FORM 10-Q

             SECURITIES AND EXCHANGE COMMISSION
                  Washington, D.C.  20549



(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
          THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended           September 30, 1996

                           OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
           THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                  to

Commission File No.                 0-13295


CATERPILLAR FINANCIAL SERVICES CORPORATION
(Exact name of Registrant as specified in its charter)


           DELAWARE                                 37-1105865
      (State or other jurisdiction of          (I.R.S. Employer
       incorporation or organization)           Identification No.)


      3322 WEST END AVENUE, NASHVILLE, TENNESSEE 37203-0983
           (Address of principal executive offices)


       Registrant's telephone number, including area code:
                         (615) 386-5800


    Indicate by a 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.
Yes    X    No

    The Registrant complies with the conditions set forth in
General Instruction (H)(1)(a) and (b) of Form 10-Q and is
therefore filing this form with the reduced disclosure
format.

    At September 30, 1996 one share of common stock of the
Registrant was outstanding.

         Caterpillar Financial Services Corporation

     Form 10-Q for the Quarter Ended September 30, 1996



                           Index



PART I. FINANCIAL INFORMATION
Page No.


Item 1.  Financial Statements (Unaudited)

         Consolidated Statement of Financial Position   3

         Consolidated Statement of Income               4

         Consolidated Statement of Cash Flows           5

      Notes to Consolidated Financial Statements        6-7


Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations            7-11



PART II.  OTHER INFORMATION


Item 6.  Exhibits and Reports on Form 8-K                 12

Signatures                                                13


















               PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

         Caterpillar Financial Services Corporation

        Consolidated Statement of Financial Position
                        (Unaudited)
                   (Millions of Dollars)

                                    Sept. 30,   Dec. 31,  Sept. 30,
                                         1996       1995       1995
Assets:
  Cash and cash equivalents          $   27.9   $   43.6   $   23.5
  Finance receivables:
    Wholesale notes receivable          917.2      538.3    1,056.7
    Retail notes receivable           1,503.6    1,382.1    1,343.3 
    Investment in finance receivables 3,994.9    3,471.7    3,102.2
                                      6,415.7    5,392.1    5,502.2
    Less:  Unearned income              567.8      515.6      462.2
           Allowance for credit losses   68.4       57.0       55.5
                                      5,779.5    4,819.5    4,984.5
  Equipment on operating leases,
    less accumulated depreciation       479.6      437.3      393.7
  Deferred income taxes                   2.9         -          -
  Other assets                          155.0      121.7      138.5

Total assets                         $6,444.9   $5,422.1   $5,540.2

Liabilities and stockholder's equity:
  Payable to dealers and others      $   84.8   $   51.0   $   72.5
  Payable to Caterpillar Inc.-Borrowings333.5      475.5         -
  Payable to Caterpillar Inc.- Other      3.2        5.1        3.7
  Accrued interest payable               61.1       39.2       68.2
  Income tax payable                     33.9       18.5       37.7
  Other liabilities                      10.2        4.5        3.9
  Short-term borrowings               2,448.0    1,453.1    2,028.6
  Current maturities of long-term debt1,134.1    1,105.8      944.8
  Long-term debt                      1,614.1    1,621.3    1,766.7
  Deferred income taxes                  43.5       44.8       21.1
Total liabilities                     5,766.4    4,818.8    4,947.2

  Common stock - $1 par value
    Authorized:  2,000 shares
    Issued & outstanding: one share     345.0      325.0       325.0
  Profit employed in the business       331.4      272.9       261.4
  Foreign currency translation
    adjustment                            2.1        5.4         6.6
Total stockholder's equity              678.5      603.3       593.0
Total liabilities and stockholder's
  equity                             $6,444.9   $5,422.1    $5,540.2






      (See Notes to Consolidated Financial Statements)
                              
         Caterpillar Financial Services Corporation

              Consolidated Statement of Income
                        (Unaudited)
                   (Millions of Dollars)

     
     
     
     
     
     
                             Three Months Ended     NineMonths Ended
                            Sept. 30, Sept. 30,   Sept. 30,Sept. 30,
                                 1996      1995       1996      1995
Revenues:
  Wholesale finance income     $ 18.3    $ 23.0     $  34.7   $ 48.4
  Retail finance income         106.7      96.0       311.4    267.3
  Rental income                  39.1      27.3       115.0     98.4
  Other income                   11.2      14.2        34.5     42.4
    Total revenues              175.3     160.5       495.6    456.5

Expenses:
  Interest                       82.7      81.6       232.3    221.7
  Depreciation                   30.5      20.1        88.3     74.4
  General, operating, and 
    administrative               19.7      15.1        56.8     43.5
  Provision for credit losses     8.3      10.8        25.5     27.2
  Other expense                   0.4        .5         1.2      2.7
    Total expenses              141.6     128.1       404.1    369.5

Income before income taxes       33.7      32.4        91.5     87.0

Provision for income taxes       11.6      11.9        33.0     33.2

Net Income                     $ 22.1    $ 20.5      $ 58.5   $ 53.8




















                              
      (See Notes to Consolidated Financial Statements)

         Caterpillar Financial Services Corporation

            Consolidated Statement of Cash Flows
                        (Unaudited)
                   (Millions of Dollars)

                                            Nine MonthsEnded
                                           Sept. 30, Sept. 30,
                                               1996       1995
Cash flows from operating activities:
  Net income                                $  58.5   $   53.8
  Adjustments for noncash items:
    Depreciation                               88.3       74.4
    Provision for credit losses                25.5       27.2
    Mark-to-market adjustment                    -       (10.9)
    Other                                      (4.4)        .2
  Change in assets and liabilities:
    Receivables from customers and others     (43.8)     (46.2)
    Deferred income taxes                      (4.2)      10.6
    Payable to dealers and others              33.8       24.6
    Payable to Caterpillar Inc.-Other          (1.9)        .5
    Accrued interest payable                   21.9       30.1
    Income tax payable                         15.4       16.0
    Other, net                                  5.7      (10.7)
      Net cash provided by operating
        activities                            194.8      169.6

Cash flows from investing activities:
  Additions to property and equipment        (175.0)    (120.9)
  Disposals of equipment                       67.1       52.7
  Additions to finance receivables         (4,157.9   (3,770.0)
  Collections of finance receivables        2,167.1    1,887.4
  Proceeds from sale of receivables, net      963.8      935.0
  Other, net                                    7.6         .8
      Net cash used for investing
        activities                         (1,127.3)  (1,015.0)

Cash flows from financing activities:
  Additional paid-in capital                   20.0       30.0
  Payable to Caterpillar, Inc.- Borrowings   (142.0)        -
  Proceeds from long-term debt                773.9      929.5
  Payments on long-term debt                 (745.0)    (706.2)
  Short-term borrowings, net                1,015.4      599.0
      Net cash provided by financing
        activities                            922.3      852.3

Effect of exchange rate changes on cash        (5.5)        .3

Net change in cash and cash equivalents       (15.7)       7.2

Cash and cash equivalents at beginning
  of year                                      43.6       16.3

Cash and cash equivalents at end of quarter $  27.9   $   23.5




      (See Notes to Consolidated Financial Statements)

         Notes to Consolidated Financial Statements
                (Dollar Amounts in Millions)

1.  The accompanying unaudited consolidated financial
statements have been prepared by Caterpillar Financial
Services Corporation (the "Company") pursuant to the rules
and regulations of the Securities and Exchange Commission.
Although the Company believes the disclosures are adequate,
it is suggested that these financial statements be read in
conjunction with the financial statements and the notes
thereto presented in the Company's 1995 Annual Report and
the Company's Annual Report on Form 10-K.  Unless the
context otherwise requires, the term "Company" includes
subsidiary companies.

    The information furnished reflects, in the opinion of
management, all adjustments, which include normal and
recurring accruals, necessary for a fair presentation of the
consolidated statements of financial position, income, and
cash flows for the periods presented.  The results for
interim periods are not necessarily indicative of the
results to be expected for the year.

2.  Income on financing leases, installment sale contracts,
and customer and dealer loans (retail finance income) is
recognized over the term of the contract at a constant rate
of return on the scheduled uncollected principal balance.
Income on dealer floor planning and rental fleet financing
(wholesale finance income) is recognized based on the daily
balance of wholesale receivables outstanding and the
applicable effective interest rate.  Income on operating
leases (rental income) is reported over the life of the
operating lease in the period earned.  Loan origination fees
and commitment fees in excess of five hundred dollars are
amortized to finance income using the interest method over
the contractual lives of the finance receivables.

3.  The Company has a tax sharing agreement with Caterpillar
Inc. ("Caterpillar") in which Caterpillar collects from or
pays to the Company its allocated share of any consolidated
U.S. income tax liability or credit applicable to any period
for which the Company is included as a member of the
consolidated group.  A similar agreement exists between
Caterpillar Financial Australia Limited and Caterpillar of
Australia Ltd. with respect to taxes payable in Australia.

4.  During the first nine months of 1996, the Company
publicly issued $760.8 million medium-term notes.  The notes
are offered on a continuous basis through agents and have
maturities ranging from nine months to 15 years. Interest
rates on fixed-rate medium-term notes are established by the
Company as of the date of issuance.  Interest rates on
floating-rate medium-term notes are primarily indexed to
LIBOR.  The weighted average interest rate on all
outstanding medium-term notes was 6.4% at September 30,
1996.  Long-term debt outstanding at September 30, 1996,
matures as follows:


                        1996          $ 366.4
                        1997            901.5
                        1998            668.4
                        1999            459.1
                        2000            204.3
                        2001             45.0
                     Thereafter         103.5
                        Total        $2,748.2

5.   In June 1996, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards
("SFAS") No. 125 "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities,"
effective for transfers and servicing of financial assets and
extinguishments of liabilities occurring after December 31,
1996.  The Company believes there will be no material impact
on its results of operations or financial position upon
adoption of this accounting standard.  The Company will adopt
this accounting standard on January 1, 1997, as required.


Item 2. Management's Discussion and Analysis of Financial
Condition and
        Results of Operations

A.  Consolidated Results of Operations

    Three Months Ended September 30, 1996 vs. Three Months
Ended
    September 30, 1995

    Total revenues for the third quarter of 1996 were $175.3
million, a 9% increase over 1995 third quarter revenues of
$160.5 million.  The increase in revenues resulted primarily
from increased financing volume. The portfolio value
increased to $6,293.7 million at September 30, 1996 from
$5,412.2 million at September 30, 1995.

    The Company financed new retail business transactions
totaling $833.7 million during the third quarter of 1996
compared with $778.5 million during the third quarter of
1995. The increase was the result of financing a higher
volume and increased percentage of Caterpillar product
deliveries.  Wholesale financing activity during the third
quarter of 1996 was $643.5 million, compared with $483.3
million for the third quarter of 1995.  The increase was
primarily due to a higher volume of Caterpillar dealer
rental fleet financing in North America.

    The annualized interest rate on finance receivables
(computed by dividing annualized finance income by the
average monthly finance receivable balances, net of unearned
income) was 8.8% for the third quarter of 1996 compared with
9.3% for the third quarter of 1995.  Tax benefits associated
with governmental lease purchase contracts and tax-oriented
leases are not reflected in such annualized interest rates.

    Other income of $11.2 million for the third quarter of
1996 included servicing and other securitization-related
income, fees, and other miscellaneous income.  The decrease
of $3.0 million in other income during the third quarter of
1996, as compared with the same period in 1995, was
primarily due to a $4.1 million gain on $459.1 million of
installment sale contract receivables sold in the third
quarter of 1995 versus a $.5 million gain on a $100.0
million increase to the pool of wholesale receivables sold
(see Capital Resources and Liquidity) in the third quarter
of 1996.

    Third quarter interest expense of $82.7 million was $1.1
million higher than 1995 third quarter interest expense due
to increased borrowings to support the larger portfolio,
substantially offset by lower borrowing rates. The average
cost of borrowed funds was 6.0% for the third quarter of
1996 compared with 6.6% for the third quarter of 1995.

    Depreciation expense increased from $20.1 million for
the third quarter of 1995 to $30.5 million for the third
quarter of 1996 due to a third-quarter 1995 decrease
resulting from reclassification of certain contracts from
operating to finance leases and a third-quarter 1996
increase in new operating lease business.

    General, operating, and administrative expenses
increased $4.6 million during the third quarter of 1996
compared with the same period last year, primarily due to
staff-related and other expenses required to increase new
business and service the larger managed portfolio.  The
Company's full-time employment increased from 448 at
September 30, 1995 to 571 at September 30, 1996.

    Provision for credit losses decreased from $10.8 million
during the third quarter of 1995 to $8.3 million during the
third quarter of 1996, reflecting a higher provision taken
during the third quarter of 1995.  Receivables, net of
recoveries, of $4.5 million were written off against the
allowance for credit losses during the third quarter of
1996, compared with $2.6 million during the third quarter of
1995.  Receivables past due over 30 days were 1.8% of total
receivables at September 30, 1996, compared with 2.2% at
September 30, 1995.  The allowance for credit losses will
continue to be monitored to provide for an amount which, in
management's judgment, is adequate to cover uncollectible
receivables after considering the value of any collateral.
At September 30, 1996, the allowance for credit losses was
$68.4 million which was 1.2% of finance receivables, net of
unearned income (1.4% excluding wholesale receivables),
compared with $55.5 million and 1.1% (1.4% excluding
wholesale receivables) at September 30, 1995, respectively.

    The effective income tax rate for the third quarter of
1996 was 34% compared with 37% for the third quarter of
1995.  The decrease was primarily due to offsetting income
for European subsidiaries with prior years' start-up losses.

    Net income for the third quarter of 1996 was $22.1
million, $1.6 million above 1995 third quarter net income of
$20.5 million.  The increase resulted primarily from a
larger portfolio, partially offset by a decrease in gain on
sale of receivables.

    Nine Months Ended September 30, 1996 vs. Nine Months
Ended
    September 30, 1995

    Total revenues for the first nine months of 1996 were
$495.6 million, a 9% increase over the revenues for the
first nine months of 1995 of $456.5 million.  The increase
in revenues resulted primarily from increased financing
volume.  Also, see the changes in Other income described
below.

    The Company financed new retail business transactions
totaling $2,540.7 million during the first nine months of
1996 compared with $2,118.0 million during the first nine
months of 1995.  The increase was the result of financing a
higher volume and increased percentage of Caterpillar
product deliveries.  Wholesale financing activity during the
first nine months of 1996 was $1,769.7 million compared with
$1,799.4 million for the first nine months of 1995.

    The annualized interest rate on finance receivables
(computed by dividing annualized finance income by the
average monthly finance receivable balances, net of unearned
income) was 8.8% for the first nine months of 1996 compared
with 9.1% for the first nine months of 1995.  Tax benefits
associated with governmental lease purchase contracts and
tax-oriented leases are not reflected in such annualized
interest rates.

    Other income of $34.5 million for the first nine months
of 1996 included servicing and other securitization-related
income, fees, gains on sales of receivables, and other
miscellaneous income.  The decrease of $7.9 million during
the first nine months of 1996, as compared with the same
period in 1995, resulted primarily from recording gains of
$10.9 million in the first half of 1995 on interest rate
caps written by the Company, partially offset by an increase
of $5.1 million in servicing and other securitization-
related income.

    Interest expense for the first nine months of 1996 was
$232.3 million, $10.6 million higher than the first nine
months of 1995 due to increased borrowings to support the
larger portfolio, partially offset by lower borrowing rates,
as the average cost of borrowed funds was 6.1% for the first
nine months of 1996 compared with 6.7% in 1995.

    Depreciation expense increased from $74.4 million for
the first nine months of 1995 to $88.3 million for the first
nine months of 1996 due to new operating lease business and
a third-quarter 1995 decrease resulting from
reclassification of certain contracts from operating to
finance leases.

    General, operating, and administrative expenses for the
first nine months of 1996 increased $13.3 million over the
same period last year, primarily due to staff-related and
other expenses required to increase new business and service
the larger managed portfolio.

    Provision for credit losses during the first nine months
of 1996 decreased from $27.2 million in the first nine
months of 1995 to $25.5 million in the first nine months of
1996.  This decrease reflected a higher provision taken
during 1995, partially offset by increased levels of new
retail business.  Receivables, net of recoveries, of $10.6
million were written off against the allowance for credit
losses during the first nine months of 1996 compared with
$19.2 million during the first nine months of 1995.  The
decreased write-offs were primarily attributable to
recognizing a loss with one customer in the fishing industry
during the second quarter of 1995.

    The effective income tax rate for the first nine months
of 1996 was 36% compared with 38% for the first nine months
of 1995.  The decrease was primarily due to offsetting
income for European subsidiaries with prior years' start-up
losses.

    Net income for the first nine months of 1996 was $58.5
million compared with $53.8 million in the first nine months
of 1995.  The increase resulted primarily from a larger
portfolio, partially offset by a $6.8 million mark-to-market
after tax gain in the first half of 1995 for interest rate
caps written by the Company.

B.  Capital Resources and Liquidity

    The Company's operations during the third quarter of
1996 were primarily funded with a combination of commercial
paper, proceeds from sale of receivables, medium-term notes,
bank borrowings, retained earnings, and additional equity
capital of $20.0 million invested by Caterpillar.  The ratio
of debt to equity at September 30, 1996 was 8.1 to 1
compared with 7.7 to 1 at December 31, 1995.

    Total debt outstanding as of September 30, 1996 was
$5,196.2 million, an increase of $1,016.0 million over that
at December 31, 1995, and was primarily comprised of
$2,671.1 million of medium-term notes, $2,180.6 million of
commercial paper, and $239.7 million of bank borrowings.
The increase in debt and the funds provided by operations
and by Caterpillar were used to finance the increase in the
portfolio.

     In May 1996, $371.9 million of the Company's installment
sale contracts were securitized and in September 1996 the
Company's private-placement, revolving, asset-backed
securitization of wholesale receivables was increased from
$300.0 million to $400.0 million.  The proceeds from these
securitizations were used to reduce debt.  The Company
recognized a $3.1 million pre-tax gain on the second-quarter
transaction and a $.5 million pre-tax gain on the third-
quarter transaction and will receive fees in future periods
for servicing these sold receivables.

     The net amount of sold receivables serviced by the
Company was $981.3 million at September 30, 1996 which
consisted of $400.0 million of wholesale receivables, under
a revolving asset-backed securitization agreement, and
$581.3 million of installment sale contracts.

    At September 30, 1996, the Company had available a total
of $866.3 million of short-term credit lines which expire at
various dates through the third quarter 1997, and a $29.4
million long-term credit line which expires May 1999.  These
credit lines are with a number of banks and are considered
support for the Company's outstanding commercial paper and
commercial paper guarantees and utilized for bank
borrowings.  At September 30, 1996, there were $239.7
million of these lines utilized for bank borrowings in
Europe and Mexico.

    The Company also participates with Caterpillar in two
syndicated revolving credit facilities aggregating $2.3
billion, consisting of a $1.4 billion five-year facility and
a $.9 billion 364-day revolving facility.  The Company's
allocation is $1,840.0 million, consisting of a $1,120.0
million five-year revolving credit and a $720.0 million 364-
day revolving credit.  The Company has the ability to
request a change in its allocation to maintain the required
amount of support for the Company's outstanding commercial
paper and commercial paper guarantees. These facilities
provide for borrowings at interest rates which vary
according to LIBOR or money market rates.  At September 30,
1996, there were no borrowings under these facilities.
Effective October 7, 1996, the debt to equity ratio covenant
was amended to maintain a ratio of not greater than 8.5 to
1, previously 8.25 to 1, on a six month moving average
basis.  The debt to equity ratio of 8.0 to 1 on each
December 31 remains the same.

     The Company also has a USD one billion five year
revolving credit facility in the United Kingdom to support
its USD one billion Euro-commercial paper program (both
increased effective August 9, 1996 - previously $.5 billion
each).  The commercial paper is issued by Caterpillar
International Finance plc, an Irish subsidiary of the
Company, with the guarantee of the Company.  Proceeds from
the issuance of commercial paper have been used to replace
bank borrowings of certain of the Company's subsidiaries.
At September 30, 1996, there were no borrowings under this
facility.
     
    In connection with its match funding objectives, the
Company utilizes a variety of interest rate contracts
including swap and forward rate agreements.  All of these
interest rate agreements are held or issued for purposes
other than trading.  The agreements are entered into with
major financial institutions and are utilized for two
principal reasons: 1) To modify the Company's debt structure
in order to match fund its receivable portfolio which
reduces the risk of deteriorating margins between its
interest-earning assets and interest-bearing liabilities,
and 2) To gain an economic/competitive advantage through
lowering the cost of borrowed funds by either changing the
characteristics of existing debt instruments or entering
into agreements in combination with the issuance of debt.

    As of September 30, 1996, the Company had outstanding
interest rate swap contracts with notional amounts totaling
$1,869.0 million, all of which are either designated as
hedges of specific debt issuances or of commercial paper.
These swap agreements have terms generally ranging up to
five years, which effectively change $1,400.9 million of
floating rate debt to fixed rate debt, $189.0 million of
fixed rate debt to floating rate debt, and $279.1 million of
floating rate debt to floating rate debt having different
characteristics.  The interest rate swaps designated to
commercial paper provide the ability to obtain fixed rate
term debt utilizing short-term debt markets.  The Company
also had a swap having a future effective date with a
notional amount of $3.0 million, which will effectively
change $3.0 million of fixed rate debt to floating rate
debt.  The effective date of the future dated swap is 1998,
and the term of this swap is ten months.

    The Company had no outstanding forward rate agreements
at the end of the third quarter of 1996.

    The Company has forward exchange contracts to hedge its
U.S. dollar denominated obligations in Spain, its U.S.
dollar denominated customer receivables in Australia, and
its foreign denominated short-term intercompany loans
receivable against currency fluctuations.  These contracts
have terms generally ranging up to three months and do not
subject the Company to risk due to exchange rate movements,
because the gains and losses on the contracts offset the
losses and gains on the items being hedged.  At September
30, 1996, the Company had forward exchange contracts
totaling $581.2 million, of which $2.7 million were with
Caterpillar.

    To supplement external debt financing sources, the
Company has variable amount lending agreements with
Caterpillar.  Under these agreements, which may be amended
from time to time, the Company may borrow up to $739.6
million from Caterpillar, and Caterpillar may borrow up to
$239.6 million from the Company.  All of the variable amount
lending agreements are effective for indefinite terms and
may be terminated by either party upon 30 days' notice.  At
September 30, 1996 and December 31, 1995, the Company had
borrowings with Caterpillar totaling $333.5 million and
$475.5 million, respectively, but had no loans receivable
under these agreements.  At September 30, 1995, the Company
had no outstanding borrowings or loans receivable under
these agreements.

                PART II.  OTHER INFORMATION


Item 6.  Exhibits and Reports on Form 8-K

     (a)  Exhibits

          None



     (b)  Reports on Form 8-K

          None















































                         Signatures



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



         Caterpillar Financial Services Corporation
                        (Registrant)






Date:  October 28, 1996  By:       /s/K.C. Springer
                                  K.C. Springer, Controller and
                                  Principal Accounting Officer





Date:  October 28, 1996       By:       /s/J.S. Beard
                                  J.S. Beard, President