UNDERWRITING AGREEMENT

Exhibit 1.1

HSBC AUTOMOTIVE TRUST (USA) 2006-3

$208,700,000 Class A-1 Notes
$196,300,000 Class A-2 Notes
$283,600,000 Class A-3 Notes
$150,149,000 Class A-4 Notes

UNDERWRITING AGREEMENT

HSBC Securities (USA) Inc.,
       as Representative of the Underwriters
452 Fifth Avenue, 9th Floor
New York, New York 10018

October 23, 2006

Dear Sirs:

HSBC Finance Corporation, a corporation organized and existing under the laws of Delaware, individually (“ HSBC Finance ”) and as Servicer (the “ Servicer ”), and HSBC Auto Receivables Corporation, a corporation organized and existing under the laws of Nevada and a wholly owned subsidiary of HSBC Finance, individually (“ HARC ”) and as Seller (the “ Depositor ”), agree with you as set forth herein.

The Depositor has authorized the issuance and sale of $208,700,000 Class A-1 Notes, $196,300,000 Class A-2 Notes, $283,600,000 Class A-3 Notes and $150,149,000 Class A-4 Notes (collectively, the “ Notes ”).  The Notes are to be issued by HSBC Automotive Trust (USA) 2006-3 (the “ Trust ”) pursuant to an Indenture (the “ Indenture ”), dated as of the date of the Closing Time (as defined below), among the Trust, The Bank of New York Trust Company, N.A., a national banking association, as indenture trustee (the “ Indenture Trustee ”), and HSBC Bank USA, National Association, a national banking association, as administrator (the “ Administrator ”), as supplemented by a Series Supplement (the “ Series Supplement ”), dated as of the date of the Closing Time, by and among the Servicer, the Trust, the Depositor, the Indenture Trustee, the Administrator and U.S. Bank Trust National Association, a national banking association, as Owner Trustee (the “ Owner Trustee ”).  In addition to the Notes, the Trust will also issue the Series 2006-3 Certificates (the “ Certificates ”) pursuant to a Trust Agreement, dated as of the date of the Closing Time, among the Depositor and the Owner Trustee, as amended and restated by an Amended and Restated Trust Agreement (the “ Trust Agreement ”), dated as of the date of the Closing Time, and as supplemented by the Series Supplement.  The Notes and the Certificates are referred to herein collectively as the “ Securities .”  The assets of the Trust will include a pool of non-prime retail installment sales contracts and loan and security agreements secured by new or used automobiles, light duty trucks and vans (the “ Receivables ”) and certain monies due thereunder after the close of business on October 16, 2006 (the “ Cut-Off Date ”).

As used herein, the term “ Depositor Agreements ” means the Sale and Servicing Agreement dated as of the date of the Closing Time, among the Trust, the Depositor, the Servicer, the Indenture Trustee and the Administrator (the “ Sale and Servicing Agreement ”), the Series Supplement, the Master Receivables Purchase Agreement dated as of November 18, 2002, between the Depositor and HAFI (the “ HAFI Receivables Purchase Agreement ”), and the Master Receivables Purchase Agreement dated as of August 8, 2002, between the Depositor and HACI (the “ HACI Receivables Purchase Agreement ”, and together with the HAFI Receivables Purchase Agreement, the “ Master Receivables Purchase Agreements ”), the Trust Agreement and this Underwriting Agreement (this “ Agreement ”); the term “ HAFI Agreements ” means the HAFI Receivables Purchase Agreement and this Agreement; the term “ HACI Agreements ” means the HACI Receivables Purchase Agreement and this Agreement; the term “ HSBC Finance Agreements ” means the Sale and Servicing Agreement, the Series Supplement and this Agreement.

HSBC Finance and the Depositor are collectively referred to herein as the “ HSBC Parties .”  HSBC Finance, the Depositor, HAFI and HACI are collectively referred to herein as the “ HSBC Entities .”

The Notes are being purchased by the Underwriters named in Schedule I to the terms agreement (the “ Terms Agreement ”), to be executed by the parties with respect to the Notes, and the Underwriters are purchasing, severally, only the Notes set forth opposite their names in Schedule I to the Terms Agreement, except that the amounts purchased by the Underwriters may change in accordance with Section 13 of this Agreement.  HSBC Securities (USA) Inc. is acting as representative of the Underwriters and, in such capacity, is hereinafter referred to as the “ Representative .”  The provisions of the Terms Agreement are deemed to be part of the terms and conditions of this Agreement.

The offering of the Notes will be made by the Underwriters, and the HSBC Entities understand that the Underwriters propose to make a public offering of the Notes for settlement on the date of the Closing Time.

None of the Certificates are being purchased by the Underwriters hereby.

The Depositor has filed with the Securities and Exchange Commission (the “Commission”) a registration statement on Form S-3 (File No. 333-131714) relating to the Notes and the offering thereof from time to time in accordance with Rule 415 under the Securities Act of 1933, as amended (the “1933 Act”), and has filed all amendments thereto that are required as of the date hereof pursuant to the 1933 Act and the rules of the Commission thereunder (the “1933 Act Regulations”).  The registration statement, as amended, has been declared effective by the Commission.  Such registration statement, as amended at the time of effectiveness, including all material incorporated by reference therein and including all information (if any) deemed to be part of the registration statement at the time of effectiveness pursuant to Rule 430B under the 1933 Act, is referred to in this Agreement as the “ Registration Statement .” The Depositor has filed or will file with the Commission pursuant to Rule 424(b) of the 1933 Act Regulations (“ Rule 424(b) ”) a supplement (the “ Prospectus Supplement ”) to the prospectus included in the Registration Statement (such prospectus, in the form it appears in the Registration Statement or in the form most recently revised and filed with the Commission pursuant to Rule 424(b), is

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hereinafter referred to as the “ Base Prospectus ”) relating to the Notes and the method of distribution thereof.  The Base Prospectus and the Prospectus Supplement, together with any amendment thereof or supplement thereto, is hereinafter referred to as the “ Prospectus .”

For the purposes of this Agreement, “Time of Sale” is the date and time specified in the Terms Agreement and is the time the first “contract of sale” within the meaning contemplated by Rule 159 of the 1933 Act Regulations (a “Contract of Sale”) for the Notes was entered into.  Prior to the Time of Sale, the Depositor prepared a preliminary Prospectus, dated as of the date hereof (subject to completion). As used herein, “ Preliminary Prospectus ” means, with respect to any date or time referred to herein, the most recent preliminary Prospectus (as amended or supplemented, if applicable), which has been prepared and delivered by the Depositor to the Underwriters in accordance with the provisions hereof.

For purposes of this Agreement, all references to the Registration Statement, the Prospectus, the Preliminary Prospectus or any amendment or supplement to any of the foregoing shall be deemed to be the copy filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval system (“ EDGAR ”).

All references in this Agreement to financial statements and schedules and other information that is “contained”, “included” or “stated” in the Registration Statement, the Preliminary Prospectus or the Prospectus (or other references of like import) shall be deemed to mean and include all such financial statements and schedules and other information which are incorporated by reference in the Registration Statement, the Preliminary Prospectus or the Prospectus, as the case may be; and all references in this Agreement to amendments or supplements to the Registration Statement, the Preliminary Prospectus or the Prospectus shall be deemed to mean and include the filing of any document under the Securities Exchange Act of 1934, as amended (the “1934 Act”), which is incorporated by reference in the Registration Statement, the Preliminary Prospectus or the Prospectus, as the case may be.

Capitalized terms used but not otherwise defined herein shall have the meanings assigned thereto in the Sale and Servicing Agreement or the Prospectus or the Preliminary Prospectus, as applicable.

SECTION 1.  Representations and Warranties .

(a)           Each of HSBC Finance and the Depositor, individually, represents and warrants to, and agrees with, each Underwriter as set forth in this Section 1(a):

(i)            The Depositor meets the requirements for use of Form S-3 under the 1933 Act, as set forth in the General Instructions to Form S-3, and the conditions of Rule 415 of the 1933 Act Regulations have been satisfied.  The Registration Statement was filed with the Commission and has been declared effective by the Commission and is effective as of the date hereof. “Effective Date” shall mean the most recent date as of which the Registration Statement was declared effective by the Commission, or any later effective date determined pursuant to Rule 430B(f)(2) under the 1933 Act. The Commission has not issued any order preventing or suspending the use of the Preliminary Prospectus or the Prospectus or any “free writing prospectus” (as defined in Rule 405 of the 1933 Act

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Regulations) relating to the Notes (each, a “Free Writing Prospectus”) or suspending the effectiveness of the Registration Statement, and no proceedings for such purpose are pending or, to the Depositor’s knowledge, threatened by the Commission.

(ii)           On the Effective Date, the Registration Statement complied in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations and the 1934 Act and the rules and regulations of the Commission thereunder (the “1934 Act Regulations”), and did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and on the Closing Time, the Registration Statement and any amendments and supplements thereto, and the Prospectus, including documents incorporated or deemed to be incorporated by reference in the Registration Statement or the Prospectus, will comply in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations and the 1934 Act and 1934 Act Regulations, and neither of such documents will include an untrue statement of a material fact or will omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided , however , that the Depositor makes no representations or warranties as to any statements in, or omissions from, the Registration Statement or the Prospectus made in reliance upon and in conformity with the Underwriter Information (as defined in Subsection 9(b) below).

(iii)          The Preliminary Prospectus at the Time of Sale did not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (it being understood that no representation or warranty is made with respect to the omission of pricing and price-dependent information, which information shall of necessity appear only in the final Prospectus); provided , however , that the Depositor makes no representations or warranties as to any statements in, or omissions from, the Preliminary Prospectus made in reliance upon and in conformity with the Underwriter Information.

(iv)          Each Issuer Free Writing Prospectus, at the time of filing thereof and at the Time of Sale, did not contain any untrue statement of a material fact or omit to state a material fact necessary in order to the statements therein, in the light of the circumstances under which they were made, not misleading, and each Issuer Free Writing Prospectus does not conflict with the information contained in the Registration Statement, the Preliminary Prospectus or the Prospectus; provided, however , that the Depositor makes no representations or warranties as to any statements in, or omissions from, any Issuer Free Writing Prospectus made in reliance upon and in conformity with the Underwriter Information.  “Issuer Free Writing Prospectus” means a “written communication” (as defined in Rule 405 under the 1933 Act Regulations) that constitutes an “issuer free writing prospectus” within the meaning contemplated by Rule 433(h)(1) of the 1933 Act Regulations.  Other than the Preliminary Prospectus, the Prospectus and any Issuer Free Writing Prospectus, the Depositor (including its agents and representatives other than the Underwriters in their capacity as such) has not made, used, prepared, authorized, approved or referred to and will not make, use, prepare, authorize, approve or refer to any

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“written communication” (as defined in Rule 405 of the 1933 Act Regulations) that constitutes an offer to sell or solicitation of any offer to buy the Notes.

(v)           Since the respective dates as of which information is given in the Preliminary Prospectus and the Prospectus, there has not been any material adverse change in the general affairs, management, financial condition, or results of operations of the Depositor or of its subsidiaries, other than as disclosed in the Preliminary Prospectus and the Prospectus or in reports filed by HSBC Finance with the Commission pursuant to the 1934 Act and the 1934 Act Regulations.

(vi)          The Depositor is a corporation duly organized and validly existing and in good standing under the laws of its jurisdiction of incorporation.  The Depositor has all requisite power and authority to own its properties and conduct its business as presently conducted and is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction which requires such qualification, except where failure to have such requisite power and authority or to be so qualified would not have a material adverse effect on the business or consolidated financial condition of the Depositor.

(vii)         The Depositor is not in violation of its certificate of incorporation or in default in the performance or observance of any material obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, note, lease or other instrument to which it is a party or by which it may be bound, or to which any of the property or assets of the Depositor is subject, except where any such violation or default would not have a material adverse effect on the transactions contemplated by this Agreement.

(viii)        The execution, delivery and performance by the Depositor of each Depositor Agreement, the issuance of the Securities and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary action or proceedings and will not conflict with or constitute a breach of, or default under, or, other than as contemplated in the Preliminary Prospectus and Prospectus, result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Depositor pursuant to, any contract, indenture, mortgage, loan agreement, note, lease or other instrument to which the Depositor is a party or by which it may be bound, or to which any of the property or assets of the Depositor is subject, nor will such action result in any violation of the provisions of the certificate of incorporation or by-laws of the Depositor or any applicable law, administrative regulation or administrative or court decree, except where any such conflict, breach, default, encumbrance or violation would not have a material adverse effect on the transactions contemplated by this Agreement.

(ix)           Each Depositor Agreement has been, or when executed and delivered, will have been, duly executed and delivered by the Depositor; and each Depositor Agreement constitutes, or, when executed and delivered, will constitute, legal, valid and binding instruments enforceable against the Depositor in accordance with their respective terms, subject as to enforceability (A) to applicable bankruptcy, reorganization, insolvency, moratorium or other similar laws affecting creditors’ rights generally, (B) to general

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principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law) and (C) with respect to rights of indemnity under this Agreement, to limitations of public policy under applicable securities laws.

(x)            The Depositor has authorized the conveyance of the Receivables to the Trust; and the Depositor has directed the Trust to issue and sell the Securities.

(xi)           The Depositor is solvent and will not become insolvent after giving effect to the transactions contemplated by this Agreement and the Master Receivables Purchase Agreements, the Sale and Servicing Agreement, the Trust Agreement, the Series Supplement or the Indenture.  The Depositor has no indebtedness to any Person other than pursuant to this Agreement and other than pursuant to transactions in which the Depositor transfers assets to a trust which issues securities.  The Depositor, after giving effect to the transactions contemplated by the Master Receivables Purchase Agreements, the Sale and Servicing Agreement, the Trust Agreement, the Series Supplement or the Indenture, will have an adequate amount of capital to conduct its business in the foreseeable future.

(xii)          Any taxes, fees and other governmental charges in connection with the execution, delivery and performance of any Depositor Agreement, the Indenture and the Securities shall have been paid or will be paid by the Depositor at or prior to the Closing Time.

(xiii)         The Notes have been duly and validly authorized, and, when validly executed, authenticated, issued and delivered in accordance with the Indenture and as provided herein will conform in all material respects to the description thereof contained in the Preliminary Prospectus and Prospectus and will be validly issued and outstanding and entitled to the benefits of the Indenture.

(xiv)        There are no legal or governmental proceedings pending, or to the knowledge of the Depositor threatened, to which the Depositor is a party or of which any of its property is the subject, other than proceedings which are not reasonably expected, individually or in the aggregate, to have a material adverse effect on the shareholder’s equity or consolidated financial position of such person and its subsidiaries taken as a whole, or which would have a material adverse effect on the transactions contemplated by this Agreement.

(xv)         KPMG LLP is an independent registered public accounting firm with respect to the Depositor as required by the 1933 Act and 1933 Act Regulations.

(xvi)        No consent, approval, authorization, order, registration, filing, qualification, license or permit of or with any court or governmental agency or body of the United States is required for the issue and sale of the Notes, or the consummation by the Depositor of the other transactions contemplated by this Agreement, the Master Receivables Purchase Agreements, the Sale and Servicing Agreement, the Trust Agreement, the Series Supplement or the Indenture, except for (A) the registration under the 1933 Act of the Notes, (B) such consents, approvals, authorizations, orders,

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registrations, qualifications, licenses or permits as have been obtained or as may be required under state securities or Blue Sky laws in connection with the purchase of the Notes and the subsequent distribution of the Notes by the Underwriters or (C) where the failure to obtain such consents, approvals, authorizations, orders, registrations, filings, qualifications, licenses or permits would not have a material adverse effect on the business or consolidated financial condition of the Depositor or the transactions contemplated by such agreements.

(xvii)       (A) The Depositor has the power and authority to sell the Receivables to the Trust, and (B) following the conveyance of the Receivables to the Trust pursuant to the Sale and Servicing Agreement, the Trust will own the Receivables free and clear of any lien, mortgage, pledge, charge, encumbrance, adverse claim or other security interest (collectively, “ Liens ”) other than Liens in favor of the Indenture Trustee created by the Indenture.

(xviii)      As of the Cut-Off Date, each of the Receivables will meet the eligibility criteria described in the Prospectus.

(xix)         The Depositor will not conduct its operations while any of the Securities are outstanding in a manner that would require the Depositor or the Trust to be registered as an “investment company” under the Investment Company Act of 1940, as amended (the “ 1940 Act ”), as in effect on the date hereof.

(xx)          The Depositor possesses all material licenses, certificates, authorities or permits issued by the appropriate state, federal or foreign regulatory agencies or bodies necessary to conduct the business now conducted by it and as described in the Preliminary Prospectus and the Prospectus and the Depositor has not received notice of any proceedings relating to the revocation or modification of such license, certificate, authority or permit which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, is likely to materially and adversely affect the conduct of its business, operations, financial condition or income.

(xxi)         At the Closing Time, each of the representations and warranties of the Depositor set forth in the Depositor Agreements will be true and correct in all material respects.

(xxii)        The Depositor is not, and on the date on which the first bona fide offer of the Notes is made will not be, an “ineligible issuer” as defined in Rule 405 under the 1933 Act.

(b)           HSBC Finance represents and warrants to, and agrees with, each Underwriter as set forth in this Section 1(b):

(i)            Each of HSBC Finance, HAFI and HACI is a corporation duly organized and validly existing and in good standing under the laws of its jurisdiction of incorporation.  Each of HSBC Finance, HAFI and HACI has all requisite power and authority to own its properties and conduct its business as presently conducted and is duly

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qualified as a foreign corporation to transact business and is in good standing in each jurisdiction which requires such qualification, except where the failure to have such power and authority or to be so qualified would not have a material adverse effect on the business or consolidated financial condition of HSBC Finance, HAFI and HACI and their respective subsidiaries, in each case taken as a whole, or on the transactions contemplated by this Agreement.

(ii)           None of HSBC Finance, HAFI or HACI is in violation of its certificate of incorporation or in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, note, lease or other instrument material to the business of HSBC Finance, HAFI and HACI and their respective subsidiaries, in each case taken as a whole, to which it is a party or by which it may be bound, or to which any of the property or assets of HSBC Finance, HAFI or HACI is subject, except where any such violation would not have a material adverse effect on the business or consolidated financial condition of HSBC Finance or the transactions contemplated by this Agreement.

(iii)          The execution, delivery and performance by HSBC Finance of the HSBC Finance Agreements, and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary action or proceedings and will not conflict with or constitute a breach of, or default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of HSBC Finance pursuant to, any contract, indenture, mortgage, loan agreement, note, lease or other instrument to which HSBC Finance is a party or by which it may be bound, or to which any of the property or assets of HSBC Finance is subject, nor will such action result in any violation of the provisions of the restated articles of incorporation or by-laws of HSBC Finance or any applicable law, administrative regulation or administrative or court decree, except where any such conflict, breach, default, encumbrance or violation would not have a material adverse effect on the business or consolidated financial condition of HSBC Finance or the transactions contemplated by this Agreement.

(iv)          The execution, delivery and performance by HAFI of each HAFI Agreement, the issuance of the Securities and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary action or proceedings and will not conflict with or constitute a breach of, or default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or, other than as contemplated by the Preliminary Prospectus and Prospectus, assets of HAFI pursuant to, any contract, indenture, mortgage, loan agreement, note, lease or other instrument to which HAFI is a party or by which it may be bound, or to which any of the property or assets of HAFI is subject, nor will such action result in any violation of the provisions of the charter or by-laws of HAFI or any applicable law, administrative regulation or administrative or court decree, except where any such conflict, breach, default, encumbrance or violation would not have a material adverse effect on the transactions contemplated by this Agreement.

(v)           The execution, delivery and performance by HACI of each HACI Agreement has been duly and validly authorized by all necessary action or proceedings

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and will not conflict with or constitute a breach of, or default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or, other than as contemplated by the Preliminary Prospectus and Prospectus, assets of HACI pursuant to, any contract, indenture, mortgage, loan agreement, note, lease or other instrument to which HACI is a party or by which it may be bound, or to which any of the property or assets of HACI is subject, nor will such action result in any violation of the provisions of the charter or by-laws of HACI or any applicable law, administrative regulation or administrative or court decree, except where any such conflict, breach, default, encumbrance or violation would not have a material adverse effect on the transactions contemplated by this Agreement.

(vi)          Each HSBC Finance Agreement has been, or, when executed and delivered, will have been, duly executed and delivered by HSBC Finance; and each HSBC Finance Agreement constitutes, or, when executed and delivered, will constitute, legal, valid and binding instruments enforceable against HSBC Finance in accordance with their respective terms, subject as to enforceability (A) to applicable bankruptcy, reorganization, insolvency, moratorium or other similar laws affecting creditors’ rights generally, (B) to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law) and (C) with respect to rights of indemnity under this Agreement to limitations of public policy under applicable securities laws.

(vii)         Each HAFI Agreement has been, or, when executed and delivered, will have been duly executed and delivered by HAFI; and each HAFI Agreement constitutes, or, when executed and delivered, will constitute, legal, valid and binding instruments enforceable against HAFI in accordance with their respective terms, subject as to the enforceability (A) to applicable bankruptcy, reorganization, insolvency, moratorium or other similar laws affecting creditors’ rights generally, (B) to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law) and (C) with respect to rights of indemnity under this Agreement, to limitations of public policy under applicable securities law.

(viii)        Each HACI Agreement has been, or, when executed and delivered, will have been duly executed and delivered by HACI; and each HACI Agreement constitutes, or, when executed and delivered, will constitute, a legal, valid and binding instrument enforceable against HACI in accordance with their respective terms, subject as to enforceability (A) to applicable bankruptcy, reorganization, insolvency, moratorium or other similar laws affecting creditors’ rights generally, (B) to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law) and (C) with respect to rights of indemnity under this Agreement, to limitations of public policy under applicable securities law.

(ix)           HAFI and HACI have each authorized the conveyance of the respective Receivables to be conveyed by such Person to the Depositor.

(x)            Since the respective dates as of which information is given in the Preliminary Prospectus and the Prospectus, (A) there has not been any material adverse change in the general affairs, management, financial condition, shareholder’s equity or

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results of operations of any of HSBC Finance, HAFI and HACI and the Depositor and their respective subsidiaries, taken as a whole, other than as disclosed in the Preliminary Prospectus and the Prospectus or in reports filed by HSBC Finance with the Commission pursuant to the 1934 Act and the 1934 Act Regulations and (B) HAFI has not entered into any transaction or agreement (whether or not in the ordinary course of business) material to HAFI that, in either case, would reasonably be expected to materially adversely affect the interests of the holders of the Notes, other than as disclosed in the Preliminary Prospectus and the Prospectus.

(xi)           Each of HSBC Finance, HAFI and HACI is solvent and will not become insolvent after giving effect to the transactions contemplated by this Agreement and the Master Receivables Purchase Agreements, the Sale and Servicing Agreement, the Trust Agreement, the Series Supplement or the Indenture.  Each of HSBC Finance, HAFI and HACI, after giving effect to the transactions contemplated by this Agreement and the Master Receivables Purchase Agreements, the Sale and Servicing Agreement, the Trust Agreement, the Series Supplement or the Indenture, will have an adequate amount of capital to conduct its business in the foreseeable future.

(xii)          There are no legal or governmental proceedings pending, or to the knowledge of HSBC Finance, HAFI or HACI threatened, to which HSBC Finance, HAFI or HACI is a party or of which any of its property is the subject, other than proceedings which are not reasonably expected, individually or in the aggregate, to have a material adverse effect on the shareholder’s equity or consolidated financial position of such person and its subsidiaries taken as a whole or which would have a material adverse effect upon the transactions contemplated by this Agreement.

(xiii)         No consent, approval, authorization, order, registration, filing, qualification, license or permit of or with any court or governmental agency or body of the United States is required for the consummation by HSBC Finance, HAFI or HACI of the transactions contemplated by this Agreement, and the Master Receivables Purchase Agreements, the Sale and Servicing Agreement, the Trust Agreement, the Series Supplement or the Indenture, except for (A) the registration under the 1933 Act of the Notes, (B) such consents, approvals, authorizations, orders, registrations, filings, qualifications, licenses or permits as have been obtained or as may be required under State securities or Blue Sky laws in connection with the purchase of the Notes and the subsequent distribution of the Notes by the Underwriters or (C) where the failure to obtain such consents, approvals, authorizations, orders, registrations, filings, qualifications, licenses or permits would not have a material adverse effect on the business or consolidated financial condition of HSBC Finance and its subsidiaries taken as a whole or the transactions contemplated by such agreements.

(xiv)        Neither of HAFI or HACI will conduct its operations while any of the Securities are outstanding in a manner that would require the Depositor or the Trust to be registered as an “investment company” under the 1940 Act, as in effect on the date hereof.

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(xv)         Each of HAFI and HACI possesses all material licenses, certificates, authorities or permits issued by the appropriate state, federal or foreign regulatory agencies or bodies necessary to conduct the business now conducted by it and as described in the Preliminary Prospectus and the Prospectus and neither of HAFI or HACI has received notice of any proceedings relating to the revocation or modification of such license, certificate, authority or permit which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, is likely to materially and adversely affect the conduct of its business, operations, financial condition or income.

(xvi)        At the Closing Time, each of the representations and warranties of HSBC Finance in the HSBC Finance Agreements, or HAFI set forth in the HAFI Agreements and of HACI set forth in the HACI Agreements will be true and correct in all material respects.

(xvii)       KPMG LLP is an independent registered public accounting firm with respect to HSBC Finance, HAFI and HACI.

SECTION 2.  Purchase and Sale .  Subject to the terms and conditions and in reliance upon the covenants, representations and warranties herein set forth, the Depositor agrees to sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Depositor the principal amount of each class of Notes at the purchase price set forth opposite such Underwriter’s name in Schedule I to the Terms Agreement pursuant to the terms of this Agreement and the Terms Agreement.

SECTION 3.  Delivery and Payment .  Payment of the purchase price for, and delivery of, the Notes to be purchased by the Underwriters shall be made at the offices of Dewey Ballantine, LLP, or at such other place as shall be agreed upon by you, the Depositor and HSBC Finance, at the time on or about the date and time of delivery and payment for the Notes set forth in the Terms Agreement, such date and time of delivery and payment for the Notes being herein referred to as the “ Closing Time ,” which date, time or place may be postponed or changed by agreement between you, the Depositor and HSBC Finance.  Delivery of one or more global certificates representing the Notes shall be made to the accounts of the several Underwriters against payment by them of the purchase price therefor, to or upon the order of the Depositor by one or more wire transfers in immediately available funds.  The global certificates to be so delivered shall be registered in the name of Cede & Co., as nominee for The Depository Trust Company (“ DTC ”).  The interests of beneficial owners of the Notes will be represented by book entries on the records of DTC and participating members thereof.  Definitive Notes representing the Notes will be available only under limited circumstances as described in the Indenture.

SECTION 4.  Offering by the Underwriters .  Each Underwriter severally represents, warrants and covenants as follows:

(a)           Such Underwriter shall offer and/or solicit offers for the Notes for sale to the public as set forth in the Preliminary Prospectus and the Prospectus and agrees that all offers, solicitations and sales shall be made in compliance with all applicable laws and regulations.  Furthermore, such Underwriter shall comply with all applicable laws and regulations in

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connection with the use of Free Writing Prospectuses, including but not limited to Rules 164 and 433 of the 1933 Act Regulations.

(b)           Unless preceded or accompanied by the Prospectus, no Underwriter may convey or deliver any “written communication” within the meaning of Rule 405 of the 1933 Act Regulations to any person in connection with the offering of the Notes, unless such written communication is: (i) the Prospectus; (ii) the Preliminary Prospectus; (iii) an Underwriter Free Writing Prospectus that contains only subscription information regarding the Notes, Approved Issuer Information or ABS ICM (which, to the extent it constitutes Issuer Information, must also be Approved Issuer Information); (iv) an Underwriter Free Writing Prospectus that constitutes Bloomberg Information; (v) an Issuer Free Writing Prospectus; or (vi) a written confirmation of sale or a notice of allocation of securities sold or to be sold made in reliance on Rule 172 of the 1933 Act Regulations.  “Underwriter Free Writing Prospectus” means a Free Writing Prospectus prepared by or on behalf of an Underwriter with respect to the Notes that is not an Issuer Free Writing Prospectus.   “ABS ICM” means “ABS informational and computational materials” with the meaning of Item 1101(a) of Regulation AB.  “Issuer Information” means “issuer information” within the meaning set forth in Rule 433(h)(2) of the 1933 Act Regulations with respect to the Notes and includes, without limitation, the information with respect to the Notes specified in footnote 271 of Commission Release No. 33-8591 (Securities Offering Reform) other than Underwriter Derived Information.  “Approved Issuer Information” has the meaning set forth in Subsection 4(c) below.  “Bloomberg Information” means information provided by an Underwriter to Bloomberg, Intex or a similar entity, for use by investors and prospective investors together with or after the delivery of the Preliminary Prospectus that does not contain information other than identifying information relating to the Trust and the Notes or any class of Notes; the asset type supporting the Notes; expected ratings; the expected pricing date, expected closing date and first payment date for the Notes or any class of Notes; expected principal amount and class amounts; principal payment windows; pricing speeds/prepayment assumptions; duration/modified duration; expected weighted average life, expected final payment date, expected legal final payment date and clean-up call or other redemption features; expected interest rate index; preliminary guidance as to the interest rate and/or yield for any class of Notes (but not final interest rate or yield information); names of lead managers and co-managers; information about the principal amount of the Notes of each class offered by each Underwriter; average lives; ratings and ratings agencies; credit enhancement provider, if any; 100% pot vs. retention status; percent interest only; geographic concentration; public, 144A or Reg S offering; 2a-7 eligibility; other similar or related information such as expected pricing parameters and benchmarks; pricing guidance; status of subscriptions and Underwriters’ retentions and ERISA eligibility.  References to “expected” in the foregoing includes ranges, windows or references to benchmarks.  “Underwriter Derived Information” means information of the type described in clause (5) of footnote 271 of Commission Release No. 33-8591 (Securities Offering Reform) when prepared by an Underwriter, including traditional computational and analytical materials prepared by an Underwriter.

(c)           Such Underwriter will not include any Issuer Information in any Underwriter Free Writing Prospectus with respect to the Notes unless the Issuer Information was accurately extracted from the Preliminary Prospectus or the Prospectus or was provided by the Depositor or HSBC Finance expressly for inclusion therein, or such Underwriter or the Representative has obtained the prior written consent of the Depositor to the use of that Issuer Information in such

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Underwriter Free Writing Prospectus (any such Issuer Information, “Approved Issuer Information”).

(d)           Such Underwriter will not enter into a Contract of Sale with a prospective investor for any Notes until the Preliminary Prospectus has been delivered to such investor.

(e)           After the final Prospectus is available, such Underwriter will not distribute any written information concerning the Notes to a prospective investor unless such information is preceded or accompanied by the final Prospectus.

(f)            If such Underwriter distributes any “written communication” within the meaning of Rule 405 of the 1933 Act Regulations “in a manner reasonably designed to lead to its broad unrestricted dissemination” within the meaning contemplated by Rule 433(d)(ii) of the 1933 Act Regulations, such Underwriter will provide a copy of such written communication to the Depositor at a time reasonably in advance of the time for filing with the Commission specified by Rule 433(d) of the 1933 Act Regulations.

(g)           Each Underwriter Free Writing Prospectus prepared by it will not, as of the date such Underwriter Free Writing Prospectus was conveyed or delivered to any prospective purchaser of Notes, include any untrue statement of a material fact or omit any material fact necessary to make the statements contained therein, in light of the circumstances under which they were made, not misleading; provided, however , that no Underwriter makes such representation, warranty or agreement to the extent such misstatements or omissions were the result of any inaccurate information that was included in the Preliminary Prospectus, the Prospectus, Approved Issuer Information or any written information furnished to the related Underwriter by the Depositor or HSBC Finance expressly for use therein, which information was not corrected by information subsequently provided by the Depositor or HSBC Finance to the related Underwriter prior to the time of first use of such Underwriter Free Writing Prospectus.

(h)           Such Underwriter has in place, and covenants that it shall maintain, internal controls and procedures that it reasonably believes to be sufficient to ensure full compliance with all applicable legal requirements of the 1933 Act Regulations with respect to the generation and use of Free Writing Prospectuses in connection with the offering of the Notes.  In addition, such Underwriter will maintain written and/or electronic records of the following for a period of at least three years after the date thereof:

(i)            a copy of any Underwriter Free Writing Prospectus used by such Underwriter to solicit offers to purchase the Notes to the extent not filed with the Commission;

(ii)           regarding each Free Writing Prospectus delivered by such Underwriter to a prospective investor, the date of such delivery and identity of such investor; and

(iii)          regarding each Contract of Sale entered into by such Underwriter, the date, identity of the investor and the terms of such Contract of Sale, as set forth in the related confirmation of trade.

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