans, then the “Alternative Rate” for such Lender for such period (or portion thereof) shall be calculated using an interest rate per annum equal to the greater of (i) Prime Rate or (ii) Federal Funds Effective Rate plus 1.50% per annum; and (b) while an Event of Default is continuing, then for purposes of determining the Class B Interest Rate, the “Alternative Rate” for any period (or portion thereof) shall be the applicable rate otherwise determined pursuant to this definition, plus 3.00% per annum.

     “Amount Financed” means the amount set forth in the underlying Contract as the “Amount Financed.”

     “Annual Percentage Rate” or “APR” of a Contract means the annual percentage rate of finance charges or service charges, as stated in such Contract; provided that, if the annual rate with respect to such Contract is reduced pursuant to the Servicemembers Relief Act, formerly known as the Soldiers’ and Sailors’ Civil Relief Act of 1940, the Annual Percentage Rate or APR shall refer to such reduced rate.

     “Approved Third-Party Vendor” has the meaning set forth in the Servicing Agreement.

     “Authorized Signatory” means, with respect to Borrower, (x) any officer of the Owner Trustee who is authorized to act for the Owner Trustee in matters relating to Borrower and who is identified on the list of authorized officers delivered by the Owner Trustee to the Agent on the Closing Date (as such list may be modified or supplemented from time to time thereafter) and (y), so long as the Administrator is acting as such, a Responsible Officer of Administrator.

     “Auto Loan Purchase and Sale Agreement” means any agreement between a Third-Party Lender and TFC relating to the acquisition of Contracts from a Third-Party Lender by TFC.

     “Backup Servicer” has the meaning set forth in the Servicing Agreement.

     “Bankruptcy Code” means the law codified and enacted as Title 11 of the United States Code, entitled “Bankruptcy” and any successor statute thereto, in either case, as now or hereafter in effect.

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     “Base Servicing Fee” has the meaning set forth in the Servicing Agreement.

     “Blocked Account Agreement” means the Amended and Restated Blocked Account Agreement, dated as of January 10, 2008, by and among Borrower, TFC, Mellon, and The Bank of New York (as successor to JPMorgan Chase Bank, National Association), in its capacities as agent and as trustee under various securitization trust instruments and as agent of the Agent and the Lenders and the Other Warehouse Lender under the Loan Documents, as such agreement may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof and hereof.

     “Board” means the Board of Governors of the Federal Reserve System.

     “Borrower” shall have the meaning set forth in the preamble hereof.

     “Borrower Trust Certificates” means the trust certificates evidencing the beneficial interest of the Certificateholder in Borrower.

     “Borrowing” means a borrowing of a Class A Loan and a Class B Loan on a Borrowing Date during the Commitment Period in a minimum amount not less than the applicable Minimum Borrowing Amount.

     “Borrowing Base” means, on any date of determination, an amount equal to the sum of (a) the product of (x) the then-applicable Advance Rate for all Class 1 Eligible Contracts and (y) the aggregate Principal Balance (as of the applicable Borrowing Base Reference Date) of all Class 1 Eligible Contracts and (b) the product of (x) the then-applicable Advance Rate for the Class 2 Eligible Contracts and (y) the aggregate Principal Balance (as of the applicable Borrowing Base Reference Date) of all Class 2 Eligible Contracts; provided that, notwithstanding the foregoing, as of any such date of determination, the Eligible Contracts that shall be permitted to be included in the foregoing Borrowing Base calculation shall be subject to the following limitations (unless otherwise consented to in writing by the Agent):

(x) if the portion of the Borrowing Base (computed as described above) composed of Class 2 Eligible Contracts described in clause (iii)(a) of the definition of “Advance Rate” exceeds the amount specified in item 5 of Schedule I, then such portion of the Borrowing Base composed of such excess shall be reduced by 25%;

(y) the amount of the Borrowing Base composed of Class 2 Eligible Contracts described in clauses (iii)(a), (iii)(b) and (iii)(c) of the definition of “Advance Rate” (after giving effect to the preceding clause (x)) shall not exceed the amount specified in item 6 of Schedule I; and

(z) the amount of the Borrowing Base composed of Class 2 Eligible Contracts described in clauses (iii)(b) and (iii)(c) of the definition of “Advance Rate” shall not exceed the amount specified in item 7 of Schedule I.

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     “Borrowing Base Certificate” means a borrowing base certificate substantially in the form of Exhibit B hereto (as such Exhibit B may be amended, supplemented or otherwise modified from time to time by the written consent of Borrower and the Agent).

     “Borrowing Base Reference Date” means (a) with respect to any date of determination and an eligible Clean-up Call Contract to be pledged under the Security Agreement during the Collection Period in which such date of determination occurs, the close of business on the last day of the calendar month immediately preceding the related Clean-up Call Settlement Date (provided that such Clean-up Call Settlement Date is to occur during the calendar month in which such date of determination occurs), (b) with respect to any other Eligible Contract and the Initial Borrowing Base Determination Date for such Eligible Contract, the later of (i) the beginning of business on the Cut-off Date specified in the related Notice of Borrowing and (ii) the origination date of such Eligible Contract, and (c) with respect to any other Eligible Contract and any date of determination other than the Initial Borrowing Base Determination Date for such Eligible Contract, (i) if such date of determination is on or prior to the Remittance Date in the month of such date of determination, the close of business on the last day of the second Collection Period preceding such date of determination and (ii) if such date of determination is after the Remittance Date in the month of such date of determination, the close of business on the last day of the Collection Period immediately preceding such date of determination.

     “Borrowing Date” means any date, during the Commitment Period, on which a Borrowing occurs hereunder.

     “Business Day” means any day other than a Saturday, a Sunday, or a day on which banking institutions in the State of New York, the State of California or the State of Delaware shall be authorized or obligated by law, executive order, or governmental decree to be closed. Any action required to be taken on a day which falls on a day other than a Business Day shall be conducted on the next Business Day.

     “Certificate Distribution Account” has the meaning ascribed to such term in the Trust Agreement.

     “Certificateholder” means the Person in whose name the Borrower Trust Certificates are registered.

     “Change of Control” means any event or circumstance as a result of which (i) TFC no longer owns 100% of the membership interests in Seller, (ii) Seller no longer owns 100% of the Borrower Trust Certificates, (iii) unless TFC has completed an initial public offering of its capital stock, Hunter’s Glen/Ford, Ltd. and its Affiliates, GTCR Golder Rauner, LLC and its Affiliates and Goldman Sachs Investor Group no longer collectively own (A) at least 50% of the capital stock of TFC and (B) at least 50% of the aggregate voting power of all classes of Voting Stock of TFC, (iv) any other Person and its Affiliates collectively own a greater percentage of either the capital stock of TFC or the aggregate voting power of all classes of Voting Stock of TFC than the largest holder of such capital stock or Voting Stock among (A) Hunter’s Glen/Ford, Ltd. and its Affiliates, (B) GTCR Golder Rauner, LLC and its Affiliates and (C) Goldman Sachs Investor Group, or (v) any of TFC, Seller or Borrower merges or consolidates with, or sells all or substantially all of its assets to, any other Person. As used in this definition,

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“Voting Stock” of any Person shall mean the capital stock or other indicia of equity rights of such Person which at the time has the power to vote for the election of one or more members of the Board of Directors (or other governing body) of such Person.

     “Class A Additional Principal Payment Amount” means, with respect to any Remittance Date that occurs on or after the Termination Date, and after giving effect to all payments made pursuant to clauses (i) through (viii) of Section 3.12(c) on such Remittance Date, an amount equal to the excess of the Class A Outstandings over the Class A Term Loan Borrowing Base on such Remittance Date.

     “Class A Borrowing Base” means, for any date of determination, the product of the Class A Note Percentage for such date of determination and the Borrowing Base for such date of determination.

     “Class A Borrowing Base Deficiency” means, for any date of determination, the amount by which the Class A Outstandings exceed the Class A Borrowing Base for such day.

     “Class A Dynamic Overcollateralization Percentage” means, for any date of determination, the excess of (a) the Credit Loss Estimate as of such date of determination multiplied by the number specified in item 8 of Schedule I over (b) the percentage specified in item 9 of Schedule I multiplied by the Excess Spread Ratio as of such date multiplied by the weighted average life of the Contracts, expressed in years as of such date. The Class A Dynamic Overcollateralization Percentage shall in no event be less than zero.

     “Class A Interest Rate” means for any period (or portion thereof), (a) to the extent that the Class A Lender funded or maintained its interest in the applicable Class A Loans through the issuance of Commercial Paper during such period (or portion thereof), the per annum rate equivalent to the weighted average of the per annum rates paid or payable by the Class A Lender from time to time as interest on or otherwise (by means of interest rate hedges or otherwise) in respect of Commercial Paper issued by the Class A Lender that are allocated, in whole or in part by the Class A Lender to fund or maintain its interest in the Class A Loans during such period (or portion thereof); provided, however, that (x) if any component of such rate (or rates) charged in respect of the Class A Lender’s Commercial Paper issued to fund or maintain its interest in the Class A Loans is a discount rate, the Class A Lender shall use for such component the rate (or if more than one rate, the weighted average of the rates) resulting from converting such discount rate (or rates) to an interest bearing equivalent rate per annum and (y) such rate (or rates), to the extent not already inclusive thereof, shall be increased by 0.05% (or such higher rate as may be in effect from time to time) in respect of dealer fees and commissions, and (b) to the extent that the Class A Lender funded or maintained its interest in the Class A Loans other than through the issuance of Commercial Paper during such period (or portion thereof), the Alternative Rate for such period (or portion thereof) plus, so long as the Alternative Rate is determined based on the Adjusted Eurodollar Rate, 0.50% per annum, and (c) to the extent that an Event of Default has occurred and is outstanding, the applicable rate determined pursuant to clauses (a) and (b) above, plus 3.00% per annum.

     “Class A Lender” has the meaning ascribed to such term in the preamble.

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     “Class A Loan” has the meaning ascribed to such term in Section 2.01(a).

     ‘Class A Note” has the meaning ascribed to such term in Section 2.02.

     “Class A Note Percentage” means, for any date of determination, the excess of 100% over the Class B Note Percentage for such date of determination.

     “Class A Outstandings” means, with respect to any date of determination, the unpaid principal amount of all Class A Loans outstanding hereunder as of such date of determination.

     “Class A Regular Principal Payment Amount” has the meaning set forth in Section 3.03(b)(i).

     “Class A Term Loan Borrowing Base” means, with respect to any date of determination during the Term Loan Extension Period, a percentage of the Class A Borrowing Base as of such date of determination equal to the percentage specified in Item 13 of Schedule I.

     “Class B Additional Principal Payment Amount” means, with respect to any Remittance Date that occurs on or after the Termination Date, and after giving effect to all payments made pursuant to clauses (i) through (ix) of Section 3.12(c) on such Remittance Date, an amount equal to the excess of the Class B Outstandings over the Class B Term Loan Borrowing Base on such Remittance Date.

     “Class B Borrowing Base” means, for any date of determination, the product of the Class B Note Percentage for such date of determination and the Borrowing Base for such date of determination.

     “Class B Borrowing Base Deficiency” means, for any date of determination, the amount by which the Class B Outstandings exceed the Class B Borrowing Base for such day.

     “Class B Dynamic Overcollateralization Percentage” means, for any date of determination, the excess of (a) the Credit Loss Estimate as of such date of determination multiplied by the number specified in item 10 of Schedule I over (b) the percentage specified in item 11 of Schedule I multiplied by the Excess Spread Ratio as of such date multiplied by the weighted average life of the Contracts, expressed in years as of such date. The Class B Dynamic Overcollateralization Percentage shall in no event be less than zero.

     “Class B Interest Rate” means, with respect to any period or portion thereof, the Alternative Rate for such period or portion thereof.

     “Class B Lender” has the meaning ascribed to such term in the preamble.

     “Class B Loan” has the meaning ascribed to such term in Section 2.01(a).

     “Class B Maximum Outstandings” means as of an date of determination $65,000,000.

     ‘Class B Note” has the meaning ascribed to such term in Section 2.02.

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     “Class B Note Percentage” means, for any date of determination, the excess of the Class A Dynamic Overcollateralization Percentage for such date of determination over the Class B Dynamic Overcollateralization Percentage for such date of determination.

     “Class B Outstandings” means, with respect to any date of determination, the unpaid principal amount of all Class B Loans outstanding hereunder as of such date of determination.

     “Class B Regular Principal Payment Amount” has the meaning set forth in Section 3.03(b)(ii).

     “Class B Term Loan Borrowing Base” means, with respect to any date of determination during the Term Loan Extension Period, a percentage of the Class B Borrowing Base as of such date of determination equal to the percentage specified in Item 13 of Schedule I.

     “Class 1 Eligible Contracts” means, for any date of determination, the Eligible Contracts that are current or delinquent thirty (30) consecutive days or less as of the close of business on the last day of the Collection Period immediately preceding such date of determination (or, for any such date of determination made during the Collection Period in which the initial Cut-off Date occurs, as of such initial Cut-off Date).

     “Class 2 Eligible Contracts” means, for any date of determination, Eligible Contracts that are delinquent thirty-one (31) consecutive days or more, but not more than one hundred twenty (120) consecutive days as of the close of business on the last day of the Collection Period immediately preceding such date of determination (or, for any such date of determination made during the Collection Period in which the initial Cut-off Date occurs, as of such initial Cut-off Date).

     “Clean-up Call” means, with respect to any securitization of motor vehicle loans sponsored by Originator, a contractual right of Originator (in its capacity as servicer in such securitization) to purchase from the issuer in such securitization the motor vehicle loans collateralizing or supporting the securities issued in such securitization when the aggregate principal balance of such loans has declined to an amount specified in the sale and servicing agreement or pooling and servicing agreement for such securitization.

     “Clean-up Call Contract” means a Contract that (x) was transferred to an issuer in a securitization sponsored by Originator, (y) was purchased by Originator (in its capacity as servicer in such securitization) in connection with a Clean-up Call and (z) is pledged by the Borrower to the Agent for the benefit of the Lenders under the Security Agreement on a Borrowing Date that is no later than one Business Day after the date of the purchase referenced in clause (y) above.

     “Clean-up Call Loan” means any Loan with respect to which any Clean-up Call Contract is listed on the related Notice of Borrowing; provided that the Clean-up Call Loans listed on the Notice of Borrowing with respect to any Clean-up Call Loan shall all relate to the same Clean-up Call.

     “Clean-up Call Differential Amount” means, with respect to any Clean-up Call Loan, an amount equal to (x) the Optional Redemption Amount for the related Clean-up Call minus (y)

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the Clean-up Call Loan Funding Amount for such Clean-up Call Loan minus (z) the Other Lender Related Clean-up Call Loan Disbursement Amount for such Clean-up Call Loan (as determined by Borrower after giving effect to the amount of the Other Lender Related Clean-up Call Loan Funding Amount for such Clean-up Call Loan).

     “Clean-up Call Loan Disbursement Account” means the account designated as such, established and maintained pursuant to Section 2.06(a).

     “Clean-up Call Loan Disbursement Amount” means, with respect to any Clean-up Call Loan, the sum of (x) the Clean-up Call Loan Funding Amount for such Clean-up Call Loan and (y) the Clean-up Call Differential Amount for such Clean-up Call Loan.

     “Clean-up Call Loan Funding Amount” means, with respect to any Clean-up Call Loan, an amount equal to the proceeds of a Borrowing in respect of such Clean-up Call Loan to be made available to Borrower upon fulfillment of all applicable conditions to such Loan set forth in this Agreement (including, without limitation, all conditions specified in the applicable Lender Clean-up Call Disbursement Notice).

     “Clean-up Call Settlement Date” means, with respect to any Clean-up Call Loan, the date on which, in connection with the exercise of the related Clean-up Call, the servicer in the related securitization is required to deposit the applicable Optional Redemption Amount into the collection account for such securitization thereby effecting the satisfaction and discharge of the indenture and the release by the indenture trustee of the lien of the indenture on the Clean-up Call Contracts and other collateral.

     “Clearing Account” means account number 002-8644, titled “Triad Financial Corporation,” or such other account or accounts designated as such, established and maintained with Mellon pursuant to the Blocked Account Agreement.

     “Closing Date” means the date that all of the conditions precedent set forth in Section 4.01 hereof have been fulfilled.

     “Collateral” has the meaning set forth in the Security Agreement.

     “Collection Account” means the account designated as such, established and maintained pursuant to Section 3.10(c).

     “Collection Account Bank” has the meaning specified in Section 3.10(c). The initial Collection Account Bank shall be The Bank of New York.

     “Collection Account Bank Indemnified Expenses” has the meaning set forth in Section 10.04.

     “Collection Account Bank Indemnified Parties” has the meaning set forth in Section 10.04.

     “Collection Period” means, in respect of a Remittance Date, the calendar month preceding the month in which such Remittance Date occurs; provided that the initial Collection

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Period shall be the period from and including the Closing Date to and including January 31, 2008.

     “Commercial Paper” means promissory notes of any Lender issued by such Lender in the commercial paper market.

     “Commitment” means as of any date of determination during the period commencing on the Closing Date and ending on the Business Day immediately preceding the Termination Date, an amount equal to $500,000,000.

     “Commitment Period” means the period commencing with the Closing Date and ending on the Business Day immediately preceding the Termination Date. For the avoidance of doubt, the Term Loan Extension Period (if any) shall not be part of the Commitment Period.

     “Commitment Termination Event” means the giving, or deemed giving, by the Agent or any Lender to Borrower of notice of termination of the Commitment following an Event of Default, in accordance with Section 8.02(a).

     “Concentration Account” means account number 013-5271, titled “Triad Financial Corporation,” or such other account or accounts designated as such, established and maintained with Mellon pursuant to the Blocked Account Agreement.

     “Confidential Collateral Proposal Report” means a report, item of correspondence or other statement of information that relates solely to a prospective purchase or financing of any Collateral, any Other Warehouse Financing Facility Collateral, or any collateral under the Residual Facility, which purchase or financing shall have been proposed by a financial institution other than either Lender.

     “Contract” means any retail installment sale contract or loan and security agreement executed by an Obligor in respect of a Financed Vehicle, (a) under which the portion of a payment allocable to interest and the portion allocable to principal is determined in accordance with the Simple Interest Method, the “actuarial”, the “sum of the period balances” or the “sum of the monthly balances” method (or any equivalent method) and (b) (i) identified on a schedule delivered to the Agent (in electronic format or hard copy substantially in the form of such schedule delivered on the initial Cut-off Date), (ii) which is subject to the first priority security interest of the Agent under the Security Agreement and (iii) which has not been released from the Lien of the Agent as provided in Section 12(b) of the Security Agreement. For the avoidance of doubt, if Borrower or Servicer shall be obligated to make a mandatory prepayment in the amount of the Release Consideration for a Contract pursuant to Section 3.03(f) or 3.03(g), as applicable, the Agent shall be obligated to release its Lien on such Contract in accordance with Section 12(b)(ii) or Section 12(b)(iii) of the Security Agreement, as applicable.

     “Contract Files” means, with respect to any Contract and the related Financed Vehicle, a copy (which may be maintained as an electronic image) of each of the following documents:

          (a) the fully executed original of the Contract and any related dealer assignment;

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          (b) the original credit application fully executed by the Obligor;

          (c) the Lien Certificate or such documents that Borrower, or the Servicer on behalf of Borrower, shall keep on file, in accordance with its customary procedures, evidencing the security interest of the Originator in the Financed Vehicle;

          (d) all other documents listed on the Documentation Checklist in effect on the Borrowing Date relating to such Contract; and

          (e) any and all other documents that Borrower, or the Servicer on behalf of Borrower, shall keep on file, in accordance with its customary procedures, relating to a Contract, an Obligor or a Financed Vehicle.

     “Conveyed Property” shall have the meaning set forth in the Receivables Purchase Agreement.

     “Corresponding Other Lender Clean-up Call Loan” means, with respect to a Clean-up Call Loan, the Clean-up Call Loan Settlement Date therefor and the Clean-up Call related thereto, an Other Lender Clean-up Call Loan that (a) relates to such Clean-up Call and (b) is scheduled to close on such Clean-up Call Loan Settlement Date.

     “Credit Loss Estimate” means, at any time, an estimate by the Borrower of credit losses on the Contracts calculated as the weighted average (based on the principal balance of the Contracts in each of the credit scoring categories specified in the chart set forth as item 12 on Schedule I) of the expected loss percentages specified in the chart set forth as item 12 on Schedule I below for each such credit scoring category.

     “Custodian” means Servicer, in its capacity as custodian of the Legal Files pursuant to the Servicing Agreement; provided, however, that, if any Rating Agency shall at any time require the appointment of a third-party custodian of receivables files in connection with any securitization of motor vehicle loans sponsored by TFC or any Affiliate thereof, the Agent, in its sole discretion, may require that such third-party custodian be appointed as Custodian of the Legal Files pursuant to a custodial agreement among such custodian, the Agent, Borrower and Servicer.

     “Cut-off Date” means, in respect of any Contract, the related Borrowing Date or such other date, acceptable to the Agent in its reasonable discretion, as may be specified in the related Notice of Borrowing.

     “Dealer” means the dealer who sold a Financed Vehicle to an Obligor and who originated and assigned the Contract relating to such Financed Vehicle to Originator under an existing Dealer Agreement between such Dealer and Originator, and any successor to such Dealer.

     “Dealer Agreement” means any agreement between Originator and a Dealer with respect to the origination of Contracts, substantially in a form attached hereto as Exhibit D or such other form as shall be approved by the Agent, which approval shall not be unreasonably withheld.

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     “Dealer Recourse” means, with respect to any Contract, all rights arising under the related Dealer Agreement or otherwise against the Dealer which originated such Contract.

     “Dealer Title Addendum” means, with respect to each Contract as to which the Dealer Title Guaranty, if applicable, is included in the related Dealer Agreement, a schedule of Dealers delivered to Servicer listing all Dealers for which the Dealer Title Guaranty is included in the related Dealer Agreement.

     “Dealer Title Guaranty” means, where, for reasons that are reasonably acceptable to Servicer, the relevant Dealer is temporarily unable to furnish a Lien Certificate, a written guaranty of such Dealer (which may be included in the related Dealer Agreement if so indicated on the Dealer Title Addendum); each of such documents having been signed where required by the Dealer in the appropriate spaces, and with all blanks properly filled in and otherwise correctly prepared.

     “Default” means any condition, act or event which, with notice or lapse of time or both, would constitute an Event of Default.

     “Documentation Checklist” means the Documentation Checklist attached hereto as Exhibit E, as the same may be amended from time to time (provided that Borrower shall provide the Agent with written notice of any such amendment promptly after such amendment).

     “Dollar” and the sign “$” means lawful money of the United States of America.

     “Eligible Contracts” means all Contracts other than Ineligible Contracts.

     “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 shall have a credit rating from each Rating Agency in one of its generic rating categories that signifies investment grade.

     “Eligible Institution” means (a) The Bank of New York 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), which (i) has either (A) a long-term unsecured debt rating of at least AA by Standard & Poor’s and Aa2 by Moody’s or (B) a certificate of deposit rating of A-1+ by Standard & Poor’s and P-1 by Moody’s, or any other long-term, short-term or certificate of deposit rating acceptable to the Agent and (ii) whose deposits are insured by the FDIC; provided that Mellon shall be considered an Eligible Institution for the purposes of the second sentence of Section 3.10(a).

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     “Eligible Investments” means book-entry securities, negotiable instruments or securities, having a maturity date as specified in Section 3.10(d), represented by instruments in bearer or registered form which evidence:

     (i) direct obligations of, and obligations fully guaranteed as to timely payment by, the United States of America;

     (ii) demand deposits, time deposits or certificates of deposit of any depository institution or trust company incorporated under the laws of the United States of America or any State thereof (or any domestic branch of a foreign bank) and subject to supervision and examination by federal or State banking or depository institution authorities; provided, however, that at the time of the investment or contractual commitment to invest therein, the commercial paper or other short-term unsecured debt obligations (other than such obligations the rating of which is based on the credit of a Person other than such depository institution or trust company) thereof shall have a short-term credit rating of A-1+ by S&P and P-1 from Moody’s;

     (iii) commercial paper having, at the time of the investment or contractual commitment to invest therein, a rating from Moody’s of P-1 and a rating of A-1+ from S&P;

     (iv) investments in money market funds having a rating from Moody’s in the highest investment category granted thereby and a rating of AAA from S&P;

     (v) demand deposits, time deposits and certificates of deposit that are fully insured by the FDIC;

     (vi) bankers’ acceptances issued by any depository institution or trust company referred to in clause (ii) above;

     (vii) repurchase obligations with respect to any security that is a direct obligation of, or fully guaranteed by, the United States of America or any agency or instrumentality thereof the obligations of which are backed by the full faith and credit of the United States of America, in either case entered into with a depository institution or trust company (acting as principal) described in clause (ii) above; and

     (viii) any other investments approved in writing by the Agent.

     “Eligible State” means any State listed in Schedule A, and any other State approved by the Agent, which approval shall be deemed to have been granted by the Agent upon Borrower’s delivery to the Agent of (a) a request to add such additional State, (b) a copy of a certificate evidencing the good standing of TFC, dated as of a date no more than 10 days prior to the date of such request, from the secretary of state (or other appropriate authority) of each such additional State, and (c) in the case of any State in which Contracts comprising ten percent (10%) or more of the value of the Collateral (but only such Collateral that consists of Contracts) have been originated, if the Total Outstandings are greater than $150,000,000, an Opinion of Counsel, who shall not be an employee of or counsel to Borrower, Originator or Servicer, in form and substance satisfactory to the Agent (A) with respect to the method of perfecting a security

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interest in the Financed Vehicles securing Contracts originated in such other State and (B) as to such other matters as counsel to TFC or any Affiliate of TFC are required to address in opinions of counsel delivered in connection with any securitization of motor vehicle receivables sponsored by TFC or an Affiliate of TFC, relating to States in which ten percent (10%) or more of such receivables have been originated.

     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

     “Equity Sponsors” means each Person comprising the Goldman Sachs Investor Group, GTCR Golder Rauner, LLC and Hunter’s Glen/Ford, Ltd.

     “Event of Default” shall have the meaning set forth in Section 8.01 hereof.

     “Excess Spread Ratio” means with respect to any date of determination a percentage (which may be a negative percentage) computed as follows: (a) the weighted average APR of the Contracts as of such date of determination, minus (b) the Weighted Average Hedge Fixed Rate as of such date of determination, minus (c) the percentage applicable for purposes of computing the servicing fees payable pursuant to the terms of the most recent securitization of motor vehicle loans sponsored by the Originator minus (d) the Program Fee Rate.

     “Expected Facility Termination Date” means January 7, 2010.

     “FDIC” means the Federal Deposit Insurance Corporation.

     “Fee Letter” means that certain letter agreement regarding fees of even date herewith among TFC, the Seller, the Borrower, the Class A Lender, the Class B Lender and the Agent, as the same may be amended, restated, supplemented or otherwise modified from time to time.

     “Financed Vehicle” means a new or used automobile, van, sport utility vehicle or light-duty truck, together with all accessions thereto, securing an Obligor’s indebtedness under the related Contract.

     “Financial Institution” means the financial institutions party to the Liquidity Agreement as “Assignees.”

     “Form-of-Contract Requirements” means, with respect to any form on which a Contract is originated in any State, all requirements for forms of motor vehicle retail installment loan contracts originated in such State (including, without limitation, all requirements applicable to such a contract originated in any State). Listed in Exhibit F hereto, as such list may be amended from time to time, are the Form-of-Contract Requirements for the three States in which the largest numbers of Contracts are written by the Originator; provided that Originator shall deliver to the Agent then-current copies of the Form-of-Contract Requirements for such three States as required pursuant to Section 6.20.

     “Form of Contract” means a form of Contract that meets all applicable Form-of-Contract Requirements.

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     “GAAP” means generally accepted accounting principles as in effect in the United States, as may be in place from time to time, applied on a consistent basis.

     “Goldman Sachs Investor Group” means any or all of GS Capital Partners 2000, L.P., GS Capital Partners 2000 Employee Fund, L.P., GS Capital Partners 2000 Offshore, L.P., Goldman Sachs Direct Investment Fund 2000, L.P., GS Capital Partners 2000 GmbH & Co. BETEILIGUNGS KG and MTGLQ Investors, L.P. and the Affiliates of each of the foregoing.

     “Governmental Authority” means any nation, government, or State, or any political subdivision thereof, or any court, stock exchange, entity or agency exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

     “Guarantee” means, as to any Person (the “Guaranteeing person”), any obligation of the Guaranteeing person guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or other obligations (the “primary obligations”) of any other third Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, any obligation of the Guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided, however, that the term Guarantee shall not include the endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any guarantee of any Guaranteeing person shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee is made and (b) the maximum amount for which such Guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guarantee, unless such primary obligation and the maximum amount for which such Guaranteeing person may be liable are not stated or determinable, in which case the amount of such Guarantee shall be such Guaranteeing person’s maximum reasonably anticipated liability in respect thereof as determined by the Guaranteeing person in good faith.

     “Hedging Strategy” means an interest rate hedging strategy implemented by Borrower for the purpose of providing protection with respect to the Loans against fluctuations in interest rates.

     “Indebtedness” means, with respect to any Person, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person, whether or not contingent, under repurchase agreements, sales/buy-back agreements or similar arrangements, to repurchase property from another Person, (d) all obligations of such Person to pay the deferred or acquisition price of property or services, other than trade accounts payable (except for borrowed money) arising in the ordinary course of business, so long as such trade accounts payable are payable within 90 days of the date the respective goods are delivered or the respective services are delivered to such Person, (e) all indebtedness of others secured by (or for which the holder of

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such indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed (only to the extent of the fair market value of such asset if such indebtedness has not been assumed by such Person), (f) all Guarantees of such Person, (g) all capitalized lease obligations of such Person, (h) all obligations of such Person as an account party in respect of letters of credit and similar instruments issued for the account of such Person, and (i) any of the foregoing which constitute obligations or indebtedness of a general partnership or a limited liability partnership for which such Person is liable as a matter of law or contract.

     “Ineligible Contract” means any Contract (i) as to which, on any date of determination, there is a breach of any representation, warranty or covenant set forth in Schedule B hereto (after giving effect to such representation, warranty or covenant as if it were made as of, and relates to, such date of determination, as well as any prior date specified therein), which breach materially and adversely affects such Contract, (ii) which is a Liquidated Contract, (iii) as to which the related Financed Vehicle has been liquidated by repossession and sale thereof or through casualty and receipt of insurance proceeds thereof or is otherwise reflected properly as a deficiency balance, (iv) as to which an Obligor thereon is the subject—or, at any time during the term of such Contract, has been subject—of a bankruptcy proceeding, (v) which is delinquent more than one hundred twenty (120) consecutive days as of the close of business on the last day of the Collection Period immediately preceding the date of determination (or, for any such date of determination made during the Collection Period in which the initial Cut-off Date occurs, as of such initial Cut-off Date), (vi) which has been modified in contravention of the Servicing Policies and Procedures, (vii) as to which there is a breach of any covenant set forth in the Servicing Agreement, (viii) as to which Servicer has not received the Lien Certificate for the applicable Financed Vehicle within one hundred fifty (150) days after the last day of the month in which the Contract applicable thereto became subject to the Lien of the Agent under the Security Agreement, (ix) as to which there is an incomplete Legal File (other than as contemplated in clause (viii) hereof), (x) as to which there is an incomplete Contract File after the thirtieth (30^th) day following the date on which the Contract became subject to the Lien of the Agent under the Security Agreement (other than as contemplated in clause (viii) hereof), (xi) as to which the date of origination of the Contract by the Originator is more than ninety (90) days earlier than the date on which such Contract was pledged to the Agent under the Security Agreement (except that a Contract shall not be deemed to be an Ineligible Contract pursuant to this clause (xi) if it is a Clean-up Call Contract), (xii) which is delinquent more than thirty (30) consecutive days as of the date on which such Contract was pledged to the Agent under the Security Agreement (except that a Contract shall not be deemed to be an Ineligible Contract pursuant to this clause (xii) if it is a Clean-up Call Contract), or (xiii) which would, as a result of the addition or continued inclusion of such Contract in the pool of Eligible Contracts, cause the aggregate Principal Balance of otherwise Eligible Contracts (exclusive of Clean-Up Call Contracts) that have remained subject to the terms of this Agreement and the Security Agreement for more than two hundred seventy (270) days (whether or not consecutive) to exceed $25,000,000 (except that a Contract shall not be deemed to be an Ineligible Contract pursuant to this clause (xiii) if it is a Clean-up Call Contract); provided, that if any such event or condition is thereafter cured or remedied, such Ineligible Contract shall be reinstated as an Eligible Contract; provided further that a Contract shall not be deemed to be an Ineligible Contract pursuant to clause (i) through (xiii) above if the Agent, in its sole discretion, consents in writing that such

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Contract shall not be deemed to be an Ineligible Contract pursuant to such clauses (i) through (xiii).

     “Initial Borrowing Base Determination Date” means, for any Eligible Contract, the date on which Borrower delivers to the Agent the Notice of Borrowing on which such Eligible Contract is listed.

     “Insurance Policies” means any comprehensive and collision, fire and theft and physical damage insurance policies maintained by Obligors (including, without limitation, the Obligor’s comprehensive insurance policy), any credit policy (including without limitation credit life and credit disability), any service contracts and any GAP insurance.

     “Intercreditor Agreement” means the Amended and Restated Intercreditor Agreement Re: Lockboxes and Remittances, dated as of January 10, 2008, among TFC, The Bank of New York (as successor to JPMorgan Chase Bank, National Association), in its capacities as agent and trustee under various securitization trust instruments, the Agent, the Other Warehouse Lender, Citibank, N.A., Financial Security Assurance Inc. and Ambac Assurance Corporation, as amended, supplemented or otherwise modified from time to time in accordance with the terms thereof and hereof.

     “Investment Earnings” means, with respect to any Remittance Date, the investment earnings (net of losses and investment expenses) on amounts on deposit in the Collection Account, which investment earnings are to be deposited into the Collection Account no later than the Business Day immediately preceding the related Remittance Date pursuant to Section 3.10(d).

     “Legal Files” means, with respect to each Contract, the following documents held by the Custodian: the fully executed original of such Contract with fully executed assignment from the related Dealer to Originator (together with any agreements modifying the Contract, including, without limitation, any extension agreements), a fully executed assignment in blank from Originator, the Lien Certificate or the Title Package, the fully executed original of any form legally required to be executed by a co-signer, evidence of verification of physical damage insurance coverage and the original of the Obligor’s credit application.

     “Lender” means the Class A Lender or the Class B Lender, and “Lenders” shall mean, collectively, the Class A Lender and the Class B Lender.

     “Lender Clean-up Call Disbursement Notice” has the meaning specified in Section 2.06(e). A Lender Clean-up Call Disbursement Notice will contain the conditions precedent specified in Section 2.06(f).

     “Lender Deposit Date” means, with respect to any Clean-up Call Loan, the date specified in the applicable Notice of Borrowing that occurs no earlier than two (2) Business Days before the Clean-up Call Settlement Date for such Clean-up Call Loan.

     “Lender Loan Document” means any Loan Document other than a document specified in clause (n) or clause (o) of the definition of “Loan Documents”.

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     “Lenders’ Intercreditor Agreement” means the Intercreditor Agreement, dated as of the date hereof, among the Lenders, the Agent and the Other Warehouse Lender, as amended, supplemented or otherwise modified from time to time in accordance with the terms thereof.

     “LIBOR Rate” means, for any period (or portion thereof), the rate determined by the Agent to be the daily average during such period of the London Inter-Bank Offered Rate for one-month U.S. dollar deposits, as such rate appears as “BBAM” “Page 3751” on Bloomberg as of 8:00 a.m. (New York City time) on each day during such period (rounded up to the nearest whole multiple of 1/16%); provided that if, on any day, such rate does not appear on Bloomberg, the rate for such date will be the rate determined by reference to such other comparable publicly available service publishing such rates as may be selected by the Agent in its sole discretion and communicated to Borrower.

     “LIBOR Reserve Percentage” shall mean, with respect to any period (or portion thereof), a percentage (expressed as a decimal) equal to the weighted average of the percentages in effect during such period (or portion thereof), as prescribed by the Board (or any successor thereto) for determining the maximum reserve requirements applicable to “Eurocurrency liabilities” pursuant to Regulation D or any other applicable regulation of the Board (or any successor thereto) which prescribes reserve requirements applicable to “Eurocurrency liabilities” as currently defined in Regulation D.

     “Lien” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement and any financing lease having substantially the same economic effect as any of the foregoing).

     “Lien Certificate” means, with respect to a Financed Vehicle, an original certificate of title, certificate of lien or other notification issued by the Registrar of Titles of the applicable State to a secured party or such other evidence acceptable to the Registrar of Titles of the applicable State, in each case, which indicates that the lien of the secured party on the Financed Vehicle is recorded on the original certificate of title. In any State in which the original certificate of title is required to be given to the Obligor, the term “Lien Certificate” means only a certificate or notification issued to a secured party.

     “Liquidated Contract” means, with respect to any Collection Period, any Contract with respect to which any of the following has occurred: (i) 10% or more of any scheduled payment thereon is 120 days or more past due; (ii) (A) at least 90 days have elapsed since the Servicer repossessed the Financed Vehicle or (B) the related Financed Vehicle has been sold; or (iii) the Servicer has determined in good faith that all amounts it expects to be recovered have been received.

     “Liquidation Proceeds” means, with respect to any Liquidated Contract, the moneys collected in respect thereof during the Collection Period in which such Contract became a Liquidated Contract, from whatever source (including Dealer Recourse), net any amount required by law to be remitted to the Obligor on such Liquidated Contract; provided, however, that the Liquidation Proceeds with respect to any Contract shall in no event be less than zero.

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     “Liquidity Agreement” means the revolving asset purchase agreement dated as of the Closing Date, among the Class A Lender, the Financial Institutions and the Agent, as amended, restated, supplemented or otherwise modified from time to time.

     “Liquidity Commitment” means, for each Financial Institution, the commitment of such Financial Institution to purchase interests in the Class A Loans pursuant to the Liquidity Agreement.

     “Liquidity Non-Renewal Date” means January 8, 2009, unless the Liquidity Commitments shall have been extended to the Expected Facility Termination Date on terms satisfactory to the Agent and the Lenders.

     “List of Contracts” shall have the meaning set forth in Section 4.02(e)(ii) hereof.

     “Loan” or “Loans” shall have the respective meanings set forth in Section 2.01(a) hereof.

     “Loan Documents” means (a) this Agreement, (b) the Notes, (c) the Security Agreement, (d) the Sale and Contribution Agreement (and each Sale and Contribution Supplement related thereto), (e) the Receivables Purchase Agreement (and each Receivables Purchase Agreement Supplement related thereto), (f) the Servicing Agreement, (g) the Blocked Account Agreement, (h) each document and instrument executed and delivered in connection with the Hedging Strategy, (i) the Warehouse Affiliate Guaranty, (j) the Intercreditor Agreement, (k) the Lenders’ Intercreditor Agreement, (l) the Trust Agreement, (m) all other documents and instruments executed and delivered in connection herewith or therewith, (n) all documents and instruments executed and delivered in connection with the Other Warehouse Facility and (o) all documents and instruments executed and delivered in connection with any residual financing facility that the Residual Facility Borrower has with the Other Warehouse Lender.

     “Lockbox” shall have the meaning set forth in Section 3.10(a) hereof.

     “Lockbox Depository” means Mellon, or such other financial institutions appointed from time to time in accordance with the Blocked Account Agreement.

     “London Business Day” means any Business Day on which dealings in deposits in United States Dollars are transacted in the London interbank market.

     “Margin Stock” shall have the meaning set forth in Regulation U of the Board.

     “Material Adverse Change” means a material adverse change in, or the disclosure or discovery of any information not previously disclosed to the Agent which the Agent or any Lender deems material and adverse relating to the business, operations, properties, condition (financial or otherwise) or prospects of Servicer, Originator, Seller or Borrower, in each case, individually, or with its respective Affiliates, taken as a whole.

     “Material Adverse Effect” means a material adverse effect on (a) the Contracts or any of the other Collateral (including, without limitation, the enforceability or collectibility of the Contracts), (b) the business, operations, properties, condition (financial or otherwise) or prospects of Servicer, Originator, Seller or Borrower, in each case, individually, or with its

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respective Affiliates, taken as a whole, (c) the validity or enforceability of this or any of the other Loan Documents or the rights or remedies of the Agent or any Lender hereunder or thereunder or the validity, perfection or priority of any Lien in favor of the Agent for the benefit of the Lenders granted thereunder, (d) the timely payment of the principal of or interest on any Borrowings or other amounts payable in connection therewith or (e) the ability of Servicer, Originator, Seller or Borrower to perform its obligations under any Loan Document to which it is a party.

     “Mellon” means Mellon Bank, N.A., a national banking association organized under the laws of the United States of America and Mellon Financial Services Corporation #1, a Delaware corporation.

     “Minimum Borrowing Amount” means $2,000,000.

     “Moody’s” means Moody’s Investors Service, Inc., or its successor.

     “Net Securitization Proceeds Percentage” means, at any date of determination, with respect to the related Prospective Securitization of Contracts, a percentage equivalent to (x) an amount equal to (A) the gross sales price of all investment-grade notes and certificates sold or expected to be sold pursuant to such securitization, minus (B) any amounts deposited or to be deposited in any spread, reserve, yield supplement or capitalized interest account, minus (C) all underwriting discounts or placement agency fees paid or expected to be paid with respect to the sale of any notes or certificates pursuant to such securitization, minus (D) all fees, costs and expenses incurred or expected to be incurred by Borrower and its Affiliates in connection with such securitization (including residual financing); divided by (y) the sum of (1) the anticipated aggregate outstanding principal balance of the motor vehicle loans transferred or expected to be transferred to the issuer in such securitization and (2) the initial pre-funding amount, if any, with respect to such securitization. The components of the foregoing computation in connection with any Prospective Securitization of the Contracts shall be determined by the Agent in its reasonable business judgment based on such information and considerations as the Agent in its reasonable business judgment deems relevant or appropriate.

     “Notes” means the Class A Note and the Class B Note.

     “Notice of Borrowing” shall have the meaning set forth in Section 2.03 hereof.

     “Notice of Clean-up Call” means, with respect to any Clean-up Call Loan and the Clean-up Call related thereto, a notice of the intent of the servicer in the related securitization to effect such Clean-up Call, the delivery of which notice to the indenture trustee in such securitization is a condition to such servicer’s exercise of such Clean-up Call pursuant to the transaction documents for such securitization.

     “Obligations” means (i) the unpaid principal of and premium, if any, and interest (including interest accruing at the then applicable rate provided in this Agreement after the maturity of the Loans and interest accruing at the then applicable rate provided in this Agreement after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceedings, relating to Borrower whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) on the Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise and (ii) all

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other obligations and liabilities of every nature of Borrower from time to time owing to any Lender, in each case whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), to the extent such obligations and liabilities arise under, out of, or in connection with, this Agreement or any other Loan Document or under any other document made, delivered or given in connection with any of the foregoing, in each case whether on account of principal, premium, if any, interest, fees, indemnities, costs, expenses or otherwise (including, without limitation, all reasonable fees and disbursements of counsel to the Agent and the Lenders) that are required to be paid by Borrower pursuant to the terms of this Agreement or any other Loan Document.

     “Obligor” means, with respect to a Contract, the purchaser or co-purchaser of the Financed Vehicle and/or any other person who owes payments under such Contract.

     “Opinion of Counsel” means one or more written opinions of counsel, who, unless otherwise provided herein, may be an employee of or counsel to Originator, which counsel shall be acceptable to the Agent.

     “Optional Redemption Amount” means, with respect to any Clean-up Call Loan and the Clean-up Call related thereto, the amount required to be deposited into the collection account for the related securitization, by or on behalf of the servicer in such securitization, to purchase the related Clean-up Call Contracts (and any other applicable assets of the securitization issuer) in connection with the exercise by such servicer of such Clean-up Call.

     “Originator” means TFC in its capacity as originator of the Contracts.

     “Other Lender Clean-up Call Loan” has the meaning ascribed to the term “Clean-up Call Loan” in the Warehouse Lending Agreement related to the Other Warehouse Facility.

     “Other Lender Clean-up Call Loan Disbursement Amount” has the meaning ascribed to the term “Clean-up Call Loan Disbursement Amount” in the Warehouse Lending Agreement related to the Other Warehouse Facility.

     “Other Lender Clean-up Call Loan Funding Amount” has the meaning ascribed to the term “Clean-up Call Loan Funding Amount” in the Warehouse Lending Agreement related to the Other Warehouse Facility.

     “Other Lender Deficiency” means an Other Lender Residual Deficiency or an Other Lender Warehouse Deficiency.

     “Other Lender Related Clean-up Call Loan Disbursement Amount” means, with respect to a Clean-up Call Loan, the Other Lender Clean-up Call Loan Disbursement Amount (if any) in respect of the Corresponding Other Lender Clean-up Call Loan (if any) related to such Clean-up Call Loan.

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     “Other Lender Related Clean-up Call Loan Funding Amount” means, with respect to a Clean-up Call Loan, the Other Lender Clean-up Call Loan Funding Amount (if any) in respect of the Corresponding Other Lender Clean-up Call Loan (if any) related to such Clean-up Call Loan.

     “Other Lender Residual Deficiency” means, with respect to any date of determination and any residual financing facility that the Residual Facility Borrower has with the Other Warehouse Lender, any amount that is due and unpaid under such facility as of such date of determination, and that the Other Warehouse Lender shall have provided notice of to the Agent on or prior to such date of determination.

     “Other Lender Warehouse Deficiency” means, with respect to any date of determination, any amount that is due and unpaid under the Other Warehouse Facility as of such date of determination, and that the Other Warehouse Lender shall have provided notice of to the Agent on or prior to such date of determination.

     “Other Warehouse Facility” means the warehouse financing facility established pursuant to that certain Warehouse Lending Agreement, dated as of April 29, 2005, among TFC, as originator and servicer, Seller, as seller, Borrower, as borrower, the Collection Account Bank, as collection account bank, and the Other Warehouse Lender, as lender as amended, supplemented or otherwise modified from time to time in accordance with the terms thereof.

     “Other Warehouse Financing Facility Collateral” has the meaning set forth in the Security Agreement.

     “Other Warehouse Lender” means Citigroup Global Markets Realty Corp., as lender under the Other Warehouse Facility.

     “Owner Trustee” means Wilmington Trust Company, not in its individual capacity but solely as Owner Trustee under the Trust Agreement, its successors in interest or any successor Owner Trustee under the Trust Agreement.

     “Payment Determination Date” means (i) with respect to any Regular Remittance Date, the third Business Day preceding such Remittance Date, and (ii) with respect to any Special Remittance Date, the second Business Day preceding such Remittance Date.

     “Permitted Borrowing Date” means the Business Day following Borrower’s delivery of a Notice of Borrowing during the Commitment Period.

     “Person” means any individual, partnership, firm, corporation, association, joint venture, trust, limited liability company or other entity of whatever nature.

     “Precomputed Contract” means any Contract under which the portion of a payment allocable to earned interest (which may be referred to in the related Contract as an add-on finance charge) and the portion allocable to the Amount Financed is determined according to the “actuarial”, the “sum of periodic balances” or the “sum of monthly balances” method (or any equivalent method).

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     “Prime Rate” means the prime rate (or if a range is given, the average of such prime rates) listed under “Money Rates” in The Wall Street Journal for such date or, if The Wall Street Journal is not published on such date, then in The Wall Street Journal most recently published.

     “Principal Balance” means, as of the close of business on the last day of a Collection Period and as to any Contract, the Amount Financed minus the portion of all payments actually collected from or on behalf of the related Obligor on or prior to such day and allocable to principal using the Simple Interest Method.

     “Program Fee” means the Program Fee as defined and set forth in the Fee Letter.

     “Program Fee Rate” means the Program Fee Rate as defined and set forth in the Fee Letter.

     “Program Guidelines” means the Triad Financial Corporation Program Guidelines, a copy of which is attached hereto as Exhibit J, as such Program Guidelines may be amended from time to time; provided, that Originator shall give the Agent at least ten (10) Business Days prior written notice of any amendment to the Program Guidelines.

     “Prospective Securitization of Contracts” means, with respect to a reasonable determination by the Agent of the Net Securitization Proceeds Percentage as of any date of determination, a proposed or hypothetical securitization of Class 1 Eligible Contracts on or about such date of determination.

     “Rating Agency” means each of Moody’s and Standard & Poor’s. If no such organization or successor is any longer in existence, “Rating Agency” shall be a nationally recognized statistical rating organization or other comparable Person designated by the Agent, notice of which designation shall be given to Borrower.

     “Receivables Purchase Agreement” means the Master Receivables Purchase Agreement between Borrower, as purchaser, and Seller, as seller, dated as of January 10, 2008, a copy of which is attached as Exhibit S hereto, as supplemented by the applicable Receivables Purchase Agreement Supplements between Borrower, as purchaser, and Seller, as seller, as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof.

     “Receivables Purchase Agreement Supplement” shall have the meaning set forth in the Receivables Purchase Agreement.

     “Recoveries” means, with respect to any Contract that becomes a Liquidated Contract, monies collected in respect thereof during any Collection Period following the Collection Period in which such Contract became a Liquidated Contract, from whatever source (including Dealer Recourse), net of any amount required by law to be remitted to the Obligor; provided, however, that the Recoveries with respect to any Contract shall in no event be less than zero.

     “Regular Remittance Date” means the twelfth (12th) day of each month, or if such day is not a Business Day, the Business Day immediately succeeding such day, beginning in February 2008.

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     “Regulation U” means Regulation U promulgated by the Board.

     “Related Assets” means (i) Borrower’s security interest in Financed Vehicles, (ii) Borrower’s rights, remedies, powers and privileges under the Contracts, including any personal guaranty thereof, (iii) Borrower’s rights, remedies, powers and privileges under the Sale and Contribution Agreement, (iv) Borrower’s rights, remedies, powers and privileges under the Servicing Agreement, (v) Borrower’s rights, remedies, powers and privileges under the Dealer Agreements, including but not limited to Dealer Recourse and any holdback amounts, (vi) insurance proceeds or rebates under Insurance Policies and (vii) all proceeds of the foregoing, in each case, only to the extent such items relate to the Contracts.

     “Release Consideration” means, with respect to any Contract that (i) is repurchased by Seller from Borrower pursuant to Section 6.2 of the Receivables Purchase Agreement, is repurchased by TFC from Seller pursuant to Section 6.2 of the Sale and Contribution Agreement, and the Agent’s security interest in which is released pursuant to Section 12(b)(ii) of the Security Agreement or (ii) is purchased by the Servicer from Borrower pursuant to Section 2.07 of the Servicing Agreement and the Agent’s security interest in which is released pursuant to Section 12(b)(iii) of the Security Agreement, an amount equal to the outstanding Principal Balance of such Contract as of the date of such purchase or repurchase, as applicable, plus all accrued but unpaid interest thereon.

     “Relevant Report” means any report, correspondence or other statement of information related to (a) any Collateral, any Other Warehouse Financing Facility Collateral, or any collateral under any Residual Facility (other than a Confidential Collateral Proposal Report), (b) any secured financing facility under which TFC or any Affiliate thereof is a borrower (including, but not limited to, the Other Warehouse Facility, any Residual Facility and each facility established pursuant to the Lender Loan Documents), (c) any securitization of motor vehicle loans or retail installment sale contracts sponsored or contemplated by TFC, (d) any other actual or contemplated securities issuance by TFC or any Affiliate of TFC, (e) the origination policies, procedures or operations of TFC, (f) the servicing policies, procedures or operations of TFC, or (g) any circumstance, event, or development relating to the business, operations, properties, condition (financial or otherwise) or prospects of TFC, Seller or Borrower that constitutes, or is reasonably likely to constitute, a Material Adverse Change or that has resulted in, or is reasonably likely to result in, a Material Adverse Effect.

     “Remittance Date” means a Regular Remittance Date or a Special Remittance Date.

     “Repurchase Date” has the meaning specified in Section 6.2 of the Sale and Contribution Agreement.

     “Required Audit Report” means any report required to be delivered pursuant to Section 2.11(a) of the Servicing Agreement.

     “Required Cure of Breach Date” has the meaning specified in Section 3.03(f).

     “Required Remittance Amount” means, for any Remittance Date, the sum of (i) all amounts received from Obligors or from any other sources on or in respect of the Contracts during the immediately preceding Collection Period (and during the period since the immediately

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preceding Remittance Date, in the case of a Special Remittance Date) and (ii) all Investment Earnings with respect to such Remittance Date. For the avoidance of doubt, no amount received in respect of any Contract shall be part of the Required Remittance Amount for any Special Remittance Date if such amount was part of the Required Remittance Amount for the immediately preceding Remittance Date.

     “Requirement of Law” means, as to any Person, any law, statute, rule, treaty, regulation, or determination of an arbitrator, court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its properties or to which any such Person or any of its properties may be bound or affected.

     “Residual Facility” means the residual financing facility established pursuant to that certain Master Residual Loan Agreement, dated as of April 29, 2005, among Residual Facility Borrower, as borrower, the Collection Account Bank, as collection account bank, and the Other Warehouse Lender, as lender, as amended, supplemented or otherwise modified from time to time in accordance with the terms thereof, and other any residual financing facility between the Residual Facility Borrower with the Other Warehouse Lender.

     “Residual Facility Borrower” means Triad Financial Residual Special Purpose LLC, a Delaware limited liability company, as borrower under any residual financing facility with the Other Warehouse Lender.

     “Responsible Officer” means any of the president, chief executive officer, chief financial officer, any executive vice president, treasurer, controller or secretary of Originator, Servicer, Administrator or Seller, as the case may be.

     “Sale” means a sale of Contracts either through (a) a securitization of such Contracts or (b) a “whole loan” sale of such Contracts.

     “Sale and Contribution Agreement” means the Master Sale and Contribution Agreement between Seller, as purchaser, and Originator, as seller, dated as of January 10, 2008, a copy of which is attached as Exhibit T hereto, as supplemented by the applicable Sale and Contribution Agreement Supplements between Seller, as purchaser, and Originator, as seller, as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof.

     “Sale and Contribution Agreement Supplement” shall have the meaning set forth in the Sale and Contribution Agreement.

     “Sale Notice” means a sale notice substantially in the form of Exhibit I hereto.

     “Scheduled Payment” means the payment required to be made by the Obligor during the related Collection Period as set forth in the related Contract.

     “Securitization LLC” means Triad Financial Special Purpose, LLC, a Delaware limited liability company.

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     “Security Agreement” means the Security Agreement between Borrower, as pledgor, and the Agent, as pledgee, dated as of the date hereof, a copy of which is attached as Exhibit L hereto, as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof.

     “Seller” shall have the meaning set forth in the preamble hereof.

     “Servicer” means TFC in is capacity as servicer of the Contracts pursuant to the Servicing Agreement.

     “Servicer’s Certificate” means an Officers’ Certificate of the Servicer delivered pursuant to Section 2.09 of the Servicing Agreement, substantially in the form of Exhibit A of the Servicing Agreement.

     “Servicer Termination Event” has the meaning set forth in Section 4.01 of the Servicing Agreement.

     “Servicing Agreement” means the Servicing Agreement among the Agent, the Lenders, Borrower, Servicer and the Backup Servicer, dated as of the date hereof, a copy of which is attached as Exhibit U hereto, as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof.

     “Servicing Fee” has the meaning set forth in the Servicing Agreement.

     “Servicing Policies and Procedures” means the Servicing Policies and Procedures attached hereto as Exhibit H, as the same may be amended from time to time with the prior written consent of the Agent.

     “Simple Interest Contract” means any Contract under which the portion of a payment allocable to interest and the portion allocable to principal is determined in accordance with the Simple Interest Method.

     “Simple Interest Method” means the method of allocating a fixed level payment to principal and interest, pursuant to which the portion of such payment that is allocated to interest is equal to the product of the fixed rate of interest multiplied by the unpaid principal balance multiplied by the period of time elapsed since the date through which the preceding payment of interest was applied and the remainder of such payment is allocable to principal.

     “Special Remittance Date” means (a) each Business Day designated by the Agent as a Remittance Date during the continuation of an Event of Default and (b) the later of (i) the Termination Date and (ii) any Term Loan Maturity Date (or, if such later date is not a Business Day, the Business Day immediately succeeding such date).

     “Standard & Poor’s” or “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc., or its successor.

     “State” means any State of the United States of America, or the District of Columbia.

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     “Subsidiary” means, as to any Person, a corporation, partnership or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person.

     “Successor Servicer” has the meaning set forth in the Servicing Agreement.

     “Supplemental Servicing Fee” has the meaning set forth in the Servicing Agreement.

     “Termination Date” means the earliest to occur of (x) the Expected Facility Termination Date, (y) the date on which a Commitment Termination Event occurs and (z) the Liquidity Non-Renewal Date.

     “Term Loan Commitment Fee” means a fee in an amount equal to the product of (x) the percentage specified in Item 14 of Schedule I and (y) the Aggregate Total Outstandings on the Termination Date.

     “Term Loan Extension Period” means, with respect to a Termination Date that occurs on the Expected Facility Termination Date or on the Liquidity Non-Renewal Date, the period commencing with such Termination Date and ending on the Term Loan Maturity Date.

     “Term Loan Maturity Date” means, with respect to a Termination Date that occurs on the Expected Facility Termination Date or on the Liquidity Non-Renewal Date, the date that is 180 days following such Termination Date.

     “TFC” has the meaning set forth in the preamble hereof.

     “Third-Party Lender” means an entity that originated a loan to a consumer or was the original assignee of a motor vehicle retail installment sale contract from a dealer for the purchase of a motor vehicle and sold the loan or motor vehicle retail installment sale contract to TFC pursuant to an Auto Loan Purchase and Sale Agreement.

     “Third-Party Lender Assignment” means, with respect to a Contract, the assignment executed by a Third-Party Lender conveying the Contract to TFC.

     “Title” shall have the meaning set forth in the Security Agreement.

     “Title Package” means (i) evidence that documentation has been submitted to the appropriate State motor vehicle authority to obtain a Lien Certificate noting the first priority lien of Originator or (ii) a Dealer Title Guaranty, if any.

     “Total Outstandings” means, with respect to any date of determination, the unpaid principal amount of all Loans outstanding hereunder as of such date of determination.

     “Transferred Property” shall have the meaning set forth in the Sale and Contribution Agreement.

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     “Triad Entities” means each of Triad Holdings L.L.C. and its subsidiaries.

     “Trust Agreement” means the Amended and Restated Trust Agreement dated as of January 10, 2008 between Seller, as depositor, TFC, as administrator, and the Owner Trustee, as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof.

     “Unsecured TFC Noteholder” means a holder of Triad Financial Corporation 11.125% Senior Notes due 2013 or a holder of any other unsecured corporate debt of TFC or any Affiliate of TFC.

     “Unused Fee” means the Unused Fee as defined and set forth in the Fee Letter.

     “Unused Fee Rate” means the Unused Fee Rate as defined and set forth in the Fee Letter.

     “Warehouse Affiliate Guaranty” means, the written guaranty made by TFC, as guarantor, in favor of the Agent and the Lenders, dated as of the date hereof, a copy of which is attached as Exhibit V hereto.

     “Weighted Average Hedge Fixed Rate” means for any Collection Period, the weighted average (based on the respective notional amounts of the agreements entered into pursuant to the Hedging Strategy) of the fixed interest rates applicable under the agreements entered into pursuant to the Hedging Strategy. In the event that the Hedging Strategy incorporates a collar swaption hedge, the fixed interest rates applicable hereunder shall be the average of the upper and lower collar rate.

     Section 1.02. Accounting Terms and Determinations. Unless otherwise defined or specified herein, all accounting terms shall be construed herein, all accounting determinations hereunder shall be made, all financial statements required to be delivered hereunder shall be prepared and all financial records shall be maintained in accordance with GAAP.

     Section 1.03. Other Definitional Terms. The words “hereof”, “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and article, section, schedule, exhibit and like references are to this Agreement unless otherwise specified.

     Any defined term which relates to a document shall include within its definition any amendments, modifications, renewals, restatements, extensions, supplements or substitutions which may have been heretofore or may be hereafter executed in accordance with the terms thereof.

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ARTICLE II.

AMOUNT AND TERMS OF THE LOANS

     Section 2.01. The Loans.

          (a) The Class A Lender agrees, upon the terms and subject to the conditions and relying upon the representations and warranties hereinafter set forth, to make one or more loans (each, a “Class A Loan” and, together, the “Class A Loans”) to Borrower during the Commitment Period, and the Class B Lender agrees, upon the terms and subject to the conditions and relying upon the representations and warranties hereinafter set forth, to make one or more loans (each, a “Class B Loan” and, together, the “Class B Loans”, and, collectively, with the Class A Loans, “Loans”) to Borrower during the Commitment Period.

          (b) Notwithstanding Section 2.01(a), no Loan shall be made:

          (i) on a day other than a Permitted Borrowing Date;

          (ii) in an aggregate principal amount of Class A Loans and Class B Loans made on the same Borrowing Date of less than the Minimum Borrowing Amount; or

          (iii) if after giving effect thereto (A) the aggregate Class A Outstandings would exceed (1) the Class A Borrowing Base for the applicable Borrowing Date or (2) the product of the Class A Note Percentage for the applicable Borrowing Date and the Total Outstandings or (B) the aggregate Class B Outstandings would exceed (1) the Class B Borrowing Base for the applicable Borrowing Date, (2) the product of the Class B Note Percentage for the applicable Borrowing Date and the Total Outstandings or (3) the Class B Maximum Outstandings.

          (c) All Loans may be borrowed, repaid and reborrowed in accordance with the terms of this Agreement; provided that no Loans shall be made hereunder during the Term Loan Extension Period.

          (d) The Borrower may request an extension of the Liquidity Non-Renewal Date to the Expected Facility Termination Date by written notice to the Agent, the Class A Lender and the Class B Lender given no more than sixty (60) calendar days and no fewer than forty-five (45) calendar days prior to the then effective Liquidity Non-Renewal Date. On or before the thirtieth (30^th) day preceding the then effective Liquidity Non-Renewal Date, each of the Class A Lender and the Class B Lender shall notify the Agent and the Borrower whether it has determined, in its sole discretion, to extend the Liquidity Non-Renewal Date to the Expected Facility Termination Date. If both the Class A Lender and the Class B Lender agree to such extension, the Liquidity Non-Renewal Date shall be extended to the Expected Facility Termination Date. If the Class A Lender or the Class B Lender declines the requested extension (or fails to notify the Borrower and the Agent of its extension on or before the thirtieth (30^th) day prior to the Liquidity Non-Renewal Date then in effect), the Liquidity Non-Renewal Date shall not be extended to the Expected Facility Termination Date.

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     Section 2.02. The Notes. (a) The Class A Loans shall be evidenced by a promissory note substantially in the form of Exhibit N-1 hereto, duly executed by Borrower, dated the date hereof, payable to the order of the Agent for the benefit of the Class A Lender in the maximum principal amount equal to five hundred million dollars (U.S. $500,000,000) (the “Class A Note”), and the Class B Loans shall be evidenced by a promissory note substantially in the form of Exhibit N-2 hereto, duly executed by Borrower, dated the date hereof, payable to the order of the Agent for the benefit of the Class B Lender in the maximum principal amount equal to sixty-five million dollars (U.S. $65,000,000) (the “Class B Note”). The Agent and each applicable Lender is hereby authorized to record the dates and amounts of all Class A Loans or Class B Loans, as applicable, made by such Lender to Borrower under this Agreement and the dates and amounts of all payments and prepayments of the principal of the Class A Loans or Class B Loans, as applicable, on the schedule (and each continuation thereof) attached to and constituting part of the Class A Note or the Class B Note, as applicable. Such recordation shall be conclusive in the absence of manifest error; provided that the failure of the Agent or the applicable Lender to make any such recordation or any error in such recordation shall not affect the obligations of Borrower hereunder and/or under the Class A Note or Class B Note, as applicable.

          (b) The outstanding principal amount of the Loans shall be payable as set forth in Article III hereof. Borrower shall pay interest on the outstanding principal amount of the Loans, for each day from and including the date of the making of such Loans to but excluding the date the principal amount thereof shall be paid in full, at the rates and pursuant to the terms set forth in Article III hereof.

     Section 2.03. Making the Loans. Each Borrowing shall be made on notice (a “Notice of Borrowing”) by Borrower to the Agent, substantially in the form of Exhibit O hereto, appropriately completed and executed by an Authorized Signatory of Borrower, which Notice of Borrowing must be received by the Agent not later than 2:00 p.m. (New York City time) on the Business Day prior to the proposed Borrowing Date; provided that, if any of the Eligible Contracts to be pledged in connection with a Borrowing are Clean-up Call Contracts, the related Notice of Borrowing must be received by the Agent not later than 2:00 p.m. (New York City time) on the third (3^rd) Business Day of the month of the Borrowing Date proposed by Borrower to the Agent and the Lenders; provided further, that there shall be no more than one Notice of Borrowing per Business Day and no more than five (5) Notices of Borrowing per week (except that there may be one additional Notice of Borrowing delivered on a Business Day on which a Notice of Borrowing with respect to a Clean-up Call Loan is delivered and, if such an additional Notice of Borrowing is delivered on such a Business Day, a total of six (6) Notices of Borrowing may be delivered during the week in which such Business Day falls). Each such Notice of Borrowing shall be irrevocable. In the case of any Clean-up Call Loan, Borrower shall deliver to the Agent a copy of the related Notice of Clean-up Call, together with a notice to the Agent of Borrower’s intent to deliver a Notice of Borrowing with respect to such Clean-up Call Loan, no later than the Business Day immediately following the date on which such Notice of Clean-up Call shall have been delivered to the indenture trustee in the related securitization. Upon fulfillment of the applicable conditions set forth in Article IV hereof, each Lender shall make the proceeds of the Class A Loans or Class B Loans, as applicable, included in such Borrowing made on notice in accordance with this Section 2.03 available to Borrower in immediately available funds to such account or accounts as Borrower shall designate to the Agent and such Lender in writing. Except in the case of Borrowings with respect to Clean-up Call Loans

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pursuant to Section 2.06, proceeds of a Borrowing in accordance with the preceding sentence shall be made on the proposed Borrowing Date, but in no event earlier than 2:00 p.m. (New York City time) on such Borrowing Date.

     Section 2.04. [Reserved].

     Section 2.05. [Reserved].

     Section 2.06. Borrowings in Respect of Clean-up Call Contracts. In addition to the satisfaction of all other requirements for Warehouse Loans specified in this Article II and such requirements specified in Article IV, the following requirements shall also be satisfied in connection with any Clean-up Call Loan:

          (a) The Collection Account Bank (as defined in Section 3.10(c)), for the benefit of the Agent on behalf of the Lenders, shall cause to be established and maintained at the Collection Account Bank, or such other financial institution as determined by the Agent upon written notice to the Collection Account Bank, in the name of the Agent an Eligible Deposit Account (the “Clean-up Call Loan Disbursement Account”), bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the Agent (and with the Agent as the sole “customer” (as defined in Section 4-104 of the UCC) or sole “entitlement holder” (as defined in Section 8-102(a)(7) of the UCC), as applicable, with respect to the Clean-up Call Loan Disbursement Account). The Agent hereby revocably authorizes the Collection Account Bank to make payments and disbursements from any amounts on deposit in the Clean-up Call Disbursement Account in connection with a proposed Clean-up Call Loan in accordance with the provisions of and subject to the conditions specified in this Agreement and the Lender Clean-up Call Disbursement Notice with respect thereto. The Agent may, in its sole discretion, revoke at any time such authority and appoint a successor entity (and successors thereto from time to time) to make such payments and disbursements. Funds on deposit in the Clean-up Call Loan Disbursement Account shall be invested by the Collection Account Bank in Eligible Investments upon the same terms as those specified in Section 3.10(d) with respect to such investments in respect of the Collection Account.

          (b) No later than the Lender Deposit Date for a Clean-up Call Loan, Borrower shall deliver to the Collection Account Bank in immediately available funds, for deposit into the Clean-up Call Loan Disbursement Account, the Clean-up Call Differential Amount for such Clean-up Call Loan. Borrower hereby authorizes the Collection Account Bank to make payments and disbursements from any Clean-up Call Differential Amounts on deposit in the Clean-up Call Disbursement Account in connection with a proposed Clean-up Call Loan in accordance with the provisions and subject to the conditions specified in this Agreement and the applicable Lender Clean-up Call Disbursement Notice with respect thereto. The Collection Account Bank shall hold such Clean-up Call Differential Amount for such Clean-up Call Loan until it receives disbursement instructions from the Agent with respect to such Clean-up Call Differential Amount pursuant to Section 2.06(f) or withdrawal instructions from the Agent pursuant to Section 2.06(g).

          (c) In the Notice of Borrowing delivered in connection with any Clean-up Call Loan, Borrower shall specify (i) the Clean-up Call Settlement Date for such Clean-up Call

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Loan and (ii) the Lender Deposit Date for such Clean-up Call Loan; provided that the Lender Deposit Date for a Clean-up Call Loan shall be no earlier than two (2) Business Days prior to the Clean-up Call Settlement Date for such Clean-up Call Loan.

          (d) On the Lender Deposit Date for a Clean-up Call Loan (as specified in the related Notice of Borrowing pursuant to Section 2.06(c)), the Lenders shall remit to the Agent and the Agent shall deposit into the Clean-up Call Loan Disbursement Account in immediately available funds the related Clean-up Call Loan Funding Amount. The Collection Account Bank shall hold such Clean-up Call Loan Funding Amount uninvested in the Collection Account until it receives disbursement instructions from the Agent with respect to such Clean-up Call Loan Funding Amount pursuant to Section 2.06(f) or withdrawal instructions from the Agent pursuant to Section 2.06(g).

          (e) On the Lender Deposit Date for a Clean-up Call Loan, the Agent will deliver to the Collection Account Bank a notice with respect to the proposed Clean-up Call Loan (a “Lender Clean-up Call Disbursement Notice”), which notice will specify the following:

          (i) the name of the securitization trust subject to the proposed Clean-up Call;

          (ii) the “Optional Redemption Amount” for such Clean-up Call (based solely upon information provided to the Agent by the Servicer);

          (iii) the Clean-up Call Settlement Date;

          (iv) the Clean-up Call Loan Funding Amount;

          (v) the Clean-up Call Differential Amount then on deposit in the Clean-up Call Disbursement Account;

          (vi) the conditions precedent to the Agent’s instruction to the Collection Account Bank to disburse the Clean-up Call Disbursement Amount; and

          (vii) such other information as the Agent may reasonably deem necessary or appropriate.

          (f) On the Clean-up Call Settlement Date for a Clean-up Call Loan (as specified in the related Notice of Borrowing pursuant to Section 2.06(c)), the Agent shall instruct the Collection Account Bank to withdraw from the Clean-up Call Loan Disbursement Account the related Clean-up Call Disbursement Amount (including, without limitation, the related Clean-up Call Loan Funding Amount and the Clean-up Call Differential Amount) and to deposit such Clean-up Call Loan Disbursement Amount into the collection account for the related securitization, on behalf of the servicer in such securitization, as consideration for the purchase by the servicer of the related Clean-up Call Contracts (and any other applicable assets of the related securitization issuer) in connection with the exercise of the related Clean-up Call; provided, however, that the Agent shall so instruct the Collection Account Bank only if each of the conditions precedent set forth in the related Lender Clean-up Call Disbursement Notice shall have been satisfied on or prior to such Clean-up Call Settlement Date.

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     Each Lender Clean-up Call Disbursement Notice will specify the applicable conditions precedent, including the following:

          (i) the Agent shall have received a fully executed copy of the Sale and Contribution Agreement Supplement transferring the Clean-up Call Contracts to the Borrower pursuant to the Sale and Contribution Agreement;

          (ii) the Agent shall have received a fully executed copy of the Notice of Borrowing pledging the Clean-up Call Contracts to the Agent pursuant to this Agreement, together with any other documents required by or provided for in this Agreement, including, without limitation, the applicable Borrowing Base Certificate;

          (iii) if a Clean-up Call Loan is also being made under the Other Warehouse Facility, then the Agent shall receive copies of Other Lender’s Clean-up Call Disbursement Notice and evidence reasonably acceptable to the Agent of satisfaction of all conditions precedent to disbursement of the clean-up call disbursement amount under the Other Warehouse Facility;

          (iv) the Agent shall have received an Opinion of Counsel of the issuer or the servicer in the related securitization, dated the Clean-up Call Settlement Date, addressed to the Agent and the Lenders and in form and substance reasonably acceptable to the Agent, containing an opinion that all conditions precedent to the exercise of the Clean-up Call (in accordance with all applicable documents for such securitization) have been satisfied;

          (v) the indenture trustee in the related securitization shall have delivered to the Agent evidence of the satisfaction and discharge of the relevant indenture, together with a written release of all of its right, title and interest in and to such Clean-up Call Contracts;

          (vi) the Agent shall have received the UCC-3 Partial Release Statements referenced in Section 4.02(e)(iv)(2) with respect to such Clean-up Call Contracts; and

          (vii) the Agent shall have received such other opinions, documents and instruments as the Agent or its counsel shall reasonably request.

          (g) If the Agent has not instructed the Collection Account Bank by 11:00 a.m. (New York City time) on the Clean-up Call Settlement Date that the conditions precedent specified in the Lender Clean-up Call Disbursement Notice have been satisfied or waived, then the Collection Account Bank shall, prior to 1:00 p.m. (New York City time) on such date, withdraw the related Clean-up Call Loan Disbursement Amount from the Clean-up Call Loan Disbursement Account and deliver the Clean-up Call Loan Funding Amount to the order of the Agent for disbursement to the Lenders and the Clean-up Call Differential Amount to the order of Borrower, unless the Agent shall have otherwise instructed the Collection Account Bank in writing.

     Section 2.07. [Reserved].

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     Section 2.08. Notices of Net Securitization Percentage. Promptly following the Agent’s receipt from Servicer of a Servicer’s Certificate delivered pursuant to Section 2.09 of the Servicing Agreement and Section 6.19 hereof, the Agent shall provide Borrower with notice of the Agent’s most recent determination of the Net Securitization Proceeds Percentage.

ARTICLE III.

INTEREST, PAYMENTS, ETC.

     Section 3.01. Interest on the Loans. (a) The Lenders shall be entitled to receive payments of interest on their respective portions of the Total Outstandings as provided herein at the Class A Interest Rate or the Class B Interest Rate, as applicable, from the Closing Date until the later of the Termination Date and the reduction of the Total Outstandings to zero. After the initial Remittance Date, payments of interest accrued on the Loans will be calculated on the average daily outstanding Total Outstandings for the period from and including the Remittance Date immediately preceding the applicable Remittance Date after giving effect to any payments of principal on such immediately preceding Remittance Date, to but excluding the applicable Remittance Date. With respect to the initial Remittance Date, interest will be calculated on the average daily outstanding Total Outstandings from the initial Borrowing Date through the day preceding the initial Remittance Date. All computations of interest accrued on any Loan shall be made on the basis of a 360-day year and the actual days elapsed.

          (b) Except as otherwise provided herein, all accrued and unpaid interest on the Loans shall be payable in arrears:

          (i) on each Remittance Date;

          (ii) pursuant to Section 3.03(e); and

          (iii) on the Termination Date.

          (c) If, by the terms of this Agreement or either Note, Borrower at any time is required or obligated to pay interest at a rate in excess of the maximum rate permitted by applicable law, the rate of interest shall be deemed to be immediately reduced to such maximum rate and the portion of all prior interest payments in excess of such maximum rate shall be applied and shall be deemed to have been payments made in reduction of the principal amount due hereunder and under the applicable Note and shall be applied to Class A Outstandings or Class B Outstandings, as applicable.

     Section 3.02. Optional Prepayments. Borrower may, at its sole option, prepay the Loans on any day, in whole or in part, at any time upon two (2) Business Days’ prior written notice to the Agent and the Collection Account Bank. Any such prepayment shall be accompanied by all other obligations due and owing in respect of such prepayment, including, without limitation, with respect to interest, fees and payments pursuant to this Article III. Any prepayment of the Loans in part shall be applied ratably to the Class A Outstandings and the Class B Outstandings by reference to the Class A Note Percentage and the Class B Note Percentage, unless otherwise agreed to by the Agent and the Lenders. In addition, in selecting the Collateral to be released from the lien of the Security Agreement upon a partial prepayment, unless such partial

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prepayment relates to a securitization of the Contracts so to be released, no selection procedures adverse to the interests of Lenders, in the Agent’s reasonable discretion, shall be utilized by Borrower.

     Section 3.03. Mandatory Repayments and Prepayments. (a) If the Termination Date shall occur as a result of a Commitment Termination Event, the Total Outstandings shall be due and payable in full on the Termination Date. If the Termination Date occurs on the Expected Facility Termination Date and Borrower pays the Agent on behalf of the Lenders the Term Loan Commitment Fee no later than the Termination Date, the Total Outstandings shall be due and payable in full no later than the Term Loan Maturity Date; provided that, if Borrower shall not have paid such Term Loan Commitment Fee by the Termination Date, the Total Outstandings shall be due and payable in full on the Termination Date.

          (b) On each Remittance Date:

          (i) Borrower shall prepay the Class A Outstandings by an amount equal to the Class A Borrowing Base Deficiency, if any, which occurred as of the last day of the immediately preceding calendar month, which have not been prepaid pursuant to clauses (c) or (d) below (the required amount of any such prepayment on any Remittance Date pursuant to this Section 3.03(b)(i), the “Class A Regular Principal Payment Amount” for such Remittance Date); and

          (ii) Borrower shall prepay the Class B Outstandings by an amount equal to the Class B Borrowing Base Deficiency, if any, which occurred as of the last day of the immediately preceding calendar month, which have not been prepaid pursuant to clauses (c) or (d) below (the required amount of any such prepayment on any Remittance Date pursuant to this Section 3.03(b)(ii), the “Class B Regular Principal Payment Amount” for such Remittance Date).

          (c) On the date of any Sale, Borrower shall prepay an amount equal to the sum of (A) the difference between (i) the Class A Outstandings as of such date and (ii) the Class A Borrowing Base of the Eligible Contracts remaining subject to the Lien of the Agent under the Security Agreement after giving effect to such Sale, and (B) the difference between (i) the Class B Outstandings as of such date and (ii) the Class B Borrowing Base of the Eligible Contracts remaining subject to the Lien of the Agent under the Security Agreement after giving effect to such Sale. Borrower hereby agrees to provide to the Agent a Sale Notice at least five (5) Business Days prior to any Sale. Notwithstanding the foregoing, in the event that the Cut-off Date with respect to any Contracts subject to a Sale is the first day of the calendar month in which such Sale occurs, the amount of the Total Outstandings to be prepaid on the date of such Sale shall equal the product of (x) the aggregate Principal Balance of the Contracts to be included in such Sale and released from the Lien of the Agent, as of the first day of the calendar month in which such Sale occurs (or any later date in such month on which a Borrowing shall have been made to acquire the Contracts subject to such Sale), times (y) the then-applicable Advance Rate for such Contracts.

          (d) If a Class A Borrowing Base Deficiency or Class B Borrowing Base Deficiency has occurred on any day (other than the last day of the immediately preceding

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calendar month), Borrower shall prepay the Class A Outstandings and Class B Outstandings, as applicable, or shall provide additional Eligible Contracts to the Agent, in an amount equal to such Class A Borrowing Base Deficiency or Class B Borrowing Base Deficiency, as the case may be, within one (1) Business Day after the occurrence of such Class A Borrowing Base Deficiency or Class B Borrowing Base Deficiency, as the case may be. Notwithstanding anything to the contrary herein, the Agent may from time to time in its discretion determine the Net Securitization Proceeds Percentage (which determination, in the Agent’s discretion, may be based on the Agent’s consultation with any Rating Agency and/or any third party credit enhancement provider). In connection with any such redetermination of the Net Securitization Proceeds Percentage, the Agent, in its discretion, may request a redetermination by the Borrower of the Class A Borrowing Base and the Class B Borrowing Base, which redetermination the Borrower shall complete within three Business Days of such request from the Agent. If such redetermination of the Class A Borrowing Base and the Class B Borrowing Base results in a Class A Borrowing Base Deficiency or a Class B Borrowing Base Deficiency, any such deficiency shall be remedied as described above in this paragraph (d).

          (e) All payments and prepayments made pursuant to paragraphs (a) through (d) above shall be accompanied by payment of all accrued and unpaid interest due and owing on the amount of Total Outstandings so paid or prepaid.

          (f) In the event of any breach of any representation and warranty of Borrower set forth in Schedule B hereto with respect to any Contract, unless such breach shall have been cured within twenty (20) Business Days of the discovery by or notice (from any Person) to Borrower of such breach (such twentieth Business Day, the “Required Cure of Breach Date”), Borrower shall, no later than 2:00 p.m., New York City time, on the Required Cure of Breach Date, deposit (or cause to the Servicer to deposit) into the Collection Account the Release Consideration for each Contract to which such breach relates. In the event that such breach relates to a representation regarding a characteristic of the Contracts in the aggregate, unless the breach shall have been cured by the Required Cure of Breach Date, Borrower shall, no later than 2:00 p.m., New York City time, on the Required Cure of Breach Date, deposit (or cause the Servicer to deposit) into the Collection Account the aggregate Release Consideration for Contracts such that, following the release of such Contracts from the Lien of the Security Agreement, such representation shall be true and correct with respect to the remainder of the Contracts, in the aggregate, pledged to the Agent under the Security Agreement. Any Contract for which a release is required to be obtained pursuant to this Section 3.03(f) shall be repurchased from Borrower by Seller in accordance with Section 6.2 of the Receivables Purchase Agreement and shall be repurchased from Seller by TFC in accordance with Section 6.2 of the Sale and Contribution Agreement. Upon receipt by the Agent of a certificate from an authorized officer of the Servicer, certifying that the Servicer has received the Release Consideration for each such Contract from TFC in accordance with Section 6.2 of the Receivables Purchase Agreement and Section 6.2 of the Sale and Contribution Agreement and that the Servicer has deposited such Release Consideration into the Collection Account in accordance with this Section 3.03(f) and Section 3.10(f) of this Agreement, the Agent shall release its security interest in such Contract (and the Collateral related thereto) in accordance with Section 12(b)(ii) of the Security Agreement; provided, however, that, if a Class A Borrowing Base Deficiency or a Class B Borrowing Base Deficiency would otherwise occur as a result of such release and payment of the related Release Consideration, Borrower shall, on the date of such release, cure such

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prospective Class A Borrowing Base Deficiency or Class B Borrowing Base Deficiency in the manner set forth in Section 3.03(d); provided further that, if Borrower shall have prepaid the Total Outstandings pursuant to Section 3.03(d) to cure a Class A Borrowing Base Deficiency and/or Class B Borrowing Base Deficiency arising from a breach of a representation and warranty of Borrower set forth in Schedule B hereto with respect to a Contract, prior to the payment by Borrower of the Release Consideration for such Contract pursuant to this Section 3.03(f), then the amount of such prepayment (equal to the amount of such Class A Borrowing Base Deficiency or Class B Borrowing Base Deficiency caused by such breach in respect of such Contract) shall be credited toward Borrower’s payment of the Release Consideration for such Contract.

          (g) If any Contract is required to be purchased from Borrower by the Servicer pursuant to Section 2.07 of the Servicing Agreement, Borrower, shall, no later than 2:00 p.m., New York City time, on the date of such purchase, deposit (or cause the Servicer to deposit) into the Collection Account the Release Consideration for such Contract. Upon receipt by the Agent of a certificate from an authorized officer of the Servicer, certifying that the Servicer has deposited such Release Consideration into the Collection Account in accordance with this Section 3.03(g) and Section 3.10(g) of this Agreement, the Agent shall release its security interest in such Contract (and the Collateral related thereto) in accordance with Section 12(b)(iii) of the Security Agreement; provided, however, that, if a Class A Borrowing Base Deficiency or a Class B Borrowing Base Deficiency would otherwise occur as a result of such release and payment of the related Release Consideration, Borrower shall, on the date of such release, cure such prospective Class A Borrowing Base Deficiency or Class B Borrowing Base Deficiency in the manner set forth in Section 3.03(d).

     Section 3.04. Funds; Manner of Payment. Each payment and each prepayment of principal of and interest on any Loan, and each payment on account of all other Obligations shall be paid by Borrower without set-off or counterclaim to the Agent pursuant to the Agent Wire Transfer Instructions, in Federal or other immediately available funds in lawful money of the United States of America, not later than 2:00 p.m. (or 4:30 p.m. in the case of any prepayment required to be made pursuant to Section 3.03(c) hereof from a Sale), New York City time, on the date on which any such payment or prepayment is payable. If any payment hereunder or under either Note becomes due and payable on a day other than a Business Day, the maturity thereof shall be extended to the next succeeding Business Day. If the date for any payments or prepayments of principal is extended by operation of law or otherwise, interest thereon shall be payable at the then applicable rate during such extension.

     Section 3.05. Default Interest. If Borrower shall default in the payment of the principal of or interest on any Loan or any other Obligation, Borrower shall on demand pay interest on such overdue principal or other amount and, to the extent permitted by applicable law, on such overdue interest and any other overdue amount, for each day at a rate per annum equal to three hundred (300) basis points in excess of the interest rate for such Loans or other Obligations that would otherwise be applicable hereunder. In each case, such interest shall be calculated on the basis of the actual number of days elapsed in a year of 360 days and shall accrue from the date such payment was due until such amount is paid in full.

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     Section 3.06. Requirements of Law. (a) If any Requirement of Law or any change in the interpretation or application thereof or compliance by any Affected Person with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the date hereof,

          (i) shall subject such Affected Person to any tax of any kind whatsoever with respect to, as applicable, this Agreement, either Note, any Loan made by it, its portion of the Commitment, its Liquidity Commitment or any funding under the Liquidity Agreement (excluding net income taxes) or change the basis of taxation of payments to such Affected Person in respect thereof;

          (ii) shall subject any Affected Person to any tax of any kind whatsoever with respect to this Agreement, either Note or any Loan made by it, its portion of the Commitment, its Liquidity Commitment or any funding under the Liquidity Agreement (excluding net income taxes) or change the basis of taxation of advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Affected Person; or

          (iii) shall impose on any Affected Person any other condition;

and the result of any of the foregoing is to increase the cost to such Affected Person, by an amount which such Affected Person deems to be material, of making, continuing or maintaining, as applicable, any Loan, any investment under the Liquidity Agreement or its portion of the Commitment or its Liquidity Commitment or to reduce any amount receivable hereunder in respect thereof, then, in any such case, Borrower shall promptly pay the Agent for such Affected Person such additional amount or amounts as will compensate such Affected Person on an after-tax basis for such increased cost or reduced amount receivable.

          (b) If an Affected Person shall have determined that the adoption of or any change in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof or compliance by such Affected Person with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the date hereof shall have the effect of reducing the rate of return on such Affected Person’s capital as a consequence of, as applicable, this Agreement, either Note, any Loan made by it, its portion of the Commitment, its Liquidity Commitment or any funding under the Liquidity Agreement, to a level below that which such Affected Person (taking into consideration Affected Person’s or such corporation’s policies with respect to capital adequacy) by an amount deemed by such Affected Person to be material, then from time to time, Borrower shall promptly pay to the Agent for such Affected Person such additional amount or amounts as will compensate such Affected Person on an after-tax basis for such reduction.

          (c) If any Affected Person becomes entitled to claim any additional amounts pursuant to this Section, it shall promptly notify the Agent, who, in turn, will notify Borrower of the event by reason of which it has become so entitled. A certificate as to any additional amounts payable pursuant to this Section submitted by an Affected Person to the Agent and by the Agent to Borrower shall be conclusive in the absence of manifest error.

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     Section 3.07. Indemnity. Borrower agrees (with respect to clause (d) below) and Borrower, Seller and Originator, jointly and severally, agree (with respect to clauses (a), (b), (c) and (e) below) to indemnify the Agent and each Lender and to hold it harmless from any cost, loss or expense that such Lender may sustain or incur as a consequence of (a) Borrower making any payment or prepayment (other than pursuant to Section 3.03 hereof) of principal of any Loan on a day which is not a Business Day, (b) Borrower making any optional prepayment of any Loan pursuant to Section 3.02 hereof on any day other than two (2) Business Days after prior written notice to the Agent, (c) any failure by Borrower to make a Borrowing hereunder after notice of such Borrowing has been given pursuant to this Agreement, (d) any default by Borrower in making any payment of Class A Outstandings or Class B Outstandings on a due date therefor, or (e) any acceleration of the maturity of any Loans by the Agent or any Lender in accordance with the terms of this Agreement, including, but not limited to, any cost, loss or expense arising in liquidating the Loans and from interest or fees payable by any Lender to lenders of funds obtained by it in order to maintain the Loans hereunder. In the event Borrower is required to make any payment pursuant to this Section 3.07, the relevant Lender shall provide to Borrower in writing the basis upon which such charges were calculated in reasonable detail, which calculation shall be conclusive in the absence of manifest error by such Lender. Indemnification pursuant to this Section shall survive the termination of this Agreement and shall include reasonable fees and expenses of counsel and expenses of litigation.

     Section 3.08. [Reserved].

     Section 3.09. Application of Payments during Event of Default. Upon the occurrence and during the continuance of an Event of Default, all payments made hereunder and under the other Lender Loan Documents (including from the proceeds of any Collateral) shall be applied as follows:

          (a) First, to the Servicer, any accrued and unpaid Servicing Fees due to the Servicer in accordance with the Servicing Agreement; provided that, so long as TFC is Servicer, amounts payable to Servicer pursuant to this Section 3.09(a) shall be paid first to the Backup Servicer to the extent that the Servicer has not paid any fees and expenses due and payable to the Backup Servicer pursuant to Section 2.18(f) of the Servicing Agreement (it being understood that amounts payable to the Backup Servicer pursuant to this Section 3.09(a) shall be limited to amounts otherwise payable to the Servicer pursuant to this Section 3.09(a));

          (b) Second, to the Successor Servicer (if any), any accrued and unpaid servicer transition expenses of any incoming servicer then due to such Successor Servicer, up to the maximum amount of $150,000 in the aggregate;

          (c) Third, to all costs and expenses incurred by the Agent or any Lender in connection with any Default or Event of Default including without limitation those described in Section 11.04 hereof;

          (d) Fourth, to the Class A Lender, the aggregate amount due and payable hereunder on account of accrued and unpaid interest (including, for purposes of clarity, any unpaid interest due and payable on any prior date) on the Class A Loans;

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          (e) Fifth, to the Class B Lender, the aggregate amount due and payable hereunder on account of accrued and unpaid interest (including, for purposes of clarity, any unpaid interest due and payable on any prior date) on the Class B Loans;

          (f) Sixth, to the Agent, the aggregate amount due and payable pursuant to the Fee Letter on account of the Program Fee and the Unused Fee (including, for purposes of clarity, any unpaid Program Fee and Unused Fee due and payable on any prior date), to be allocated among the Agent and the Lenders as separately agreed among them;

          (g) Seventh, to the Class A Lender, the Class A Outstandings;

          (h) Eighth, to the Class B Lender, the Class B Outstandings;

          (i) Ninth, to the Class A Lender, any other Obligation owing to the Class A Lender not otherwise paid pursuant to clauses (a) through (h) above;

          (j) Tenth, to the Class B Lender, any other Obligation owing to the Class B Lender not otherwise paid pursuant to clauses (a) through (i) above;

          (k) Eleventh, to the Other Warehouse Lender, for amounts due and unpaid pursuant to the Other Warehouse Facility, if an event of default shall have occurred and be continuing under the Other Warehouse Facility;

          (l) Twelfth, to the Other Warehouse Lender, for amounts due and unpaid pursuant to any residual financing facility that the Residual Facility Borrower has with the Other Warehouse Lender, if an event of default shall have occurred and be continuing under such residual financing facility;

          (m) Thirteenth, to the Backup Servicer, (A) any fees and expenses due and payable to the Backup Servicer pursuant to Section 2.18(f) of the Servicing Agreement (solely to the extent that such fees and/or expenses shall not have been paid directly by Servicer as required under Section 2.18(f) of the Servicing Agreement or Section 3.09(a) of this Agreement) and (B) any indemnity payments due and payable to the Backup Servicer pursuant to Section 2.15 of the Servicing Agreement;

          (n) Fourteenth, to the Collection Account Bank, (A) any fees and expenses due and payable to the Collection Account Bank (solely to the extent that such fees and/or expenses shall not have been paid directly by Originator as required under Section 10.03) and (B) any Collection Account Bank Indemnified Expenses due and payable pursuant to Section 10.04 (solely to the extent that such Collection Account Bank Indemnified Expenses shall not have been paid directly by Originator as required under Section 10.04);

          (o) Fifteenth, to Administrator, any Administration Fees due and payable to Administrator; and

          (p) Sixteenth, upon payment in full of all amounts due by Borrower under the Loan Documents, any excess to the Owner Trustee for deposit in the Certificate Distribution

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Account and distribution to the Certificateholder pursuant to the Trust Agreement, or to any Person who shall be lawfully entitled to such excess.

     Section 3.10. Application of Payments, Establishment of Lockbox, Clearing Account, Concentration Account and Collection Account. (a) In accordance with the Blocked Account Agreement, Servicer has established and maintains with the Lockbox Depository the lockbox identified in the Blocked Account Agreement as number 10104 (such lockbox, together with any other lockbox established under the Blocked Account Agreement, collectively, the “Lockbox”) and the Clearing Account and the Concentration Account. Each of the Clearing Account and the Concentration Account shall at all times be an Eligible Deposit Account. In connection with the origination of each Contract, Servicer shall instruct the Obligor to direct all payments and other amounts in respect of the Contracts to the Lockbox, the Clearing Account or the Concentration Account. All Scheduled Payments actually collected and other amounts received from Obligors or other sources on or in respect of the Contracts shall initially be deposited to the Clearing Account or to the Concentration Account. No later than the close of each Business Day, the remittances then on deposit in the Clearing Account will be deposited to the Concentration Account. Notwithstanding the Blocked Account Agreement or any of the provisions of this Agreement relating to the Lockbox or the Blocked Account Agreement or the Lockbox Account, the Clearing Account or the Concentration Account, Servicer shall remain obligated and liable to the Agent, Lenders and Borrower for servicing and administering the Contracts and the other Collateral in accordance with the provisions of this Agreement, the Servicing Agreement and the other Lender Loan Documents without diminution of such obligation or liability by virtue thereof. All expenses incurred in connection with the Lockbox, the Clearing Account, the Concentration Account and the Collection Account, including, without limitation, all fees and expenses of The Bank of New York, as Collection Account Bank and as agent under the Intercreditor Agreement, all fees and expenses of the Lockbox Depository and all insufficient funds charges imposed by the Lockbox Depository, shall be borne by Servicer; provided that, if Servicer shall fail to pay such fees and expenses to the Collection Account Bank, such fees and expenses shall be among the fees and expenses payable to the Collection Account Bank pursuant to Section 3.12(c)(xv) or Section 3.09(n), as applicable, provided further that any such payment pursuant to Section 3.12(c)(xv) or section 3.09(n), as applicable, shall not relieve Servicer of its obligation for the payment of such fees and expenses.

          (b) As funds relating to the Contracts become available in the Concentration Account and in no event later than two Business Days after receipt, all such collections shall be swept from the Concentration Account to the Collection Account pursuant to daily wire instructions from Servicer. All collections relating to the Contracts received by the Servicer but not deposited to the Clearing Account or the Concentration Account pursuant to this Section 3.10(a) and (b) shall be held in trust by the Servicer and promptly, but in no event later than two Business Days after receipt, deposited to the Collection Account.

          (c) Servicer, for the benefit of the Agent, acting on behalf of itself and the Lenders, shall cause to be established and maintained at The Bank of New York, or such other financial institution as determined by the Agent with the prior written consent of Servicer, such consent not to be unreasonably withheld (the “Collection Account Bank”), in the name of the Agent an Eligible Deposit Account (the “Collection Account”), bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the Agent (and with the

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Agent as the sole “customer” (as defined in Section 4-104 of the UCC) or sole “entitlement holder” (as defined in Section 8-102(a)(7) of the UCC), as applicable, with respect to the Collection Account). The Agent hereby revocably authorizes the Collection Account Bank to make payments and distributions from the Collection Account required under this Agreement. The Agent may, in its sole discretion, revoke at any time such authority and appoint a successor entity (and successors thereto from time to time) to make such payments and distributions.

          (d) Funds on deposit in the Collection Account shall be invested by the Collection Account Bank in Eligible Investments selected in writing by Borrower (pursuant to standing instructions or otherwise); provided that, in the absence of such a direction, amounts on deposit in the Collection Account shall remain uninvested. All such Eligible Investments shall be held by the Collection Account Bank for the benefit of the Agent in a manner sufficient to provide the Agent, acting on behalf of itself and the Lenders, a perfected first priority security interest in such Eligible Investments pursuant to documentation reasonably acceptable to the Agent. On the Business Day immediately preceding each Remittance Date, all interest and other investment income (net of losses and investment expenses) on funds on deposit in the Collection Account shall be deposited into the Collection Account and shall constitute amounts available for such Remittance Date. Other than as instructed in writing by Borrower, funds on deposit in the Collection Account shall be invested in Eligible Investments that will mature (i) not later than the Business Day immediately preceding the next Remittance Date or (ii) on such next Remittance Date if such investment is held in the trust department of the Collection Account Bank and is invested in a time deposit of the Collection Account Bank rated at least A-1 by Standard & Poor’s and P-1 by Moody’s (such accounts being maintained initially at The Bank of New York). Funds deposited in the Collection Account on a day which immediately precedes a Remittance Date upon the maturity of any Eligible Investments are not required to be invested overnight. Upon the Agent’s inquiry to Borrower or the Collection Account Bank, Borrower or the Collection Account Bank, the case may be, shall inform of the Agent of all Eligible Investments in which amounts on deposit in the Collection Account are then invested. The Collection Account Bank shall not be liable for the amount of any loss incurred in respect of any investment or lack of investment of funds held in the Collection Account made in accordance with this Section 3.10(d), except for losses attributable to the Collection Account Bank’s failure to make payments on such Eligible Investments issued by the Collection Account Bank, in its commercial capacity as principal obligor and not as Collection Account Bank, in accordance with their terms.

          (e) [Reserved].

          (f) On the Required Cure of Breach Date on which Borrower is required to deliver to the Agent for the benefit of the Lenders the Release Consideration for any Contract pursuant to Section 3.03(f) of this Agreement, Borrower shall deposit (or cause the Servicer to deposit on its behalf) in the Collection Account such Release Consideration for each such Contract, in accordance with (and within the time specified under) Section 3.03(f) of this Agreement and in accordance with Section 6.2 of the Receivables Purchase Agreement and Section 6.2 of the Sale and Contribution Agreement (it being understood that the Servicer shall, on the Repurchase Date on which it receives any such Release Consideration from TFC, on behalf of Borrower pursuant to Section 6.2 of the Receivables Purchase Agreement and on

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behalf of Seller pursuant to Section 6.2 of the Sale and Contribution Agreement, deposit such amount in the Collection Account).

          (g) On the date of any purchase by the Servicer of a Contract from Borrower pursuant to Section 2.07 of the Servicing Agreement, in satisfaction of the payment to Borrower of the Release Consideration for such Contract, the Servicer shall, on behalf of Borrower, deposit such Release Consideration into the Collection Account in accordance with (and within the time specified under) Section 3.03(g).

     Section 3.11. Collections. Servicer shall remit within two Business Days of receipt thereof to the Collection Account all payments by or on behalf of the Obligors with respect to the Contracts and all Liquidation Proceeds and Recoveries, in each case as collected during the related Collection Period. For purposes of this Article III the phrase “payments by or on behalf of Obligors” means payments made with respect to the Contracts by Persons other than Servicer.

     Section 3.12. Application of Collections by Borrower. (a) With respect to each Contract, Scheduled Payments actually collected from or on behalf of the Obligor shall be applied by Servicer to interest and principal in accordance with the Simple Interest Method, in each case in accordance with Section 2.16 of the Servicing Agreement.

          (b) [Reserved].

          (c) On each Remittance Date (subject to the last paragraph of this Section 3.12(c) and subject to Section 3.09), Servicer shall instruct the Collection Account Bank in writing (no later than 1:00 p.m. New York City time on such Remittance Date) to withdraw from the Collection Account the Required Remittance Amount for such Remittance Date and to apply such Required Remittance Amount (based solely on the information contained in the Servicer’s Certificate delivered on the related Payment Determination Date pursuant to Section 2.09 of the Servicing Agreement and Section 6.19 hereof) in the following order of priority:

          (i) first, to the Agent and each Lender, any fees or reimbursements due to the Agent or such Lender pursuant to this Agreement or any other Lender Loan Document and previously unpaid;

          (ii) second, to Servicer, the Base Servicing Fee for such Remittance Date (plus any past-due Base Servicing Fees not previously paid); provided that, so long as TFC is Servicer, amounts payable to Servicer pursuant to this clause (ii) shall be paid first to the Backup Servicer to the extent that the Servicer has not paid any fees and expenses due and payable to the Backup Servicer pursuant to Section 2.18(f) of the Servicing Agreement (it being understood that amounts payable to the Backup Servicer pursuant to this clause (ii) on any Remittance Date shall be limited to amounts otherwise payable to the Servicer pursuant to this clause (ii) on such Remittance Date);

          (iii) third, to the Successor Servicer (if any), any accrued and unpaid servicer transition expenses of any incoming servicer then due to such Successor Servicer, up to the maximum amount of $150,000 in the aggregate for such Remittance Date and all prior Remittance Dates;

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          (iv) fourth, to the Class A Lender, the aggregate amount due and payable hereunder on account of accrued and unpaid interest (including, for purposes of clarity, any unpaid interest due and payable on any prior date) on the Class A Outstandings;

          (v) fifth, to the Class B Lender, the aggregate amount due and payable hereunder on account of accrued and unpaid interest (including, for purposes of clarity, any unpaid interest due and payable on any prior date) on the Class B Outstandings;

          (vi) sixth, to the Agent, the aggregate amount due and payable pursuant to the Fee Letter on account of the Program Fee and the Unused Fee (including, for purposes of clarity, any unpaid Program Fee and Unused Fee due and payable on any prior date), to be allocated among the Agent and the Lenders as separately agreed among them;

          (vii) seventh, if such Remittance Date is prior to the Termination Date, to the Class A Lender, the Class A Regular Principal Payment Amount for such Remittance Date;

          (viii) eighth, if such Remittance Date is prior to the Termination Date, to the Class B Lender, the Class B Regular Principal Payment Amount for such Remittance Date;

          (ix) ninth, if such Remittance Date is on or after the Termination Date, to the Class A Lender, the Class A Additional Principal Payment Amount for such Remittance Date (which amount shall be applied to the repayment of principal of the Class A Loans until the earlier to occur of the following: (A) the Class A Outstandings are equal to the Class A Term Loan Borrowing Base and (B) the Class A Outstandings are equal to zero);

          (x) tenth, if such Remittance Date is on or after the Termination Date, to the Class B Lender, the Class B Additional Principal Payment Amount for such Remittance Date (which amount shall be applied to the repayment of principal of the Class B Loans until the Class B Outstandings are equal to the Class B Term Loan Borrowing Base);

          (xi) eleventh, to the Backup Servicer, the fees and expenses due and payable to the Backup Servicer as of such Remittance Date pursuant to Section 2.18(f) of the Servicing Agreement (solely to the extent that such fees and/or expenses shall not have been paid directly by Servicer as required under Section 2.18(f) of the Servicing Agreement and shall have not been paid pursuant to clause (ii) above);

          (xii) twelfth, to the Other Warehouse Lender, for amounts due and unpaid pursuant to the Other Warehouse Facility, if an Other Lender Warehouse Deficiency shall have occurred and be continuing as of such Remittance Date;

          (xiii) thirteenth, to the Other Warehouse Lender, for amounts due and unpaid pursuant to any residual financing facility that the Residual Facility Borrower has

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with the Other Warehouse Lender, if an Other Lender Residual Deficiency shall have occurred and be continuing as of such Remittance Date;

          (xiv) fourteenth, to the Servicer, any Supplemental Servicing Fee for such Remittance Date (plus any past-due Supplemental Servicing Fees not previously paid);

          (xv) fifteenth, to the Collection Account Bank, (A) the fees and expenses due and payable to the Collection Account Bank on such Remittance Date (solely to the extent that such fees and/or expenses shall not have been paid directly by Originator as required under Section 10.03) and (B) any Collection Account Bank Indemnified Expenses due and payable pursuant to Section 10.04 as of such Remittance Date (solely to the extent that such Collection Account Bank Indemnified Expenses shall not have been paid directly by Originator as required under Section 10.04 and shall not have been paid pursuant to clause (ii) above);

          (xvi) sixteenth, to the Backup Servicer, any indemnity payments due and payable to the Backup Servicer pursuant to Section 2.15 of the Servicing Agreement (solely to the extent that such payments shall not have been made directly by Servicer as required under Section 2.15 of the Servicing Agreement);

          (xvii) seventeenth, to Administrator, the Administration Fee for such Remittance Date (plus any past-due Administration Fees not previously paid) and the reimbursement of reasonable expenses incurred by Administrator in connection with its performance of its obligations pursuant to the Trust Agreement, to the extent not previously reimbursed; and

          (xviii) eighteenth, any excess to the Owner Trustee for deposit in the Certificate Distribution Account and distribution to the Certificateholder pursuant to the Trust Agreement (or to such other Person as Borrower shall direct, unless a Default or an Event of Default shall have occurred and be continuing).

The Agent may independently verify the information contained in the Servicer’s Certificate delivered on any Payment Determination Date. If the Agent reasonably determines that there are errors or inaccuracies with respect to the information in any such Servicer’s Certificate, on the basis of which the Collection Account Bank would otherwise be required apply the Required Remittance Amount on the related Remittance Date pursuant to this Section 3.12(c), the Agent shall inform Servicer and the Collection Account Bank of such determination in writing no later than 11:00 a.m. (New York City time) on the Business Day immediately preceding such Remittance Date. In such case, the Agent shall instruct the Collection Account Bank in writing (no later than 1:00 p.m. New York City time on such Remittance Date) to withdraw from the Collection Account the Required Remittance Amount for such Remittance Date and to apply such Required Remittance Amount in the order of priority set forth in this Section 3.12(c), based solely on information provided by the Agent to the Collection Account Bank. If Servicer fails to deliver a completed Servicer’s Certificate to the Agent and the Collection Account Bank on any Payment Determination Date, then, no later than 1:00 p.m. (New York City time) on the Remittance Date to which such Payment Determination Date relates, the Agent shall instruct the

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Collection Account Bank in writing to withdraw from the Collection Account the Required Remittance Amount for such Remittance Date and to apply such Required Remittance Amount in the order of priority set forth in this Section 3.12(c), based solely on information provided by the Agent to the Collection Account Bank.

     Section 3.13. [Reserved].

     Section 3.14. [Reserved].

     Section 3.15. [Reserved].

     Section 3.16. Taxes. All payments made by Borrower under this Agreement and each Note shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding net income taxes, gross receipt taxes and franchise taxes (imposed in lieu of net income taxes) imposed on any the Agent or any Lender as a result of a present or former connection between the Agent or such Lender and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from the Agent or such Lender having executed, delivered or performed its obligations or received a payment under, or enforced, as applicable, this Agreement or either Note). If any such non-excluded taxes, levies, imposts, duties, charges, fees, deductions or withholdings (“Non-Excluded Taxes”) are required to be imposed on the Agent or any Lender hereunder or under either Note, Borrower shall pay such taxes by having the amounts so payable to the Agent or such Lender increased to the extent necessary to yield to the Agent or such Lender (after payment of all Non-Excluded Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement and the applicable Note. Whenever any Non-Excluded Taxes are payable by Borrower, promptly as possible thereafter Borrower shall send to the Agent a certified copy of an original official receipt received by Borrower showing payment thereof. If Borrower fails to pay any Non-Excluded Taxes when due to the appropriate taxing authority or fails to remit to the Agent the required receipts or other required documentary evidence, Borrower shall indemnify the Agent and each Lender for any incremental taxes, interest or penalties that may become due by Servicer as a result of any such failure.

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ARTICLE IV.

CONDITIONS TO CLOSING AND THE LOANS

     Section 4.01. Conditions Precedent to the Closing. The effectiveness of the obligations of the Lenders under this Agreement is subject to fulfillment of the following conditions precedent, on or before the Closing Date:

          (a) Receipt of Documents. Receipt by the Agent of the following documents, each dated as of the Closing Date, where applicable, in form and substance satisfactory to the Agent and its counsel:

          (i) This Agreement, executed and delivered on behalf of TFC, the Collection Account Bank, Seller and Borrower, together with the Fee Letter executed and delivered on behalf of TFC, Seller and Borrower;

          (ii) Each Note, executed and delivered on behalf of Borrower;

          (iii) The Warehouse Affiliate Guaranty, executed and delivered on behalf of TFC;

          (iv) The Servicing Agreement, executed and delivered on behalf of Servicer, Backup Servicer and Borrower;

          (v) The Lenders’ Intercreditor Agreement, executed and delivered on behalf of the Agent, the Lenders and Other Warehouse Lender;

          (vi) The Blocked Account Agreement, executed and delivered on behalf of Borrower, TFC, Mellon, and The Bank of New York;

          (vii) The Intercreditor Agreement, executed and delivered on behalf of TFC, The Bank of New York, Other Warehouse Lender, Citibank, N.A., the Agent, Financial Security Assurance Inc. and Ambac Assurance Corporation;

          (viii) The Security Agreement, executed and delivered on behalf of Borrower and the Agent, together with:

1) Results of lien searches in the records of the Secretary of State and any other appropriate official in each applicable jurisdiction;

2) UCC-1 financing statements delivered by (a) Originator naming Originator as “debtor”, Seller as “secured party” and Borrower as “assignee”, with evidence of filing in all jurisdictions as may be necessary in the reasonable opinion of the Agent, to perfect the security interest contemplated under the Sale and Contribution Agreement (together with UCC-3 amendments to such UCC-1 financing statements, listing the Agent on behalf of the Lenders as assignee, in each jurisdiction in which such UCC-1 financing statements are filed), (b) Seller naming Seller as “debtor”, Borrower as “secured party” and the Agent on behalf

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of the Lenders as “assignee”, with evidence of filing in all jurisdictions as may be necessary in the reasonable opinion of the Agent, to perfect the security interest contemplated under the Receivables Purchase Agreement, and (c) Borrower naming Borrower as “debtor” and the Agent on behalf of the Lenders as “secured party,” with evidence of filing in all jurisdictions as may be necessary in the reasonable opinion of the Agent, to perfect the security interest contemplated under the Security Agreement;

3) Evidence that all other actions necessary to perfect the security interest contemplated under the Security Agreement have been taken;

          (ix) The Sale and Contribution Agreement, executed and delivered on behalf of Originator and Seller;

          (x) The Receivables Purchase Agreement, executed and delivered on behalf of Seller and Borrower;

          (xi) A copy of the resolutions of each of Originator, Servicer and Seller authorizing (A) the execution, delivery and performance of the Loan Documents by each of Originator, Servicer and Seller, (B) with respect to Seller, the sales contemplated under the Receivables Purchase Agreement, with respect to the Originator, the sales contemplated under the Sale and Contribution Agreement and with respect to Servicer, the servicing contemplated under the Servicing Agreement and (C) with respect to Seller, the granting of the security interest contemplated under the Receivables Purchase Agreement and with respect to the Originator, the granting of the security interest contemplated under the Sale and Contribution Agreement, certified by the Secretary or an Assistant Secretary of Seller, Originator or Servicer, as applicable, as of the Closing Date, which certificate shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded as of the date of such certificate;

          (xii) Certificates of the Secretary or an Assistant Secretary of Seller, Originator and Servicer certifying the names and the signatures of the officers of Seller, Originator or Servicer, as applicable, authorized to sign the Loan Documents to be delivered hereunder;

          (xiii) (A) copy of the Certificate of Incorporation of each of Originator and Servicer and each amendment thereto certified under recent date by the Secretary of State of California, (B) copy of the Certificate of Formation of Seller certified under recent date by the Secretary of State of Delaware, (C) copy of the By-Laws of each of Originator and Servicer and each amendment thereto, certified by the Secretary or an Assistant Secretary of Servicer or Originator, as applicable, as being true, complete and correct as of the Closing Date, (D) copy of the limited liability company operating agreement of Seller and each amendment thereto, certified by the Secretary or an Assistant Secretary of Seller as being true, complete and correct as of the Closing Date, (E) copy of the Certificate of Trust of Borrower certified under recent date by the Secretary of State of Delaware, and (F) copy of the Trust Agreement and each

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amendment thereto, certified by the Secretary or an Assistant Secretary of Seller as being true, complete and correct as of the Closing Date;

          (xiv) Copies of certificates (long form) or other evidence from the Secretary of State or other appropriate authority of the State of California and of each jurisdiction where Servicer or Originator is qualified to do business, evidencing the good standing of Originator and Servicer in the State of California and such other jurisdictions, in each case, dated no earlier than 45 days prior to the Closing Date;

          (xv) Copies of certificates (long form) or other evidence from the Secretary of State or other appropriate authority of the State of Delaware and of each jurisdiction where Seller is qualified to do business, evidencing the good standing of Seller in the State of Delaware and such other jurisdictions, in each case, dated no earlier than 45 days prior to the Closing Date;

          (xvi) Copies of certificates (long form) or other evidence from the Secretary of State or other appropriate authority of the State of Delaware and of each jurisdiction where Borrower is qualified to do business, evidencing the good standing of Borrower in the State of Delaware and such other jurisdictions, in each case, dated no earlier than 45 days prior to the Closing Date;

          (xvii) Opinions of counsel to Borrower, Seller, Originator and Servicer addressing such matters as the Agent or any Lender reasonably request, in form and substance that is reasonably satisfactory to the Agent;

          (xviii) Copies of any commitment or agreement between Seller or Borrower and any lender or other financial institution, other than any such commitment or agreement (or portion thereof) which the Agent specifically agrees are not required to be delivered hereunder; and

          (xix) Such other opinions, documents and instruments as the Agent or its counsel shall reasonably request.

          (b) Representation and Warranties. Each of the representations and warranties made by or on behalf of Borrower, Seller, Originator or Servicer herein or in any other Loan Document to which any such Person is a party shall be true and correct on and as of the Closing Date (except to the extent that such representations and warranties relate solely to a Cut-off Date, in which case such representations and warranties shall be true and correct as of such Cut-off Date).

          (c) No Default or Event of Default. No Default or Event of Default (or no event that given the lapse of time would result in a Default or Event of Default) shall have occurred and be continuing on and as of the Closing Date.

          (d) Fees. On the Closing Date, all fees required to be paid on or before the Closing Date pursuant to the Fee Letter shall have been paid.

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          (e) Expenses of the Agent and the Lenders. On the Closing Date, Borrower shall have paid all fees and expenses incurred by the Agent and the Lenders in connection herewith as to which the Agent shall have advised Borrower at least five (5) Business Days prior to the Closing Date.

          (f) [Reserved].

          (g) No Material Adverse Change. No Material Adverse Change shall have occurred since September 30, 2007.

          (h) Servicing Audit Report. The Agent shall have received a copy of the most recent report of independent accountants with respect to TFC’s servicing of motor vehicle loans, delivered pursuant to the sale and servicing agreements under the then-outstanding term securitizations sponsored by TFC.

          (i) Other Warehouse Facility. The Other Warehouse Facility and the Residual Facility shall be in full force and effect and in good standing.

          (j) Test Mapping by Backup Servicer. Pursuant to Section 2.18 of the Servicing Agreement, the Backup Servicer shall have performed a test data mapping within the nine (9) calendar months prior to the Closing Date of the servicing data with respect to a sample of Contracts (which sample shall be reasonably acceptable to the Agent) to the Backup Servicer’s servicing system, based upon servicing data with respect to such sample of Contracts that shall have been provided by the Servicer to the Backup Servicer in an electronic format reasonably acceptable to the Backup Servicer.

     Section 4.02. Conditions Precedent to All Loans. The Lenders’ obligation to make any Loan hereunder is subject to the following conditions precedent and the delivery by Borrower of a Notice of Borrowing pursuant to Section 2.03 and the acceptance of the proceeds of any Borrowing by Borrower shall be deemed certification by Borrower that the following conditions shall have been met:

          (a) No Commitment Termination Event. No Commitment Termination Event shall have occurred, and no Commitment Termination Event will occur as a result of making such Loan.

          (b) Representation and Warranties. Each of the representations and warranties made by or on behalf of Borrower, Seller, Originator or Servicer herein or in any other Loan Document to which any such Person is a party, shall be true and correct in all respects on and as of the Borrowing Date, before and after giving effect to the Borrowing to be made on such date and the application of the proceeds therefrom, as though made on and as of such date (except to the extent that such representations and warranties relate solely to a Cut-off Date, in which case such representations and warranties shall be true and correct as of such Cut-off Date).

          (c) No Default or Event of Default. After giving effect to such Borrowing and the application of proceeds therefrom, no Default or Event of Default shall have occurred and be continuing on and as of such Borrowing Date.

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          (d) Contract Eligibility Criteria. On and as of the Borrowing Date, each of the representations and warranties set forth in Schedule B hereto is true and correct (except to the extent that such representations and warranties relate solely to a Cut-off Date, in which case such representations and warranties shall be true and correct as of such Cut-off Date) for all Contracts pledged by Borrower to the Agent under the Security Agreement on such date and no such Contract is an Ineligible Contract. No Contract was originated in any jurisdiction in which Borrower is required to be licensed in order to own such Contract and such license has not been obtained prior to Borrower owning such Contract. With respect to each Contract, the applicable Dealer has either been paid or received credit from Originator for all proceeds from the sale of such Contract to Originator.

          (e) Deliveries. The Agent shall have received the following:

          (i) Borrower shall have delivered to the Agent a Notice of Borrowing in compliance with Section 2.03 hereof (and, in the case of any Clean-up Call Loan, Section 2.06 hereof).

          (ii) Borrower shall have delivered to the Agent and Servicer not later than 2:00 p.m. (New York City time) on the Business Day prior to the proposed Borrowing Date (or the third (3^rd) Business Day of the month of the proposed Borrowing Date, in the case of a Clean-up Call Loan) in computer readable form, a detailed listing of all Contracts to be pledged by Borrower to the Agent under the Security Agreement in connection with the Borrowing (the “List of Contracts”) and such other data relating to the Contracts and the Related Assets as the Agent may reasonably request.

          (iii) The Agent shall have received from the Custodian a certification from Servicer that all items required to be delivered to the Custodian pursuant to Section 3.01 of the Servicing Agreement with respect to the Contracts to be pledged by Borrower to the Agent under the Security Agreement on such Borrowing Date have been delivered.

          (iv) the Agent shall have received UCC-3 Partial Release Statements (or other appropriate forms) in appropriate form for filing, together with a release letter reasonably satisfactory to the Agent, in each case duly executed by (1) any other warehouse lender releasing the Contracts to be pledged by Borrower to the Agent under the Security Agreement on such Borrowing Date from the security interest of such other warehouse lender or (2) in the case of a Clean-up Call Contract, the secured party in the related securitization releasing such Contract to be pledged by Borrower to the Agent under the Security Agreement on such Borrowing Date from the security interest pursuant to such securitization.

          (v) The Agent shall have received the most recent Servicer’s Certificate required to be delivered in accordance with Section 2.09 of the Servicing Agreement and Section 6.19 hereof.

          (vi) The Agent shall have received the most recent Borrowing Base Certificate required to be delivered in accordance with Section 6.13 hereof.

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          (vii) In the case of any Clean-up Call Loan, the Agent shall have received all opinions, documents and instruments required pursuant to Section 2.06.

          (viii) If an Opinion of Counsel is required to be delivered in connection with such Loan pursuant to the requirements for Opinions of Counsel set forth in the definition of “Eligible State” herein, Borrower shall have delivered such Opinion of Counsel to the Agent.

          (ix) Solely with respect to the initial Borrowing, opinions of counsel to Borrower, Seller, Originator and Servicer addressing (A) the true-sale of the Transferred Property from TFC to Seller, (B) substantive consolidation of TFC, Seller and Borrower and (C) such other matters as the Agent or any Lender reasonably request, in each case in form and substance that is reasonably satisfactory to the Agent.

          (f) Borrowing Base, Etc. The Class A Outstandings shall not exceed (i) the Class A Borrowing Base for the applicable Borrowing Date or (ii) the product of the Class A Note Percentage for the applicable Borrowing Date and the Total Outstandings, and the aggregate Class B Outstandings shall not exceed (x) the Class B Borrowing Base for the applicable Borrowing Date, (y) the product of the Class B Note Percentage for the applicable Borrowing Date and the Total Outstandings or (z) the Class B Maximum Outstandings (in each case, after giving effect to such Loan and to the new Contracts being pledged to the Agent under the Security Agreement on such date).

          (g) No Material Adverse Change or Material Adverse Effect. There shall not have occurred one or more events that constitutes, or is reasonably likely to constitute, a Material Adverse Change or that results in, or is reasonably likely to result in, a Material Adverse Effect.

          (h) Filings, Registrations, Recordings. All documents (including, without limitation, financing statements) required to be filed, registered or recorded in order to create, in favor of the Agent for the benefit of the Lenders, a perfected, first-priority security interest in the Collateral, subject to no Liens other than those created under the Security Agreement or any other Loan Document, shall have been properly prepared (and if required, executed) for filing, registration or recording in each office in each jurisdiction in which such filings, registrations and recordations are required to perfect such first-priority security interest.

          (i) Lender Licenses. Neither the Agent nor any Lender shall be required solely as a result of financing the Collateral or the pledge to the Agent of the Collateral to be licensed, registered or approved or to obtain permits or otherwise qualify (i) to do business in any State in which it is not currently so required or (ii) under any State consumer lending, fair debt collection or other applicable State statute or regulation.

          (j) Audit Reports. The Agent shall have timely received each Required Audit Report and each other report required pursuant to Section 2.11 of the Servicing Agreement.

          (k) Hedging Strategy. Borrower shall have implemented and maintained a Hedging Strategy that is reasonably acceptable to the Agent.

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          (l) Other Conditions. Borrower shall have satisfied all other conditions that the Agent or any Lender may reasonably require, if the Agent or such Lender shall have given Borrower reasonable advance notice of such conditions.

ARTICLE V.

REPRESENTATIONS AND WARRANTIES OF BORROWER

     In order to induce the Lenders to enter into this Agreement and to make the Loans hereunder, Borrower hereby represents and warrants to the Agent and the Lenders as follows:

     Section 5.01. Organization and Good Standing. Borrower is duly organized and validly existing as a statutory trust in good standing under the laws of the State of Delaware, with the power and authority to own its properties and to conduct its business as such properties are currently owned and such business is presently conducted, and had at all relevant times, and has, the power, authority and legal right to acquire and own the Contracts and the other Collateral and to pledge the Contracts and the other Collateral to the Agent for the benefit of the Lenders pursuant to the Security Agreement and to enter into and perform its other obligations under this Warehouse Lending Agreement, each Note, the Security Agreement, the Receivables Purchase Agreement, each Receivables Purchase Agreement Supplement and each other Loan Document to which it is a party.

     Section 5.02. Due Qualification. Borrower is duly qualified to do business as a foreign entity in good standing, and has obtained all necessary licenses and approvals, in all jurisdictions in which the ownership or lease of its property or the conduct of its business (including, without limitation, the purchase of the Contracts from Seller under the Receivables Purchase Agreement and each Receivables Purchase Agreement Supplement, the pledge of the Contracts by Borrower to the Agent pursuant to the Security Agreement, and the performance of its other obligations under the Receivables Purchase Agreement, each Receivables Purchase Agreement Supplement, this Warehouse Lending Agreement, each Note, the Security Agreement and the other Loan Documents to which it is a party) shall require such qualifications, licenses and/or approvals.

     Section 5.03. Power and Authority. Borrower has the power and authority to execute and deliver this Warehouse Lending Agreement, each Note, the Security Agreement, the Receivables Purchase Agreement, each Receivables Purchase Agreement Supplement and each other Loan Document to which it is a party and to carry out its terms and their terms, respectively. The execution, delivery and performance of this Warehouse Lending Agreement, each Note, the Security Agreement, the Receivables Purchase Agreement, each Receivables Purchase Agreement Supplement and each other Loan Document to which it is a party have been duly authorized by Borrower by all necessary action.

     Section 5.04. Binding Obligation. Each of this Warehouse Lending Agreement, each Note, the Security Agreement, the Receivables Purchase Agreement, each Receivables Purchase Agreement Supplement and each other Loan Document to which Borrower is a party shall constitute a legal, valid and binding obligation of Borrower enforceable in accordance with its terms, except only as such enforcement may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally.

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     Section 5.05. No Violation. The execution, delivery and performance by Borrower of this Warehouse Lending Agreement, each Note, the Security Agreement, the Receivables Purchase Agreement, each Receivables Purchase Agreement Supplement and each other Loan Document to which Borrower is a party and the consummation of the transactions contemplated hereby and thereby and the fulfillment of the terms hereof and thereof do not conflict with, result in a material breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time) a default under, Borrower’s organizational documents, or any indenture, agreement, mortgage, deed of trust, or other instrument to which Borrower is a party or by which it is bound or to which any of its properties are subject; or result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any indenture, agreement, mortgage, deed of trust, or other instrument (other than the Lender Loan Documents); or violate any law, order, rule or regulation applicable to Borrower of any court or of any Federal or State regulatory body, administrative agency or other governmental instrumentality having jurisdiction over Borrower or its properties.

     Section 5.06. Compliance with Law. Borrower is conducting its business and operations in compliance with all applicable laws, regulations, ordinances and directives of governmental authorities, except to the extent that any noncompliance results from the failure of either Lender to be licensed or qualified where necessary and except to the extent that any such noncompliance could not reasonably be expected to have a Material Adverse Effect. Borrower has filed all tax returns required to be filed and has paid all taxes due in respect of the ownership of its assets or the conduct of its operations except to the extent that the payment of such taxes is being contested in good faith by it in appropriate proceedings and adequate reserves have been provided for the payment thereof.

     Section 5.07. No Consents. Borrower is not required to obtain the consent of any other party or any consent, license, approval or authorization, or registration or declaration with, any governmental authority, bureau or agency in connection with the execution, delivery, performance, validity or enforceability of this Warehouse Lending Agreement, either Note, the Security Agreement, the Receivables Purchase Agreement, any Receivables Purchase Agreement Supplement or any other Loan Document to which Borrower is a party, except those which may have been obtained and are in full force and effect.

     Section 5.08. No Proceedings. There are no proceedings or investigations pending or, to Borrower’s best knowledge, threatened against Borrower before any court, regulatory body, administrative agency, other government instrumentality, arbitral tribunal or other tribunal having jurisdiction over Borrower or its properties (i) asserting the invalidity of this Warehouse Lending Agreement, either Note, the Security Agreement, the Receivables Purchase Agreement, any Receivables Purchase Agreement Supplement or any other Loan Document to which Borrower is a party, (ii) seeking to prevent the consummation of any of the transactions contemplated by this Warehouse Lending Agreement, either Note, the Security Agreement, the Receivables Purchase Agreement, any Receivables Purchase Agreement Supplement or any other Loan Document to which Borrower is a party, or (iii) seeking any determination or ruling that could have a Material Adverse Effect.

     Section 5.09. No Adverse Selection. Borrower has not selected Contracts to be pledged to the Agent for the benefit of the Lenders in accordance with the terms of the Security

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Agreement and the other Loan Documents through a process that is intended to be, or could be expected to be, adverse to the Lenders.

     Section 5.10. Other Obligations. Borrower is not in default in the performance, observance or fulfillment of any obligation, covenant or condition in any of the Loan Documents to which it is a party or in any agreement or instrument to which it is a party or by which it is bound the result of which could have a Material Adverse Effect.

     Section 5.11. Regulation U. No proceeds of any Loan will be used, directly or indirectly, by Borrower for the purpose of purchasing or carrying any Margin Stock (as defined in Regulation U or for the purpose of reducing or retiring any indebtedness which was originally incurred to purchase or carry Margin Stock or for any other purpose which might cause any Loan to be a “purpose credit” within the meaning of Regulation U.

     Section 5.12. Investment Company Act, Etc. Borrower is not an “investment company” or a company “controlled” by an investment company within the meaning of the Investment Company Act of 1940, as amended. Borrower is not subject to regulation under any Requirement of Law (other than Regulation X of the Board) which limits its ability to incur Indebtedness.

     Section 5.13. [Reserved].

     Section 5.14. Collateral Security. (a) Borrower owns and will own each item which it pledges as Collateral, free and clear of any and all Liens (including, without limitation, any tax liens), other than Liens created in favor of the Agent for the benefit of the Lenders pursuant to the Security Agreement or in favor of the Agent, the Lenders or the Other Warehouse Lender under any other Loan Document. No security agreement, financing statement or other public notice similar in effect with respect to all or any part of the Collateral is or will be on file or of record in any public office, except such as have been or may hereinafter be filed pursuant to this Agreement and the Security Agreement and except such as shall be terminated as to the Collateral no later than immediately prior to the pledge of such Collateral to the Agent for the benefit of the Lenders under the Security Agreement.

          (b) The Security Agreement is effective to create, as collateral security for the Obligations hereunder, valid and enforceable Liens on the Collateral in favor of the Agent for the benefit of the Lenders.

          (c) Upon filing of the financing statement delivered to the Agent by Borrower on or prior to the Closing Date with the Secretary of State of the State of Delaware (which financing statement is in proper form for filing in such jurisdiction), the Liens created pursuant to this Agreement and the Security Agreement will constitute a perfected security interest in the Collateral in favor of the Agent for the benefit of the Lenders, which Liens will be prior to all other Liens of all other Persons which may be perfected by filing a financing statement under Article 9 of the Uniform Commercial Code and which Liens are enforceable as such as against all other Person.

     Section 5.15. Ownership of Properties. Borrower has good and marketable title to any and all of its properties and assets, subject only to a Lien under any Loan Document.

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     Section 5.16. [Reserved].

     Section 5.17. [Reserved].

     Section 5.18. The Security Agreement. Each of the representations and warranties of Borrower contained in the Security Agreement is true and correct.

     Section 5.19. Eligible Contracts. All Contracts included in the Borrowing Base are Eligible Contracts.

     Section 5.20. Ownership of Borrower. Seller owns beneficially and of record 100% of the Borrower Trust Certificates free and clear of all Liens.

     Section 5.21. No Other Business. Borrower engages in no other business activities other than the purchase of non-prime consumer new or used automobile, van, sport utility vehicle and light-duty truck loans, pledging such loans to the Agent for the benefit of the Lenders and the Other Warehouse Lender, transferring such loans in connection with securitizations and in connection with whole-loan sales, and other activities relating to the foregoing to the extent permitted by the organizational documents of Borrower as in effect on the date hereof, or as amended with the prior written consent of the Agent. Without limitation of the foregoing, Borrower is not a borrower under any loan or financing agreement, facility or other arrangement other than the facility established pursuant to this Agreement and the Other Warehouse Facility.

     Section 5.22. No Indebtedness. Borrower has no Indebtedness, other than Indebtedness incurred under (or contemplated by) the terms of this Agreement and the Other Warehouse Facility.

     Section 5.23. No Fraudulent Conveyance. As of the Closing Date and immediately after giving effect to each Borrowing, the fair value of the assets of Borrower is greater than the fair value of its liabilities (including, without limitation, contingent liabilities of Borrower), and Borrower is and will be solvent, does and will pay its debts as they mature and does not and will not have an unreasonably small capital to engage in the business in which it is engaged and proposes to engage. Borrower does not intend to incur, or believe that it has incurred, debts beyond its ability to pay such debts as they mature. Borrower is not in default under any material obligation to pay money to any Person. Borrower is not contemplating the commencement of insolvency, bankruptcy, liquidation or consolidation proceedings or the appointment of a receiver, liquidator, conservator, trustee or similar official in respect of Borrower or any of its assets. Borrower is not transferring any Collateral with any intent to hinder, delay or defraud any of its creditors. Borrower will not use the proceeds from the transactions contemplated by this Warehouse Lending Agreement or any other Loan Document to give any preference to any creditor or class of creditors. Borrower has given fair consideration and reasonably equivalent value in exchange for the sale of the Contracts by Seller under the Receivables Purchase Agreement.

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ARTICLE VI.

AFFIRMATIVE COVENANTS

     Until all of the Obligations have been paid in full, the Commitment has been terminated and this Agreement has been terminated:

     Section 6.01. Notice of Defaults, Other Commitment Termination Events, Litigation, Adverse Judgments, Etc. TFC, Seller or Borrower, as applicable, shall give notice to the Agent promptly:

          (a) upon TFC, Seller or Borrower, as the case may be, becoming aware of, and in any event within one (1) Business Day after, the occurrence of any Default or any event of default or default under any other Loan Document, any Residual Facility, the Other Warehouse Facility, any residual financing agreement with the Other Warehouse Lender, or any other material agreement of TFC, Seller, Borrower or the Residual Facility Borrower;

          (b) upon TFC, Seller or Borrower, as the case may be, becoming aware of, and in any event within one (1) Business Day after, the occurrence of any other Commitment Termination Event,

          (c) upon, and in any event within one (1) Business Day after, service of process on TFC, Seller or Borrower (as the case may be), or any agent thereof for service of process, in respect of any legal or arbitrable proceedings affecting TFC, Seller or Borrower (i) that questions or challenges the validity or enforceability of any of the Loan Documents, (ii) in which the amount in controversy exceeds $1,000,000 or (iii) that could reasonably be expected to have a Material Adverse Effect;

          (d) upon, and in any event within one (1) Business Day after, TFC, Seller or Borrower, as the case may be, becoming aware of any Rating Agency requirement for the appointment of a third-party custodian of receivables files in connection with any securitization of Contracts,

          (e) upon, and in any event within one (1) Business Day after, TFC, Seller or Borrower, as the case may be, becoming aware of any event or change in circumstances that could reasonably be expected to have a Material Adverse Effect, to constitute a Material Adverse Change or to cause a Default; and

          (f) upon, and in any event within one (1) Business Day after, TFC, Seller or Borrower, as the case may be, becoming aware of entry of a judgment or decree in respect of TFC, Seller or Borrower, its respective assets or the Collateral in an amount in excess of $1,000,000.

Each notice pursuant to this Section 6.01 shall be accompanied by a statement of an officer of TFC or Seller or a statement of Borrower, as applicable, setting forth details of the occurrence referred to therein and stating what action TFC, Seller and Borrower, as the case may be, have taken or propose to take with respect thereto.

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     Section 6.02. Taxes. Borrower shall pay and discharge all taxes and governmental charges upon it or against any of its properties or assets or its income prior to the date after which penalties attach for failure to pay, except (a) to the extent that Borrower shall be contesting in good faith in appropriate proceedings its obligation to pay such taxes or charges, adequate reserves having been set aside for the payment thereof, or (b) with respect to such taxes and charges which are not material in either nature or amount such that any failure to pay or discharge them, and any resulting penalties, either in any one instance or in the aggregate, would not materially and adversely affect the financial condition, operations, business or prospects of Borrower.

     Section 6.03. Separate Existence; No Commingling. (a) Each of Seller and Borrower shall, and TFC shall cause itself and any other Affiliates of Borrower to, maintain the truth and accuracy of all facts assumed by Kirkland & Ellis LLP in the true-sale and non-consolidation opinions of Kirkland & Ellis LLP; provided that in the event that any request is made for the Agent or either Lender to consent to or approve any matter that, if effectuated or consummated, would result in a change to the continuing truth and accuracy of any of the factual assumptions in the true-sale or non-consolidation opinions of Kirkland & Ellis LLP, such request shall be accompanied by an opinion of counsel that the conclusions set forth in the true-sale and non-consolidation opinions of Kirkland & Ellis LLP will be unaffected by such change.

          (b) Seller will (i) own no assets, and not engage in any business, other than the assets and transactions specifically contemplated by this Agreement and the other Loan Documents, (ii) not incur any indebtedness or obligation, secured or unsecured, direct or indirect, absolute or contingent, other than as contemplated by this Agreement and the other Loan Documents, (iii) not make any loans or advances to any third party, and shall not acquire obligations or securities of any Affiliate, (iv) pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) only from its own assets, (v) do all things necessary under applicable law and its organizational documents to observe organizational formalities and to preserve its existence, and will not amend, modify or otherwise change its certificate of incorporation or bylaws, or suffer the same to be amended, modified or otherwise changed, in a manner that will have a Material Adverse Effect, (vi) maintain all of its books, records, financial statements and bank accounts separate from those of any Affiliate, (vii) be, and at all times will hold itself out to the public as, a legal entity separate and distinct from any other entity (including any Affiliate), correct any known misunderstanding regarding its status as a separate entity, conduct business in its own name, not identify itself or any Affiliate as a division or part of the other and maintain and utilize separate stationery, (viii) maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations, (ix) not engage in or suffer any dissolution, winding-up, liquidation, consolidation or merger in whole or in part, (x) not commingle its funds or other assets with those of any Affiliate or any other Person, (xi) maintain its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify its individual assets from those of any Affiliate or any other Person, (xii) not and will not hold itself out to be responsible for the debts or obligations of any other Person and (xiii) be formed and organized solely for the purpose of purchasing and selling non-prime consumer new and used automobile, van, sport utility vehicle and light-duty truck loans, transferring such loans to Borrower under the Receivables Purchase Agreement, transferring such loans in connection with securitizations and in connection with whole-loan sales, and other activities relating to the foregoing.

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          (c) Borrower will (i) own no assets, and not engage in any business, other than the assets and transactions specifically contemplated by this Agreement and the other Loan Documents, (ii) not incur any indebtedness or obligation, secured or unsecured, direct or indirect, absolute or contingent, other than as contemplated by this Agreement and the other Loan Documents, (iii) not make any loans or advances to any third party, and shall not acquire obligations or securities of any Affiliate, (iv) pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) only from its own assets, (v) do all things necessary under applicable law and its organizational documents to observe organizational formalities and to preserve its existence, and will not amend, modify or otherwise change its certificate of incorporation or bylaws, or suffer the same to be amended, modified or otherwise changed, in a manner that will have a Material Adverse Effect, (vi) maintain all of its books, records, financial statements and bank accounts separate from those of any Affiliate, (vii) be, and at all times will hold itself out to the public as, a legal entity separate and distinct from any other entity (including any Affiliate), correct any known misunderstanding regarding its status as a separate entity, conduct business in its own name, not identify itself or any Affiliate as a division or part of the other and maintain and utilize separate stationery, (viii) maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations, (ix) not engage in or suffer any dissolution, winding-up, liquidation, consolidation or merger in whole or in part, (x) not commingle its funds or other assets with those of any Affiliate or any other Person (other than in the Lockbox, the Clearing Account and the Concentration Account), (xi) maintain its assets in such a manner that it will not be costly or difficult to segregate, ascertain or identify its individual assets from those of any Affiliate or any other Person, (xii) not and will not hold itself out to be responsible for the debts or obligations of any other Person and (xiii) be formed and organized solely for the purpose of purchasing and selling non-prime consumer new and used automobile, van, sport utility vehicle and light-duty truck loans, pledging such loans to the Agent and the Other Warehouse Lender, transferring such loans in connection with securitizations and in connection with whole-loan sales, and other activities relating to the foregoing.

     Section 6.04. Financing Statements. At the Agent’s request, Originator, Seller and Borrower shall execute such financing statements as the Agent reasonably determines may be required by law to perfect, maintain and protect the interest of the Agent for the benefit of the Lenders in the Collateral and in the proceeds thereof.

     Section 6.05. Books and Records; Other Information. (a) Borrower shall maintain accurate and complete books and records with respect to the Collateral and Borrower’s business. Seller shall maintain accurate and complete books and records with respect to the Conveyed Property and Seller’s business. All accounting books and records shall be maintained in accordance with GAAP.

          (b) Originator, Servicer, Seller and Borrower shall, and shall cause each of their respective Affiliates to, permit any representative of the Agent or any Lender to visit and inspect any of the properties of Borrower and such Affiliates to examine the books and records of Originator, Servicer, Seller or Borrower and such Affiliates, as applicable, and to make copies and take extracts therefrom, and to discuss the business, operations, properties, condition (financial or otherwise) or prospects of Originator, Servicer, Seller or Borrower and each such Affiliate, as applicable, or any of the Collateral with the officers and independent public

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accountants thereof and as often as the Agent or such Lender may reasonably request, and so long as no Default or Event of Default shall have occurred and be continuing, all at such reasonable times during normal business hours upon reasonable notice; provided that, after a Default or Event of Default shall have occurred and be continuing, the Agent and any Lender shall make such inspections, examine such documents and conduct such discussions at such times as it may determine in its sole discretion.

          (c) Each of Seller and Borrower shall promptly provide to the Agent or any Lender all information regarding its respective operations and practices as the Agent or any Lender shall reasonably request.

     Section 6.06. Payment of Fees and Expenses. Servicer shall pay to the Agent or any Lender, on demand, any and all fees, costs or expenses which the Agent or any Lender pays to a bank or other similar institution arising out of or in connection with the return of payments from Borrower deposited for collection by the Agent or any Lender.

     Section 6.07. Continuity of Business and Compliance With Agreement. Borrower shall continue in business in a prudent, reasonable and lawful manner with all licenses, permits, and qualifications necessary to perform its respective obligations under this Agreement, except where such failure could not be expected to materially and adversely affect such performance or the enforceability of the Agent’s security interest for the benefit of the Lenders in the Collateral.

     Section 6.08. Ownership of Borrower. Seller shall own beneficially and of record 100% of the Borrower Trust Certificates free and clear of all Liens.

     Section 6.09. Shareholder Reports, Governmental Filings, Etc. TFC, Seller and Borrower shall furnish to the Agent, as soon as available, copies of (w) any and all Relevant Reports that TFC, Seller or Borrower sends to its respective shareholders, members or Certificateholder, (x) all reports, correspondence and other information provided by Triad Acquisition Corp. or TFC to the Unsecured TFC Noteholders, (y) copies of all (if any) regular, periodic and special reports, and all registration statements publicly filed by TFC or any Affiliate of TFC with the Securities and Exchange Commission or any Governmental Authority that supervises the issuance of securities by TFC, Seller, Borrower or any other Affiliate of TFC, and (z) any press releases concerning TFC, Seller or Borrower.

     Section 6.10. Fulfillment of Obligations. Borrower shall pay and perform, as and when due, all of its obligations of whatever nature, except where the amount or validity thereof is currently being contested in good faith by appropriate proceedings and reserves in conformity with GAAP with respect thereto have been provided on the books of Borrower, and except to the extent that the failure to do so could not, individually or in the aggregate, be expected to have a Material Adverse Effect.

     Section 6.11. Changes in Location, Name, Etc. Borrower will not (i) change its “location” as defined in Section 9-307 of the UCC, (ii) change its form of organization, or (iii) change its name or identity in any manner that would, could or might make any financing statement or continuation statement filed in accordance with this Agreement or any other Lender Loan Document seriously misleading within the applicable provisions of the UCC, unless, in any

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such case, Borrower shall have given the Agent at least thirty (30) days prior written notice thereof and shall have delivered to the Agent all UCC financing statements, continuation statements and amendments thereto and taken all other actions as are necessary (or as are requested by the Secured Party) to continue the Agent’s perfected senior first priority security interest for the benefit of the Lenders in the Collateral or the Agent’s perfected junior second priority security interest for the benefit of the Lenders in the Other Warehouse Financing Facility Collateral.

     Section 6.12. Compliance with Laws, Etc. Each of TFC, Seller and Borrower shall, and shall cause each of its Subsidiaries to, comply (i) in all material respects with all Requirements of Law and any change therein or in the application, administration or interpretation thereof (including, without limitation any request, directive, guideline or policy, whether or not having the force of law) by any Governmental Authority charged with the administration or interpretation thereof; and (ii) with all indentures, mortgages, deeds of trust, agreements, or other instruments or contractual obligations to which it is a party, including without limitation, each Loan Document to which it is a party, or by which it or any of its properties may be bound or affected, or which may affect the Contracts, if the failure to comply therewith could, individually or in the aggregate, be expected to have a Material Adverse Effect.

     Section 6.13. Borrowing Base Certificates. Borrower shall deliver to the Agent no later than 4:00 p.m. (New York City time) two (2) Business Days prior to each Remittance Date during the term hereof, a Borrowing Base Certificate as of the close of business on the last day of the immediately preceding calendar month.

     Section 6.14. Collateral Statements. Borrower will furnish to the Agent from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Agent may reasonably request, all in reasonable detail.

     Section 6.15. Actions to Preserve the Agent’s Security Interest. TFC, Seller and Borrower will defend the Collateral against, and will take such other action as is necessary to remove, any Lien, security interest or claim on or to the Collateral, other than the security interests created under the Security Agreement or any other Loan Document, and TFC, Seller and Borrower will defend the right, title and interest of the Agent for the benefit of the Lenders in and to any of the Collateral against the claims and demands of all Persons whomsoever. At the Agent’s request, TFC, Seller or Borrower, as applicable, shall prepare (and execute, if required) such financing statements as the Agent reasonably determines are required by law to perfect, maintain and protect the security interest of the Agent for the benefit of the Lenders in the Collateral and in the proceeds thereof.

     Section 6.16. Actions to Enforce Rights under Contracts. TFC, Seller and Borrower shall take such reasonable and lawful actions as the Agent shall request to enforce Borrower’s rights under the Contracts, and, following the occurrence of a Default, shall take such reasonable and lawful actions as are necessary to enable the Agent to exercise such rights in the Agent’s own name.

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     Section 6.17. Collateral Performance Tests. There shall not occur any “Event of Default” or similar event arising out of or otherwise relating to the “Delinquency Rate”, the “Cumulative Net Loss Rate” or any similar concept (as each such term is defined or concept is specified in the Insurance and Indemnity Agreement or any similar agreement relating to any securitization transaction relating to automotive receivables similar to the Contracts entered into by Originator or any of its Affiliates after the date hereof). On each Payment Determination Date, a Responsible Officer of TFC shall deliver to the Agent an officer’s certificate certifying as to (i) whether any such “Event of Default” or similar event has occurred and is then continuing with respect to any such securitization and (ii) the steps being taken to cure or correct each such “Event of Default” or similar event that has occurred and is then continuing; provided that, to the extent that such information is contained in the most recent monthly servicer’s certificate for any such securitization, the requirements set forth in this sentence may be satisfied by the delivery of a copy of such monthly servicer’s certificate to the Agent.

     Section 6.18. Hedging Strategy. Borrower shall implement and maintain a Hedging Strategy that is reasonably acceptable to the Agent.

     Section 6.19. Monthly Servicer’s Certificate. Borrower shall, or shall cause TFC (so long as TFC is Servicer) to, deliver to the Agent, the Collection Account Bank and the Backup Servicer, no later than 4:00 p.m., New York City time, on each Payment Determination Date, in a computer-readable format reasonably acceptable to each such Person, a Servicer’s Certificate executed by a Responsible Officer or agent of Servicer containing, among other things (without duplication), (i) all information on the basis of which Servicer makes any withdrawal and deposit required by Section 3.12, (ii) all information necessary to enable the Collection Account Bank to make the allocations required to be made on the next Remittance Date pursuant to Section 3.12(c) or Section 3.09, as applicable, (iii) a listing of all Contracts repurchased by Seller (pursuant to Section 6.2 of the Receivables Purchase Agreement), by TFC (pursuant to Section 6.2 of the Sale and Contribution Agreement) or by Servicer (pursuant to Section 2.07 of the Servicing Agreement) during the related Collection Period and each Contract that became a Liquidated Contract or that was paid in full during the related Collection Period, identified by account number (as set forth in the schedule of contracts delivered to the Agent) and (iv) the Borrowing Base as of the last day of the related Collection Period. In addition to the information set forth in the preceding sentence, each Servicer’s Certificate shall also contain the following information: (a) whether a Servicer Termination Event has occurred; and (b) such other information reasonably requested by the Agent. Servicer shall deliver to the Agent, Borrower, the Collection Account Bank and the Backup Servicer a hard copy of any such Servicer’s Certificate upon request of such Person.

     Section 6.20. Notice to Agent of Amendments to Documentation Checklist, Program Guidelines, Servicing Policies and Procedures or Form-of-Contract Requirements. Promptly after any amendment to the Documentation Checklist, Borrower shall provide the Agent with written notice of such amendment. Originator shall give the Agent at least ten (10) Business Days prior written notice of any amendment to the Program Guidelines. Originator shall give the Agent prior written notice of any proposed amendment to the Servicing Policies and Procedures, and the Agent’s prior written consent shall be required for any such amendment. No later than the last day of each calendar quarter, and on each additional date as the Agent shall reasonably

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request upon five (5) days prior written notice, Originator shall deliver to the Agent a copy of the Form-of-Contract Requirements that are current as of such date.

     Section 6.21. Conformity to Higher Standards That May Be Specified in Securitizations. With respect to any duty, obligation, covenant or agreement of Borrower, Seller, Originator or Servicer (so long as TFC is Servicer) hereunder or under any other Lender Loan Document, if TFC or any Affiliate of TFC becomes required to perform an analogous duty, obligation, covenant or agreement under any securitization of motor vehicle loans or retail installment sale contracts to a standard that is higher, stricter or more exacting than the standard to which Borrower, Seller, Originator or Servicer, as the case may be, is held with respect to such duty, obligation, covenant or agreement under the applicable Lender Loan Documents, then, upon the Agent’s reasonable request, Borrower, Seller, Originator and/or Servicer (so long as TFC is Servicer), as applicable, shall thereafter perform such duty, obligation, covenant or agreement to such higher, stricter or more exacting standard.

ARTICLE VII.

NEGATIVE COVENANTS

     Until all of the Obligations have been paid in full, the Commitment has been terminated and this Agreement has been terminated:

     Section 7.01. Adverse Transactions. Borrower shall not enter into any transaction which adversely affects the Collateral or rights of the Agent or any Lender under this Agreement, either Note or the Security Agreement.

     Section 7.02. Guarantees. Borrower shall not Guarantee or otherwise in any way become liable with respect to the obligations or liabilities of any other Person, except (a) for the obligations of Borrower to the Agent and the Lenders and the Other Warehouse Lender and (b) by customary endorsement of instruments or items of payment for deposit to the general account of Borrower or for delivery to the Agent.

     Section 7.03. Dividends. Borrower shall not declare or pay any dividends except to the extent of funds legally available therefor from payments received by Borrower pursuant to Section 3.12(c)(xviii). Notwithstanding the foregoing, Borrower shall not declare or pay any dividends on any date as of which any of a Default or an Other Lender Deficiency shall have occurred and be continuing.

     Section 7.04. Investments. Borrower shall not make any investment in any Person through the direct or indirect holding of securities or otherwise, other than in the ordinary course of business or in connection with the future securitization of Contracts.

     Section 7.05. [Reserved].

     Section 7.06. Limitations on Loans; Other Advances by Borrower. Borrower shall not make any unsecured loans or other advances of money to officers, directors, employees, stockholders, or Affiliates in excess of $50,000 in the aggregate. Other than the indebtedness

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under this Agreement and the Notes, Borrower shall not incur any long term or working capital debt if such action would constitute a breach of a covenant contained herein.

     Section 7.07. Changes in Capital Structure or Business Objectives. Borrower shall not do any of the following if it will adversely affect the payment or performance of, or Borrower’s ability to pay and/or perform, its obligations to the Agent and the Lenders with respect to this Agreement or any other Loan Document to which it is a party, or either Note: (i) cancel any of the Borrower Trust Certificates, or (ii) make any material change in any of its business objectives, purposes or operations which could adversely affect the payment or performance of, or Borrower’s ability to pay and/or perform, its obligations to the Agent and the Lenders with respect to this Agreement or any other Loan Document to which it is a party, or either Note.

     Section 7.08. Limitation on Modifications, Etc. (a) Without the prior written consent of the Agent, none of TFC, Seller or Borrower will, nor will TFC, Seller or Borrower permit or allow others to, amend, modify, terminate or waive any material provision of any Contract document, except to the extent otherwise expressly permissible under the Loan Documents. Notwithstanding the foregoing, TFC (in its capacity as Servicer) may, without the prior written consent of the Agent, waive any assumption fees, late payment charges, charges for checks returned for insufficient funds, or other fees which may be collected in the ordinary course of servicing the Contracts and that the Servicer is entitled to retain pursuant to the Servicing Agreement.

          (b) Neither Seller nor Borrower shall amend, supplement or otherwise modify any document related to the Other Warehouse Facility without prior written notice to the Agent. In the event of any such amendment, supplement or other modification to the Other Warehouse Facility, the Agent may, in its sole discretion, either require or reject a parallel amendment, supplement or other modification to the applicable Lender Loan Document.

     Section 7.09. Asset Sales. Prior to the termination of this Agreement and each other Loan Document and the payment of all amounts payable pursuant hereto and thereto, Borrower will not sell all or any material portion of the Contracts and other Collateral related thereto if, following such sale, either the Class A Outstandings would exceed the Class A Borrowing Base or the Class B Outstandings would exceed Class B Borrowing Base, in either case after giving effect to the application of proceeds of such sale; provided that in the event that Borrower, Seller or TFC shall intend to sell any Contracts in a whole-loan transfer to any third party, Borrower, Seller or TFC shall inform the Agent of such prospective sale and the Agent or any Lender shall be permitted to bid on such Contracts in the same bidding process as that in which any third party is permitted to bid on such Contracts.

     Section 7.10. No Liens on Equity Interests in Borrower. Seller shall not grant or otherwise create any Lien on the Borrower Trust Certificates (or any other equity interest in Borrower), except to the extent otherwise expressly permitted under the Loan Documents.

     Section 7.11. No Petition.

          (a) TFC shall not prior to the date that is one year and one day after the termination of this Agreement and the payment in full of all Loans, all other amounts payable

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hereunder and all amounts payable under the other Loan Documents, petition or otherwise invoke or cause Seller or Residual Facility Borrower to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against Seller or Residual Facility Borrower under any federal or State bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of Seller or any substantial part of the property of Seller or Residual Facility Borrower, or ordering the winding up or liquidation of the affairs of Seller or Residual Facility Borrower.

          (b) Neither TFC nor Seller shall, prior to the date that is one year and one day after the termination of this Agreement and the payment in full of all Loans, all other amounts payable hereunder and all amounts payable under the other Loan Documents, petition or otherwise invoke or cause Borrower to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against Borrower under any federal or State bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of Borrower or any substantial part of its property, or ordering the winding up or liquidation of the affairs of Borrower.

     Section 7.12. Sale and Contribution Agreement and Receivables Purchase Agreement. TFC will not amend, modify, waive or terminate any terms or conditions of the Sale and Contribution Agreement without the prior written consent of the Agent, and shall perform its obligations thereunder. Seller will not amend, modify, waive or terminate any terms or conditions of the Receivables Purchase Agreement without the prior written consent of the Agent, and shall perform its obligations thereunder.

     Section 7.13. No Indebtedness. Borrower will not at any time incur any Indebtedness, other than Indebtedness incurred under (or contemplated by) the terms of this Agreement and the Other Warehouse Facility.

     Section 7.14. No Other Business. Borrower will not at any time engage in any other business activities than the purchase of non-prime consumer automobile, van, sport utility vehicle and light-duty truck loans, pledging such loans to the Agent for the benefit of the Lenders and to the Other Warehouse Lender, transferring such loans in connection with securitizations and in connection with whole-loan sales, and other activities relating to the foregoing to the extent permitted by the organizational documents of Borrower as in effect on the date hereof, or as amended with the prior written consent of the Agent. Without limitation of the foregoing, Borrower will not at any time be a borrower under any loan or financing agreement, facility or other arrangement other than the facility established pursuant to this Agreement and the Other Warehouse Facility.

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ARTICLE VIII.

EVENTS OF DEFAULT

     Section 8.01. Events of Default. Each of the following events and occurrences shall constitute an Event of Default under this Agreement:

          (a) (i) Any payment by or on behalf of Borrower shall fail to be made to the Agent or any Lender when due of principal or interest on the Loans or (ii) any payment by or on behalf of Borrower of any other Obligation shall fail to be made on its due date;

          (b) Originator, Servicer, Seller, Borrower or Residual Facility Borrower shall fail to perform or observe in any material respect any term, covenant or agreement under this Agreement (other than any term, covenant or agreement referred to in another subsection of this Section 8.01), either Note or any other Lender Loan Document to which it is a party, which failure is (i) curable by payment of money and continues unremedied for a period of three (3) Business Days, (ii) curable by means other than payment of money and continues unremedied for a period of fifteen (15) Business Days; or (iii) is not curable;

          (c) Any representation or warranty made or deemed to be made by Originator, Servicer, Seller, Borrower or Residual Facility Borrower, or any of their respective officers, under or in connection with this Agreement or any other Lender Loan Document, any remittance report or other information or report delivered pursuant hereto or any other Lender Loan Document shall prove to have been false or incorrect in any material respect when made which failure is (i) curable by payment of money and continues unremedied for a period of three (3) Business Days, (ii) curable by means other than payment of money and continues unremedied for a period of fifteen (15) Business Days; or (iii) is not curable;

          (d) TFC, Seller, Borrower, Servicer, Originator, Residual Facility Borrower or any Affiliate of TFC shall fail to pay any money due under any other agreement, note, indenture or instrument evidencing, securing, Guaranteeing or otherwise relating to Indebtedness of Borrower, Seller, Servicer, Originator, Residual Facility Borrower or such Affiliate of TFC (including, without limitation, Indebtedness relating to any Residual Facility, Indebtedness relating to any securitization and Indebtedness to the Other Warehouse Lender), which failure to pay constitutes an event of default under any such agreement, note, indenture or instrument or constitutes a default thereunder and such default shall continue unremedied for three (3) Business Days; or TFC, Seller, Borrower, Servicer, Originator, Residual Facility Borrower or any Affiliate of TFC shall otherwise fail to perform or observe any term, covenant, agreement or representation and warranty under any such other agreement, note, indenture or instrument, which failure constitutes an event of default under any such agreement, note, indenture or instrument or constitutes a default thereunder and such default shall result in the acceleration of such Indebtedness; or any other event under any such agreement or instrument shall occur or condition shall exist if the effect of such event or condition is to accelerate the maturity of such Indebtedness; provided that, if such Indebtedness is solely Indebtedness of TFC, Originator and/or Servicer (and not in whole or in part Indebtedness of Seller, Borrower, Residual Facility Borrower or any other Affiliate of TFC), such Indebtedness must be in an aggregate amount of at least $500,000 in order for an event described in this clause (d) to constitute an Event of Default;

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          (e) The Collateral or any other material assets of Borrower, Seller, Servicer, Originator or Residual Facility Borrower are attached, seized, levied upon or subjected to a writ or distress warrant, or come within the possession of any receiver, trustee, custodian or assignee for the benefit of Borrower, Seller, Servicer, Originator or Residual Facility Borrower and the same is not dissolved or dismissed within thirty (30) days thereafter; an application is made by any Person other than Borrower, Seller, Servicer, Originator or Residual Facility Borrower for the appointment of a receiver, trustee, or custodian for the Collateral or a material portion of the assets of, Borrower, Seller, Servicer, Originator or Residual Facility Borrower and the same is not dismissed within thirty (30) days after the application thereof, or Borrower, Seller, Servicer, Originator or Residual Facility Borrower shall have concealed, removed or permitted to be concealed or removed any part of its property with intent to hinder, delay or defraud its creditors or made or suffered a transfer of any of its property which is fraudulent under any bankruptcy, fraudulent conveyance or other similar law;

          (f) An application is made by Borrower, Seller, Servicer, Originator or Residual Facility Borrower for the appointment of a receiver, trustee or custodian for the Collateral or any other material assets of Borrower, Seller, Servicer, Originator or Residual Facility Borrower; a petition under any section or chapter of the Bankruptcy Code or federal or State law or regulation shall be filed by Borrower, Seller, Servicer, Originator or Residual Facility Borrower; Borrower, Seller, Servicer, Originator or Residual Facility Borrower shall make an assignment for the benefit of its creditors, or any case or proceeding shall be filed by Borrower, Seller, Servicer, Originator or Residual Facility Borrower for its dissolution, liquidation, or termination; or Borrower, Servicer or Originator ceases to conduct its business;

          (g) Borrower, Seller, Servicer, Originator or Residual Facility Borrower is enjoined, restrained or prevented by court order from conducting all or any material part of its business affairs, or a petition under any section or chapter of the Bankruptcy Code or any similar federal or State law or regulation is filed against Borrower, Seller, Servicer, Originator or Residual Facility Borrower, or any case or proceeding is filed against Borrower, Seller, Servicer, Originator or Residual Facility Borrower, for its dissolution or liquidation, and either an order for the requested relief is entered or such injunction, restraint, petition, case or proceeding is not dismissed within sixty (60) days after the entry of filing thereof;

          (h) Borrower, Seller, Servicer, Originator or Residual Facility Borrower admits in writing to its inability to pay its debts as they mature;

          (i) The Agent for the benefit of the Lenders shall for any reason cease to have a first priority perfected security interest in any Collateral free and clear of all Liens (other than a Lien under any Loan Document); provided, however, that if an event described in this clause (i) is cured by the repurchases of Contracts pursuant to Section 6.2 of the Receivables Purchase Agreement and Section 6.2 of the Sale and Contribution Agreement and the corresponding payment of the applicable Release Consideration pursuant to Section 3.03(f) of this Agreement, such event shall cease to constitute an Event of Default; provided further that, if an event described in this clause (i) relates only to a de minimis portion of the Collateral, such event shall constitute an Event of Default solely to the extent that such condition is not cured within ten (10) Business Days of such cessation by the repurchases of Contracts pursuant to Section 6.2 of the Receivables Purchase Agreement and Section 6.2 of the Sale and Contribution Agreement and

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the corresponding payment of the applicable Release Consideration pursuant to Section 3.03(f) of this Agreement;

          (j) The Agent or any Lender, in its reasonable, good faith judgment, has cause to believe that (i) there has been a Material Adverse Effect or (ii) Originator, Servicer, Seller, Borrower or Residual Facility Borrower shall have suffered any Material Adverse Change;

          (k) (i) TFC shall at any time resign, or be terminated, as a servicer under any securitization; or (ii) there shall be a default or termination event (regardless of whether such default or termination event has been waived) on the part of TFC as servicer under any securitization;

          (l) Borrower shall have failed to cure a Class A Borrowing Base Deficiency or a Class B Borrowing Base Deficiency in the manner, and within the time periods, set forth in Section 3.03, as applicable;

          (m) Any Change of Control shall occur with respect to Originator, Servicer, Seller or Borrower, unless the Agent shall have expressly consented to such Change of Control in writing;

          (n) A final, nonappealable judgment by any competent court in the United States of America for the payment of money in an amount in excess of $1,000,000 shall be rendered against Originator, Servicer, Seller, Borrower or Residual Facility Borrower, and the same remains undischarged and unstayed for a period of thirty (30) days after the entry thereof;

          (o) Originator, Servicer, Seller, Borrower or Residual Facility Borrower shall pay an amount in excess of $1,000,000 in connection with the settlement of any action filed in any competent court in the United States of America, in which action such Person is a named defendant, if such action contains undismissed allegations of fraud, wrongful conduct in connection with such Person’s lending, servicing or origination practices or other wrongdoing that could have a Material Adverse Effect;

          (p) [Reserved];

          (q) A Servicer Termination Event (if TFC is the Servicer) other than the Servicer Termination Events set forth in Sections 4.01(k) and 4.01(l) of the Servicing Agreement, shall have occurred and be continuing;

          (r) [Reserved];

          (s) Any Loan Document shall be terminated or cease to be in full force and effect, or the enforceability thereof shall be (i) reasonably contested by the Agent or any, (ii) contested by any other party thereto, or (iii) contested by an indenture trustee on behalf of Unsecured TFC Noteholders; or

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          (t) Borrower shall fail to have implemented and maintained a Hedging Strategy that is reasonably acceptable to the Agent and such failure shall have remained uncured for at least five (5) Business Days.

     Section 8.02. Remedies of Default. (a) If not cured within the cure period, if any, provided within the relevant provision, then upon the continuance of such Event of Default the Agent or any Lender may, by notice to Borrower (which notice shall be deemed given automatically upon occurrence of an Event of Default referred to in paragraph (e), (f), (g) or (h) of Section 8.01), terminate its Commitment to make any Loans hereunder, and declare immediately due and payable all principal, interest and other Obligations payable hereunder and under each Note by Borrower then due and payable that would otherwise be due after the date specified in the notice (or the date such notice is deemed given), whereupon all those amounts shall become immediately due and payable, all without further diligence, presentment, demand of payment, protest or notice of any kind, all of which are expressly waived by Borrower. If any Event of Default shall occur and be continuing, the Agent and the Lenders may exercise all rights and remedies of a secured party under the UCC, and, to the extent permitted by law, all other rights and remedies granted to the Agent or any Lender in this Agreement and in any other instrument or agreement securing, evidencing or relating to the Obligations. Without limitation to the foregoing, such actions may include selling the Collateral in a commercially reasonable manner as determined by the Agent for the benefit of the Lenders, instituting suit in equity or instituting other appropriate proceedings, whether for the specific performance of any agreement contained herein, or for an injunction against a violation of any of the terms hereof, or in aid of the exercise of any power granted hereby or by law. If the Agent for the benefit of the Lenders opts to sell or otherwise dispose of the Collateral as one of its remedies upon an Event of Default, Borrower shall remain liable for any remaining deficiency upon applying the proceeds of such sale or other disposition against any and all Obligations, including, without limitation, the reasonable fees and disbursements of any attorneys employed by the Agent or any Lender to collect such deficiency.

          (b) (i) Without limitation to any of the provisions or remedies set forth in Section 8.02(a), if any Event of Default shall have occurred and be continuing, Borrower may, with the consent of the Agent and each Lender in their respective sole discretion, (A) make a principal payment on the Loans in such amount as the Agent and the Lenders shall specify or (B) pledge additional Collateral having such value, as determined by the Agent and the Lenders in their sole discretion, as the Agent shall specify. If the Agent and the Lenders consent to Borrower’s taking such action as is described in this Section 8.02(b) upon an Event of Default, Borrower shall remain liable for any remaining deficiency between the amount of the Obligations and the amount of the principal payment or pledge of additional Collateral made pursuant hereto, and under no circumstances shall the consent of the Agent and the Lenders to such action be construed as a waiver of such deficiency or a modification of the Obligations.

          (ii) In the event that Borrower shall hereinafter pledge any additional Collateral to the Agent for the benefit of the Lenders as specified in Section 8.02(b)(i), Borrower shall, concurrently with such pledge, deliver to the Agent and the Lenders an opinion of counsel in form and substance reasonably satisfactory to the Agent regarding priority, perfection and the absence of Liens in respect of such Collateral.

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ARTICLE IX.

REPRESENTATIONS, WARRANTIES AND COVENANTS OF TFC AND SELLER

     Section 9.01. Representations, Warranties and Covenants of TFC. In order to induce the Agent and the Lenders to enter into this Agreement and to make the Loans hereunder, TFC hereby makes to the Agent and the Lenders each representation and warranty set forth in Section 3.2 of the Sale and Contribution Agreement and each covenant set forth in Article V of the Sale and Contribution Agreement.

     Section 9.02. Representations, Warranties and Covenants of Seller. In order to induce the Agent and the Lenders to enter into this Agreement and to make the Loans hereunder, Seller hereby makes to the Agent and the Lenders each representation and warranty set forth in Section 3.2 of the Receivables Purchase Agreement and each covenant set forth in Article V of the Receivables Purchase Agreement.

ARTICLE X.

THE COLLECTION ACCOUNT BANK

     Section 10.01. Duties and Rights of Collection Account Bank.

          (a) The Collection Account Bank accepts the trusts under this Agreement in accordance with the provisions of this Agreement and agrees to perform its duties required under this Agreement in accordance with the terms of hereof to the end that the interests of the Agent and the Lenders may be adequately and effectively protected.

          (b) Notwithstanding the foregoing:

          (i) the Collection Account Bank undertakes to perform such duties and only such duties as are specifically set forth in this Agreement and no implied covenants or obligations shall be read into this Agreement against the Collection Account Bank; and

          (ii) in the absence of bad faith on its part, the Collection Account Bank may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon the face value of the certificates, reports, resolutions, documents, orders, opinions or other instruments furnished to the Collection Account Bank and conforming to the requirements of this Agreement; provided, however, that the Collection Account Bank shall not be responsible for the accuracy or content of any such resolution, certificate, statement, opinion, report, document, order or other instrument; provided further, however, that the Collection Account Bank shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Agreement. If any such instrument is found not to conform in any material respect to the requirements of this Agreement, the Collection Account Bank shall notify the Agent in the event that the Collection Account Bank, after so requesting, does not receive a satisfactorily corrected instrument.

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          (c) The Collection Account Bank may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that:

          (i) this paragraph does not limit the effect of paragraph (b) of this Section; and

          (ii) the Collection Account Bank shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to the terms of this Agreement.

          (d) No provision of this Agreement shall require the Collection Account Bank to advance, expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder, if it shall have reasonable grounds to believe that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it.

          (e) The Collection Account Bank shall have no obligation to seek enforcement with respect to the Contracts or to determine the sufficiency of any payment thereunder.

     Section 10.02. Individual Rights of Collection Account Bank. The Collection Account Bank in its individual or any other capacity may deal with Borrower and/or its Affiliates with the same rights it would have if it were not Collection Account Bank.

     Section 10.03. Collection Account Bank’s Fees and Expenses. The Collection Account Bank shall receive as compensation for its services hereunder such fees as have been separately agreed upon before the date hereof between Originator and the Collection Account Bank (as outlined in the fee letter from the Collection Account Bank to Triad Financial Corporation, dated April 29, 2005), and the Collection Account Bank shall be entitled to be reimbursed by Originator for its other reasonable expenses hereunder, including the reasonable compensation, expenses and disbursements of such agents, representatives, experts and counsel as the Collection Account Bank may employ in connection with the exercise and performance of its rights and its duties hereunder. If any fees and/or expenses due to the Collection Account Bank as of any Remittance Date shall not have been paid by Originator, the Collection Account Bank shall be entitled to receive such outstanding fees and expenses from Borrower on such Remittance Date, in the priority set forth in Section 3.12(c)(xv) or Section 3.09(n), as applicable. Any amounts paid pursuant to the immediately preceding sentence shall be payable solely in the priority set forth in Section 3.12(c)(xv) or Section 3.09(n), as applicable, and shall be deemed not to be a part of the Collateral immediately after such payment.

     Section 10.04. Indemnity to Collection Account Bank. Originator shall be liable as primary obligor for, and shall indemnify the Collection Account Bank and its successors, assigns, agents and servants (collectively, the “Collection Account Bank Indemnified Parties”) from and against, any and all liabilities, obligations, losses, damages, taxes, claims, actions and suits, and any and all reasonable costs, expenses and disbursements (including reasonable legal fees and expenses) of any kind and nature whatsoever (collectively, “Collection Account Bank Indemnified Expenses”) which may at any time be imposed on, incurred by, or asserted against the Collection Account Bank or any Collection Account Bank Indemnified Party in any way

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relating to or arising out of this Agreement, except only that Originator shall not be liable for or required to indemnify a Collection Account Bank Indemnified Party from and against Collection Account Bank Indemnified Expenses arising or resulting from the Collection Account Bank’s own willful misconduct, negligence or bad faith. The indemnities contained in this Section 10.04 shall survive the resignation or termination of the Collection Account Bank or the termination of this Agreement. In any event of any claim, action or proceeding for which indemnity will be sought pursuant to this Section 10.04, the Collection Account Bank Indemnified Party’s choice of legal counsel shall be subject to the approval of Originator, which approval shall not be unreasonably withheld. If any Collection Account Bank Indemnified Expenses due to any Collection Account Bank Indemnified Party as of any Remittance Date shall not have been paid by Originator, the Collection Account Bank, on behalf of such Collection Account Bank Indemnified Party, shall be entitled to receive such Collection Account Bank Indemnified Expenses from Borrower on such Remittance Date, in the priority set forth in Section 3.12(c)(xv) or Section 3.09(n), as applicable. Any amounts paid pursuant to the immediately preceding sentence shall be payable solely in the priority set forth in Section 3.12(c)(xv) or Section 3.09(n), as applicable, and shall be deemed not to be a part of the Collateral immediately after such payment.

     Section 10.05. Replacement of Collection Account Bank.

          (a) No resignation or removal of the Collection Account Bank and no appointment of a successor Collection Account Bank shall become effective until the acceptance of appointment by the successor Collection Account Bank pursuant to this Section 10.05(a). The Collection Account Bank may resign at any time by so notifying the Agent and Borrower. The Agent may remove the Collection Account Bank by so notifying the Collection Account Bank and may appoint a successor Collection Account Bank. If the Collection Account Bank resigns or is removed or if a vacancy exists in the office of Collection Account Bank for any reason (the Collection Account Bank in such event being referred to herein as the retiring Collection Account Bank), the Agent shall promptly appoint a successor Collection Account Bank.

          (b) Notwithstanding the replacement of the Collection Account Bank pursuant to this Section, Originator’s and Borrower’s obligations under Section 10.03 and Section 10.04 shall continue for the benefit of the retiring Collection Account Bank. Without limitation of the foregoing, the retiring Collection Account Bank shall be paid all amounts owed to it upon its resignation or removal, by Originator or Borrower in accordance with Section 10.03 and Section 10.04. The retiring Collection Account Bank shall not be liable for the acts or omissions of any Successor Collection Account Bank.

     Section 10.06. Successor Collection Account Bank. If the Collection Account Bank consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation without any further act shall be the successor Collection Account Bank.

     Section 10.07. Waiver of Setoffs. The Collection Account Bank hereby expressly waives any and all rights of setoff that the Collection Account Bank may otherwise at any time have under applicable law with respect to the Collection Account and agrees that amounts in the

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Collection Account shall at all times be held and applied solely in accordance with the provisions hereof and of the other Lender Loan Documents.

     Section 10.08. No Petition.

          (a) The Collection Account Bank shall not, prior to the date that is one year and one day after the termination of this Agreement and the payment in full of all Loans, all other amounts payable hereunder and all amounts payable under the other Loan Documents, petition or otherwise invoke or cause either Seller or Borrower to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against Seller or Borrower under any federal or State bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of Seller or Borrower or any substantial part of the property of Seller or Borrower, or ordering the winding up or liquidation of the affairs of Seller or Borrower.

          (b) Neither the Agent nor any Lender shall petition or otherwise invoke or cause Securitization LLC to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against Securitization LLC under any federal or State bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of Securitization LLC or any substantial part of its property, or ordering the winding up or liquidation of the affairs of Securitization LLC.

     Section 10.09. Representations and Warranties of the Collection Account Bank. The Collection Account Bank represents and warrants to the Agent, the Lenders, Borrower and Originator as follows:

          (a) Due organization. The Collection Account Bank is a national banking association and is duly authorized and licensed under applicable law to conduct its business as presently conducted.

          (b) Power and Authority. The Collection Account Bank has all requisite right, power and authority to execute and deliver this Agreement and to perform all of its duties as Collection Account Bank hereunder.

          (c) Due Authorization. The execution and delivery by the Collection Account Bank of this Agreement, and the performance by the Collection Account Bank of its duties hereunder, have been duly authorized by all necessary banking association proceedings and no further approvals or filings, including any governmental approvals, are required for the valid execution and delivery by the Collection Account Bank, or the performance by the Collection Account Bank, of this Agreement.

          (d) Valid and Binding Agreement. The Collection Account Bank has duly executed and delivered this Agreement, and this Agreement constitutes the legal, valid and binding obligation of the Collection Account Bank, enforceable against the Collection Account Bank in accordance with its terms, except as (i) such enforceability may be limited by insolvency, reorganization and similar laws relating to or affecting the enforcement of creditors’ rights generally and (ii) the availability of equitable remedies may be limited by equitable principles of general applicability.

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ARTICLE XI.

MISCELLANEOUS

     Section 11.01. Set-off. In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, during the continuance of any Event of Default hereunder the Agent and each Lender is hereby authorized at any time and from time to time, without notice to Borrower, or to any other person or entity, any such notice being hereby expressly waived, to set-off against any obligation owing by the Agent, any Lender or any affiliate of the Agent or any Lender to Borrower, or against any funds or other property of Borrower or any of its Subsidiaries held by or otherwise in the possession of the Agent, any Lender or any affiliate of the Agent or any Lender, the obligations and liabilities of Borrower or any of its Subsidiaries to the Agent or any Lender under this Agreement irrespective of whether the Agent or any Lender shall have made any demand hereunder.

     Section 11.02. Amendments, Waivers, etc. None of the Lender Loan Documents or any terms thereof may be amended, modified or otherwise supplemented except in writing signed by the parties thereto. In the case of any waiver of a Default or Event of Default, any Default or Event of Default waived shall be deemed to be cured and not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default, or impair any right consequent thereon.

     Section 11.03. No Waiver; Remedies Cumulative. No failure or delay on the part of the Agent or any Lender in exercising any right, remedy, power or privilege under any Lender Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of, or any abandonment or discontinuance of steps to enforce any right, remedy, power or privilege under any Lender Loan Document preclude any other or further exercise thereof or the exercise of any other rights, remedies or privileges thereunder. The rights, remedies, powers and privileges provided in the Lender Loan Documents are cumulative and may be exercised singularly or concurrently and are not exclusive of any other rights, remedies, powers or privileges provided by law.

     Section 11.04. Payment of Expenses, Indemnity, etc. Borrower, Seller and Originator, jointly and severally, agree to:

          (a) pay or reimburse the Agent and the Lenders on the Closing Date and thereafter within 30 days following presentment of invoices for all its out-of-pocket fees, costs and expenses incurred in connection with the development, preparation and execution of, and any amendment, modification or supplement to, or any waiver under, any Lender Loan Document and any other document prepared in connection therewith, and the consummation and administration of the transactions contemplated thereby, including, without limitation, the reasonable fees and disbursements of counsel to the Agent and the Lenders with respect to any of the foregoing, including, without limitation, such fees and disbursements incurred in advising the Agent and the Lenders from time to time as to its rights and remedies under any Loan Document;

          (b) pay on demand all reasonable costs and expenses of the Agent and the Lenders, including without limitation the reasonable fees and disbursements of counsel to the

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Agent and the Lenders, in connection with the occurrence or continuance of a Default or Event of Default and the enforcement, collection, protection or preservation (whether through negotiations, legal proceedings or otherwise) of this Agreement or any other Loan Document, the Collateral, any Obligation or any right, remedy, power or privilege of the Agent and the Lenders hereunder or under any other Loan Document;

          (c) except as otherwise set forth in Section 3.16, pay and hold the Agent and the Lenders harmless from and against any and all present and future stamp, excise, recording or other similar taxes or fees payable in connection with the execution, delivery, recording and filing of any Loan Document and hold the Agent and the Lenders harmless from and against any and all liabilities with respect to or resulting from any delay or omission by Borrower to pay such taxes or fees; and

          (d) indemnify the Agent and the Lenders and their respective Affiliates and each of their respective directors, officers, employees and agents and hold each of them harmless from and against, any and all liabilities, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and disbursements, including without limitation the reasonable fees and disbursement of counsel to the Agent and the Lenders and such other parties, incurred by any of them in connection with, arising out of or in any way relating to any investigation, claim, litigation or other proceeding, pending or threatened (whether or not any of them is designated a party thereto), in connection with, arising out of or in any way related to this Agreement or any other Loan Document or any of the transactions contemplated herein or therein or any use of the proceeds of any Loan by Borrower or the Contracts (including without limitation, the underwriting, origination and servicing of such Contracts); provided that any of the Agent or the Lenders shall not be entitled to any indemnification for any of the foregoing to the extent resulting from the gross negligence, willful misconduct or bad faith on the part of it or any of its agents, officers, directors, employees or representatives.

     If and to the extent that the indemnity obligations of Borrower, Seller or Originator, as applicable, under this Section 11.04 may be unenforceable for any reason, Borrower hereby agrees to make the maximum contribution to the payment and satisfaction of each of such indemnity obligations which is permissible under applicable law.

     Section 11.05. Headings Descriptive. The headings of the several articles and sections of this Agreement, and the Table of Contents, are inserted for convenience only and shall not in any way affect the meaning or construction of any provisions of this Agreement.

     Section 11.06. Severability. Any provision of this Agreement or any other Lender Loan Document which is prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or non-authorization without invalidating the remaining provisions hereof or thereof to the extent permitted by law or affecting the validity, enforceability or legality of such provisions in any other jurisdiction.

     Section 11.07. Entire Agreement. This Agreement and the other Lender Loan Documents constitute the entire agreement among the parties relative to the subject matter hereof. Any previous agreement among the parties with respect to the subject matter hereof is

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superseded by this Agreement and the other Lender Loan Documents. Except to the extent otherwise provided in Section 11.13, nothing in this Agreement or in the other Lender Loan Documents, express or implied, is intended to confer upon any party other than the parties hereto and thereto any rights, remedies, obligations or liabilities under or by reason of this Agreement or the other Lender Loan Documents. Notwithstanding the foregoing, nothing in this Section 11.07 shall supersede, nullify, derogate from or otherwise affect any rights of the Agent or any Lender under any document or instrument related to the Other Warehouse Facility or any residual financing agreement between Borrower, Seller, the Residual Facility Borrower or TFC, on one hand, and the Other Warehouse Lender, on the other.

     Section 11.08. Binding Effect. This Agreement shall be binding upon and shall be enforceable by Borrower, the Agent and either Lender and their respective successors and permitted assigns.

     Section 11.09. Survival. The provisions of Sections 3.07, 3.16, 10.04 and 11.04 shall survive the execution and delivery of this Agreement and the payment in full of the Obligations.

     Section 11.10. GOVERNING LAW, ETC., WAIVER OF TRIAL BY JURY. (a) THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. EACH PARTY HERETO HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE NOTE, ANY OTHER LENDER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF ANY PARTY HERETO TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE OTHER PARTY IN ANY OTHER JURISDICTION.

          (b) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

          (c) EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS PERSONALLY DELIVERED OR TRANSMITTED BY REGISTERED MAIL TO THE ADDRESS SET FORTH FOR NOTICES IN SECTION 11.09; PROVIDED THAT UPON ANY SUCH SERVICE BY REGISTERED MAIL THE SENDING PARTY SHALL, SIMULTANEOUSLY THEREWITH, SEND NOTICE OF SUCH SERVICE TO THE OTHER PARTY VIA FACSIMILE TRANSMISSION. NOTHING IN THIS AGREEMENT WILL

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AFFECT THE RIGHT OF EITHER PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

     Section 11.11. Notice. Any notice hereunder shall be in writing and shall be personally delivered, transmitted by postage prepaid registered airmail, by facsimile telegram or cable to the parties as follows:

To the Class A Lender:	Sheffield Receivables Corporation
	c/o Barclays Bank PLC
	200 Park Avenue
	New York, New York 10160
	Attention: Mary Logan
	Telephone: (212) 412-3266
	Facsimile: (212) 412-6846
To the Agent/Class B Lender:	Barclays Bank PLC
	200 Park Avenue
	New York, New York 10160
	Attention: Mary Logan
	Telephone: (212) 412-3266
	Facsimile: (212) 412-6846
To Originator/Servicer:	Triad Financial Corporation
	5201 Rufe Snow Drive
	North Richland Hills, Texas 76180
	Attention: General Counsel
	Telephone: (817) 605-5288
	Facsimile: (817) 605-6540
To Seller:	Triad Financial Warehouse Special Purpose LLC
	7711 Center Avenue, Suite 390
	Huntington Beach, California 92647
	Attention: Chief Financial Officer
	Telephone: (714) 373-8300
	Facsimile: (714) 934-6062
To Borrower:	Triad Automobile Receivables Warehouse Trust
	c/o Wilmington Trust Company
	Rodney Square North
	1100 North Market Street
	Wilmington, Delaware 19890
	Attention: Corporate Trust Administration
	Telephone: (302) 651-1000
	Facsimile: (302) 636-4148
	with a copy to:

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	Triad Automobile Receivables Warehouse Trust
	c/o Triad Financial Corporation, as Administrator
	7711 Center Avenue
	Suite 200
	Huntington Beach, California 92647
	Attention: Chief Financial Officer
	Telephone: (714) 373-8300
	Facsimile: (714) 934-6062
Collection Account Bank:	The Bank of New York
	101 Barclay Street, Floor 4W
	New York, NY 10286
	Attention: Corporate Trust Asset Back
	Telephone: (212) 815-3518
	Facsimile: (212) 815-2493

     All notices and other communications shall be deemed to have been duly given on the date of receipt if delivered personally; the date five (5) calendar days after posting if transmitted by mail; or in the case of a facsimile, telegram or cable, at the time sent. Either party may change its address for purposes hereof by notice to the other.

     Section 11.12. Counterparts. This Agreement may be signed in any number of counterparts which, taken together, shall constitute a full and original agreement for all purposes.

     Section 11.13. Third-Party Beneficiaries. The Other Warehouse Lender is an express third-party beneficiary of Sections 3.09(k), 3.09(l), 3.12(c)(xii) and 3.12(c)(xiii) of this Agreement. Each of the parties to the Sale and Contribution Agreement hereby agrees that the Agent shall be permitted but not obligated to enforce the rights of Seller directly thereunder in the place and stead of Seller, but the Agent shall not have any obligations under the Sale and Contribution Agreement. Each of the parties to the Receivables Purchase Agreement hereby agrees that the Agent shall be permitted but not obligated to enforce the rights of Borrower directly thereunder in the place and stead of Borrower, but the Agent shall not have any obligations under the Receivables Purchase Agreement.

     Section 11.14. Future Assurances. At its sole cost and without expense to the Agent or any Lender, on demand, Borrower shall do, execute, acknowledge and deliver all and every such further acts, deeds, conveyances, assignments, notices of assignment, transfers and assurances as the Agent or any Lender shall from time to time reasonably require for better assuring, conveying, assigning, transferring and confirming unto the Agent for the benefit of the Lenders the property and rights pledged or assigned or intended now or hereafter so to be, or which Borrower may be or may hereafter become bound to convey, pledge or assign to the Agent for the benefit of the Lenders, or for carrying out the intention or facilitating the performance of the terms of this Agreement or any of the other Loan Documents, or for filing, registering or recording of the Loan Documents.

     Section 11.15. Assignments; Participations. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

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None of Borrower, Seller, TFC, Originator or Servicer may assign any of its rights or obligations hereunder, under either Note or under any other Loan Document without the prior written consent of the Agent. The Agent may assign, participate or otherwise transfer (including, without limitation, by pledge or hypothecation) to any Affiliate of the Agent or any Lender or any other Person all or any of its rights or obligations under this Agreement and the other Loan Documents. Each of Borrower, Seller, TFC, Originator and Servicer agrees to cooperate with the Agent and the Lenders in connection with any such assignment or transfer, to execute and deliver such replacement notes, and to enter into such restatements of, and amendments, supplements and other modifications to, this Agreement and the other Loan Documents in order to give effect to such assignment or transfer.

     Section 11.16. Confidentiality of Information. Each of the Agent, the Lenders, Borrower, Seller and TFC agrees to keep information obtained by it pursuant hereto and the other Loan Documents confidential in accordance with its customary practices. It further agrees that it shall only use such information in connection with the transactions contemplated by this Agreement and/or the other Loan Documents, including for the purposes of its legal, credit or compliance review in connection with any such transactions, or as required by law or regulation and not disclose any such information other than (a) to its affiliates, officers, directors, employees, representatives, counsel and agents that are, or are expected to be, involved in the evaluation of such information in connection with (i) the transactions contemplated by this Agreement and/or the other Loan Documents, (ii) its legal or compliance or credit review in connection with any such transactions or (iii) enforcing its rights and performing under the terms of this Agreement and/or the other Loan Documents and are advised of the confidential nature of such information, (b) to the extent such information presently is or hereafter becomes (i) available to such party from a source other than the party hereto to which such information relates or any of its affiliates, and such disclosing party does not know that such information is disclosed in violation of a confidentiality agreement or is otherwise unauthorized or (ii) available to the public other than as a result of a breach by such party of this Section 11.16, (c) to the extent disclosure is required by law, regulation or judicial order or requested or required by bank or other regulators or auditors, as long as, to the extent permitted by Requirements of Law, notice is given to the party hereto to which such information relates by the disclosing party prior to (or, in the event that prior notice is not reasonably practicable or in case of a judicial order, promptly after) such disclosure, or (d) to current or prospective assignees, participants and contractual counterparties in connection with the transactions contemplated by this Agreement and/or the other Loan Documents or in any hedging contract permitted under the Loan Documents and to their respective representatives and legal or financial advisors, in each case and to the extent such assignees, participants, grantees or counterparties agree to be bound by, and to cause their advisors to comply with, the provisions of this Section 11.16 (unless, in the case of counterparties in any hedge, the terms of the applicable hedging contract between any Lender and TFC and/or Borrower permits otherwise). Notwithstanding any other provision in this Agreement, TFC, Seller and Borrower hereby agree that the Agent or any Lender (and each of its officers, directors, employees, accountants, attorneys and other advisors) may disclose to any and all persons, without limitation of any kind, the U.S. tax treatment and U.S. tax structure of the transactions contemplated hereby and all materials of any kind (including opinions and other tax analyses) that are provided to the Agent or any Lender relating to such U.S. tax treatment and U.S. tax structure, other than any information for which nondisclosure is reasonably necessary in order to comply with applicable

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securities laws. The provisions of this Section 11.16 shall survive termination of this Agreement for a period of two years.

     Section 11.17. Agent Consent to Transactions. Notwithstanding any provision of this Warehouse Lending Agreement or any of the other Loan Documents, any requirement in this Warehouse Lending Agreement for TFC, Seller or Borrower to obtain the prior consent of the Agent to any action or transaction shall not be effective or binding, to the extent the Obligations shall have been indefeasibly repaid in full (other than any indemnification or expense claims which have not been made) and each of the Loan Documents shall have been terminated prior to such action or transaction.

     Section 11.18. Limitation of Liability of Owner Trustee. It is expressly understood and agreed by the parties hereto that (a) this Agreement is executed and delivered by Wilmington Trust Company, not individually or personally but solely in its trustee capacity, in the exercise of the powers and authority conferred and vested in it under the Trust Agreement, (b) each of the representations, undertakings and agreements herein made on the part of Borrower is made and intended not as a personal representation, undertaking or agreement by Wilmington Trust Company but is made and intended for the purpose of binding only Borrower and (c) under no circumstances shall Wilmington Trust Company be personally liable for the payment of any indebtedness or expenses of Borrower or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by Borrower under this Agreement or any other Loan Documents.

     Section 11.19. Appointment of Agent for the Lenders. Each Lender hereby irrevocably designates and appoints Barclays Bank PLC as Agent hereunder, and authorizes the Agent to take such action on its behalf under the provisions of this Warehouse Lending Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated to the Agent by the terms of this Warehouse Lending Agreement and the other Loan Documents, together with such other powers as are reasonably incidental thereto.

     Notwithstanding any provision to the contrary elsewhere in this Warehouse Lending Agreement and the other Loan Documents, the Agent shall not have any duties or responsibilities, except those expressly set forth herein and in the other Loan Documents, or any fiduciary relationship with any other party hereto or any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities on the part of the Agent shall be read into this Warehouse Lending Agreement or any other Loan Document or otherwise exist against the Agent. The provisions hereof are solely for the benefit of the Agent, and no other party shall have any rights as a third-party beneficiary or otherwise under any of the provisions hereof. In performing its functions and duties hereunder, the Agent shall act solely as the agent of the Lenders and does not assume nor shall be deemed to have assumed any obligation or relationship of trust or agency with or for the Other Warehouse Lender, any other lender, the Borrower, the Seller, the Originator, TFC or any of their respective successors and assigns. The Agent may execute any of its duties under this Warehouse Lending Agreement by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.

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     Neither the Agent nor any of its directors, officers, agents or employees shall be (a) liable for any action lawfully taken or omitted to be taken by it or them under or in connection with this Warehouse Lending Agreement (except for its, their or such person’s own gross negligence, bad faith, breach of a representation, warranty or covenant of such Person hereunder or willful misconduct), or (b) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties contained herein or in any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, or received under or in connection with, the Loans or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of the Loans, the Collateral, this Warehouse Lending Agreement and the other Loan Documents or any other document furnished in connection therewith or herewith, or for the satisfaction of any condition specified in this Warehouse Lending Agreement or any other Loan Document. The Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements or covenants contained in, or conditions of, the Loans or the Collateral, or to inspect the Collateral or the properties, books or records of any Person.

     The Agent shall in all cases be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document believed by it to be genuine and correct and to have been signed, sent or made by the proper person or persons and upon advice and statements of legal counsel, independent accountants and other experts selected by the Agent. The Agent shall in all cases be fully justified in failing or refusing to take any action under this Warehouse Lending Agreement or any other document furnished in connection herewith or therewith unless it shall first receive such advice or concurrence of the Lenders as it deems appropriate and it shall be indemnified to its satisfaction by the Lenders against any and all liability, cost and expense which may be incurred by it by reason of taking or continuing to take any such action. The Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Warehouse Lending Agreement in accordance with a request of the Lenders and such request and any action taken or failure to act pursuant thereto shall be binding upon the Lenders and their successors and assigns.

     Each Lender expressly acknowledges that neither the Agent, nor any of its officers, directors, employees, agents, attorneys-in-fact or affiliates has made any representations or warranties to it and that no act by the Agent hereafter taken, including, without limitation, any review of the affairs of the Borrower, the Seller, the Originator or TFC, shall be deemed to constitute any representation or warranty by the Agent. The Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, prospects, financial and other condition or creditworthiness of the Borrower, the Seller, the Originator, TFC or any other Person which may come into the possession of the Agent or any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates.

     Each Lender agrees to indemnify the Agent (in its capacity as Agent) and its officers, directors, employees, representatives and agents (to the extent not reimbursed by the Borrower or any of its Affiliates and without limiting the obligation of the Borrower or any such Affiliate to do so), ratably according to their pro rata shares of the aggregate Total Outstandings, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits,

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costs, expenses or disbursements of any kind or nature whatsoever (including, without limitation, the reasonable fees and disbursements of counsel for the Agent or such Person in connection with any investigative, administrative or judicial proceeding commenced or threatened, whether or not the Agent or such Person shall be designated a party thereto) that may at any time be imposed on, incurred by or asserted against the Agent or such Person as a result of, or arising out of, or in any way related to or by reason of, any of the transactions contemplated hereunder or the other Loan Documents or the execution, delivery or performance of this Warehouse Lending Agreement or the other Loan Documents or the Loans or any other document furnished in connection herewith or therewith (but excluding any such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting solely from the gross negligence or willful misconduct of the Agent or such Person).

     The Agent and its Affiliates may make loans to, accept deposits from and generally engage in any kind of business with any other party hereto or any Affiliate of any other party hereto as though the Agent were not the Agent hereunder. With respect to the Loans pursuant to this Warehouse Lending Agreement or the other Loan Documents, Barclays Bank PLC as a Lender shall have the same rights and powers under this Warehouse Lending Agreement and the Loan Documents as any Lender and may exercise the same as though it were not the Agent, and the terms “Financial Institution,” “Class B Lender,” “Lender” and the plural forms thereof shall include Barclays in its individual capacity.

     The Agent may, upon ten days’ notice to the Borrower and the Lenders, resign as Agent for the Lenders. If the Agent shall resign as Agent for the Lenders, then (i) the Lenders during such 10-day period shall appoint a successor Agent or (ii) if the Lenders do not so appoint a successor Agent after the closing of such 10-day period, the Agent shall appoint a commercial bank to be the Agent or petition a court of competent jurisdiction to appoint a successor Agent for the Lenders. In either case, such successor agent shall succeed to the rights, powers and duties of the Agent and the term “Agent” shall mean such successor agent, effective upon its appointment and acceptance, and the former Agent’s rights, powers and duties as Agent shall be terminated, without any other or further act or deed on the part of such former Agent or any of the parties to this Warehouse Lending Agreement. After the retiring Agent’s resignation hereunder as Agent, the provisions of this Section 11.19 and the all indemnification and other protective terms of this Warehouse Loan Agreement and the other Loan Documents covering the Agent shall continue to inure to its benefit as to any actions taken or omitted to be taken by it during such time as it was Agent.

     Section 11.20. Bankruptcy Petition Against Sheffield Receivables Corporation. Each party hereto hereby covenants and agrees, on behalf of itself and each of its Affiliates, that prior to the date which is one year and one day after the payment in full of all indebtedness for borrowed money of Sheffield Receivables Corporation, such party will not institute against, or join any other Person in instituting against, Sheffield Receivables Corporation any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other similar proceeding under the laws of the United States or any state of the United States. The agreements set forth in this paragraph and the parties’ respective obligations hereunder shall survive termination of this Warehouse Lending Agreement and repayment of the Loans.

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     Section 11.21. Nonrecourse Nature of Transactions. Each party hereto hereby acknowledges and agrees that all transactions with Sheffield Receivables Corporation shall be without recourse of any kind to Sheffield Receivables Corporation. Sheffield Receivables Corporation shall have no obligation to pay any amounts owing hereunder unless and until such Sheffield Receivables Corporation has received such amounts pursuant to this Warehouse Lending Agreement or the other Loan Documents. In addition, each party hereto agrees that Sheffield Receivables Corporation shall have no obligation to pay any party hereto any amounts constituting a reimbursement for expenses or indemnities (collectively, “Expense Claims”) and such Expense Claims shall not constitute a claim against Sheffield Receivables Corporation (as defined in Section 101 of Title 11 of the United Bankruptcy Code), unless or until Sheffield Receivables Corporation has received amounts sufficient to pay such Expense Claims pursuant to this Warehouse Lending Agreement or the other Loan Documents and such amounts are not required to pay Commercial Paper of Sheffield Receivables Corporation. Any such delay in receiving amounts referred to in this Section 11.21 shall not increase the obligations of any other Lender without its consent. The agreements set forth in this paragraph and the parties’ respective obligations hereunder shall survive termination of this Warehouse Lending Agreement and repayment of the Loans.

[Signature Page Follows]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized representatives on the date first written above.

TRIAD AUTOMOBILE RECEIVABLES WAREHOUSE TRUST, Borrower
By:	WILMINGTON TRUST COMPANY, not in its individual capacity but solely as Owner Trustee
By:	/s/ Rachel L. Simpson
	Name:	Rachel L. Simpson
	Title:	Sr. Financial Services Officer

[SIGNATURE PAGE TO WAREHOUSE LENDING AGREEMENT]

TRIAD FINANCIAL WAREHOUSE SPECIAL PURPOSE LLC, Seller
By:	/s/ Mike L. Wilhelms
	Name:	Mike L. Wilhelms
	Title:	Chief Financial Officer
TRIAD FINANCIAL CORPORATION, Originator
By:	/s/ Mike L. Wilhelms
	Name:	Mike L. Wilhelms
	Title:	Chief Financial Officer
TRIAD FINANCIAL CORPORATION, Servicer
By:	/s/ Mike L. Wilhelms
	Name:	Mike L. Wilhelms
	Title:	Chief Financial Officer
THE BANK OF NEW YORK, Collection Account Bank
By:	/s/ Michael Burack
	Name:	Michael Burack
	Title:	Assistant Treasurer

[SIGNATURE PAGE TO WAREHOUSE LENDING AGREEMENT]

SHEFFIELD RECEIVABLES CORPORATION, Class A Lender
By:	BARCLAYS BANK PLC, as attorney-in-fact
By:	/s/ David Lister
	Name:	David Lister
	Title:	Director
BARCLAYS BANK PLC, Class B Lender
By:	/s/ Lisa C. Milazzo
	Name:	Lisa C. Milazzo
	Title:	Director
BARCLAYS BANK PLC, the Agent
By:	/s/ Lisa C. Milazzo
	Name:	Lisa C. Milazzo
	Title:	Director

[SIGNATURE PAGE TO WAREHOUSE LENDING AGREEMENT]

SCHEDULE I

SI-1

SCHEDULE B

Representations and Warranties of Borrower
with Respect to the Contracts.

     Borrower makes the following representations and warranties as to each Contract in which a Lien is granted to the Agent for the benefit of the Lenders. Such representations and warranties speak, unless otherwise specifically provided therein, as of the related Borrowing Date and as to the Contracts being pledged to the Agent on such Borrowing Date.

     1. Characteristics of Contracts. Each Contract (A) was originated (i) by the Originator, (ii) by a Dealer for the retail sale of a Financed Vehicle in the ordinary course of such Dealer’s business and purchased by the Originator from such Dealer under an existing Dealer Agreement or pursuant to a Dealer Assignment with the Originator and was validly assigned by such Dealer to the Originator pursuant to a Dealer Assignment, or (iii) by a Third-Party Lender and purchased by the Originator from such Third-Party Lender under an existing Auto Loan Purchase and Sale Agreement or pursuant to a Third-Party Lender Assignment with the Originator and was validly assigned by such Third-Party Lender to the Originator pursuant to a Third-Party Lender Assignment, (B) was originated by the Originator, such Dealer or such Third-Party Lender for the retail sale, consumer-to-consumer sale or refinancing of a Financed Vehicle in the ordinary course of the Originator’s, the Dealer’s or the Third-Party Lender’s business, in each case, in accordance with the Originator’s credit policies and was fully and properly executed by the parties thereto, and the Originator, each Dealer and each Third-Party Lender had all necessary licenses and permits to originate Contracts in the State where the Originator, each such Dealer or each such Third-Party Lender was located, (C) has not been amended or collections with respect to which waived, other than as evidenced in the Legal File relating thereto, (D) contains customary and enforceable provisions such that the rights and remedies of the holder thereof are adequate for realization against the collateral of the benefits of the security, (E) provides for level monthly payments (provided, that the payment in the first or last month in the life of the Contract may be minimally different from the level payments) that, if made when due, will fully amortize the Amount Financed by maturity and yield interest at the Annual Percentage Rate, (F) was originated in accordance with the Program Guidelines, (G) shall have been originated on a Form of Contract that meets all applicable Form-of-Contract Requirements, (H) shall be originated in an Eligible State and (I) will not, as a result of the addition of such Contract to the pool of Eligible Contracts, cause the percentage of Eligible Contracts (by aggregate Principal Balance as of any date of determination) that are Precomputed Contracts to exceed one percent (1%).

     2. Fraud or Misrepresentation. Each Contract was originated (i) by the Originator, (ii) by a Dealer and was sold by the Dealer to the Originator, or (iii) by a Third-Party Lender and was sold by the Third-Party Lender to the Originator, and was transferred by the Originator to Seller, transferred by Seller to Borrower and pledged by Borrower to the Agent for the benefit of the Lenders without any fraud or misrepresentation on the part of the Originator, Seller, Borrower, such Dealer or Third-Party Lender in any case.

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     3. Origination. Each Contract was originated in the United States and the related Obligor is a resident of the United States.

     4. List of Contracts. The information set forth in the related List of Contracts has been produced from the Electronic Ledger and is true and correct in all material respects as of the beginning of business on the related Cut-off Date.

     5. Compliance with Law. All requirements of applicable federal, State and local laws, and regulations thereunder (including, without limitation, usury laws, the Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Federal Trade Commission Act, the Moss-Magnuson Warranty Act, the Board’s Regulations “B” and “Z” (including amendments to the Federal Reserve’s Official Staff Commentary to Regulation Z, effective October 1, 1998, concerning negative equity loans), the Servicemembers Civil Relief Act, each applicable State Motor Vehicle Retail Installment Sales Act, and State adaptations of the National Consumer Act and of the Uniform Consumer Credit Code and other consumer credit laws and equal credit opportunity and disclosure laws) in respect of the Contracts and the Financed Vehicles, have been complied with in all material respects, and each Contract and the sale of the Financed Vehicle evidenced by each Contract complied at the time it was originated or made and now complies in all material respects with all applicable legal requirements.

     6. Binding Obligation. Each Contract represents the genuine, legal, valid and binding payment obligation of the Obligor thereon, enforceable by the holder thereof in accordance with its terms, except (A) as enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting the enforcement of creditors’ rights generally and by equitable limitations on the availability of specific remedies, regardless of whether such enforceability is considered in a proceeding in equity or at law and (B) as such Contract may be modified by the application after the applicable Cut-off Date of the Servicemembers Civil Relief Act, as amended; and all parties to each Contract had full legal capacity to execute and deliver such Contract and all other documents related thereto and to grant the security interest purported to be granted thereby.

     7. No Government, Corporate or Fleet Obligor. None of the Contracts is due from the United States of America or any State or from any agency, department or instrumentality of the United States of America or any State. All of the Contracts are due from Obligors who are natural persons or, if any Obligor is not a natural person, (a) such entity is an obligor with respect to five or fewer financed vehicles and (b) the related Contract or Contracts have the benefit of the personal guaranty of a natural person or persons. No Contract has been included in a “fleet” sale (i.e., a sale to any single Obligor of more than five Financed Vehicles).

     8. Security Interest in Financed Vehicle. Each Contract created or will create a valid, binding and enforceable first priority security interest in favor of the Originator in the Financed Vehicle. The Lien Certificate and original certificate of title for each Financed Vehicle show, or if a new or replacement Lien Certificate is being applied for with respect to such Financed Vehicle the Lien Certificate will be received within one hundred fifty (150) days of the Contract origination date and will show, the Originator as the original secured party under each Contract, or that such Contract has been assigned to the Originator, as the holder of a first priority security

SB-2

interest in such Financed Vehicle. With respect to each Contract for which the Lien Certificate has not yet been returned from the Registrar of Titles, the Originator has a Title Package for the related Financed Vehicle. In the case of each Financed Vehicle, the Originator’s security interest has been validly assigned by the Originator to Seller pursuant to the Sale and Contribution Agreement, by Seller to Borrower pursuant to the Receivables Purchase Agreement and by Borrower to the Agent for the benefit of the Lenders pursuant to the Warehouse Lending Agreement. Immediately after (x) the sale, transfer and assignment thereof by the Originator to Seller and by Seller to Borrower and (y) the pledge by Borrower to the Agent for the benefit of the Lenders pursuant to the Warehouse Lending Agreement, each Contract will be secured by an enforceable and perfected first priority security interest in the Financed Vehicle in favor of the Agent for the benefit of the Lenders as secured party, which security interest is prior to all other Liens upon and security interests in such Financed Vehicle which now exist or may hereafter arise or be created (except, as to priority, for any lien for taxes, labor or materials affecting a Financed Vehicle arising subsequent to the applicable Borrowing Date); provided that, for the purposes of clause (i) of the definition of “Ineligible Contract” in the Warehouse Lending Agreement but not for the purposes of Section 3.03(f) of the Warehouse Lending Agreement, Section 6.2 of the Receivables Purchase Agreement or Section 6.2 of the Sale and Contribution Agreement, if any lien referenced in the preceding parenthetical shall arise or be created as to any Loan subsequent to the applicable Borrowing Date, such occurrence shall be deemed to constitute a breach of the representation and warranty set forth in this paragraph 8.

     9. Contracts in Force. No Contract has been satisfied, subordinated or rescinded, and the Financed Vehicle securing each such Contract has not been released from the lien of the related Contracts in whole or in part. No terms of any Contract have been waived, altered or modified in any respect since its origination, except by instruments or documents identified in the Legal File. No Contract has been modified as a result of application of the Servicemembers Civil Relief Act, as amended. All funds payable to or on behalf of the Obligors with respect to the Contracts have been fully disbursed.

     10. No Amendments. No Contract has been amended since the related Cut-off Date such that the amount of the Obligor’s scheduled payments has been increased, except as required by law.

     11. No Defenses. No Contract is subject to any right of rescission, setoff, counterclaim or defense and no such right has been asserted or threatened with respect to any Contract.

     12. No Liens. As of the Cut-off Date, no liens or claims have been filed for work, labor or materials relating to a Financed Vehicle that are liens prior to, or equal to or coordinate with, the security interest in the Financed Vehicle granted by any Contract.

     13. No Default. There has been no default, breach, violation or event permitting acceleration under the terms of any Contract (other than payment delinquencies of not more than 29 days calculated on the basis of a 360-day year of twelve 30 day months), and no condition exists or event has occurred and is continuing that with notice, the lapse of time or both would constitute a default, breach, violation or event permitting acceleration under the terms of any Contract, and there has been no waiver of, and Servicer shall not waive, any of the foregoing.

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     14. Insurance. At the time of an origination of a Contract by the Originator or a purchase of a Contract by the Originator from a Dealer or Third-Party Lender, each Financed Vehicle was required to be covered by a comprehensive and collision insurance policy (i) subject to maximum deductibles of $1,000 for collision coverage and $1,000 for comprehensive coverage, (ii) naming the Originator as loss payee and (iii) insuring against loss and damage due to fire, theft, transportation, collision and other risks generally covered by comprehensive and collision coverage. No Financed Vehicle is insured under a policy of force-placed insurance on the Cut-off Date.

     15. Good Title. No Contract has been sold, transferred, assigned or pledged by the Dealer or Third-Party Lender, the Originator, Seller or Borrower, as the case may be, to any Person other than the Originator, Seller, Borrower and the Agent, as the case may be. Immediately prior to the conveyance of the Contracts to Seller pursuant to the Sale and Contribution Agreement, the Originator was the sole owner thereof and had good title thereto, free of any Lien and, upon execution and delivery of the Sale and Contribution Agreement by the Originator, Seller will have good title to and will be the sole owner of such Contracts, free of any Lien. Immediately prior to the conveyance of the Contracts to Borrower pursuant to the Receivables Purchase Agreement, Seller was the sole owner thereof and had good title thereto, free of any Lien and, upon execution and delivery of the Receivables Purchase Agreement by Seller, Borrower will have good title to and will be the sole owner of such Contracts, free of any Lien. No Dealer or Third-Party Lender has any participation in, or other right, title or interest in any Contract or the proceeds thereof. Neither the Originator nor Seller has taken any action to convey any right to any Person that would result in such Person having a right to payments received under the related Insurance Policies or the related Dealer Agreements, Auto Loan Purchase and Sale Agreements, Dealer Assignments or Third-Party Lender Assignments or to payments due under such Contracts.

     16. Lawful Assignment; No Consent Required. No Contract was originated in, or is subject to the laws of, any jurisdiction the laws of which would make unlawful, void or voidable the sale, transfer and assignment of such Contract and the other Transferred Property by the Originator to Seller under the Sale and Contribution Agreement, the sale, transfer and assignment of such Contract and the other Conveyed Property by Seller to Borrower under the Warehouse Lending Agreement or the pledge of the Contracts and the other Collateral by Borrower to the Agent for the benefit of the Lenders pursuant to the Warehouse Lending Agreement or pursuant to transfers of the Notes. For the validity of (x) the sales, transfers and assignments of the Contracts and other Transferred Property to Originator and Seller, respectively, (y) the sale, transfer and assignment of the Contracts and other Conveyed Property to Borrower, and (z) the pledge of the Contracts and the other Collateral by Borrower to the Agent for the benefit of the Lenders, no consent by any Dealer, Third-Party Lender, Obligor or any other Person is required under any agreement or applicable law.

     17. All Filings Made. All filings (including, without limitation, UCC filings) required to be made by any Person, and actions required to be taken or performed by any Person in any jurisdiction to give the Agent a first priority perfected lien on, or ownership interest in, the Contracts and the proceeds thereof and the other Collateral have been made, taken or performed.

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     18. One Original. There is only one original executed copy of each Contract and dealer assignment thereof.

     19. [Reserved].

     20. Remaining Principal Balance. At the Cut-off Date the Principal Balance of each Contract set forth in the List of Contracts is true and accurate in all material respects.

     21. Scheduled Payments. Each Contract has a first Scheduled Payment due no later than 45 days after the date of origination of such Contract.

     22. Simple Interest Contracts. Except in the case of Precomputed Contracts that collectively satisfy the criterion set forth in paragraph 1(I) of this Schedule B, each Contract is a Simple Interest Contract and provides that all allocations of payments with respect to principal and interest, and the determination of periodic charges and the like, are made using the Simple Interest Method, based on the actual number of days elapsed and the actual number of days in the calendar year.

     23. Location of Contract Files. The Contract Files are maintained either in hard copy or in an electronic format at one or more of the locations listed in Schedule C to the Warehouse Lending Agreement.

     24. [Reserved].

     25. No Bankruptcies. Other than as expressly permitted by the Program Guidelines, as of the related Cut-off Date no Obligor on any Contract filed for bankruptcy that was neither discharged nor dismissed.

     26. No Repossessions. As of the Cut-off Date, no Financed Vehicle securing any Contract is in repossession status.

     27. Tangible Chattel Paper. Each Contract constitutes “tangible chattel paper” as defined in the UCC as in effect in the States of New York, California, Delaware and Texas.

     28. Marking Records. By the applicable Borrowing Date, the Originator will have caused the portions of the Electronic Ledger relating to the Contracts to be clearly and unambiguously marked to show that the Contracts have been sold to Seller by the Originator, sold to Borrower by Seller, and pledged by Borrower to the Agent for the benefit of the Lenders in accordance with the terms of the Warehouse Lending Agreement.

     29. Computer Tape. The computer tape made available by the Originator to the Agent one (1) Business Day before the proposed Borrowing Date (or, in the case of any computer tape listing any Clean-up Call Contracts, on the third (3^rd) Business Day of the month of the proposed Borrowing Date), pursuant to Section 4.02(e)(ii) of the Warehouse Lending Agreement, was complete and accurate as of the Cut-off Date and includes a description of the same Contracts that are described in the List of Contracts.

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     30. Adverse Selection. No selection procedures adverse to the Agent or the Lenders were utilized in selecting the Contracts from those receivables owned by the Originator which met the selection criteria contained in the Warehouse Lending Agreement.

     31. Legal Files Complete. There exists a Legal File pertaining to each Contract and such Legal File contains (a) a fully executed original of the Contract, (b) in the case of retail installment sale contracts, the original executed credit application, or a paper or electronic copy thereof and (c) the original Lien Certificate or application therefor. Each of such documents which is required to be signed by the Obligor has been signed by the Obligor in the appropriate spaces. All blanks on any form have been properly filled in and each form has otherwise been correctly prepared. The complete Legal File for each Contract currently is in the possession of the Custodian or in the possession of an Approved Third-Party Vendor.

     32. No Impairment. The Originator has not done anything to convey any right to any Person that would result in such Person having a right to payments due under the Contract or otherwise to impair the rights of Seller, Borrower or the Agent or any Lender in any Contract or the proceeds thereof. Seller has not done anything to convey any right to any Person that would result in such Person having a right to payments due under the Contract or otherwise to impair the rights of Borrower or the Agent or any Lender in any Contract or the proceeds thereof. Borrower has not done anything to convey any right to any Person that would result in such Person having a right to payments due under the Contract or otherwise to impair the rights of the Agent or any Lender in any Contract or the proceeds thereof.

     33. Contract Not Assumable. No Contract is assumable by another Person in a manner which would release the Obligor thereof from such Obligor’s obligations to the Originator with respect to such Contract.

     34. No Advances. No funds have been advanced by Borrower, Seller, the Servicer, any Dealer, or anyone acting on behalf of any of them in order to cause any Contract to qualify as an Eligible Contract as of the applicable Borrowing Date.

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SCHEDULE C

Location of Contract Files and Legal Files

Contract Files:	Triad Financial Corporation
	5201 Rufe Snow Drive
	North Richland Hills, Texas 76180
	or, at such other or additional locations in the United States as Borrower may specify in writing to the Agent from time to time, ten Business Days prior to first use of such location.
Legal Files:	Triad Financial Corporation
	5201 Rufe Snow Drive
	North Richland Hills, Texas 76180
	or, at such other or additional locations in the United States as Borrower may specify in writing to the Agent from time to time, ten Business Days prior to first use of such location.

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EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PERIODIC REPORT
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Daniel D. Leonard, President and Chief Executive Officer of Triad Financial Corporation, certify that:

1. I have reviewed this annual report on Form 10-K of Triad Financial Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/  Daniel D. Leonard

Daniel D. Leonard

President and Chief Executive Officer

Dated: March 28, 2008

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PERIODIC REPORT
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Mike L. Wilhelms, Senior Vice President and Chief Financial Officer of Triad Financial Corporation, certify that:

1. I have reviewed this annual report on Form 10-K of Triad Financial Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/  Mike L. Wilhelms

Mike L. Wilhelms

Senior Vice President and Chief Financial Officer

Dated: March 28, 2008

EX-32

EXHIBIT 32

Certification of Chief Executive Officer and Principal Financial Officer

Certification of Periodic Financial Report

Daniel D. Leonard and Mike L. Wilhelms hereby certify as follows:

1. They are the Chief Executive Officer and Chief Financial Officer, respectively, of Triad Financial Corporation.

2. The Form 10-K of Triad Financial Corporation for the Year Ended December 31, 2007 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) and the information contained in the report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of Triad Financial Corporation.

Date: March 28, 2008	/s/  Daniel D. Leonard Daniel D. Leonard, President & Chief Executive Officer
Date: March 28, 2008	/s/  Mike L. Wilhelms Mike L. Wilhelms Senior Vice President & Chief Financial Officer