<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, 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 August 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      Six Months Ended
                                     June 30,               June 30,     
                                 1998       1997        1998       1997  
                                         (dollars in thousands)
<S>                            <C>        <C>         <C>        <C>
Revenues
  Finance charges              $331,712   $315,248    $658,464   $635,047
  Insurance                      44,379     46,740      87,340     94,269
  Other                          20,003     17,482      38,955     34,902

Total revenues                  396,094    379,470     784,759    764,218

Expenses
  Interest expense              124,016    112,816     245,718    225,647
  Operating expenses            126,758    117,582     251,550    236,251
  Provision for finance
    receivable losses            50,902     63,458      99,907    131,005
  Loss on sale of non- 
    strategic assets               -        42,225        -        42,225
  Insurance losses and loss
    adjustment expenses          21,731     21,748      43,768     45,752

Total expenses                  323,407    357,829     640,943    680,880

Income before provision for
  income taxes                   72,687     21,641     143,816     83,338

Provision for Income Taxes       27,506      8,019      54,413     30,922


Net Income                     $ 45,181   $ 13,622    $ 89,403   $ 52,416


<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,
                                                1998            1997   
                                               (dollars in thousands)
<S>                                          <C>             <C>
Assets

Finance receivables, net of unearned          
  finance charges:
    Real estate loans                        $4,740,538      $4,155,167
    Non-real estate loans                     2,567,735       2,554,888
    Retail sales finance                      1,313,577       1,301,133

Net finance receivables                       8,621,850       8,011,188
Allowance for finance receivable
  losses                                       (365,153)       (372,653)
Net finance receivables, less allowance
  for finance receivable losses               8,256,697       7,638,535

Investment securities                           955,906         929,311
Cash and cash equivalents                       108,049         105,695
Other assets                                    668,452         615,959

Total assets                                 $9,989,104      $9,289,500


Liabilities and Shareholder's Equity

Long-term debt                               $4,253,814      $4,011,457
Short-term notes payable:
  Commercial paper                            3,508,254       3,157,671
  Banks and other                               100,000          95,000
Investment certificates                           2,109           2,574
Insurance claims and policyholder
  liabilities                                   432,795         436,859
Other liabilities                               334,415         300,342
Accrued taxes                                    22,118          22,272

Total liabilities                             8,653,505       8,026,175

Shareholder's equity:
  Common stock                                    1,000           1,000
  Additional paid-in capital                    757,083         743,083
  Accumulated other comprehensive    
    income                                       34,984          34,512 
  Retained earnings                             542,532         484,730

Total shareholder's equity                    1,335,599       1,263,325

Total liabilities and shareholder's equity   $9,989,104      $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>
                                                         Six Months Ended  
                                                             June 30,      
                                                        1998          1997
                                                      (dollars in thousands)
<S>                                                   <C>           <C>
Cash Flows from Operating Activities
Net income                                            $ 89,403      $ 52,416
Reconciling adjustments:
  Provision for finance receivable losses               99,907       131,005
  Depreciation and amortization                         48,340        42,562
  Deferral of finance receivable origination costs     (21,833)      (19,522)
  Deferred federal income tax charge                     4,090        60,466
  Change in other assets and other liabilities          26,399       (55,183)
  Change in insurance claims and
    policyholder liabilities                            (4,064)      (23,287)
  Change in taxes receivable and payable                23,919         2,217
  Loss on sale of non-strategic assets                     -          42,225
  Operations related to assets held for sale               -          39,905
  Other, net                                            (7,381)       10,409
Net cash provided by operating activities              258,780       283,213

Cash Flows from Investing Activities
  Finance receivables originated or purchased       (3,069,098)   (2,155,436)
  Principal collections on finance receivables       2,352,989     2,145,602
  Net collections on assets held for sale                  -          61,266
  Securitized finance receivables purchased                -        (100,000)
  Advances for purchases of finance receivables        (27,764)         (309)
  Sale of non-strategic assets                             -         732,504
  Investment securities purchased                     (103,503)      (70,981)
  Investment securities called, matured and sold        82,058        70,269
  Change in premiums on finance receivables
    purchased and deferred charges                     (65,746)       (2,104)
  Other, net                                            (3,716)       (1,320) 
Net cash (used for) provided by investing activities  (834,780)      679,491

Cash Flows from Financing Activities
  Proceeds from issuance of long-term debt             872,760       161,776
  Repayment of long-term debt                         (631,923)     (711,282)
  Change in investment certificates                       (465)         (538)
  Change in short-term notes payable                   355,583      (346,778)
  Capital contribution from parent                      14,000        40,000  
  Dividends paid                                       (31,601)     (106,000)
Net cash provided by (used for) financing activities   578,354      (962,822)

Increase (decrease) in cash and cash equivalents         2,354          (118)
Cash and cash equivalents at beginning of period       105,695       105,493
Cash and cash equivalents at end of period            $108,049      $105,375

Supplemental Disclosure of Cash Flow Information
  Income taxes paid                                   $ 26,052      $ 38,791
  Interest paid                                       $240,265      $254,071
<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      Six Months Ended
                                     June 30,               June 30,     
                                 1998       1997        1998       1997  
                                         (dollars in thousands)

<S>                             <C>        <C>         <C>        <C>
Net income                      $45,181    $13,622     $89,403    $52,416
                                                                         
Other comprehensive income: 
  Net unrealized gains
    (losses) on investment
    securities                    2,147     17,136         820     (2,526)
  Income tax effect                (751)    (5,997)       (287)       884 

  Net unrealized gains
    (losses) on investment
    securities, net of tax        1,396     11,139         533     (1,642)

  Reclassification adjustment
    for realized gains 
    included in net income          (92)       (27)        (94)      (109)
  Income tax effect                  32          9          33         38
                       
  Realized gains included in  
    net income, net of tax          (60)       (18)        (61)       (71)
                           
Other comprehensive income
  (loss), net of tax              1,336     11,121         472     (1,713)


Comprehensive income            $46,517    $24,743     $89,875    $50,703


<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
                               June 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 June 30,  1998 and December 31, 1997,  its consolidated results
of  operations for the three months and six  months ended June 30, 1998 and
1997, its  consolidated cash flows for  the six months ended  June 30, 1998
and  1997, and its consolidated  comprehensive income for  the three months
and six months ended June 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.
<PAGE>
<PAGE> 7
  
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
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  $765.0 million
in notional  amount at June 30, 1998, with a weighted average interest rate
payable of 7.69% and a weighted average interest  rate receivable of 5.58%.

Treasury rate  lock agreements are 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.   During fourth  quarter 1997, AGFC  entered into  treasury
rate lock agreements  with settlement dates in 1998.  At June 30, 1998, the
notional amount of these agreements was $190.0 million.

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 six 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.
<PAGE>
<PAGE> 8

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.

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 $258.8 million for the six months ended June
30, 1998  compared to  $283.2 million  for the  same period  in 1997.   The
decrease in operating cash flow for the six months ended June 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  $868.7 million for  the six
months ended June 30, 1998.  This cash flow was used principally to finance
the  net  originations  and  purchases of  finance  receivables  of  $743.9
million,  to fund the increase in premiums on finance receivables purchased
and  deferred charges of  $65.7 million, and  to pay dividends  to American
General of  $31.6 million.    Operating cash  flow  combined with  the  net
collections of finance receivables  and assets held for sale,  the proceeds
<PAGE>
<PAGE> 9

from the sale of non-strategic assets,  and a capital contribution of $40.0
million from American General generated  cash flow of $1.1 billion for  the
six months  ended June 30,  1997.  This  cash flow was used  principally to
fund  the net  repayments of debt  of $896.8  million, to  pay dividends to
American General of  $106.0 million,  and to repurchase  $100.0 million  of
securitized finance receivables.  

Dividends  are paid (or capital  contributions are received)  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 June 30, 1998
was 7.54 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, 1998, the  Company's capital totaled  $9.2 billion,
consisting of $7.9 billion of debt  and $1.3 billion of equity, compared to
$7.9 billion at June 30, 1997, consisting of $6.7 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  uses
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
<PAGE>
<PAGE> 10

requirements.  At June 30, 1998, the Company was an eligible borrower under
$4.8 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 June  30, 1998, the  Company also  had
$318.5  million  of uncommitted  credit  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 June
30,  1998,   Company  borrowings   outstanding  under   uncommitted  credit
facilities totaled $100.0 million,  and there were no borrowings  under any
committed credit facilities.


Year 2000 Contingency

The Company is in the process of modifying its systems to achieve Year 2000
readiness.   The  Company  has  developed  and  is  implementing a  plan to
minimize the risk of 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) test systems  for Year
2000 readiness; (4) reprogram  or replace  systems that  are not  Year 2000
ready; and (5) return  the systems  to operations.  The Company  expects to
substantially  complete the  foregoing for significant  systems by December
31, 1998.  However,  activities  (3) through (5)  for certain  systems will
continue in 1999.

In addition, the Company has relationships with various  third parties that
must also be Year 2000 ready.  Therefore, the  Company's plan also assesses
and attempts to  mitigate the  risks associated  with the potential failure
of third parties to achieve Year 2000 readiness.  Due to the various stages
of third parties' Year 2000 readiness, these activities will extend through
1999.

Through  June 30, 1998,  the Company has incurred and expensed $1.5 million
(pretax) related  to Year 2000  readiness, including  $.8 million  incurred
during  the first  six months  of 1998.  The Company  currently anticipates
that it will incur future  costs of approximately $5.8 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 its Year
2000  plans.  Costs  of  the  replacement  systems will  be capitalized and
amortized over their useful lives, in accordance with  the Company's normal
accounting policies.

Due  to  the   magnitude  and   complexity  of   this  project,  risks  and
uncertainties  exist.   If  conversion  of  the  Company's systems  is  not
completed  on a timely  basis  (due to nonperformance by significant third-
party  vendors, lack of qualified  personnel to perform the Year 2000 work,
or  other  unforeseen  circumstances in completing the Company's plans), or
if  significant  third  parties  fail to  achieve  Year 2000 readiness on a
timely basis, the  Year 2000 issue could have  a material adverse impact on
the operations of the Company.
<PAGE>
<PAGE> 11

                       SELECTED FINANCIAL INFORMATION


The following table shows selected financial information of the Company:

                                At or for the            At or for the
                              Three Months Ended        Six Months Ended
                                    June 30,                June 30,       
                             1998            1997     1998            1997 
                                        (dollars in thousands)
Average finance receivables 
  net of unearned finance
  charges (average net
  receivables)              $8,242,128  $7,452,793   $8,122,178  $7,501,152

Average borrowings          $7,522,371  $7,259,950   $7,400,739  $7,383,576

Yield - finance charges
  (annualized) as a
  percentage of average
  net receivables               16.13%      16.95%       16.30%      17.02%

Borrowing cost - interest
  expense (annualized) as 
  a percentage of average
  borrowings                     6.60%       6.82%        6.66%       6.76%

Interest spread - yield
  less borrowing cost            9.53%      10.13%        9.64%      10.26%

Insurance revenues
  (annualized) as a
  percentage of average
  net receivables                2.15%       2.51%        2.15%       2.51%

Operating expenses
  (annualized) as a
  percentage of average
  net receivables                6.15%       6.31%        6.19%       6.30%

Return on average assets 
  (annualized)                   1.87%        .59%        1.88%       1.12%

Return on average equity
  (annualized)                  13.91%       4.29%       13.86%       8.42%

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              2.62%       3.68%        2.66%       3.76%
<PAGE>
<PAGE> 12

Selected Financial Information (Continued)


                                                      At or for the
                                                     Six Months Ended
                                                         June 30,     
                                                     1998        1997 

Allowance ratio - allowance for finance 
  receivable losses as a percentage of
  net finance receivables                            4.24%       5.20%

Ratio of earnings to fixed charges (refer 
  to Exhibit 12 for calculations)                    1.57        1.33

Delinquency ratio - finance receivables 60
  days or more past due as a percentage of
  related receivables                                3.43%       3.73%

Debt to tangible equity ratio - debt to
  equity less goodwill and net unrealized
  gains or losses on fixed-maturity
  investment securities                              7.54        7.49

Debt to equity ratio                                 5.89        5.68



                       ANALYSIS OF OPERATING RESULTS


Net Income

Net income increased  $31.6 million,  or 232%, for  the three months  ended
June 30, 1998 and $37.0 million, or 71%, for  the six months ended June 30,
1998 when compared to the same periods in 1997 primarily due to the loss on
the sale of non-strategic  assets during second quarter 1997,  and improved
credit quality and finance receivable growth in the 1998 periods.

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  half  of  1998.
Although yield  decreased 72 basis points for the six months ended June 30,
1998 when compared to the same period in 1997, this was more than offset by
a 110 basis  point improvement in  the charge-off  ratio.  The  delinquency
ratio also improved to 3.43% at June 30, 1998 from 3.73% at June 30, 1997.
<PAGE>
<PAGE> 13

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


Finance Charges

Finance  charge  revenues increased  $16.5 million,  or  5%, for  the three
months ended June  30, 1998 and $23.4  million, or 4%,  for the six  months
ended  June 30,  1998  when compared  to the  same periods  in 1997  due to
increases in  average  net receivables,  partially offset  by decreases  in
yield.   Average net receivables increased  $789.3 million, or 11%, for the
three  months ended June  30, 1998 and  $621.0 million, or  8%, for the six
months  ended  June 30,  1998 when  compared to  the  same periods  in 1997
primarily due to growth in real estate loans, partially offset  by the sale
of  certain  private  label receivables  in  second  quarter  1997.   Yield
decreased 82 basis points  for the three months ended June  30, 1998 and 72
basis points  for the six months ended  June 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  $2.4 million,  or 5%,  for the  three months
ended June 30,  1998 and $6.9 million, or 7%, for the six months ended June
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  $2.5 million, or 14%, for  the three months ended
June 30, 1998 and $4.1  million, or 12%, for the six months  ended June 30,
1998 when compared  to the same periods in 1997  primarily due to increases
in investment revenue and revenue on  foreclosed real estate.  The increase
in investment  revenue for the three  months and six months  ended June 30,
1998  when compared to  the same periods  in 1997  was primarily due  to an
increase in adjusted  portfolio yield  for the insurance  operations of  43
basis  points  and 64  basis points,  respectively,  and growth  in average
invested assets of $57.6 million and $52.3 million, respectively.  Realized
gains  and losses remained at near the same  level for the three months and
six months ended June 30, 1998  when compared to the same periods in  1997.
Investment revenue includes $1.2 million and $2.7 million, respectively, of
net gains on calls and  tenders of investment securities that  are included
in adjusted portfolio yield for the three months and six  months ended June
30, 1998, compared to  $170 thousand and $197 thousand,  respectively, that
are included  in realized gains  and losses  for the three  months and  six
months ended June 30, 1997.
<PAGE>
<PAGE> 14

Interest Expense

Interest  expense increased  $11.2 million,  or 10%,  for the  three months
ended June 30, 1998 and $20.1 million, or 9%, for the six months ended June
30, 1998  when compared to  the same  periods in 1997  due to  increases in
average borrowings to support  asset growth, partially offset by  a decline
in borrowing cost.  Borrowing cost decreased 22 basis points  for the three
months ended June  30, 1998 and  10 basis points for  the six months  ended
June 30, 1998 when compared to the same periods in 1997.


Operating Expenses

Operating  expenses increased  $9.2 million,  or 8%,  for the  three months
ended June 30, 1998 and $15.3 million, or 6%, for the six months ended June
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 600 positions  since June
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  $12.6 million, or  20%,
for the three months ended June 30, 1998 and $31.1 million, or 24%, for the
six  months ended June 30,  1998 when compared to the  same periods in 1997
due  to decreases  in  net charge-offs  totaling  $15.1 million  and  $33.6
million, respectively.

Net charge-offs for the three months ended June 30, 1998 decreased to $53.4
million from  $68.5 million for the  same period in 1997.   Net charge-offs
for the three months ended  March 31, 1998 were $54.0 million.  The charge-
off ratio for  second quarter 1998  was 2.62% compared  to 2.70% for  first
quarter 1998 and 3.68% for second quarter 1997.   

At  June 30,  1998, delinquencies  were $316.8  million compared  to $303.3
million at  March  31, 1998  and  $299.6 million  at June  30,  1997.   The
delinquency ratio at June 30, 1998 was 3.43% compared to 3.49% at March 31,
1998 and 3.73% at June 30, 1997. 

The allowance  for finance  receivable losses decreased  to $365.2  million
from $385.2 million at June 30, 1997.  The allowance ratio at June 30, 1998
was 4.24% compared  to 4.56% at March 31, 1998 and  5.20% at June 30, 1997.
The decrease in the allowance ratio for each period reflects the results of
the  action  program to  improve  credit quality,  including  the increased
proportion of real  estate loans.  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. 
<PAGE>
<PAGE> 15

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 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.


Insurance Losses and Loss Adjustment Expenses

Insurance losses and  loss adjustment  expenses remained at  near the  same
level for the three months ended  June 30, 1998 and decreased $2.0 million,
or  4%, for the six  months ended June  30, 1998 when compared  to the same
periods in  1997.  The  decrease in  insurance losses  and loss  adjustment
expenses  for the six  months ended June  30, 1998 was  due to decreases in
provision  for future  benefits and in  claims paid.   Provision for future
benefits decreased $.9 million due to reduced sales of non-credit insurance
products.   Claims  decreased $1.1  million primarily  due to  lower earned
premiums,  partially  offset  by  unfavorable  loss  experience  on  credit
insurance.  


Provision for Income Taxes

The provision  for income taxes  increased $19.5 million, or  243%, for the
three months ended June  30, 1998 and  $23.5 million, or  76%, for the  six
months  ended June  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  significant
systems  and operations  on a timely basis; (4) adverse litigation  results
or resolution  of litigation;  and  (5)  the Company's  failure  to achieve
<PAGE>
<PAGE> 16

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.



                       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,  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  create  the potential  for  an
unpredictable judgment in any given suit. 


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

(a)  Exhibits.

     (4)  a.  The  following   instrument  is   filed  pursuant   to   Item
              601(b)(4)(ii) of  Regulation S-K as a result  of certain debt
              issuances in the second  quarter of 1998.  In  the aggregate,
              the  outstanding  issuances  of   debt  under  the  Indenture
              referred  to under  item (1)  below exceed  10% of  the total
              assets of the Company on a consolidated basis.
 
              (1)  Indenture dated as of May 1, 1997 from American  General
                   Finance  Corporation  to  The  First  National  Bank  of
                   Chicago.  Incorporated  by  reference  to  Exhibit  4(a)
                   filed   as  a   part   of   American   General   Finance
                   Corporation's  Registration   Statement  on   Form   S-3
                   (Registration No. 333-28925).
 
     (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
     1998.
<PAGE>
<PAGE> 17

                                 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 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> 18

                               Exhibit Index



      Exhibits                                                      Page

(12)  Computation of Ratio of Earnings to Fixed Charges.             19

(27)  Financial Data Schedule.                                       20
<PAGE>