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CORRESP
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            November 18, 2005

            Via Facsimile and EDGAR

Securities and Exchange Commission

Division of Corporation Finance

Attn: Ms. Angela Jackson

100 F Street, N. E.  Mail Stop 4561

Washington, D. C. 20549

            Re:

            Navistar Financial Corporation

Form 10-K for Fiscal year ended October 31, 2004

Filed February 15, 2005

File No. 001-04146

Dear Ms. Jackson:

On behalf of Navistar Financial Corporation (the “Corporation”), this letter is in response to comments provided by the Securities and Exchange Commission (“SEC” or “Commission”) staff in a letter dated  September 27, 2005, with respect to the Corporation’s Annual Report on Form 10-K for the year ended October 31, 2004.  The SEC comments and the responses from the Corporation are set forth in the attached table and Exhibit A.

Navistar Financial Corporation acknowledges that: (i) the Corporation is responsible for the adequacy of the disclosure in its Form 10-K for the period ended December 31, 2004; (ii) SEC staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; (iii) the Corporation may not assert staff comments as a defense in any proceeding initiated by the SEC or any person under the federal securities laws of the United States; and, finally, (iv) the Division of Enforcement has access to all information the Corporation provides to the staff in connection with staff’s comments on the filing noted above.

The Corporation intends to revise future filings to reflect the changes depicted in Exhibit A, beginning with the Corporation’s October 31, 2005 Form 10-K.  We desire to file the Corporation’s 2005 Form 10-K timely.  We respectfully request your response to our revisions as soon as possible.

We look forward to working with you to ensure the appropriateness of the Corporations enhanced disclosure.  Please feel free at any time to contact John Mulvaney Vice President and Controller at 630-753-4094 or via email at John.Mulvaney@nav-international.com.

Sincerely,

Andrew J. Cederoth

Principal Financial Officer

Navistar Financial Corporation

            Cc:

            Margaret Fitzgerald, SEC

Kristin L. Moran, NFC General Counsel

Thomas Hough, Chairman NFC Audit Committee

In these replies the following naming convention is used:

“Corporation” or “NFC” refers to Navistar Financial Corporation, File No. 001-04146

“Navistar” or “NIC” or “parent company” refers to Navistar International Corporation, File No. 001-9618

“International” refers to International Truck and Engine Company who owns 100% of NFC and is owned 100% by NIC.

As stated the responses to the staff comments are shown in a table format to assist in matching the staff’s comments to the Corporation’s responses.  Requested revisions to the actual 2004 disclosure, which the Corporation intends to reflect in future filings, are found in Exhibit A.

Specific Inquiries from the Securities and Exchange Commission

Financial Statements

Note 1:  Summary of Accounting Policies

Revenue on Receivables, page 17

1.   Please revise to more clearly describe each type of receivable and its associated revenue recognition policy.   For example,

•     Clarify the difference between “finance receivables” and “other finance receivables” as reported on your balance sheet.

•     More clearly describe what wholesale and retail notes and accounts represent and how revenue is recognized for each.

•     Clarify whether the term “finance leases” refers to direct financing leases.  If so, please disclose your accounting policy for such leases.

•     Distinguish between the types of revenue that you earn.   For example, clarify that revenue from retail notes and finance leases represents interest income, while revenue from operating leases is earned in the form of rental income.

Note 1:  Summary of Accounting Policies

Sales of Receivables, page
17

2.   Please revise to describe the components of “income related to sales of finance receivables” as reported on your income statement.  In addition, please tell us how you determined that it was appropriate to classify such income as revenue as opposed to other income.

Response to Comment Nos. 1
and 2

For response to Comment No. 1 and 2, the Corporation agrees with the staff and will revise the disclosure in Note 1: Summary of Accounting Policies – Finance Receivables, Revenue Recognition and Sales of Receivables and intends to clarify the titles of line items on the Statements of Consolidated Income to provide further clarification.

See Exhibit A for the revised disclosure of the information in the Company’s 2004 Form 10-K which was requested in Comments 1 and 2.

In our disclosure in the 2004 Form 10-K, the line titled “finance receivables” reported retail notes and finance lease receivables while “other finance receivables” reported the wholesale notes, wholesale accounts and retail accounts.  As illustrated in Exhibit A, the Corporation will discontinue this disclosure in future filings.

Exhibit A clarifies that finance leases refer to direct financing leases.

The Corporation has revised Note 1. Summary of Accounting Policies – Sales of Receivables to describe the components of “income related to sales of finance receivables

NFC classifies “income related to sales of finance receivables” as revenue based on our approach to reporting on a “single step” basis.  That is, the Corporation groups all of its revenues and expenses together and does not have any other subtotals prior to income before taxes.  As a result, a separate category for “other income” is not applicable.

Note 1:  Summary of Accounting Policies

Sales of Receivables, page 17

3. Please revise to disclose the key assumptions used in subsequently measuring the fair value of your retained interests (including, at a minimum, quantitative information about discount rates, expected
prepayments including the expected weighted-average life of pre-payable financial assets, and anticipated credit losses, including expected static pool losses.)  Refer to paragraph 17(g) of SFAS 140.

Note 1: Summary of Accounting Policies

Sales of
Receivables, page 17

4. Please revise to disclose the following for all material servicing assets and servicing liabilities in accordance with paragraph 17(e)of SFAS 140:

•     the amounts of servicing assets or liabilities recognized and amortized during the period;

•     the fair value of recognized servicing assets and liabilities for which it is practicable to estimate that value and the method and significant assumptions used to estimate the fair value;

•     the risk characteristics of the underlying financial assets used to stratify recognized servicing assets for purposes of measuring impairment in accordance with paragraph 63 of SFAS 140; and

•     the activity in any valuation allowance for impairment of recognized servicing assets—including beginning and ending balances, aggregate additions charged and reductions credited to operations, and aggregate direct write-downs charged against the allowances—for each period for which results of operations are presented.

Response to Comment No. 3

Rather than provide the requested assumptions in NFC’s Note 1. Accounting Policies, the Corporation will revise its future filings and include this information in Note 15. Sales of Receivables.

Please see Exhibit A.

Response to Comment No. 4

The Corporation does not have any material servicing assets or liabilities as its servicing income is just adequate compensation for the services it provides.  Paragraph 62 of SFAS 140 states, in part, “....the initial measure for servicing may be zero if the benefits of servicing are just adequate to compensate the servicer for its servicing responsibilities.”  Question 78 of the FAS 140 Implementation Guidance indicates that “a servicing contract that entitles the servicer to
receive benefits of servicing

just equal to adequate compensation, regardless of the servicer’s own servicing costs, does not result in recognizing a servicing asset or a servicing liability”.  In addition, it states that “adequate compensation is determined by the market place.”

The Corporation has determined that the contractual servicing fee represents market value, or just adequate compensation for its responsibilities.  The Corporation maintains a contract with an independent back-up servicer that has agreed to accept the Corporation’s servicing fee as compensation should a servicer default occur.  This
acceptance confirms the Corporation’s fee is market based at inception.  In addition, to further evidence that our servicing fee represents market value, the Corporation periodically reviews servicing fees and related accounting as disclosed by other major securitizers in the automotive sector in order to support the conclusion that Corporation’s servicing fee is market based.

Note 1: Summary of Accounting Policies

Finance Receivables, page 18

5. Please revise to disclose how you account for finance receivables in which you do not have the intent and ability to hold for the foreseeable future considering the guidance in paragraph 8 of SOP 01-6.  In
addition, given your history of securitizing finance receivables, tell us how you considered whether all or a portion of your finance receivables should be reported as held for sale as of October 31, 2004.

Note 1:  Summary of Accounting Policies

Finance Receivables, page 18

6. We note on your cash flow statement that you have sold a significant amount of your finance receivables.  Please tell us how you considered the guidance in paragraph 9 of SFAS 102 and SOP 01-6 in determining the appropriate classification of cash flows related to the origination and sale of finance receivables.

Response to Comment No. 5

Paragraph 8 of SOP 01-6 indicates that if management has the intent and ability to hold finance receivables for the foreseeable future, or until maturity or payoff, they should not be reported as held for sale.  The timing of when a finance receivable is transferred to “held for sale” is based on the following guidance in SOP 01-6, paragraph 8c, “Once a decision has been made to sell loans not previously classified as held for sale, such loans should be transferred into the
held-for-sale classification and carried at the lower of cost or fair value.”

The Corporation makes the decision to sell a group of finance receivables once those finance receivables have been finally selected based on specific criteria for sale into a securitization.  The Corporation documents its selection on a receivable by receivable basis in the subsidiary ledger by tagging the finance receivables that meet the underwriting criteria.  Prior to that point, the Corporation intends to and has the ability to hold until maturity all of the finance receivables it originates.

The Corporation had finance receivables which were internally designated as held for sale as of October 31, 2004 which were not separately reported on the balance sheet.  However, the related amounts were accounted for properly as those finance receivables were held at the lower of cost or fair value as required by SOP 01-6 paragraph 8(b) that states “non mortgage loans held for sale should be reported at the lower of cost or fair value.”  To enhance the disclosure, the Summary of Accounting Policies will describe this policy in future filings and the Statement of Consolidated Financial Condition or the notes thereto will be revised in future filings to separately identify the finance receivables selected for sale into a securitization as Held for Sale.  There were no finance receivables designated as held for sale at the end of any quarterly reporting period in fiscal years
2003 and 2004, except as noted above at October 31, 2004.

Response to Comment No. 6

According to paragraph 9 of SFAS 102, “Cash receipts resulting from sales of loans that were not specifically acquired for resale shall be classified as investing cash inflows.  That is, if loans were acquired as investments, cash receipts from sales of those loans shall be classified as investing cash inflows regardless of a change in the purpose for holding those loans.”

At the time they are originated (see responses to Staff comments No. 2 and 5) all finance receivables are classified as held for investment purposes.  The Corporation funds its balance sheet through equity, a revolving credit agreement, trade payables to International, debt, and on and off-balance sheet securitizations.

Based on the public financial markets and the competitiveness of funding options, the Corporation may choose to securitize and sell finance receivables in off-balance sheet transactions; generally two or three
times a year.  Finance receivables are not originated with the intent to sell them within a short period of time.  The Corporation changes its intent to hold or sell finance receivables based on funding options, which is not on a basis that would be considered frequent selling or trading. Therefore, the cash flow related to securitizations is reported as cash flows from investing activities as noted in paragraph 9 of SFAS 102 above.

Note 2:  Restatements, page 20

7. Please revise to more clearly explain your restatement related to your securitization activities.   Clearly explain your prior accounting policy for retained interests, including interest-only receivables, and explain why such accounting was
subsequently determined to be inappropriate.  In addition, clearly explain your current accounting policy for retained interests, specifically interest-only receivables.

Response to Comment No. 7

Prior to the restatement, the Corporation did not appropriately value or account for its retained interests in securitized retail notes and finance leases.  The Corporation maintained a separate allowance for losses on its sold receivables
and did not include the net losses in the QSPE’s cash flows.  The Corporation also did not record the retained interests at the time of transfer using the allocated basis methodology as required by SFAS No. 140.  The cash reserve accounts in the QSPE were not valued as retained interests, but as interests sold and valued by using the cash in method.  Finally, the discount rate used by the Corporation was determined to be inappropriately low, thus overstating the retained interests, as well as the gain recognition.

Instead, the Corporation reported the retained interests at amortized cost and recognized variances in excess spread (interest received from the customer less interest paid to the investor) between the original forecast on which
the gain was based and actual results in the period in which the variances occurred.  Fair value estimates and evaluations for impairment on the retained interest under EITF 99-20 were not performed.  This accounting had reported results which were different from results if the requirements of SFAS 140 and EITF 99-20 had been followed.

NFC’s current accounting policy records retained interests, which include interest-only receivables, cash reserve accounts, over collateralization and subordinated certificates, at relative fair value or allocated cost in the periods in which the sales occur.   The discount accretion related to the retained interests is recognized on an effective yield basis.

Management estimates the prepayment speeds for the receivables sold, market-based discount rates used to determine the fair value of the retained interests and the anticipated net losses on the receivables in order to determine the fair value of the retained interests.  The method for calculating the gain or loss aggregates the receivables in a homogenous pool.  Estimates are based on historical experience, anticipated future portfolio performance, and other factors and are made separately for each securitization transaction.  In addition, the Corporation re-evaluates the f