<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               June 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 August 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      Six Months Ended
                                     June 30,               June 30,     
                                 1997       1996        1997       1996  
                                         (dollars in thousands)
<S>                            <C>        <C>         <C>        <C>
Revenues
  Finance charges              $315,248   $362,261    $635,047   $733,661
  Insurance                      46,740     52,086      94,269    103,273
  Other                          17,482     15,557      34,902     31,928

Total revenues                  379,470    429,904     764,218    868,862

Expenses
  Interest expense              112,816    121,271     225,647    247,251
  Operating expenses            117,582    132,934     236,251    264,328
  Provision for finance
    receivable losses            63,458    101,783     131,005    210,584
  Loss on sale of non- 
    strategic assets             42,225       -         42,225       -   
  Insurance losses and loss
    adjustment expenses          21,748     26,506      45,752     55,054

Total expenses                  357,829    382,494     680,880    777,217

Income before provision for
  income taxes                   21,641     47,410      83,338     91,645

Provision for Income Taxes        8,019     17,822      30,922     33,869


Net Income                     $ 13,622   $ 29,588    $ 52,416   $ 57,776


<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>
                                              June 30,     December 31,
                                                1997            1996   
                                               (dollars in thousands)
<S>                                          <C>             <C>        
Assets

Finance receivables, net of unearned   
  finance charges:
    Real estate loans                        $3,877,126      $3,734,195
    Non-real estate loans                     2,316,731       2,516,009
    Retail sales contracts                      947,368         998,441
    Private label                               265,822         376,580

Net finance receivables                       7,407,047       7,625,225
Allowance for finance receivable
  losses                                       (385,153)       (395,153)
Net finance receivables, less allowance
  for finance receivable losses               7,021,894       7,230,072

Investment securities                           879,754         880,033
Cash and cash equivalents                       105,375         105,493
Goodwill                                        266,487         270,989
Assets held for sale                               -            667,007
Other assets                                    426,305         410,102

Total assets                                 $8,699,815      $9,563,696


Liabilities and Shareholder's Equity

Long-term debt                               $3,950,837      $4,498,530
Short-term notes payable:
  Commercial paper                            2,700,142       3,015,920
  Banks and other                                80,000         111,000
Investment certificates                           3,240           3,778
Insurance claims and policyholder
  liabilities                                   433,143         456,430
Other liabilities                               329,705         260,284
Accrued taxes                                    17,563          17,273

Total liabilities                             7,514,630       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                                   19,741          21,454 
  Retained earnings                             428,214         481,797

Total shareholder's equity                    1,185,185       1,200,481

Total liabilities and shareholder's equity   $8,699,815      $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>
                                                       Six Months Ended  
                                                           June 30,       
                                                      1997          1996  
                                                    (dollars in thousands)
<S>                                                 <C>           <C>
Cash Flows from Operating Activities
Net income                                          $ 52,416      $ 57,776
Reconciling adjustments to net cash
  provided by operating activities:
    Provision for finance receivable losses          131,005       210,584
    Depreciation and amortization                     42,562        48,594
    Deferral of finance receivable  
      origination costs                              (19,522)      (26,482)
    Deferred federal income tax charge                60,466         1,780
    Change in other assets and other liabilities     (55,183)       10,754
    Change in insurance claims and
      policyholder liabilities                       (23,287)      (19,317)
    Loss on sale of non-strategic assets              42,225          -
    Operations related to assets held for sale        39,905          -  
    Other, net                                        12,317        51,312
Net cash provided by operating activities            282,904       335,001

Cash Flows from Investing Activities
  Finance receivables originated or purchased     (2,155,436)   (2,403,223)
  Principal collections on finance receivables     2,145,602     2,529,637
  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                    (70,981)     (102,233)
  Investment securities called, matured and sold      70,269       109,171
  Other, net                                          (3,424)      (25,751)
Net cash provided by investing activities            679,800       107,601

Cash Flows from Financing Activities
  Proceeds from issuance of long-term debt           161,776        31,109
  Repayment of long-term debt                       (711,282)     (358,354)
  Change in investment certificates                     (538)         (616)
  Change in short-term notes payable                (346,778)      (47,474)
  Capital contribution from parent                    40,000          -   
  Dividends paid                                    (106,000)      (57,088)
Net cash used for financing activities              (962,822)     (432,423)

(Decrease) increase in cash and cash equivalents        (118)       10,179 
Cash and cash equivalents at beginning of period     105,493       103,238

Cash and cash equivalents at end of period          $105,375      $113,417


Supplemental Disclosure of Cash Flow Information
  Income taxes paid                                 $ 38,791      $  1,663
  Interest paid                                     $254,071      $249,524
<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
                               June 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 June 30,  1997 and December 31, 1996,  its consolidated results
of  operations for the three months and six  months ended June 30, 1997 and
1996,  and its consolidated  cash flows for  the six months  ended June 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.  


Note 3.  Accounting Changes

In  June  1997, the  Financial  Accounting  Standards Board  (FASB)  issued
Statement  of  Financial   Accounting  Standards  (SFAS)   130,  "Reporting
Comprehensive  Income" and  SFAS  131, "Disclosures  about  Segments of  an
Enterprise  and Related Information".   SFAS 130  establishes standards for
reporting and display of comprehensive income and its components  in a full
set of general-purpose  financial statements.  This  statement is effective
for fiscal years beginning after  December 15, 1997.  SFAS  131 establishes
standards for public  business enterprises reporting  on information  about
operating segments in annual  financial statements and requires that  those
enterprises report selected information about operating segments in interim
financial reports.  It  also establishes standards for  related disclosures
on  products and services, geographical  areas, and major  customers.  This
statement is effective for financial statements for periods beginning after
December 15, 1997.  Adoption of  these statements will result in additional
disclosures  but will  not  impact the  Company's  consolidated results  of
operations and financial position.
<PAGE>
<PAGE> 6

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  June
30,  1997,  outstanding  interest  conversion  agreements  in  which   AGFC
contracted  to pay  interest  at fixed  rates  and receive  floating  rates
totaled $715.0 million of notional  amount, with an average fixed  pay rate
of  7.76% and an  average floating  receive rate of  5.67%.  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 six 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
took an aftertax charge 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 $282.9 million for the six months ended June
30, 1997 compared to $335.0 million  for the same period in 1996. Operating
cash  flow combined  with the  net collections  of finance  receivables and
assets held for  sale, the proceeds from the sale  of non-strategic assets,
and a capital  contribution from  American General generated  cash flow  of
$1.1 billion  for the six  months ended  June 30, 1997  compared to  $461.4
million  for  the  same  period  in  1996.    These  cash  flows were  used
principally to  fund the net  repayments of debt  for the six  months ended
June 30, 1997 and 1996 of  $896.8 million and $375.3 million, respectively,
to pay dividends to  American General of $106.0 million and  $57.1 million,
respectively,  and  to repurchase  $100.0  million  of securitized  finance
receivables during second quarter 1997.  

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 debt to  tangible equity ratio at June 30, 1997  was 7.49 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 June  30, 1997, the  Company's capital totaled  $7.9 billion,
consisting of $6.7 billion of debt and $1.2 billion of  equity, compared to
$8.4  billion at June 30, 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 June 30, 1997, the Company had a $500.0 million committed
credit  facility and  was  an  eligible  borrower  under  $3.3  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  June 30,  1997,  the Company  also  had $466.0
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 June 30, 1997,
Company  borrowings outstanding under uncommitted credit facilities totaled
$80.0  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. 
<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        Six Months Ended
                                    June 30,                June 30,       
                             1997            1996     1997            1996 
                                        (dollars in thousands)
Average finance receivables, 
  net of unearned finance
  charges (average net
  receivables)              $7,452,793  $8,021,088   $7,501,152  $8,119,868

Average borrowings          $7,259,950  $7,049,447   $7,383,576  $7,159,378

Yield - finance charges
  (annualized) as a
  percentage of average
  net receivables               16.95%      18.13%       17.02%      18.13%

Borrowing cost - interest
  expense (annualized) as 
  a percentage of average
  borrowings                     6.82%       6.89%        6.76%       6.91%

Interest spread - yield
  less borrowing cost           10.13%      11.24%       10.26%      11.22%

Insurance revenues
  (annualized) as a
  percentage of average
  net receivables                2.51%       2.60%        2.51%       2.54%

Operating expenses
  (annualized) as a
  percentage of average
  net receivables                6.31%       6.63%        6.30%       6.51%

Return on average assets 
  (annualized)                    .59%       1.30%        1.12%       1.25%

Return on average equity
  (annualized)                   4.29%       9.07%        8.42%       8.79%

Charge-off ratio -
  net charge-offs
  (annualized) as a
  percentage of average
  net receivables                3.68%       5.33%        3.76%       5.41%

Allowance ratio - 
  allowance for finance
  receivable losses as a
  percentage of net
  finance receivables              -           -          5.20%       5.99%
<PAGE>
<PAGE> 10

Selected Financial Information (Continued)


                                                      At or for the
                                                     Six Months Ended
                                                         June 30,     
                                                     1997        1996 

Ratio of earnings to fixed charges (refer to
  Exhibit 12 for calculations)                       1.33        1.36

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)                              3.73%       3.99%

Debt to tangible equity ratio - debt to
  equity less goodwill and net unrealized
  gains or losses on fixed-maturity
  investment securities                              7.49        7.03

Debt to equity ratio                                 5.68        5.48



                       ANALYSIS OF OPERATING RESULTS


Net Income

Net income decreased $16.0 million, or 54%, for the three months ended June
30, 1997 and $5.4 million,  or 9%, for the  six months ended June 30,  1997
when compared to the same periods in 1996.  The  decreases primarily relate
to 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.  

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
<PAGE>
<PAGE> 11

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 taken 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 $7.4 billion at June 30,  1997, a decrease
of  $645.9 million from  June 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  the
last  half  of  1996.    At June  30,  1997,  real  estate  secured finance
receivables  accounted for 52% of total net finance receivables compared to
39% at June 30, 1996.  

Results of the action program  to improve credit quality became  evident in
the first  half of 1997.  Although yield decreased 111 basis points for the
six months ended  June 30, 1997 when  compared to the same  period in 1996,
this was  more than offset by a 165 basis  point improvement in the charge-
off  ratio.  The delinquency ratio also  improved to 3.73% at June 30, 1997
from 3.99%  a  year  earlier.   The  Company is  also  realizing  operating
efficiencies as evidenced  by a 21 basis point improvement in the operating
expense ratio  for the six months  ended June 30, 1997  from the comparable
period of the prior year, reflecting fewer branches and employees. 

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


Finance Charges

Finance  charge revenues  decreased $47.0  million, or  13%, for  the three
months ended June 30,  1997 and $98.6 million,  or 13%, for the six  months
ended June 30, 1997 when compared to the same periods in 1996 primarily due
to decreases in average net receivables and yield.  Average net receivables
decreased $568.3 million, or 7%,  for the three months ended June  30, 1997
and  $618.7 million,  or 8%, for  the six  months ended June  30, 1997 when
compared to  the same periods in  1996 primarily due to  the action program
<PAGE>
<PAGE> 12

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 three months
and six months ended June 30, 1997 totaled $35.2 million and $75.0 million,
respectively.  Yield  decreased 118 basis points for the three months ended
June 30, 1997 and  111 basis points for the six months  ended June 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  $5.3 million,  or 10%, for  the three  months
ended June 30, 1997 and $9.0 million, or 9%,  for the six months ended June
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 increased $1.9 million, or 12%,  for the three months ended
June 30, 1997  and $3.0 million, or  9%, for the six months  ended June 30,
1997 when compared  to the same periods in 1996  primarily due to increases
in  investment  revenue, partially  offset by  increases  in net  losses on
foreclosed  real estate.  The increases in investment revenue for the three
months and six months ended June 30, 1997 when compared to the same periods
in  1996 were primarily  due to growth  in average invested  assets for the
insurance operations  of $41.8  million  and $41.2  million,  respectively,
partially offset by decreases in adjusted portfolio yield of 9 basis points
and 21 basis points, respectively.


Interest Expense

Interest expense decreased $8.5 million, or 7%, for the three  months ended
June 30, 1997 and  $21.6 million, or 9%, for the six  months ended June 30,
1997  when compared to  the same  periods in 1996  due to  the exclusion of
interest expense related to the assets held for sale totaling $10.8 million
and  $23.2 million,  respectively, and  to the  decline in  borrowing cost,
partially offset  by  increases  in average  borrowings.    Borrowing  cost
decreased 7 basis points  for the three months  ended June 30, 1997  and 15
basis points for the  six months ended June 30,  1997 when compared to  the
same  periods in  1996 due  to lower  short-term borrowing  cost, partially
offset by  higher long-term borrowing  cost.  Average  borrowings increased
$210.5 million,  or 3%, for the three months ended June 30, 1997 and $224.2
million, or 3%, for the six months ended June 30, 1997 when compared to the
same periods  in 1996 primarily to  fund the purchases of  real estate loan
portfolios that  occurred in the last half of 1996, partially offset by the
sales of the non-strategic assets during second quarter 1997.
<PAGE>
<PAGE> 13

Operating Expenses

Operating  expenses decreased $15.4 million,  or 12%, for  the three months
ended June  30, 1997 and  $28.1 million, or  11%, for the  six months ended
June  30, 1997  when compared to  the same periods  in 1996 due  to (1) the
exclusion of expenses to service the portfolios held for sale totaling $6.1
million  and  $14.4   million,  respectively;  (2)   certain  non-recurring
operating expenses associated with discontinued initiatives that negatively
impacted the  financial  results for  the second  quarter of  1996 by  $7.3
million; 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 1,000 positions and  a net decrease of 67 branch
offices since June 30, 1996.  


Provision for Finance Receivable Losses

Provision for  finance receivable losses  decreased $38.3 million,  or 38%,
for the three months ended June 30, 1997 and $79.6 million, or 38%, for the
six months  ended June 30, 1997 when  compared to the same  periods in 1996
primarily  due to the decreases  in net charge-offs  totaling $38.3 million
and $79.7 million, respectively.  These decreases were due to the exclusion
of  net charge-offs  related to  the assets  held for  sale totaling  $28.5
million for the three months  ended June 30, 1997 and $58.6 million for the
six months  ended June 30, 1997 and reductions in charge-off levels for the
core branch network.
   
Net  charge-offs from finance receivables  for the three  months ended June
30, 1997 decreased to $68.5 million from $106.8 million for the same period
in 1996.  Net charge-offs  for the three months  ended March 31, 1997  were
$72.5  million.   The charge-off ratio  for second  quarter 1997  was 3.68%
compared to 3.83% for first quarter 1997 and 5.33% for second quarter 1996.
Excluding the portfolios  held for sale, the charge-off ratio was 4.60% for
second quarter 1996.
   
At  June 30,  1997, delinquencies  were $299.6  million compared  to $304.2
million at March  31, 1997 (excluding $68.8 million  related to assets held
for  sale) and $350.3 million at  June 30, 1996.   The delinquency ratio at
June 30,  1997 decreased to 3.73% from 3.76% at March 31, 1997 (compared to
3.99%  at June  30, 1996).   Excluding  the portfolios  held for  sale, the
delinquency ratio at June 30, 1996 was 3.77%.
 
During second  quarter 1997, management  reduced the allowance  for finance
receivable losses by $5.0 million from the balance at March  31, 1997 based
on the  improved credit quality of  the finance receivable portfolio.   The
allowance for finance receivable losses decreased $97.0 million from $482.2
million at  June 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
increased proportion of real estate loans.  The allowance ratio at June 30,
1997  was 5.20% compared to 5.23%  at March 31, 1997 and  5.99% at June 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.
<PAGE>
<PAGE> 14

Loss on Sale of Non-strategic Assets

Loss on sale of  non-strategic assets totaled $42.2 million  ($27.0 million
aftertax) for the  three months and six  months ended June 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 $4.8 million,  or
18%, for the three months ended June 30, 1997 and $9.3 million, or 17%, for
the six  months ended June  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 $4.0  million,
respectively, due  to  reduced  sales  of  non-credit  insurance  products.
Claims decreased $3.5 million and $5.3 million, respectively, primarily due
to favorable loss experience on credit insurance.    


Provision for Income Taxes

The  provision for  income taxes decreased  $9.8 million,  or 55%,  for the
three months  ended June  30, 1997  and $2.9  million, or 9%,  for the  six
months  ended  June 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; 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.  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 second 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:  August 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>