<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, 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  November  13, 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      Nine Months Ended
                                September 30,           September 30,    
                               1997       1996        1997        1996   
                                       (dollars in thousands)
<S>                          <C>        <C>        <C>         <C>
Revenues
  Finance charges            $314,997   $359,223   $  950,044  $1,092,884
  Insurance                    46,436     51,677      140,705     154,950
  Other                        18,185     18,413       53,087      50,341

Total revenues                379,618    429,313    1,143,836   1,298,175

Expenses
  Interest expense            117,169    121,267      342,816     368,518
  Operating expenses          118,970    123,499      355,221     387,827
  Provision for finance 
    receivable losses          55,634     90,636      186,639     301,220
  Loss on sale of non-  
    strategic assets             -          -          42,225        -   
  Insurance losses and loss
    adjustment expenses        23,500     25,787       69,252      80,841

Total expenses                315,273    361,189      996,153   1,138,406

Income before provision for
  income taxes                 64,345     68,124      147,683     159,769
                                
Provision for Income Taxes     23,656     24,513       54,578      58,382


Net Income                   $ 40,689   $ 43,611   $   93,105  $  101,387


<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,
                                                1997            1996
                                               (dollars in thousands)
<S>                                          <C>             <C>
Assets
   
Finance receivables, net of unearned 
  finance charges:
    Real estate loans                        $3,845,695      $3,734,195
    Non-real estate loans                     2,462,597       2,516,009
    Retail sales contracts                      965,313         998,441
    Private label                               253,028         376,580

Net finance receivables                       7,526,633       7,625,225
Allowance for finance receivable
  losses                                       (380,154)       (395,153)
Net finance receivables, less allowance
  for finance receivable losses               7,146,479       7,230,072

Investment securities                           912,281         880,033
Cash and cash equivalents                       104,262         105,493
Goodwill                                        264,244         270,989
Assets held for sale                               -            667,007
Other assets                                    398,898         410,102

Total assets                                 $8,826,164      $9,563,696


Liabilities and Shareholder's Equity

Long-term debt                               $4,178,756      $4,498,530
Short-term notes payable:
  Commercial paper                            2,583,662       3,015,920
  Banks and other                                90,000         111,000
Investment certificates                           3,249           3,778
Insurance claims and policyholder
  liabilities                                   430,963         456,430
Other liabilities                               304,365         260,284
Accrued taxes                                    20,342          17,273

Total liabilities                             7,611,337       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                                   29,194          21,454 
  Retained earnings                             448,403         481,797

Total shareholder's equity                    1,214,827       1,200,481

Total liabilities and shareholder's equity   $8,826,164      $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>
                                                       Nine Months Ended  
                                                         September 30,    
                                                      1997          1996  
                                                    (dollars in thousands)
<S>                                                 <C>           <C>
Cash Flows from Operating Activities
Net income                                          $ 93,105      $101,387
Reconciling adjustments to net cash
  provided by operating activities:
    Provision for finance receivable losses          186,639       301,220
    Depreciation and amortization                     63,228        73,028
    Deferral of finance receivable  
      origination costs                              (28,797)      (38,232)
    Deferred federal income tax charge                59,057         8,481
    Change in other assets and other liabilities     (67,908)       (7,626)
    Change in insurance claims and
      policyholder liabilities                       (25,467)      (20,585)
    Loss on sale of non-strategic assets              42,225          -
    Operations related to assets held for sale        39,905          -  
    Other, net                                        11,961        59,446
Net cash provided by operating activities            373,948       477,119

Cash Flows from Investing Activities
  Finance receivables originated or purchased     (3,380,751)   (3,859,686)
  Principal collections on finance receivables     3,199,699     3,729,716
  Net collections on assets held for sale             61,266          -
  Securitized finance receivables purchased         (100,000)         -  
  Sale of non-strategic assets                       732,504          -
  Investment securities purchased                    (99,879)     (149,261)
  Investment securities called, matured and sold      82,209       138,969
  Other, net                                          (7,503)      (43,669)
Net cash provided by (used for) 
  investing activities                               487,545      (183,931)

Cash Flows from Financing Activities
  Proceeds from issuance of long-term debt           485,367        73,031
  Repayment of long-term debt                       (807,804)     (425,584)
  Change in investment certificates                     (529)       (2,175)
  Change in short-term notes payable                (453,258)      212,917 
  Capital contribution from parent                     40,000          - 
  Dividends paid                                    (126,500)     (138,590)
Net cash used for financing activities              (862,724)     (280,401)

(Decrease) increase in cash and cash equivalents      (1,231)       12,787 
Cash and cash equivalents at beginning of period     105,493       103,238

Cash and cash equivalents at end of period          $104,262      $116,025

Supplemental Disclosure of Cash Flow Information
  Income taxes paid                                 $ 20,755      $ 13,900
  Interest paid                                     $378,066      $368,720
<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
                             September 30, 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  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, 1997  and December  31, 1996,  its consolidated
results of operations  for the three months and nine months ended September
30, 1997  and 1996, and  its consolidated  cash flows for  the nine  months
ended  September 30, 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.  

During  third  quarter  1997,  certain  real  estate secured  loans  having
advances  of  less than  $10 thousand  and  high loan-to-value  ratios were
reclassified from real estate  to non-real estate loans (effective  January
1,  1997).   From a  servicing and collection  standpoint, these  loans are
administered  more  like non-real  estate  secured loans  than  real estate
secured  loans.   This  reclassification affected  $169.1 million  loans at
September 30, 1997.


Note 3.  Accounting Changes

In  June  1997,  the Financial  Accounting  Standards  Board  (FASB) issued
Statement  of  Financial   Accounting  Standards  (SFAS)  130,   "Reporting
Comprehensive  Income"   which  establishes  standards  for  reporting  and
displaying  comprehensive  income  and  its  components  in  the  financial
statements.  This  statement is  effective for interim  and annual  periods
beginning  after   December  15,  1997.     Reclassification  of  financial
statements  for  all periods  presented  will  be required  upon  adoption.
Application of this  statement will not  change recognition  or measurement
of net income and, therefore, will  not impact  the  Company's consolidated
results of operations or financial position.
<PAGE>
<PAGE> 6

In June 1997, the  FASB also issued  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 segment
disclosures  but  will not  have an  impact  on 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.
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
September  30, 1997,  outstanding interest  conversion agreements  in which
AGFC contracted to pay interest  at fixed rates and receive  floating rates
totaled  $740.0 million of notional amount, with  an average fixed pay rate
of  7.72% and an  average floating receive  rate of  5.66%.  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 nine months of 1997 or 1996.


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 credit  card and  private label
finance receivable portfolios.   These assets held for sale were carried at
net realizable value, after considering related expenses.  

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 were  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.

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 an  aftertax loss of $27.0  million 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.
<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 $373.9  million for the  nine months  ended
September 30, 1997 compared to $477.1  million for the same period in 1996.
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 from  American General  generated cash  flow of  $1.2
billion for the  nine months ended  September 30, 1997  compared to  $477.1
million  for  the  same  period  in  1996.    These  cash  flows were  used
principally to  fund the net repayments  of debt for the  nine months ended
September  30,  1997  and  1996  of  $776.2  million  and  $141.8  million,
respectively,  to pay dividends to  American General of  $126.5 million and
$138.6 million, respectively, to finance the net originations and purchases
of  finance receivables of $181.1 million and $130.0 million, respectively,
and to repurchase  $100.0 million of securitized finance receivables during
second quarter 1997.  

Dividends are typically paid to  manage the Company's leverage to a  target
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
debt to tangible equity ratio at September 30, 1997 was 7.44  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,  1997,  the  Company's  capital totaled  $8.1
billion, consisting  of $6.9 billion  of debt and  $1.2 billion  of equity,
compared to $8.6 billion at September 30, 1996, consisting of $7.3  billion
of debt and $1.3 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
<PAGE>
<PAGE> 8

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 September 30, 1997,  the Company was an eligible borrower
under  $3.6  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,  1997,  the  Company also  had  $421.0  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  September  30,  1997,  Company   borrowings
outstanding under uncommitted credit facilities totaled $90.0 million,  and
there were no borrowings under any committed credit facilities.

Securitization

On April 1, 1997, the Company repurchased all $100.0 million of the private
label and credit  card receivables  that had previously  been sold  through
securitization.   No gain or loss resulted from the repurchase transaction.
Of  the  $100.0  million  repurchased,  approximately  $70.0  million   was
classified  as  assets held  for  sale  in  April  1997.    The  repurchase
facilitated the sale  of the credit card portfolio included  in assets held
for sale and sold in June 1997.

Year 2000 Contingency

Management  has  been  engaged  in a  company-wide  program  to render  its
computer  systems   (hardware   and  mainframe  and  personal  applications
software) year 2000 compliant.  The Company will continue to incur internal
staff costs as well as third-party vendor and other expenses to prepare the 
systems  for year  2000.  The cost  of testing  and conversion  of  systems
applications  has not  had, and is not expected to have, a material adverse
effect on the Company's  consolidated  results  of operations  or financial
condition.  However,  risks and  uncertainties  exist  in most  significant
systems development  projects.  If conversion of  the Company's  systems is
not  completed  on a  timely  basis, due to  nonperformance by  third-party
vendors or other unforeseen circumstances, the year 2000 problem could have
a material adverse impact on the operations of the Company.
<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            At or for the
                              Three Months Ended        Nine Months Ended
                                 September 30,            September 30,    
                             1997            1996     1997            1996 
                                        (dollars in thousands)
Average finance receivables, 
  net of unearned finance
  charges (average net
  receivables)              $7,446,628  $8,042,491   $7,482,977  $8,094,076

Average borrowings          $6,775,958  $7,051,834   $7,178,811  $7,123,268

Yield - finance charges
  (annualized) as a
  percentage of average
  net receivables               16.83%      17.80%       16.96%      18.02%

Borrowing cost - interest
  expense (annualized) as 
  a percentage of average
  borrowings                     6.90%       6.87%        6.80%       6.90%

Interest spread - yield
  less borrowing cost            9.93%      10.93%       10.16%      11.12%

Insurance revenues
  (annualized) as a
  percentage of average
  net receivables                2.49%       2.57%        2.51%       2.55%

Operating expenses
  (annualized) as a
  percentage of average
  net receivables                6.39%       6.14%        6.33%       6.39%

Return on average assets 
  (annualized)                   1.86%       1.91%        1.35%       1.47%

Return on average equity
  (annualized)                  13.47%      13.44%       10.07%      10.33%

Charge-off ratio -
  net charge-offs
  (annualized) as a
  percentage of average
  net receivables                3.27%       5.37%        3.59%       5.40%

Allowance ratio - 
  allowance for finance
  receivable losses as a
  percentage of net
  finance receivables              -           -          5.05%       5.67%
<PAGE>
<PAGE> 10

Selected Financial Information (Continued)


                                                       At or for the
                                                     Nine Months Ended
                                                       September 30,  
                                                     1997        1996 

Ratio of earnings to fixed charges (refer to
  Exhibit 12 for calculations)                       1.39        1.42

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)                              3.83%       4.28%

Debt to tangible equity ratio - debt to
  equity less goodwill and net unrealized
  gains or losses on fixed-maturity
  investment securities                              7.44        7.54

Debt to equity ratio                                 5.64        5.82
 


                       ANALYSIS OF OPERATING RESULTS

Net Income

Net  income  decreased $2.9  million, or  7%,  for the  three  months ended
September  30, 1997  and $8.3  million, or  8%, for  the nine  months ended
September 30, 1997 when compared to the same periods in  1996 primarily due
to  decreases  in finance  charges, partially  offset  by decreases  in the
provision for  finance receivable losses, operating  expenses, and interest
expense.   The decrease in net  income for the nine  months ended September
30, 1997 also reflected the loss on the sale of non-strategic assets during
second 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.  
<PAGE>
<PAGE> 11

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.

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.  This charge was recorded
in fourth quarter 1996. 

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
took an  aftertax charge of  $27.0 million  in second quarter  1997.   This
additional 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.

Net  finance  receivables totaled  $7.5 billion  at  September 30,  1997, a
decrease of  $681.7 million from  September 30,  1996 primarily due  to the
aforementioned reclassification and sale of credit card and certain private
label  receivables  and  the  substantial  liquidation  of  underperforming
receivables, partially offset  by purchases of real estate  loan portfolios
during fourth quarter  1996 and real  estate loan growth  during 1997.   At
September 30, 1997,  real estate secured finance  receivables accounted for
51% of total net finance receivables compared to 42% at September 30, 1996.

Results of  the action program to improve  credit quality became evident in
the first nine months of  1997.  Although yield decreased 106  basis points
for  the nine  months ended September  30, 1997  when compared  to the same
period in  1996, this was  offset by a 181  basis point improvement  in the
charge-off  ratio.   The  delinquency  ratio  also  improved  to  3.83%  at
September 30, 1997 from 4.28% a year earlier. 

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

Finance Charges

Finance  charge revenues  decreased $44.2  million, or  12%, for  the three
months ended  September 30, 1997 and  $142.8 million, or 13%,  for the nine
months ended September  30, 1997 when compared to the  same periods in 1996
primarily  due to decreases in average  net receivables and yield.  Average
net receivables decreased $595.9 million, or 7%, for the three months ended
September 30,  1997 and $611.1  million, or 8%,  for the nine  months ended
September 30,  1997 when compared to the same periods in 1996 primarily due
<PAGE>
<PAGE> 12

to  the action  program for  improving credit  quality, which  included the
aforementioned reclassification  and sales of  certain finance  receivables
and the  substantial  liquidation  of  underperforming  receivables.    The
exclusion of  finance charges related to  the assets held for  sale for the
nine  months ended  September  30,  1997  totaled  $75.0  million.    Yield
decreased 97 basis points for the three months ended September 30, 1997 and
106 basis points for the nine months ended September 30, 1997 when compared
to the  same  periods in  1996  primarily due  to  the action  program  for
improving 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  $5.2 million,  or 10%, for  the three  months
ended  September 30,  1997 and $14.2  million, or  9%, for  the nine months
ended  September  30,  1997 when  compared  to  the  same periods  in  1996
primarily due to decreases  in earned premiums.  Earned  premiums decreased
primarily due  to the  decline in  related loan  volume resulting  from the
action program for improving credit quality.

Other Revenues

Other revenues  decreased $.2 million,  or 1%,  for the three  months ended
September 30, 1997  and increased $2.7 million, or 5%,  for the nine months
ended  September 30, 1997 when  compared to the same periods  in 1996.  The
increase in other revenues for the nine months ended September 30, 1997 was
primarily  due to  an increase  in  investment revenue.    The increase  in
investment  revenue  for  the nine  months  ended  September  30, 1997  was
primarily  due to  growth  in average  invested  assets for  the  insurance
operations of $40.2  million, partially  offset by a  decrease in  adjusted
portfolio yield of 7 basis points.

Interest Expense

Interest expense decreased $4.1 million, or 3%, for the three  months ended
September 30,  1997 and $25.7  million, or  7%, for the  nine months  ended
September 30, 1997 when compared to the same periods in 1996.  The decrease
in  interest expense  for the  three months  ended September  30, 1997  was
primarily  due  to a  decrease  in  average borrowings.    The  decrease in
interest expense  for the nine months  ended September 30, 1997  was due to
the  exclusion of  interest expense  related  to the  assets held  for sale
totaling  $23.2 million  and to  the decline  in borrowing  cost, partially
offset  by an increase in average borrowings.   Borrowing cost decreased 10
basis points for the nine months  ended September 30, 1997 when compared to
the same period in 1996  due to lower short-term borrowing cost,  partially
offset by higher  long-term borrowing cost.   Average borrowings  decreased
$275.9 million,  or 4%, for the  three months ended September  30, 1997 and
increased $55.5  million, or  1%, for the  nine months ended  September 30,
1997 when compared to the  same periods in 1996.   The decrease in  average
borrowings for the three months ended September  30, 1997 was primarily due
to  the aforementioned sales  of certain finance  receivables during second
quarter  1997, partially offset by purchases of real estate loan portfolios
that occurred in fourth quarter 1996 and growth in real estate loans during
1997.    The  increase in  average  borrowings  for the  nine  months ended
September 30, 1997 was primarily to fund the purchases of  real estate loan
<PAGE>
<PAGE> 13

portfolios that occurred in fourth  quarter 1996 and growth in real  estate
loans  during 1997, partially offset by the aforementioned sales of certain
finance receivables during second quarter 1997.

Operating Expenses

Operating  expenses decreased  $4.5 million,  or 4%,  for the  three months
ended  September 30,  1997 and $32.6  million, or  8%, for  the nine months
ended September 30, 1997 when compared to  the same periods in 1996 due  to
(1)  the exclusion  of expenses  to service  the non-strategic  assets sold
during  second  quarter  1997  totaling  $3.8  million  and  $18.2 million,
respectively (the  Company continued  to  service the  receivables  through
September  1997); (2)  certain non-recurring operating  expenses associated
with  discontinued  initiatives  that  negatively  impacted  the  financial
results for  1996 by $1.2 million  and $8.5 million, respectively;  and (3)
the  action program to  improve credit  quality and  reduce expenses.   The
action  program   implemented  in  fourth  quarter   1995  (which  included
emphasizing real estate  loan growth) contributed to  a workforce reduction
of  approximately 900  positions and  a net  decrease of 62  branch offices
since September 30, 1996.  

Provision for Finance Receivable Losses

Provision  for finance receivable  losses decreased $35.0  million, or 39%,
for  the three months ended September 30,  1997 and $114.6 million, or 38%,
for the  nine months  ended September  30, 1997 when  compared to  the same
periods in 1996 primarily due to the decreases in net  charge-offs totaling
$47.0  million  and $126.7  million,  respectively.   These  decreases were
primarily  due to  reductions  in charge-off  levels  for the  core  branch
network.   The  decrease  in  net charge-offs  for  the  nine months  ended
September  30, 1997 also reflected the exclusion of net charge-offs related
to the assets held for sale totaling $58.6 million.

Net  charge-offs  from finance  receivables  for  the  three  months  ended
September  30, 1997 decreased to $60.6 million  from $107.6 million for the
same period in 1996.   Net charge-offs for the three  months ended June 30,
1997  were $68.5 million.  The charge-off  ratio for third quarter 1997 was
3.27% compared to 3.68% for second quarter 1997 and 5.37% for third quarter
1996.   Excluding the portfolios  held for sale,  the charge-off ratio  was
4.56% for third quarter 1996.
   
At September 30, 1997, delinquencies were $312.2 million compared to $380.2
million  at September 30, 1996  and $299.6 million  at June 30,  1997.  The
delinquency ratio at September 30, 1997 was 3.83% compared to 3.73% at June
30, 1997 and 4.28% at September 30, 1996.  The increase in the  delinquency
ratio  from June 30, 1997  reflected an increase in  such ratio in the loan
portfolio.  Excluding the  portfolios held for sale, the  delinquency ratio
at September 30, 1996 was 3.93%.

During third  quarter 1997,  management reduced  the allowance for  finance
receivable losses by  $5.0 million from the balance at  June 30, 1997 based
on the favorable credit quality trends of the finance receivable portfolio.
The allowance for  finance receivable losses  decreased $85.0 million  from
$465.2 million at September 30,  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
<PAGE>
<PAGE> 14

increased  proportion of  real  estate  loans.    The  allowance  ratio  at
September 30, 1997 was 5.05%  compared to 5.20% at June 30, 1997  and 5.67%
at September  30, 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.

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
Analysis of Operating Results - Net  Income for further information on loss
on sale of non-strategic assets.

Insurance Losses and Loss Adjustment Expenses

Insurance losses  and loss adjustment  expenses decreased $2.3  million, or
9%,  for the three  months ended September  30, 1997 and  $11.6 million, or
14%, for the nine months ended September 30, 1997 when compared to the same
periods in  1996 due to decreases  in provision for future  benefits and in
claims paid.  Provision for future benefits decreased $1.3 million and $5.3
million,  respectively,  due  to  reduced  sales  of  non-credit  insurance
products.   Claims decreased $1.0  million and $6.3  million, respectively,
primarily due to decreased business.   The decrease in claims for  the nine
months ended  September 30, 1997  also reflected favorable  loss experience
on credit insurance.  

Provision for Income Taxes

The provision for income taxes decreased $.9 million, or 3%,  for the three
months  ended September  30, 1997  and $3.8  million, or  7%, for  the nine
months ended September 30, 1997  when compared to the same periods  in 1996
primarily due to lower 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; the Company's  ability to  render its  computer systems
year 2000  compliant; and  failure  to  achieve  the Company's  anticipated
levels of expense savings  from cost-saving  initiatives.  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  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
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 third 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:  November 13, 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>