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[PACCAR FINANCIAL logo]

September 21, 2005

Ms. Margaret Fitzgerald

Division of Corporation Finance

Securities and Exchange Commission

Mail Stop 4561

100 F. Street, N.E.

Washington, D.C.  20549

Re:          PACCAR Financial Corp.

Form 10-K for Fiscal Year Ended December 31,
2004

Filed March 4, 2005

File No. 001-11677

Dear Ms. Fitzgerald,

This letter is in response to the letter dated September 13, 2005,
from Angela Jackson regarding PACCAR Financial Corp.’s Form 10-K for the
fiscal year ended December 31, 2004.
For convenience, each of the comments has been reproduced in italics.

Management’s Discussion and Analysis of
Financial Condition and Results of Operations, page 11

1.              Please tell us and
revise future filings to fully explain the reasons for changes in each element
of your loan loss allowance so that a reader can understand how changes in
risks in the portfolio during each period relate to the loan loss allowance at
period-end.

•                  Quantify and explain how changes in your estimation methods and
assumptions affected the allowance:

•                  Quantify and explain how changes in loan and lease concentrations,
quality, and terms that occurred during the period are reflected in your
allowance.

•                  Quantify your gross charge-offs and recoveries for each period
presented and explain why net charge-offs have decreased so significantly,
whether this trend is expected to continue, and how this affected the
determination of your allowance.

The information requested is set forth below.  The Company intends to provide similar disclosure
in future filings.

Allowance for Losses

The Company’s loan and lease portfolio is concentrated with customers
in the heavy and medium duty truck transportation industry.  The portfolio is comprised of retail loans
and leases, dealer wholesale financing and dealer master notes as follows:

  2004

  2003

  2002

  Retail loans

  62

  %

  62

  %

  61

  %

  Retail leases

  22

  %

  23

  %

  24

  %

  Dealer wholesale financing

  11

  %

  10

  %

  10

  %

  Dealer master notes

  5

  %

  5

  %

  5

  %

  Total portfolio at end of year

  100

  %

  100

  %

  100

  %

The following table summarizes changes in the Company’s allowance for
losses (in millions):

  2004

  2003

  2002

  Allowance or Losses:

  Balance at beginning of year

  $

  67.4

  $

  66.9

  $

  66.2

  Provision for losses

  4.3

  19.6

  42.2

  Credit losses

  (9.8

  )

  (23.9

  )

  (48.9

  )

  Recoveries and other

  5.2

  4.8

  7.4

  Balance at end of the year

  $

  67.1

  $

  67.4

  $

  66.9

  Ratios:

  Credit losses, net of recoveries ($4.6 in
  2004) to average net receivables ($3,109.2 in 2004)

  .15

  %

  .64

  %

  1.32

  %

  Allowance for losses ($67.1 in 2004) to
  year-end net receivables ($3,387.3 in 2004)

  1.98

  %

  2.27

  %

  2.13

  %

  Year-end finance and lease receivables and
  leases past due, over 60 days, ($16.6 in 2004) to year-end retail contracts
  and lease receivables ($3,192.7 in 2004)

  .52

  %

  1.15

  %

  1.91

  %

The reduction in the provision for losses reflects the lower credit
losses and a reduction in past-due accounts as noted in the table above.

Credit losses decreased significantly during the past two years to $9.8
in 2004 from $23.9 in 2003 and $48.9 in 2002.
Stronger truck market conditions have contributed to customer’s ability
to make timely payments on their obligations to the Company.  Increased demand for transportation services
allowed the Company’s customers to earn greater profits and generally

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pass higher fuel costs through to their customers in the form of
surcharges.  Favorable industry
conditions also increased used truck values, reducing losses on repossessions
and supporting the collateral values underlying the Company’s receivables.  Recoveries of accounts previously written off
have been relatively consistent during the past 3 years.

These improved portfolio conditions have also contributed to the lower
allowance as a percentage of outstanding receivables, which has decreased to
1.98% in 2004 from 2.27% in 2003 and 2.13% in 2002.

Although trends during 2004 were favorable, the markets in which our
customers operate are cyclical and our prior experience indicates that these
trends are not likely to continue.
Current high diesel prices and successive interest rate increases are
negative factors potentially impacting our customers’ ability to make timely payments
and increasing the risk of loss inherent in the portfolio, possibly to loss
levels experienced in 2002 and 2003.

The estimation methods and factors considered for determining the
allowance during the periods included in this filing have been consistently
applied and are discussed further under Critical Accounting Policies.  There have been no significant changes in
customer contract terms during the periods.

Critical Accounting Policies, page 13

2.              Please tell us and
in future filings revise to include a complete description of your accounting
policy for the allowance for credit losses.
Describe your systematic analysis and procedural discipline, required by
FRR-28, for determining the amount of your allowance for losses.  Specifically explain the following:

•                  How you determine each element of the allowance;

•                  Which contracts are evaluated individually and which contracts are
evaluated as a group;

•                  How you determine both the allocated and unallocated portions of the
allowance for losses;

•                  How you determine the loss factors you apply to your graded loans to
develop a general allowance; and

•                  How you consider dealer recourse provisions in determining each element
of your allowance.

The information requested is set forth below.  The Company intends to provide similar
disclosure in future filings.   The
Company does not maintain a “general allowance”.

Critical Accounting Policies

The Company determines the allowance for credit losses on its retail
loan and lease, wholesale and master note portfolios based on a combination of
historical information and current market conditions.  This analysis is dependent on estimates,
including assumptions regarding collectibility of past-due accounts,
repossession rates and the recovery rate on the underlying collateral.  Loss factors have been established from
historical collection and loss information

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using past due account data which has demonstrated a stronger
correlation to future credit losses than credit grades of customers.

The Company individually evaluates bankrupt accounts and large accounts
which have significant amounts past due ($58.8 million at December 31,
2004 or 1.7% of the total outstanding receivables).  It evaluates all other customers as a group
based on past due categories (i.e., 90+, 60-90, 30-59 and less than 30 days
past due), as well as current account balances.
The Company has developed a range of specific loss factors for each of
its retail, wholesale and dealer master note portfolios based on historical
experience, taking into account loss frequency and severity in both strong and
weak truck market conditions.  Loss
factors at December 31, 2004 range from less than 1% on current accounts
to 35% on certain accounts over 90 days past due.  A projection is made of the range of
estimated credit losses inherent in the portfolio from which an amount is
determined as probable based on current market conditions, including diesel
prices, interest rates and other factors representing leading indicators
impacting our borrowers.  We further
consider the impact of dealer recourse, cash recoveries and used equipment
collateral recoveries.  The projected
amount is then compared to the balance in the allowance and appropriate
adjustments are made.

Although certain retail contracts acquired from dealers include full or
partial dealer recourse for the credit loss, this is a minor and decreasing
component of the portfolio (10% of the retail portfolio at December 31,
2004).  For wholesale and dealer master note
portfolios, dealer recourse (including personal guarantees and pledging of
dealership assets) is present in substantially all the loan arrangements.  Cash recoveries and used equipment collateral
recoveries generally vary with market conditions.

The Company acknowledges that

• the
Company is responsible for the adequacy and accuracy of the disclosure in the
filing;

•
staff comments or changes to disclosure in response to staff comments do not
foreclose the Commission from taking action with respect to the filing; and

• the
Company may not assert staff comments as a defense in any proceeding initiated
by the Commission or any person under the federal securities laws of the United
States.

  Sincerely,

  /s/ Michael A. Tembreull

  Michael A. Tembreull

  Vice Chairman

  MAT:mm

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