<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             September 30, 1998             

                                     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  November  12, 1998,  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      Nine Months Ended
                                  September 30,          September 30,    
                                 1998       1997        1998        1997   
                                         (dollars in thousands)
<S>                            <C>        <C>         <C>         <C>
Revenues
  Finance charges              $343,612   $314,997    $1,002,076  $  950,044
  Insurance                      44,290     46,436       131,630     140,705
  Other                          19,683     18,185        58,638      53,087

Total revenues                  407,585    379,618     1,192,344   1,143,836

Expenses
  Interest expense              130,398    117,169       376,116     342,816
  Operating expenses            129,767    118,970       381,317     355,221
  Provision for finance
    receivable losses            52,706     55,634       152,613     186,639
  Loss on sale of non- 
    strategic assets               -          -             -         42,225
  Insurance losses and loss
    adjustment expenses          20,736     23,500        64,504      69,252

Total expenses                  333,607    315,273       974,550     996,153

Income before provision for
  income taxes                   73,978     64,345       217,794     147,683

Provision for Income Taxes       26,451     23,656        80,864      54,578


Net Income                     $ 47,527   $ 40,689    $  136,930  $   93,105


<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>
                                            September 30,  December 31,
                                               1998             1997   
                                               (dollars in thousands) 
<S>                                         <C>              <C>
Assets

Finance receivables, net of unearned
  finance charges:
    Real estate loans                       $ 4,956,212      $4,155,167
    Non-real estate loans                     2,540,568       2,554,888
    Retail sales finance                      1,310,737       1,301,133

Net finance receivables                       8,807,517       8,011,188
Allowance for finance receivable
  losses                                       (365,153)       (372,653)
Net finance receivables, less allowance
  for finance receivable losses               8,442,364       7,638,535

Investment securities                           993,452         929,311
Cash and cash equivalents                       126,814         105,695
Other assets                                    716,676         615,959

Total assets                                $10,279,306      $9,289,500


Liabilities and Shareholder's Equity

Long-term debt                              $ 4,327,366      $4,011,457
Short-term notes payable:
  Commercial paper                            3,614,517       3,157,671
  Banks and other                               141,500          95,000
Investment certificates                           1,883           2,574
Insurance claims and policyholder
  liabilities                                   433,904         436,859
Other liabilities                               342,181         300,342
Accrued taxes                                    22,318          22,272

Total liabilities                             8,883,669       8,026,175

Shareholder's equity:
  Common stock                                    1,000           1,000
  Additional paid-in capital                    757,083         743,083
  Accumulated other comprehensive    
    income                                       47,494          34,512 
  Retained earnings                             590,060         484,730

Total shareholder's equity                    1,395,637       1,263,325

Total liabilities and shareholder's equity  $10,279,306      $9,289,500
<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>
                                                         Nine Months Ended
                                                           September 30,   
                                                         1998         1997 
                                                       (dollars in thousands)
<S>                                                   <C>           <C>
Cash Flows from Operating Activities
Net income                                            $  136,930    $   93,105
Reconciling adjustments:
  Provision for finance receivable losses                152,613       186,639
  Depreciation and amortization                           75,529        63,228
  Deferral of finance receivable origination costs       (33,536)      (28,797)
  Deferred income tax charge                               8,836        59,057
  Change in other assets and other liabilities             4,222         6,244 
  Change in insurance claims and
    policyholder liabilities                              (2,955)      (25,467)
  Change in taxes receivable and payable                  23,127       (21,103)
  Loss on sale of non-strategic assets                      -           42,225
  Operations related to assets held for sale                -           39,905
  Other, net                                             (14,494)        6,965
Net cash provided by operating activities                350,272       422,001

Cash Flows from Investing Activities
  Finance receivables originated or purchased         (4,488,116)   (3,380,751)
  Principal collections on finance receivables         3,549,880     3,199,699
  Net collections on assets held for sale                   -           61,266
  Securitized finance receivables purchased                 -         (100,000)
  Acquisition of HSA Residential Mortgage Services
    of Texas, Inc.                                       (25,600)         -
  Advances for purchases of finance receivables          (16,020)      (48,053)
  Sale of non-strategic assets                              -          732,504
  Investment securities purchased                       (168,784)      (99,879)
  Investment securities called, matured and sold         130,776        82,209
  Change in premiums on finance receivables
    purchased and deferred charges                       (95,474)       (4,548)
  Other, net                                             (14,502)       (2,955)
Net cash (used for) provided by investing activities  (1,127,840)      439,492

Cash Flows from Financing Activities
  Proceeds from issuance of long-term debt             1,128,506       485,367
  Repayment of long-term debt                           (814,874)     (807,804)
  Change in investment certificates                         (691)         (529)
  Change in short-term notes payable                     503,346      (453,258)
  Capital contribution from parent                        14,000        40,000
  Dividends paid                                         (31,600)     (126,500)
Net cash provided by (used for) financing activities     798,687      (862,724)

Increase (decrease) in cash and cash equivalents          21,119        (1,231)
Cash and cash equivalents at beginning of period         105,695       105,493
Cash and cash equivalents at end of period              $126,814      $104,262

Supplemental Disclosure of Cash Flow Information
  Income taxes paid                                     $ 50,303      $ 20,755
  Interest paid                                         $391,397      $378,066
<FN>
<F1>
See Notes to Condensed Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 5
<TABLE>
              AMERICAN GENERAL FINANCE, INC. AND SUBSIDIARIES
         Condensed Consolidated Statements of Comprehensive Income
                                (Unaudited)

<CAPTION>
                               Three Months Ended      Nine Months Ended
                                  September 30,          September 30,   
                                 1998       1997        1998       1997  
                                         (dollars in thousands)
<S>                             <C>        <C>         <C>       <C>
Net income                      $47,527    $40,689     $136,930  $ 93,105
                                                                         
Other comprehensive income: 
  Net unrealized gains on
    investment securities        18,856     14,642       19,676    12,116
  Income tax effect              (6,600)    (5,125)      (6,887)   (4,241)

  Net unrealized gains on
    investment securities,
    net of tax                   12,256      9,517       12,789     7,875 

  Reclassification adjustment
    for realized gains
    (losses) included in 
    net income                      391        (99)         297      (208)
  Income tax effect                (137)        35         (104)       73
                       
  Realized gains (losses)     
    included in net income,
    net of tax                      254        (64)         193      (135)
                           
Other comprehensive income,
  net of tax                     12,510      9,453       12,982     7,740 


Comprehensive income            $60,037    $50,142     $149,912  $100,845


<FN>
<F1>
See Notes to Condensed Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 6

              AMERICAN GENERAL FINANCE, INC. AND SUBSIDIARIES
            Notes to Condensed Consolidated Financial Statements
                             September 30, 1998



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  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 September  30, 1998  and December  31, 1997,  its consolidated
results of operations  for the three months and nine months ended September
30, 1998  and 1997, its consolidated  cash flows for the  nine months ended
September  30, 1998 and 1997, and its consolidated comprehensive income for
the three months and nine months ended September 30, 1998 and 1997.   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,
1997.  

To conform with  the 1998 presentation,  certain items in the  prior period
have been reclassified.


Note 3.  Accounting Changes

In  June  1997, the  Financial  Accounting  Standards Board  (FASB)  issued
Statement of Financial Accounting Standards (SFAS) 131, "Disclosures  about
Segments of an Enterprise  and Related Information," which changes  the way
companies report  segment information.   This  statement  is effective  for
years beginning after December 15, 1997, but need not be applied to interim
financial  statements in the initial  year of application.   Restatement of
comparative information  for all periods  presented will  be required  upon
adoption.   Adoption  of  this  statement  will  result  in  more  detailed
disclosures  but  will not  have an  impact  on the  Company's consolidated
results of operations or financial position.

In  June 1998,  the  FASB  issued  SFAS  133,  "Accounting  for  Derivative
Instruments  and  Hedging  Activities,"   which  requires  all   derivative
instruments to be recognized  at fair value as either assets or liabilities
in the balance sheet.  Changes in the fair value of a derivative instrument
are  reported as earnings or other comprehensive income, depending upon the
intended use of the derivative instrument.  This statement is effective for
years beginning  after June 15, 1999.  Adoption of SFAS 133 is not expected
<PAGE>
<PAGE> 7

to  have a  material  impact  on  the  Company's  consolidated  results  of
operations or financial position.

During  first  quarter  1998,  the  Company adopted  SFAS  130,  "Reporting
Comprehensive  Income,"  which  establishes  standards  for  reporting  and
displaying  comprehensive  income  and  its  components  in  the  financial
statements.  The  Company elected  to report comprehensive  income and  its
components   in  the  consolidated   statements  of  comprehensive  income.
Adoption  of  SFAS 130  did not  change recognition  or measurement  of net
income and, therefore, did not impact the Company's consolidated results of
operations or financial position.


Note 4.  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 and
is  neither  a dealer  nor a  trader  in derivative  financial instruments.
AGFC's use  of derivative  financial instruments  is  generally limited  to
interest rate swap and treasury rate lock agreements.

AGFC uses interest rate swap  agreements to reduce its exposure  to adverse
future  fluctuations in  interest expense  rates by  effectively converting
short-term and certain  long-term floating-rate debt to a fixed-rate basis.
Interest rate swap agreements in  which AGFC contracted to pay interest  at
fixed rates and receive  interest at floating rates totaled  $965.0 million
in  notional amount at September 30, 1998, with a weighted average interest
rate payable of  7.24% and a weighted  average interest rate  receivable of
5.25%.  

Treasury rate lock  agreements have been used to hedge  against the risk of
rising interest  rates  on anticipated  long-term  debt issuances.    These
agreements  provide  for future  cash settlements  that  are a  function of
specified  U.S.  Treasury rates.   At  September  30, 1998,  there  were no
treasury rate lock agreements in effect.

AGFC's use of interest rate swap  and treasury rate lock agreements did not
have a material effect  on the Company's weighted average  interest rate or
reported interest expense in the first nine months of 1998 or 1997.


Note 5.  Sale of Non-strategic Assets 

During fourth  quarter 1996, the Company  decided 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 $70.0 million of allowance for finance receivable losses 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 1996, the
Company determined  that  a write-down  of  $145.5 million  ($93.5  million
aftertax) at December 31, 1996 was necessary to reduce the carrying  amount
of the  assets held  for sale  to net realizable  value, after  considering
related expenses.
<PAGE>
<PAGE> 8

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

In June 1997,  the Company  sold all of  the assets held  for sale (with  a
remaining balance of  $658.1 million)  and $81.4 million  of other  private
label finance receivables.   In  connection with these  sales, the  Company
recorded a loss of $42.2 million ($27.0 million aftertax) in second quarter
1997.    This loss  primarily resulted  from  establishing a  liability for
estimated future payments  to the  purchaser of the  credit card  portfolio
under a five-year loss sharing arrangement.



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, borrowings  under credit  facilities, the  sale of
securitized finance receivables,  and capital  contributions from  American
General.    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 $350.3  million for the  nine months  ended
September 30, 1998 compared to $422.0 million for the same  period in 1997.
The decrease in operating cash flow for the nine months ended September 30,
1998 when compared to the same period in 1997 was primarily due to the sale
of  non-strategic assets in June 1997.    Operating cash flow combined with
the net proceeds from issuance of  debt and a capital contribution of $14.0
million from American General  generated cash flow of $1.2 billion  for the
nine months ended September 30, 1998.  This cash flow  was used principally
to finance the  net originations  and purchases of  finance receivables  of
$954.3 million, to  fund the  increase in premiums  on finance  receivables
purchased  and deferred  charges  of $95.5  million,  to pay  dividends  to
American  General of $31.6 million, and to acquire HSA Residential Mortgage
Services  of Texas, Inc.  for $25.6 million.   Operating cash flow combined
with   the  proceeds  from  the  sale  of  non-strategic  assets,  the  net
collections  on assets held for  sale, and a  capital contribution of $40.0
million from American General generated cash  flow of $1.3 billion for  the
nine months ended September 30, 1997.  This cash flow  was used principally
to  fund the net repayments  of debt of $776.2 million,  to finance the net
originations and purchases of finance receivables of $229.1 million, to pay
dividends to American General  of $126.5 million, and to  repurchase $100.0
million of securitized finance receivables.  
<PAGE>
<PAGE> 9

Dividends  are paid (or capital  contributions are received)  to manage the
Company's leverage  to a target  of 7.50 to  1 of  debt to tangible  equity
(equity  less goodwill and net unrealized gains or losses on fixed-maturity
investment securities).  The debt to tangible equity ratio at September 30,
1998  was 7.56  to 1.   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  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  September 30,  1998,  the  Company's  capital totaled  $9.5
billion, consisting of  $8.1 billion of  debt and $1.4  billion of  equity,
compared  to $8.1 billion at September 30, 1997, consisting of $6.9 billion
of debt and $1.2 billion of equity.

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 capital 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.  Management determines the Company's mix of fixed-rate and
floating-rate debt  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 rate swap agreements to synthetically create fixed-rate
debt  by altering the nature of floating-rate funding, thereby limiting its
exposure to adverse  interest rate movements.   In addition, AGFC  has used
treasury rate lock agreements to hedge  against the risk of rising interest
rates on anticipated long-term debt issuances.


Credit Facilities

The  Company participates in credit  facilities to support  the issuance of
commercial paper and to provide an additional source of funds for operating
requirements.  At September 30, 1998, the Company was an  eligible borrower
under  $5.0 billion  of  committed credit  facilities extended  to American
General  and   certain  of   its   subsidiaries  (the   "shared   committed
facilities").    The  annual  commitment  fees  for  the  shared  committed
facilities ranged  from .05% to .07%.   The Company pays  only an allocated
portion of the commitment fees for such committed facilities.  At September
30,  1998,  the  Company also  had  $318.5  million  of uncommitted  credit
<PAGE>
<PAGE> 10

facilities and was an eligible borrower under $200.0 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  September  30,  1998,  Company   borrowings
outstanding under uncommitted credit facilities totaled $140.0 million, and
there were no borrowings under any committed credit facilities.


Year 2000

Internal Systems.   The Company is in the process of modifying its internal
systems  to achieve Year 2000 readiness.   The Company has developed and is
implementing a plan  to minimize the risk of a  significant negative impact
on its operations.  

The  Company's  plan includes  the following  activities:   (1)  perform an
inventory of  the  Company's  information  technology  and  non-information
technology systems; (2) assess  which items in the inventory may expose the
Company to business interruptions due to Year 2000 issues; (3) reprogram or
replace  systems that are  not Year 2000  ready; (4) test  systems to prove
that they will function into the next century as they do currently; and (5)
return the systems to operations.   As of September 30, 1998, the inventory
and  assessment activities are  substantially complete, and  the Company is
progressing   with  activities  (3)  and  (4).    The  Company  expects  to
substantially  complete the  remaining activities  for critical  systems by
December 31, 1998.  However, activities (3) through (5) for certain systems
will continue in 1999.

Third  Party Relationships.   The  Company  has relationships  with various
third parties  who must  also  be Year  2000 ready.    These third  parties
provide (or receive) resources and services  to (or  from) the  Company and
include organizations with which the Company exchanges  information.  Third
parties include vendors  of hardware, software,  and information  services;
providers of  infrastructure services such as voice and data communications
and utilities for office  facilities; and customers.  Third  parties differ
from internal systems  in that the Company  exercises less, or no,  control
over Year 2000  readiness.  The Company has developed a  plan to assess and
attempt  to mitigate  the risks  associated with  the potential  failure of
third parties  to achieve  Year  2000 readiness.    The plan  includes  the
following activities:  (1) identify and classify  third party dependencies;
(2)  research, analyze, and document Year 2000 readiness for critical third
parties;  and  (3)  test  critical  hardware  and  software  products   and
electronic  interfaces.  As of  September 30, 1998,  the identification and
classification activities are  substantially complete.  The Company expects
to substantially  complete the  research  and  analysis of  critical  third
parties'  Year  2000  readiness by  December 31, 1998.   Due to the various
stages of  third  parties' Year 2000  readiness,  testing  activities  will
extend through 1999.

Contingency Plan.  The Company has commenced contingency planning to reduce
the risk  of Year 2000-related  business  failures.  The contingency  plan,
which  addresses  both  internal  systems and  third  party  relationships,
includes the following activities: (1) evaluate the consequences of failure
of business  processes  with significant  exposure to  Year 2000  risk; (2)
determine  the  probability  of  a  Year  2000-related  failure  for  those
processes  that have a  high consequence of failure;  (3) develop an action
plan  to complete  contingency plan  for those processes  that rank high in
both  consequence  and  probability  of  failure;   and  (4)  complete  the
<PAGE>
<PAGE> 11

applicable action plan.  The Company has substantially completed evaluation
activities as of September 30, 1998  and is proceeding with  the subsequent
activities.  The Company  expects to substantially complete all contingency
planning activities by April 30, 1999.

Risks and  Uncertainties.  Based on its plan to make internal systems ready
for  Year 2000,  to deal  with third  party relationships,  and  to develop
contingency actions, the Company  believes that it will experience  at most
isolated and minor disruptions of business processes  following the turn of
the century.  Such disruptions are not expected to have a  material  effect
on  the  Company's future results of operations,  liquidity,  or  financial
condition.   However,  due to the magnitude and complexity of this project,
risks and uncertainties exist and the Company is not able to predict a most
reasonably  likely  worst  case  scenario.  If conversion  of the Company's
internal systems is not completed on a timely basis (due to non-performance
by significant third-party vendors, lack of qualified  personnel to perform
the Year  2000 work, or other  unforeseen circumstances  in completing  the
Company's plan),  or if critical third  parties fail  to achieve  Year 2000
readiness on a  timely  basis, the Year  2000 issues could  have a material
adverse  impact on  the  Company's  operations  following  the turn  of the
century.

Costs.  Through September 30,  1998, the Company has incurred and  expensed
$3.6 million  (pretax)  related  to Year  2000  readiness,  including  $2.9
million incurred  during  the  first nine  months  of 1998.    The  Company
currently anticipates that it will incur future costs of approximately $3.7
million (pretax) for  additional internal staff,  third-party vendors,  and
other expenses to  achieve Year 2000 readiness.   In addition, the  Company
has elected to  accelerate the  planned replacement of  certain systems  as
part of the Year 2000  plan.   Costs of the  replacement systems  are being
capitalized and  amortized over their  useful lives, recorded  as operating
leases, or expensed  as incurred  in accordance with  the Company's  normal
accounting policies.   The Company currently  anticipates total replacement
costs of $2.1 million.
<PAGE>
<PAGE> 12

                       SELECTED FINANCIAL INFORMATION


The following table shows selected financial information of the Company:

                                 At or for the            At or for the
                              Three Months Ended        Nine Months Ended
                                 September 30,            September 30,    
                             1998            1997     1998            1997 
                                        (dollars in thousands)
Average finance receivables 
  net of unearned finance
  charges (average net
  receivables)              $8,678,694  $7,446,628   $8,307,683  $7,482,977

Average borrowings          $7,946,247  $6,775,958   $7,584,573  $7,178,811

Yield - finance charges
  (annualized) as a
  percentage of average
  net receivables               15.75%      16.83%       16.11%      16.96%

Borrowing cost - interest
  expense (annualized) as 
  a percentage of average
  borrowings                     6.55%       6.90%        6.62%       6.80%

Interest spread - yield
  less borrowing cost            9.20%       9.93%        9.49%      10.16%

Insurance revenues
  (annualized) as a
  percentage of average
  net receivables                2.04%       2.49%        2.11%       2.51%

Operating expenses
  (annualized) as a
  percentage of average
  net receivables                5.98%       6.39%        6.12%       6.33%

Return on average assets 
  (annualized)                   1.87%       1.86%        1.88%       1.35%

Return on average equity
  (annualized)                  13.96%      13.47%       13.89%      10.07%

Charge-off ratio - net
  charge-offs (annualized)
  as a percentage of the
  average of net finance
  receivables at the
  beginning of each month
  during the period              2.44%       3.27%        2.58%       3.59%
<PAGE>
<PAGE> 13

Selected Financial Information (Continued)


                                                       At or for the
                                                     Nine Months Ended
                                                       September 30,  
                                                     1998        1997 

Allowance ratio - allowance for finance 
  receivable losses as a percentage of
  net finance receivables                            4.15%       5.05%

Ratio of earnings to fixed charges (refer 
  to Exhibit 12 for calculations)                    1.57        1.39

Delinquency ratio - finance receivables 60
  days or more past due as a percentage of
  related receivables                                3.75%       3.83%

Debt to tangible equity ratio - debt to
  equity less goodwill and net unrealized
  gains or losses on fixed-maturity
  investment securities                              7.56        7.44

Debt to equity ratio                                 5.79        5.64



                       ANALYSIS OF OPERATING RESULTS


Net Income

Net  income increased  $6.8 million,  or 17%,  for  the three  months ended
September 30,  1998 and $43.8  million, or 47%,  for the nine  months ended
September 30,  1998 when compared  to the  same periods in  1997 reflecting
lower net charge-offs and finance  receivable growth.  The increase in  net
income for the nine months ended September 30, 1998 also reflected the loss
on the sale of non-strategic assets during second quarter 1997.

During the past several years, the Company has focused on an action program
to improve credit quality.  The components  of this action program included
selling  under-performing  receivable   portfolios,  raising   underwriting
standards, and rebalancing the portfolio to increase the proportion of real
estate loans.  See Note 5. of the Notes to Condensed Consolidated Financial
Statements in Item 1. for further information on the sale  of the Company's
non-strategic assets.

Results of  the action  program  became evident  in 1997  and continued  to
improve the Company's operating  results in the first nine  months of 1998.
The charge-off ratio  improved 101 basis points  for the nine  months ended
September 30, 1998  when compared to  the same period  in 1997, which  more
than offset the decline in yield of 85 basis points.
<PAGE>
<PAGE> 14

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


Finance Charges

Finance  charge  revenues increased  $28.6 million,  or  9%, for  the three
months ended  September 30,  1998 and  $52.0 million, or  5%, for  the nine
months ended September 30, 1998  when compared to the same periods  in 1997
due to increases in  average net receivables, partially offset  by declines
in yield.  Average net receivables  increased $1.2 billion, or 17%, for the
three months ended September 30,  1998 and $824.7 million, or 11%,  for the
nine  months ended September 30, 1998 when  compared to the same periods in
1997 primarily due to growth in real estate loans.  The increase in average
net receivables  for the nine months ended September 30, 1998 was partially
offset  by the sale of certain private  label receivables in second quarter
1997.    Yield decreased  108  basis  points  for  the three  months  ended
September 30,  1998 and 85 basis points for the nine months ended September
30, 1998 when  compared to the  same periods in  1997 primarily due to  the
larger  proportion of finance receivables that are real estate loans, which
generally have lower yields.


Insurance Revenues

Insurance  revenues decreased  $2.1 million,  or 5%,  for the  three months
ended September 30, 1998 and $9.1 million, or 6%, for the nine months ended
September 30, 1998 when compared to the same periods in  1997 primarily due
to decreases in earned  premiums.  Earned premiums decreased  primarily due
to a decrease in  related loan volume in 1996 and the  first three quarters
of 1997.


Other Revenues

Other revenues increased $1.5  million, or 8%,  for the three months  ended
September  30, 1998  and $5.6 million,  or 10%,  for the  nine months ended
September 30, 1998 when compared to the same periods in 1997.  The increase
in  other  revenues for  the  nine  months  ended  September 30,  1998  was
primarily due to  an increase  in investment revenue  reflecting growth  in
average  invested  assets,  partially  offset  by  a  decline  in  adjusted
portfolio yield.


Interest Expense

Interest  expense increased  $13.2 million,  or 11%,  for the  three months
ended  September 30, 1998  and $33.3 million,  or 10%, for  the nine months
ended September  30, 1998 when compared to the  same periods in 1997 due to
increases in average borrowings  to support asset growth, partially  offset
by  declines in borrowing  cost.  Borrowing cost  decreased 35 basis points
for the three months  ended September 30, 1998 and 18  basis points for the
nine months ended  September 30, 1998 when compared to  the same periods in
1997.
<PAGE>
<PAGE> 15

Operating Expenses

Operating expenses increased  $10.8 million,  or 9%, for  the three  months
ended September  30, 1998  and $26.1  million, or 7%,  for the  nine months
ended  September 30,  1998  when  compared  to the  same  periods  in  1997
primarily  due to increases in  salaries and benefits, litigation expenses,
amortization of intangibles, and advertising expenses, partially offset  by
an increase in  deferred loan acquisition costs.  The  increase in salaries
and benefits expense  reflects an increase  in incentive program  expenses,
partially offset  by a workforce  reduction of approximately  350 positions
since September 30,  1997 which  includes the effects  of cost  containment
programs and the  sale of  the non-strategic assets  during second  quarter
1997.  


Provision for Finance Receivable Losses

Provision  for finance receivable losses decreased $2.9 million, or 5%, for
the three  months ended September 30,  1998 and $34.0 million,  or 18%, for
the nine  months ended September 30, 1998 when compared to the same periods
in 1997 due to decreases in net charge-offs totaling $7.9 million and $41.5
million, respectively.

Net charge-offs for the three months  ended September 30, 1998 decreased to
$52.7 million from $60.6 million  for the same period in 1997.  The charge-
off ratio  for third quarter  1998 was  2.44% compared to  3.27% for  third
quarter 1997.   

At September 30, 1998, delinquencies were $352.7 million compared to $312.2
million at September 30, 1997.  The delinquency ratio at September 30, 1998
was  3.75% compared to  3.83% at September  30, 1997.  The  decrease in the
delinquency  ratio from  September 30,  1997 reflected  the results  of the
Company's  efforts  to  improve  credit  quality.    The  delinquency ratio
increased from  3.43% at  June 30, 1998  reflecting the effects  of general
economic  conditions, as  well  as the  maturing  of purchased  real-estate
portfolios which were primarily new originations when purchased.

At  September 30,  1998, the  allowance for  finance receivable  losses was
$365.2  million compared  to $380.2  million at  September  30, 1997.   The
allowance  ratio  at September  30, 1998  was  4.15% compared  to  5.05% at
September  30, 1997.    The Company  maintains  the allowance  for  finance
receivable  losses at a  level based on periodic  evaluation of the finance
receivable  portfolio  which  reflects  an  amount  that,  in  management's
opinion,  is  adequate  to  absorb   anticipated  losses  in  the  existing
portfolio. 


Loss on Sale of Non-strategic Assets

Loss on sale of  non-strategic assets totaled $42.2 million  ($27.0 million
aftertax) for  the nine months ended September 30,  1997 due to the sale of
non-strategic, underperforming receivables during second quarter 1997.  See
Note 5. of the Notes to Condensed Consolidated Financial Statements in Item
1.  for  further information  on the  sale  of the  Company's non-strategic
assets.
<PAGE>
<PAGE> 16

Insurance Losses and Loss Adjustment Expenses

Insurance losses  and loss adjustment  expenses decreased $2.8  million, or
12%, for the three months ended September 30, 1998 and $4.7 million, or 7%,
for  the nine  months ended September  30, 1998  when compared  to the same
periods in  1997 due to decreases  in claims paid and  provision for future
benefits.   Claims decreased  $2.2 million and  $3.3 million, respectively,
primarily due to  lower earned  premiums and favorable  loss experience  on
credit  insurance.  Provision for future benefits decreased $.6 million and
$1.4  million, respectively, due  to reduced sales  of non-credit insurance
products.    


Provision for Income Taxes

The provision for  income taxes  increased $2.8  million, or  12%, for  the
three months  ended September 30, 1998  and $26.3 million, or  48%, for the
nine months ended  September 30, 1998 when compared to  the same periods in
1997 primarily due to higher taxable income.  


Forward-looking Statements

All statements,  trend analyses,  and other  information contained  in this
report  and  elsewhere (such  as  other  filings by  the  Company with  the
Securities  and  Exchange  Commission,  press  releases,  presentations  by
management of the  Company, or oral statements)  relative to trends in  the
Company's  operations or  financial results,  as well  as other  statements
including  words  such  as  "anticipate,"  "believe,"  "plan,"  "estimate,"
"expect,"  "intend," and  other  similar  expressions, constitute  forward-
looking  statements under the  Private Securities Litigation  Reform Act of
1995.  Forward-looking  statements are made based upon management's current
expectations and beliefs concerning future developments and their potential
effects  upon  the  Company.    There  can  be  no  assurance  that  future
developments affecting the Company will be those anticipated by management.
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:   (1)  changes  in  general economic
conditions, including the performance of financial markets, interest rates,
and the level of personal bankruptcies; (2) competitive, regulatory, or tax
changes that affect the cost  of or demand for the Company's  products; (3)
the Company's ability to achieve  Year 2000 readiness  for critical systems
and  operations  on a  timely  basis;  (4)  adverse  litigation  results or
resolution  of  litigation;  and  (5)  the  Company's  failure  to  achieve
anticipated   levels  of  expense  savings  from  cost-saving  initiatives.
Readers are also  directed to  other risks and  uncertainties discussed  in
other  documents  filed by  the Company  with  the Securities  and Exchange
Commission.   The Company undertakes no  obligation to update or revise any
forward-looking information, whether as a result of new information, future
developments, or otherwise.
<PAGE>
<PAGE> 17

                       PART II - OTHER INFORMATION


Item 1.  Legal Proceedings.

In addition to  those lawsuits  or proceedings disclosed  in the  Company's
1997 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  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  not have a  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  certain jurisdictions
continues  to create  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 third quarter of
     1998.
<PAGE>
<PAGE> 18

                                 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:  November 12, 1998          By /s/ Robert A. Cole                    
                                         Robert A. Cole                 
                                     Senior Vice President and Chief
                                       Financial Officer                
                                     (Duly Authorized Officer and Principal
                                       Financial Officer)
<PAGE>
<PAGE> 19

                               Exhibit Index



      Exhibits                                                      Page

(12)  Computation of Ratio of Earnings to Fixed Charges.             20

(27)  Financial Data Schedule.                                       21
<PAGE>