<PAGE>

                     SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C.  20549

                                 FORM 10-Q


(Mark One)

[X]       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
                        SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended               March 31, 1997              

                                     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 number 1-7422


                       AMERICAN GENERAL FINANCE, INC.   
           (Exact name of registrant as specified in its charter)



                Indiana                               35-1313922         
       (State of Incorporation)                   (I.R.S. Employer
                                                 Identification No.)


 601 N.W. Second Street, Evansville, IN                 47708            
(Address of principal executive offices)             (Zip Code)


                               (812) 424-8031                              
            (Registrant's telephone number, including area code)


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

At  May 14, 1997,  there were 2,000,000  shares of the  registrant's common
stock, $.50 par value, outstanding.
<PAGE>
<PAGE> 2

                     PART I - FINANCIAL INFORMATION


Item 1.   Financial Statements


<TABLE>
              AMERICAN GENERAL FINANCE, INC. AND SUBSIDIARIES
                Condensed Consolidated Statements of Income
                                (Unaudited)

<CAPTION>
                                                    Three Months Ended
                                                         March 31,      
                                                    1997          1996  
                                                  (dollars in thousands)
<S>                                               <C>           <C>  
Revenues
  Finance charges                                 $319,799      $371,400
  Insurance                                         47,529        51,187
  Other                                             17,420        16,371

Total revenues                                     384,748       438,958

Expenses
  Interest expense                                 112,831       125,980
  Operating expenses                               118,669       131,394
  Provision for finance
    receivable losses                               67,547       108,801
  Insurance losses and loss
    adjustment expenses                             24,004        28,548

Total expenses                                     323,051       394,723

Income before provision for
  income taxes                                      61,697        44,235

Provision for Income Taxes                          22,903        16,047


Net Income                                        $ 38,794      $ 28,188


<FN>
<F1>
See Notes to Condensed Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 3
<TABLE>
              AMERICAN GENERAL FINANCE, INC. AND SUBSIDIARIES
                   Condensed Consolidated Balance Sheets
                                (Unaudited)

<CAPTION>
                                             March 31,     December 31,
                                                1997            1996   
                                               (dollars in thousands)
<S>                                          <C>             <C>             
Assets

Finance receivables, net of unearned           
  finance charges:
    Real estate loans                        $3,799,064      $3,734,195
    Non-real estate loans                     2,362,566       2,516,009
    Retail sales contracts                      947,592         998,441
    Private label                               345,370         376,580

Net finance receivables                       7,454,592       7,625,225
Allowance for finance receivable
  losses                                       (390,154)       (395,153)
Net finance receivables, less allowance
  for finance receivable losses               7,064,438       7,230,072

Investment securities                           866,465         880,033
Cash and cash equivalents                       107,275         105,493
Goodwill                                        268,739         270,989
Assets held for sale                            633,987         667,007
Other assets                                    415,621         410,102

Total assets                                 $9,356,525      $9,563,696


Liabilities and Shareholder's Equity

Long-term debt                               $4,293,304      $4,498,530
Short-term notes payable:
  Commercial paper                            2,943,705       3,015,920
  Banks and other                                90,000         111,000
Investment certificates                           3,391           3,778
Insurance claims and policyholder
  liabilities                                   439,547         456,430
Other liabilities                               279,719         260,284
Accrued taxes                                    40,417          17,273

Total liabilities                             8,090,083       8,363,215

Shareholder's equity:
  Common stock                                    1,000           1,000
  Additional paid-in capital                    736,230         696,230
  Net unrealized gains on investment 
    securities                                    8,620          21,454 
  Retained earnings                             520,592         481,797

Total shareholder's equity                    1,266,442       1,200,481

Total liabilities and shareholder's equity   $9,356,525      $9,563,696
<FN>
<F1>
See Notes to Condensed Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 4
<TABLE>
              AMERICAN GENERAL FINANCE, INC. AND SUBSIDIARIES
              Condensed Consolidated Statements of Cash Flows
                                (Unaudited)

<CAPTION>
                                                      Three Months Ended  
                                                           March 31,      
                                                      1997          1996  
                                                    (dollars in thousands)
<S>                                                 <C>           <C>        
Cash Flows from Operating Activities
Net income                                          $ 38,794      $ 28,188
Reconciling adjustments to net cash
  provided by operating activities:
    Provision for finance receivable losses           67,547       108,801
    Depreciation and amortization                     21,374        24,712
    Deferral of finance receivable  
      origination costs                               (9,896)      (13,701)
    Deferred federal income tax charge                 1,913         1,377 
    Change in other assets and other liabilities      13,524        22,841
    Change in insurance claims and
      policyholder liabilities                       (16,883)      (15,304)
    Change in accrued taxes                           23,144         1,716 
    Operations related to assets held for sale        20,108           -   
    Other, net                                         9,533        14,770 
Net cash provided by operating activities            169,158       173,400

Cash Flows from Investing Activities
  Finance receivables originated or purchased     (1,016,540)   (1,009,626)
  Principal collections on finance receivables     1,081,779     1,269,692
  Net collections on assets held for sale             35,337           -  
  Investment securities purchased                    (43,313)      (57,670)
  Investment securities called, matured and sold      37,858        42,526
  Other, net                                          (2,736)       (6,230)
Net cash provided by investing activities             92,385       238,692 

Cash Flows from Financing Activities
  Proceeds from issuance of long-term debt             1,608        29,715
  Repayment of long-term debt                       (207,767)     (151,489)
  Change in investment certificates                     (387)         (204)
  Change in short-term notes payable                 (93,215)     (268,180)
  Capital contribution from parent                    40,000           -
  Dividends paid                                         -         (27,000)
Net cash used for financing activities              (259,761)     (417,158)

Increase (decrease) in cash and cash equivalents       1,782        (5,066)
Cash and cash equivalents at beginning of period     105,493       103,238

Cash and cash equivalents at end of period          $107,275      $ 98,172


Supplemental Disclosure of Cash Flow Information
  Income taxes (received) paid                      $ (3,952)     $  5,022
  Interest paid                                     $129,748      $121,351
<FN>
<F1>
See Notes to Condensed Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 5

              AMERICAN GENERAL FINANCE, INC. AND SUBSIDIARIES
            Notes to Condensed Consolidated Financial Statements
                               March 31, 1997



Note 1.  Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have
been prepared  in accordance with generally  accepted accounting principles
for interim periods and  include the accounts of American  General Finance,
Inc. and its subsidiaries.  American General Finance, Inc. will be referred
to  in these Notes to Condensed Consolidated Financial Statements as "AGFI"
or collectively,  with its  subsidiaries,  whether directly  or  indirectly
owned,  as the  "Company".   The  subsidiaries  are wholly-owned,  and  all
intercompany  items have  been eliminated.   Per  share information  is not
included because  AGFI is  a  wholly-owned subsidiary  of American  General
Corporation (American General).


Note 2.  Adjustments and Reclassifications

These condensed consolidated financial  statements include all adjustments,
consisting only of  normal recurring adjustments,  considered necessary  by
management for a fair presentation of the  Company's consolidated financial
position  at March 31, 1997 and December 31, 1996, its consolidated results
of  operations for the three months ended March  31, 1997 and 1996, and its
consolidated cash flows for the three months ended March 31, 1997 and 1996.
These  condensed  consolidated  financial  statements  should  be  read  in
conjunction with the  consolidated financial statements  and related  notes
included  in the Company's  Annual Report on  Form 10-K for  the year ended
December 31, 1996.  

To conform  with the 1997 presentation,  certain items in the  prior period
have been reclassified.


Note 3.  Derivative Financial Instruments

The Company's principal  borrowing subsidiary is  American General  Finance
Corporation  (AGFC), a wholly-owned subsidiary of AGFI.  AGFC makes limited
use  of derivative financial  instruments to manage  the cost of  its debt.
AGFC uses interest conversion  agreements to reduce its exposure  to future
fluctuations in interest expense rates by effectively converting short-term
and certain long-term  floating-rate debt to a fixed-rate basis.   At March
31,  1997,  outstanding  interest  conversion  agreements  in  which   AGFC
contracted  to pay  interest  at fixed  rates  and receive  floating  rates
totaled $515.0 million of  notional amount, with an average  fixed pay rate
of 8.09% and an average floating receive rate of 5.50%.  On April 14, 1997,
AGFC  entered into  interest conversion  agreements with  a  total notional
amount of $200.0 million.  AGFC's use of interest conversion agreements did
not  have a material effect on the Company's weighted-average interest rate
or reported interest expense in the first three months of 1997 or 1996.
<PAGE>
<PAGE> 6

Note 4.  Assets Held For Sale

During  fourth quarter 1996, the  Company decided to  offer for sale $874.8
million  of non-strategic,  underperforming credit  card and  private label
finance receivable portfolios.   These assets held for sale  are carried at
net  realizable value, after  considering related  expenses.   The carrying
amount at March 31, 1997 was $634.0 million, compared to  $667.0 million at
December 31, 1996.   The decrease  in assets  held for  sale  during  first
quarter  1997  was  due  to the  net  activity  of the  associated  finance
receivables and their related results of operations.  

In April 1997, the Company repurchased  $100.0 million of private label and
credit   card   receivables   that   previously  had   been  sold   through
securitization.  No gain  or loss  resulted  from this  transaction.  These
repurchased  credit card receivables are being offered  for sale along with
the Company's other credit card receivables, which  increased  the carrying
amount  of assets  held for  sale by  approximately $70.0 million  in April
1997.

Discussions  with   potential  purchasers   are  continuing;  however,   no
definitive sale agreement has been reached to date. 
<PAGE>
<PAGE> 7

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


                      LIQUIDITY AND CAPITAL RESOURCES

Overview

The Company's sources of funds  include operations, issuances of fixed-rate
and floating-rate debt, and borrowings under credit facilities.  Management
believes that the  overall sources  of liquidity available  to the  Company
will continue  to  be  sufficient  to  satisfy  its  foreseeable  financial
obligations and operational requirements.  


Liquidity

Operating  cash  flow, which  includes  net  income adjusted  for  non-cash
revenues  and expenses, totaled $169.2  million for the  three months ended
March 31,  1997 compared  to $173.4  million for the  same period  in 1996.
Operating  cash  flow   combined  with  the  net  collections   of  finance
receivables and  assets held for  sale and  a 1997 capital  contribution of
$40.0 million from American  General generated cash flow of  $309.7 million
for the  three months ended March  31, 1997 compared to  $433.5 million for
the same period  in 1996.  These  cash flows were used  principally to fund
the net  repayments of debt  of $299.8 million  and $390.2 million  for the
three  months ended  March  31, 1997  and 1996,  respectively,  and to  pay
dividends to American General  of $27.0 million for the three  months ended
March 31, 1996.  

Dividends paid  are typically  managed to  maintain the Company's  targeted
leverage of 7.5 to 1  of debt to tangible equity (equity less  goodwill and
net unrealized gains  or losses on  fixed-maturity investment  securities).
The Company exceeded targeted leverage at December 31, 1996 due to the loss
associated with the fourth quarter 1996 decision to offer for  sale certain
non-strategic, underperforming  finance receivables.  The  debt to tangible
equity ratio at March 31, 1997 was 7.41 to  1.  The Company's return to its
targeted leverage in  first quarter  1997 was partially  attributable to  a
$40.0 million capital  contribution from American General.   AGFI's ability
to pay dividends is substantially dependent on the receipt  of dividends or
other funds from  its subsidiaries, primarily AGFC.   Certain AGFI and AGFC
financing agreements effectively limit the  amount of dividends the  entity
may pay; however,  management does  not expect those  limits to affect  the
Company's  ability to  pay the  amount of  dividends necessary  to maintain
targeted leverage.  


Capital Resources

The  Company's capital  requirements vary  directly with  the level  of net
finance  receivables.  The targeted mix  of capital between debt and equity
is based  primarily upon maintaining leverage  that supports cost-effective
funding.   At March 31, 1997,  the Company's capital  totaled $8.6 billion,
consisting of  $7.3 billion of debt and $1.3 billion of equity, compared to
$8.4 billion at March 31, 1996, consisting of $7.1 billion of debt and $1.3
billion of equity.
<PAGE>
<PAGE> 8

The Company issues a combination of fixed-rate debt, principally long-term,
and floating-rate debt,  principally short-term.   The Company's  principal
borrowing subsidiary,  AGFC, and one  of its  subsidiaries sell  commercial
paper notes with maturities ranging  from 1 to 270 days directly  to banks,
insurance companies, corporations, and other institutional investors.  AGFC
may also offer medium-term notes with original maturities of nine months or
longer to certain institutional  investors.  AGFC obtains the  remainder of
its  funds  primarily  through  underwritten  public  debt  offerings  with
maturities generally ranging from three to ten years. 

The Company manages anticipated cash flows of its assets and liabilities in
an  effort  to  reduce the  risk  associated  with  unfavorable changes  in
interest rates.  The Company's mix of fixed-rate  and floating-rate debt is
determined by management based, in part, on the nature of  the assets being
supported.    The  Company limits  its  exposure  to  market interest  rate
increases by  fixing interest rates  that it  pays for term  periods.   The
primary  means  by  which the  Company  accomplishes  this  is through  the
issuance of fixed-rate debt.  To supplement fixed-rate debt issuances, AGFC
also uses interest conversion agreements to synthetically create fixed-rate
debt  by altering the nature of floating-rate funding, thereby limiting its
exposure to interest rate movements.


Credit Facilities

The  Company  maintains  credit  facilities  to  support  the  issuance  of
commercial paper and to provide an additional source of funds for operating
requirements.   At  March  31,  1997,  the  Company  had  committed  credit
facilities  of $700.0  million  and was  an  eligible borrower  under  $2.8
billion of  committed credit facilities  extended to  American General  and
certain of  its  subsidiaries (the  "shared  committed facilities").    The
annual commitment fees  for all  committed facilities ranged  from .05%  to
 .09%.   The Company pays only  an allocated portion of  the commitment fees
for the shared committed facilities.   At March 31, 1997, the  Company also
had $576.0 million  of uncommitted  credit facilities and  was an  eligible
borrower under  $165.0 million of uncommitted credit facilities extended to
American General  and certain  of its  subsidiaries.   Available borrowings
under all facilities are reduced by  any outstanding borrowings.  At  March
31,  1997,  Company   borrowings  outstanding   under  uncommitted   credit
facilities  totaled  $99.0 million,  and  there  were  no borrowings  under
committed credit facilities.


Securitization

The  Company securitized a  portion of its  portfolio of  private label and
credit card finance receivables to establish  additional sources of funding
and liquidity.  During 1995, the Company sold $100.0 million of securitized
finance  receivables with limited recourse.  At March 31, 1997, securitized
finance receivables sold remained at $100.0 million.  On April 1, 1997, the
Company  repurchased  all of  the receivables  that  had been  sold through
securitization  to  facilitate  the  anticipated sale  of  the  credit card
portfolio included in assets held for sale.  No gain or  loss resulted from
this transaction.  Of  the $100.0 million repurchased, approximately  $70.0
million was classified as assets held for sale in April 1997.
<PAGE>
<PAGE> 9

                       SELECTED FINANCIAL INFORMATION


The following  table shows  certain selected  financial information of  the
Company for the periods indicated:
                                                         At or for the
                                                      Three Months Ended
                                                           March 31,       
                                                     1997            1996  
                                                    (dollars in thousands)
Average finance receivables,             
  net of unearned finance        
  charges (average net 
  receivables)                                     $7,549,511    $8,218,649

Average borrowings                                 $7,508,575    $7,276,613

Yield - finance charges
  (annualized) as a
  percentage of average
  net receivables                                      17.09%        18.14%

Borrowing cost - interest
  expense (annualized) as 
  a percentage of average
  borrowings                                            6.71%         6.93%

Interest spread - yield
  less borrowing cost                                  10.38%        11.21%

Insurance revenues
  (annualized) as a
  percentage of average
  net receivables                                       2.52%         2.49%

Operating expenses
  (annualized) as a
  percentage of average
  net receivables                                       6.29%         6.39%

Return on average assets 
  (annualized)                                          1.64%         1.20%

Return on average equity
  (annualized)                                         12.71%         8.51%

Charge-off ratio -
  net charge-offs
  (annualized) as a
  percentage of average
  net receivables                                       3.83%         5.50%

Allowance ratio - 
  allowance for finance
  receivable losses as a
  percentage of net
  finance receivables                                   5.23%         6.07%
<PAGE>
<PAGE> 10

Selected Financial Information (Continued)


                                                       At or for the
                                                    Three Months Ended
                                                         March 31,    
                                                     1997        1996 

Ratio of earnings to fixed charges (refer to
  Exhibit 12 for calculations)                       1.48        1.34

Delinquency ratio - finance receivables any
  portion of which was 60 days or more past
  due as a percentage of related receivables
  (including unearned finance charges and
  excluding deferred origination costs, a
  fair value adjustment on finance receivables,
  and accrued interest)                              3.76%       4.03%

Debt to tangible equity ratio - debt to
  equity less goodwill and net unrealized
  gains or losses on fixed-maturity
  investment securities                              7.41        7.03

Debt to equity ratio                                 5.79        5.43


                       ANALYSIS OF OPERATING RESULTS

Net income increased  $10.6 million,  or 38%,  for the  three months  ended
March 31, 1997  when compared  to the same  period in  1996.  The  increase
primarily  relates to an improvement in credit quality during first quarter
1997.

Net income  has fluctuated over  the past two years  due to the  decline in
credit quality of the  Company's finance receivables beginning in  1995 and
management's related  actions to  address credit  quality.   The  Company's
strategy in prior years of emphasizing higher-yielding finance receivables,
which are characterized  by higher credit  risk, resulted in  delinquencies
and net charge-offs increasing to higher than anticipated  levels beginning
in the third quarter of 1995.  Due to these increases  in delinquencies and
net charge-offs, management initiated a comprehensive review of the Company
in the fourth quarter of 1995.  This review consisted of extensive internal
analysis,  together with  finance  receivable loss  development projections
supplied  by outside  credit  consultants.   The  results of  the  analysis
indicated a  need for an increase  in the allowance for  finance receivable
losses.  Accordingly, the Company recorded a $216.0 million increase in the
allowance for finance receivable losses in fourth quarter 1995.  

In addition, the  Company adopted  an action program  for improving  credit
quality that included  raising underwriting standards, expanding the use of
credit scoring, slowing branch  expansion, stressing collections, improving
branch office training,  and rebalancing the  finance receivable  portfolio
credit risk.  Strategies for rebalancing the portfolio credit risk included
slowing growth, de-emphasizing some higher risk portfolios, and  increasing
the proportion of real estate secured receivables.
<PAGE>
<PAGE> 11

To increase its focus on core operations, the Company decided in the fourth
quarter  of 1996  to  offer  for  sale  $874.8  million  of  non-strategic,
underperforming finance receivable portfolios, consisting of $520.3 million
of credit card  and $354.5  million of private  label finance  receivables.
The Company  reclassified  these  finance  receivables  and  an  associated
allowance for finance receivable losses of $70.0 million to assets held for
sale on December 31, 1996.   The Company hired an outside advisor to market
the  portfolios.    Based  on  negotiations  with  prospective   purchasers
subsequent to year end,  the Company determined that an aftertax  charge to
operations of $93.5 million was necessary to reduce the  carrying amount of
the assets held for sale to net realizable value. 

During first quarter  1997, the  Company re-evaluated the  adequacy of  the
carrying  amount of  the  assets  held for  sale  and  determined that  the
carrying amounts  approximate  net  realizable  value.    Discussions  with
potential purchasers are continuing; however, no definitive sale  agreement
has been reached to date.

Net finance receivables totaled $7.5 billion  at March 31, 1997, a decrease
of $565.6 million from  March 31, 1996 primarily due to  a reclassification
of credit card and certain private label finance receivables to assets held
for  sale  on  December 31,  1996  and to  the  substantial  liquidation of
underperforming receivables,  partially offset by purchases  of real estate
loan portfolios during the last three quarters of 1996.  At March 31, 1997,
real  estate secured  finance receivables  accounted for  51% of  total net
finance receivables compared to 36% at March 31, 1996.  

Results of  the action program to  improve credit quality in  the core U.S.
branch operations  (including benefits  from  the increased  proportion  of
finance   receivables   that  are   secured   by   real  estate   and   the
reclassification of the underperforming finance receivables to assets  held
for sale) became evident in the first quarter of 1997.  Although yield  was
105  basis points less than the prior year,  this was more than offset by a
167 basis point improvement in the charge-off ratio.  The delinquency ratio
also  improved to 3.76% at  March 31, 1997 from 4.03%  a year earlier.  The
Company is also realizing operating efficiencies as evidenced by a 10 basis
point improvement  in the  operating  expense ratio  reflecting both  fewer
branches and fewer employees.

The Company plans to  implement additional programs during 1997  to further
address  credit  quality,  finance  receivable  originations,  and  expense
reduction.  In  addition to the  increased use  of industry credit  scoring
models, custom scoring models will be implemented during 1997.  

Factors which specifically affected the Company's operating  results are as
follows:


Finance Charges

Finance  charge revenues  decreased $51.6  million, or  14%, for  the three
months ended March 31, 1997 when compared to the same period in 1996 due to
decreases in average net receivables, yield, and an additional day in 1996.
Average  net receivables  decreased $669.1  million, or  8%, for  the three
months ended  March 31,  1997  when compared  to the  same  period in  1996
primarily  due to  the action  program for  improving credit  quality which
<PAGE>
<PAGE> 12

included the reclassification of certain finance receivables to assets held
for sale on December 31, 1996 (which resulted in excluding $39.8 million of
first  quarter 1997 finance  charge revenue related to  the assets held for
sale)  and the liquidation of underperforming receivables.  Yield decreased
105 basis points for the three months ended March 31, 1997 when compared to
the  same period  in 1996 primarily  due to  the action  program to improve
credit quality, including increasing the proportion of finance  receivables
that  are real estate loans,  which generally have  lower yields, partially
offset by  the  decreased  proportion  of  non-accrual  delinquent  finance
receivables during 1997. 


Insurance Revenues

Insurance  revenues decreased  $3.7 million,  or 7%,  for the  three months
ended March 31, 1997 when compared to the same period in 1996 primarily due
to a decrease in earned premiums.  Earned  premiums decreased primarily due
to a decrease in net written premiums which reflected the  decrease in non-
real estate loan volume resulting from the action program to improve credit
quality.


Other Revenues

Other revenues  increased $1.0 million, or  6%, for the  three months ended
March 31, 1997  when compared to the same  period in 1996 primarily  due to
increases in investment revenue and revenue on foreclosed real estate.  The
increase  in investment revenue  for the three months  ended March 31, 1997
when compared to  the same period  in 1996 was  primarily due to  growth in
average invested assets for  the insurance operations of $41.9  million and
realized gains  on investments  of $.1 million  for the three  months ended
March 31,  1997 compared to  realized losses  of $.1 million  for the  same
period in 1996, partially offset by a  decrease in adjusted portfolio yield
of 33 basis points.


Interest Expense

Interest  expense decreased  $13.1 million,  or 10%,  for the  three months
ended March 31,  1997 when compared to the  same period in 1996 due  to the
exclusion of $12.4 million  of interest expense related to  the assets held
for sale and a decrease in borrowing cost, partially offset  by an increase
in average borrowings.  The borrowing cost for the three months ended March
31, 1997 decreased 22 basis points when compared to the same period in 1996
due  to a decrease in  short-term borrowing cost,  with long-term borrowing
cost  remaining relatively flat.   Average borrowings for  the three months
ended March  31, 1997 increased $232.0 million, or 3%, when compared to the
same period in  1996 primarily to  fund the purchases  of real estate  loan
portfolios that occurred in the last three quarters of 1996.
<PAGE>
<PAGE> 13

Operating Expenses

Operating  expenses decreased $12.7 million,  or 10%, for  the three months
ended March 31, 1997 when compared to the same period in 1996 primarily due
to the exclusion of $8.3 million of expenses to service the portfolios held
for  sale and to  the action program  to improve credit  quality and reduce
expenses,  partially offset by a decrease in deferral of finance receivable
origination costs.  The  action program implemented in fourth  quarter 1995
(which  included emphasizing  real  estate loan  growth)  contributed to  a
workforce  reduction of approximately 1,150 positions and a net decrease of
47 branch offices since March 31, 1996.  


Provision for Finance Receivable Losses

Provision for  finance receivable losses  decreased $41.3 million,  or 38%,
for the three months ended March 31, 1997 when  compared to the same period
in 1996 primarily due to the  exclusion of $30.1 million of net charge-offs
related to the assets held for sale and a decrease in net charge-offs.
   
Net charge-offs from finance  receivables for the three months  ended March
31, 1997 decreased to $72.5 million from $113.9 million for the same period
in 1996.  Net charge-offs for the three months ended December 31, 1996 were
$116.2 million.   The charge-off  ratio for  first quarter  1997 was  3.83%
compared to 5.69% for fourth quarter 1996 and 5.50% for first quarter 1996.
Excluding the portfolios held for sale, the charge-off ratio was 5.03%  for
fourth quarter 1996 and 4.62% for first quarter 1996.
   
At  March  31, 1997,  delinquencies  were $304.2  million  (excluding $68.8
million  related to assets  held for  sale) compared  to $316.7  million at
December 31, 1996 (excluding $68.0 million related to assets held for sale)
and $353.9 million at  March 31, 1996.  The delinquency  ratio at March 31,
1997 decreased to 3.76% from 3.83%  at December 31, 1996 (compared to 4.03%
at  March  31,  1996).    Excluding  the  portfolios  held  for  sale,  the
delinquency ratio at March 31, 1996 was 3.76%.  
 
During first  quarter 1997,  management reduced the  allowance for  finance
receivable  losses by  $5.0 million from  the balance at  December 31, 1996
based on the improved  credit quality of the finance  receivable portfolio.
The  allowance for finance  receivable losses decreased  $96.8 million from
$487.0 million  at  March 31,  1996 due  to the  reclassification of  $70.0
million of allowance for finance receivable losses to assets held  for sale
and  reductions in the allowance for finance receivable losses based on the
results of the action  program for improving credit quality,  including the
increased proportion  of real estate loans.   The allowance ratio  at March
31,  1997 was  5.23% compared to  5.18% at  December 31, 1996  and 6.07% at
March  31,  1996.    Based  upon  an  analysis  of the  finance  receivable
portfolio, management believes  that the allowance  for finance  receivable
losses is adequate given the current level of delinquencies and net charge-
offs.

Management  believes  that  the  anticipated  sale  of  the  non-strategic,
underperforming  finance receivable  portfolios combined  with  the ongoing
action  program will address the  overall credit quality  issues.  However,
adverse  changes in credit fundamentals within the consumer finance market,
including the current high level of personal bankruptcies, could negatively
impact expected results.
<PAGE>
<PAGE> 14

Insurance Losses and Loss Adjustment Expenses

Insurance losses  and loss adjustment  expenses decreased $4.5  million, or
16%, for the three  months ended March 31,  1997 when compared to  the same
period in 1996  due to decreases  in provision for  future benefits and  in
claims paid.  Provision for future benefits decreased  $2.7 million for the
three month period due  to reduced sales of non-credit  insurance products.
Claims for the three  month period decreased $1.8 million  primarily due to
favorable loss experience on credit insurance.  


Provision for Income Taxes

The  provision for  income taxes  increased $6.9  million, or 43%,  for the
three months ended March 31, 1997 when compared to the  same period in 1996
primarily due to higher taxable income. 


Forward-looking Statements

The  statements  contained  in  this  filing on  Form  10-Q  that  are  not
historical facts are  forward-looking statements within the meaning  of the
Private Securities  Litigation  Reform  Act.   Actual  results  may  differ
materially from  those included in  the forward-looking statements.   These
forward-looking statements  involve risks and uncertainties  including, but
not limited to,  the following:   changes in  general economic  conditions,
including  the performance  of financial  markets, interest rates,  and the
level  of personal  bankruptcies; competitive,  regulatory, or  tax changes
that  affect the  cost of  or  demand for  the Company's  products; adverse
litigation results; and failure to achieve the Company's anticipated levels
of  expense savings  from cost-saving  initiatives.   The  Company's future
results   also   could   be  adversely   affected  if  finance   receivable
delinquencies  and  net  charge-offs  increase  or fail  to achieve  levels
anticipated by  management, despite  the Company's  initiatives  to improve
credit quality.  Failure to  dispose of assets  held for sale for  carrying
value could also adversely affect the  Company's  future results.   Readers
are also directed to other risks and  uncertainties discussed  in documents
filed by the Company with the Securities and Exchange Commission.
<PAGE>
<PAGE> 15

                       PART II - OTHER INFORMATION


Item 1.  Legal Proceedings.

In addition to  those lawsuits  or proceedings disclosed  in the  Company's
1996 Form 10-K, AGFI and certain of its subsidiaries are parties to various
other  lawsuits and proceedings arising in the ordinary course of business.
Many  of these  lawsuits and  proceedings arise  in jurisdictions,  such as
Alabama, that permit damage awards disproportionate  to the actual economic
damages incurred.  Based upon information presently available,  the Company
believes that  the  total amounts  that will  ultimately be  paid, if  any,
arising from these lawsuits  and proceedings will have no  material adverse
effect on  the Company's consolidated  results of operations  and financial
position.  However, it should  be noted that the frequency of  large damage
awards,  including large  punitive damage  awards, that  bear little  or no
relation to actual economic damages incurred by plaintiffs in jurisdictions
like  Alabama  continues  to increase  and  creates  the  potential for  an
unpredictable judgment in any given suit.



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

(a)  Exhibits.

     (12)  Computation of Ratio of Earnings to Fixed Charges.
     (27)  Financial Data Schedule.

(b)  Reports on Form 8-K.

     No Current Reports on  Form 8-K were filed during the first quarter  of
     1997.
<PAGE>
<PAGE> 16

                                 Signature



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.


                                  AMERICAN GENERAL FINANCE, INC.           
                                           (Registrant)                    



Date:  May 14, 1997               By /s/ John S. Poelker                   
                                         John S. Poelker                
                                     Senior Vice President and Chief
                                       Financial Officer                
                                     (Duly Authorized Officer and Principal
                                       Financial Officer)               
<PAGE>
<PAGE> 17

                               Exhibit Index



      Exhibits                                                      Page

(12)  Computation of Ratio of Earnings to Fixed Charges.             18

(27)  Financial Data Schedule.                                       19
<PAGE>