PURCHASE AGREEMENT

Exhibit 10.5

EXECUTION COPY

PURCHASE AGREEMENT

BETWEEN

NAVISTAR FINANCIAL RETAIL RECEIVABLES CORPORATION

AND

NAVISTAR FINANCIAL CORPORATION

DATED AS OF OCTOBER 20, 2006

TABLE OF CONTENTS

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EXHIBITS

Exhibit A - Form of PA Assignment

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PURCHASE AGREEMENT

PURCHASE AGREEMENT, dated as of October 20, 2006, between NAVISTAR FINANCIAL RETAIL RECEIVABLES CORPORATION, a Delaware corporation (“ NFRRC ”), and NAVISTAR FINANCIAL CORPORATION, a Delaware corporation (“ NFC ”).

WHEREAS, NFRRC desires to purchase on the date hereof Receivables and the Related Security with respect thereto;

WHEREAS, NFC is willing to sell the Receivables and the Related Security with respect thereto to NFRRC;

WHEREAS, NFRRC may wish to sell or otherwise transfer the Receivables and the Related Security with respect thereto, or interests therein, to a trust, corporation, partnership or other entity (any such transferee being the “ Subsequent Transferee ”); and

WHEREAS, the Subsequent Transferee may issue debentures, notes, participations, certificates of beneficial interest, partnership interests or other interests or securities (collectively, any such issued interests or securities being “ Securities ”) to fund its acquisition of the Receivables and the Related Security with respect thereto and, in connection with such issuance, the Subsequent Transferee may grant a security interest in, or otherwise pledge the Receivables and Related Security to the Indenture Trustee, for the benefit of the Financial Parties.

NOW, THEREFORE, in consideration of the foregoing, the other good and valuable consideration and the mutual terms and covenants herein contained, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.01 Definitions . Capitalized terms used but not otherwise defined in this Agreement shall have the respective meanings assigned them in Part I of Appendix A to the Pooling Agreement of even date herewith by and between Navistar Financial 2006-RBC Owner Trust and NFRRC, as it may be amended, supplemented or modified from time to time. All references herein to “the Agreement” or “this Agreement” are to this Purchase Agreement as it may be amended, supplemented or modified from time to time, the exhibits hereto and the capitalized terms used herein which are defined in such Appendix A , and all references herein to Articles, Sections and subsections are to Articles, Sections or subsections of this Agreement unless otherwise specified. The rules of construction set forth in Part II of such Appendix A shall be applicable to this Agreement.

ARTICLE II

PURCHASE AND SALE OF RECEIVABLES

SECTION 2.01 Purchase and Sale of Receivables . Subject to the satisfaction of the conditions specified in Article IV , NFC agrees to sell, transfer, assign and otherwise convey to NFRRC, without recourse (except as provided in Section 5.04 ), and NFRRC agrees to purchase on the Closing Date (the “ Purchase Date ”) pursuant to a written assignment substantially in the form of Exhibit A (the “ PA Assignment ”), all right, title and interest of NFC in, to and under the Retail Notes identified on the Schedule of Retail Notes to the PA Assignment delivered to NFRRC on the Purchase Date (the “ Designated Receivables ”) and the Related Security associated with the Designated Receivables;

SECTION 2.02 Purchase Price . In consideration for the purchase of any Designated Receivables and Related Security, NFRRC shall, on the Purchase Date, pay to NFC an amount equal to the aggregate Starting Receivables Balance for such Designated Receivables (the “ Purchase Price ”) and NFC shall execute and deliver to NFRRC a PA Assignment with respect to such Designated Receivables. On the Closing Date, a portion of the Purchase Price payable on such date equal to $374,921,626.15 shall be paid to NFC in immediately available funds, and the balance of the Purchase Price ($21,820,835.38) shall be recorded as an intercompany obligation due from NFRRC to NFC under a revolving note issued under the Amended and Restated Intercompany Advance Agreement, dated as of May 3, 1994, between NFC and NFRRC.

SECTION 2.03 The Closing . The sale and purchase of the Designated Receivables (the “ Closing ”), shall take place at such a place, on a date and at a time mutually agreeable to NFC and NFRRC, and may occur simultaneously with the closing of any related transactions contemplated by the Further Transfer and Servicing Agreements.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

SECTION 3.01 Representations and Warranties as to Receivables . NFC makes the following representations and warranties as to the Designated Receivables on which NFRRC relies in accepting the Designated Receivables. Such representations and warranties speak as of the Closing Date for such Designated Receivables and as of the date of the related transfer of such Designated Receivables under the Further Transfer and Servicing Agreements, and shall survive the sale, transfer and assignment of such Designated Receivables to NFRRC and the subsequent assignment and transfer thereof pursuant to the Further Transfer and Servicing Agreements:

(a) Characteristics of Receivables . Each Designated Receivable:

(i) was originated or acquired by NFC to finance a retail purchase by a retail customer or a refinancing (for reasons other than credit reasons, unless it was amended or restructured at least 12 months prior to the Cutoff Date, it is not owed by an Obligor that is the subject of a bankruptcy or insolvency proceeding and since its amendment or restructuring it has not been greater than 60 days past due (measured

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from the date of any Scheduled Payment)) of a Financed Vehicle or Financed Vehicles by a retail customer;

(ii) has created or shall create a valid, binding and enforceable first priority, perfected security interest in favor of NFC in each Financed Vehicle related thereto, which security interest will be validly assigned by NFC to NFRRC and will be assignable by NFRRC to a subsequent purchaser;

(iii) contains customary and enforceable provisions such as to render the rights and remedies of the holder thereof adequate for realization against the collateral of the benefits of the security;

(iv) shall yield interest at the Annual Percentage Rate and comes from one of the following categories, which differ in their provisions for the payment of principal and interest: Equal Payment Fully Amortizing Receivables, Equal Payment Skip Receivables, Equal Payment Balloon Receivables, Level Principal Fully Amortizing Receivables, Level Principal Skip Receivables, Level Principal Balloon Receivables, or Other Receivables. “Equal Payment Fully Amortizing Receivables” are Receivables that provide for equal monthly payments that fully amortize the amount financed over its original term to maturity. “Equal Payment Skip Receivables” are Receivables that provide for equal monthly payments in eleven or fewer months of each twelve-month period that fully amortize the amount financed over its original term to maturity. “Equal Payment Balloon Receivables” are Receivables that provide for equal monthly payments except that a larger payment becomes due on the final maturity date for such Receivables. “Level Principal Fully Amortizing Receivables” are Receivables that provide for monthly payments consisting of level principal amounts together with accrued and unpaid interest on the unpaid Receivable Balances. “Level Principal Skip Receivables” are Receivables that provide for monthly payments in eleven or fewer months of each twelve-month period consisting of level principal amounts together with accrued and unpaid interest on the unpaid Receivable Balances. “Level Principal Balloon Receivables” are Receivables that provide for monthly payments consisting of level principal amounts together with accrued and unpaid interest on the unpaid Receivable Balances, except that a larger principal payment becomes due on the final maturity date for such Receivables. “Other Receivables” are Receivables not described above, including Receivables that provide for level monthly payments in eleven or fewer months of each twelve-month period that amortize a portion of the amount financed over its original term to maturity with a larger payment that becomes due on the final maturity date for such Receivables;

(v) immediately prior to the transfer and assignment thereof to NFRRC by NFC pursuant to this Agreement, NFC had good title to it, free of any Lien (except for Liens that will be released as of such transfer), and all right, title and interest in it has been validly sold by NFC to NFRRC pursuant to this Agreement, and NFRRC has good title to it, free of any Lien (except for Liens created by the Basic Documents), and the transfer of the Retail Note to NFRRC has been perfected under the UCC;

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(vi) was originated or acquired in the ordinary course of business in accordance with NFC’s underwriting standards.

(b) Schedule of Retail Notes . The information set forth in the Schedule of Retail Notes relating to such Designated Receivables is true and correct in all material respects.

(c) Compliance With Law . All requirements of applicable federal, state and local laws, and regulations thereunder, including the Equal Credit Opportunity Act, the Federal Reserve Board’s Regulation “B”, the Servicemembers Civil Relief Act, and any applicable bulk sales or bulk transfer law and other equal credit opportunity and disclosure laws, in respect of any of the Designated Receivables, have been complied with in all material respects, and each such Designated Receivable and the sale of the Financed Vehicle or Financed Vehicles evidenced thereby complied at the time it was originated or made and now complies in all material respects with all legal requirements of the jurisdiction in which it was originated or made.

(d) Binding Obligation . Each Designated Receivable represents the genuine, legal, valid and binding payment obligation in writing of the Obligor thereon, enforceable against the Obligor by the holder thereof in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization or similar laws affecting the enforcement of creditors’ rights in general and by equity, regardless of whether such enforceability is considered in a proceeding in equity or at law.

(e) Security Interest in Financed Vehicle . Immediately prior to the sale, transfer and assignment thereof pursuant hereto, each Designated Receivable was secured by a validly perfected first priority security interest in the related Financed Vehicle or, in the event any such Receivable was secured by more than one Financed Vehicle, in each related Financed Vehicle, each in favor of NFC as secured party, or all necessary and appropriate action had been commenced that will result, within 100 days following the Cutoff Date, in the valid perfection of a first priority security interest in each related Financed Vehicle in favor of NFC as secured party in each case (except for first priority security interests which may exist in any accessions not financed by NFC).

(f) Receivables In Force . No Designated Receivable has been satisfied, subordinated or rescinded, and no Financed Vehicle securing any Designated Receivable has been released from the Lien of the related Receivable in whole or in part.

(g) No Waiver . Since the Cutoff Date, no provision of any Designated Receivable has been waived, altered or modified in any respect.

(h) No Amendments . Since the Cutoff Date, no Designated Receivable has been amended or otherwise modified such that the total number of the Obligor’s Scheduled Payments is increased or the Starting Receivable Balance thereof is increased, and prior to the Cutoff Date, no Designated Receivable has been amended or restructured for credit reasons, unless it was amended or restructured at least 12 months prior to the Cutoff Date, it is not owed by an Obligor that is the subject of a bankruptcy or insolvency proceeding and since its

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amendment or restructuring it has not been greater than 60 days past due (measured from the date of any Scheduled Payment).

(i) No Defenses . No right of rescission, setoff, counterclaim or defense has been asserted or threatened with respect to any Designated Receivable.

(j) No Liens . There are, to NFC’s knowledge, no Liens or claims that have been filed for work, labor or materials affecting any Financed Vehicle relating to any Designated Receivable that are or may be prior to, or equal or coordinate with, the security interest in each Financed Vehicle granted by the Designated Receivable (except for Permitted Liens).

(k) No Default . There has been no default, breach, violation or event permitting acceleration under the terms of any Designated Receivable, and no event has occurred and is continuing that with notice or the lapse of time would constitute a default, breach, violation or event permitting acceleration under the terms of any Designated Receivable, and NFC has not waived any of the foregoing, in each case except for payments on any Designated Receivables which are not more than 60 days past due (measured from the date of any Scheduled Payment) as of the Cutoff Date, or with respect to any Eligible Restructured Receivable, no such event has occurred since the date of its amendment or restructuring.

(l) Insurance . Each Obligor on a Designated Receivable is required to maintain a physical damage insurance policy for each Financed Vehicle of the type that NFC requires in accordance with its customary underwriting standards for the purchase of truck, bus and trailer receivables, unless NFC has in accordance with its customary procedures permitted an Obligor to self-insure such Financed Vehicle.

(m) Lawful Assignment . No Designated Receivable was originated in, or is subject to the laws of, any jurisdiction the laws of which would make unlawful the sale, transfer and assignment of such Designated Receivable under this Agreement or any Further Transfer and Servicing Agreements.

(n) All Filings Made . All filings necessary under the UCC in any jurisdiction to give NFRRC a first priority perfected security or ownership interest in the Designated Receivables and the Related Security (to the extent it constitutes Code Collateral) have been made, and the Designated Receivables constitute Code Collateral.

(o) One Original . There is only one original executed copy of each Designated Receivable.

(p) No Documents or Instruments; Etc . No Designated Receivable, or constituent part thereof, constitutes a “negotiable instrument” or “negotiable document of title” (as such terms are used in the UCC), each Designated Receivable is an “account” or “tangible chattel paper” within the meaning of Section 9-102 of the UCC.

(q) Maturity of Receivables . Each Designated Receivable has an original term to maturity of not less than 7 months and not greater than 84 months and, as of the Cutoff Date, had a remaining term to maturity of not less than 6 months and not greater than 84 months.

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(r) Scheduled Payments; Delinquency . As of the Cutoff Date, each Designated Receivable had a first scheduled payment that was due on or before October 31, 2006; as of the Cutoff Date, no Designated Receivable had or will have a payment that was more than 60 days past due, or with respect to any Eligible Restructured Receivable, has not had a payment more than 60 days past due since the date of its amendment or restructuring; and as of the Purchase Date, no Designated Receivable had or will have a final scheduled payment that is due later than September 30, 2013.

(s) Vehicles . Each Financed Vehicle to which a Designated Receivable relates was a new or used medium or heavy duty truck, truck chassis, bus or trailer at the time the related Obligor executed the Retail Note.

(t) Origin . Each Designated Receivable was originated in the United States and is payable in U.S. Dollars.

(u) Starting Receivable Balance . The Starting Receivable Balance of each Designated Receivable as of the Cutoff Date shall be $1,000 or more.

(v) Concentration . (i) The aggregate Starting Receivable Balance of all Receivables from a single Obligor shall not exceed 2.00% of the Aggregate Starting Receivable Balance , (ii) the aggregate Starting Receivable Balance of all Receivables having a remaining term in excess of 72 months as of the Cutoff Date shall not exceed 10.00% of the Aggregate Starting Receivables Balance, (iii) the weighted average remaining maturity of the Designated Receivables shall not be greater than 58 months, (iv) the aggregate Starting Receivables Balance of all Receivables not originated by NFC or one of its Affiliates shall not exceed 3.00% of the Aggregate Starting Receivables Balance, (v) the aggregate Starting Receivables Balance for all Receivables that are Eligible Restructured Receivables shall not exceed 5.00% of the Aggregate Starting Receivables Balance and (vi) the aggregate Starting Receivables Balance of all Receivables secured by used vehicles does not exceed 22.50% of the Aggregate Starting Receivables Balance and (vii) the aggregate Starting Receivables Balance of all Receivables owed by Non-Fleet Obligors does not exceed 22.50% of the Aggregate Starting Receivables Balance.

(w) Selection Criteria . The Designated Receivables were selected on a random basis from all receivables satisfying the selection criteria described herein, and no selection procedures believed to be adverse to NFRRC or to holders of the Securities issued under the Further Transfer and Servicing Agreements were utilized in selecting the Designated Receivables from those receivables of NFC and Truck Retail Instalment Paper Corp., its wholly owned subsidiary, which meet the selection criteria under this Agreement.

(x) Minimum APR . As of the Cutoff Date, each Designated Receivable has an Annual Percentage Rate of not less than 5.50%.

(y) Weighted Average APR . The Designated Receivables transferred on the Pu