<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, 1996              

                                     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, 1996,  there were  2,000,000  shares of  the registrant's
common stock, $.50 par value, outstanding.
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                     PART I - FINANCIAL INFORMATION


Item 1.  Financial Statements.



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


                             Three Months Ended      Nine Months Ended
                                September 30,           September 30,    
                               1996       1995        1996        1995   
                                       (dollars in thousands)

Revenues
  Finance charges            $359,223   $384,250   $1,092,884  $1,112,910
  Insurance                    51,677     55,225      154,950     165,828
  Other                        18,413     19,905       50,341      60,539

Total revenues                429,313    459,380    1,298,175   1,339,277

Expenses
  Interest expense            121,267    131,092      368,518     386,167
  Operating expenses          123,499    122,200      387,827     345,290
  Provision for finance 
    receivable losses          90,636    113,667      301,220     260,509
  Insurance losses and loss
    adjustment expenses        25,787     32,041       80,841      91,842

Total expenses                361,189    399,000    1,138,406   1,083,808

Income before provision for
  income taxes                 68,124     60,380      159,769     255,469
                                
Provision for Income Taxes     24,513      5,424       58,382      78,007


Net Income                   $ 43,611   $ 54,956   $  101,387  $  177,462




See Notes to Condensed Consolidated Financial Statements.
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              AMERICAN GENERAL FINANCE, INC. AND SUBSIDIARIES
                   Condensed Consolidated Balance Sheets
                                (Unaudited)


                                             September 30, December 31,
                                                1996            1995   
Assets                                         (dollars in thousands) 
 
Finance receivables, net of unearned
  finance charges:
    Real estate loans                        $3,420,831      $2,904,016
    Non-real estate loans                     2,470,803       2,765,361
    Retail sales contracts                    1,017,684       1,240,708
    Private label                               784,074         942,706
    Credit cards                                514,938         557,603

Net finance receivables                       8,208,330       8,410,394
Allowance for finance receivable
  losses                                       (465,154)       (492,124)
Net finance receivables, less allowance
  for finance receivable losses               7,743,176       7,918,270

Investment securities                           857,629         884,775
Cash and cash equivalents                       116,025         103,238
Goodwill                                        273,242         279,995
Other assets                                    355,407         375,072

Total assets                                 $9,345,479      $9,561,350


Liabilities and Shareholder's Equity

Long-term debt                               $4,630,353      $4,979,883
Short-term notes payable:
  Commercial paper                            2,551,788       2,194,771
  Banks and other                               145,000         289,100
Investment certificates                           4,022           6,197
Insurance claims and policyholder
  liabilities                                   463,386         483,971
Other liabilities                               268,595         273,485
Accrued taxes                                    22,674          12,162

Total liabilities                             8,085,818       8,239,569

Shareholder's equity:
  Common stock                                    1,000           1,000
  Additional paid-in capital                    696,128         696,128
  Net unrealized gains on investment 
    securities                                   13,496          38,412 
  Retained earnings                             549,037         586,241

Total shareholder's equity                    1,259,661       1,321,781

Total liabilities and shareholder's equity   $9,345,479      $9,561,350

See Notes to Condensed Consolidated Financial Statements.
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              AMERICAN GENERAL FINANCE, INC. AND SUBSIDIARIES
              Condensed Consolidated Statements of Cash Flows
                                (Unaudited)


                                                       Nine Months Ended  
                                                         September 30,    
                                                      1996          1995  
                                                    (dollars in thousands)
Cash Flows from Operating Activities
Net income                                          $101,387      $177,462
Reconciling adjustments to net cash
  provided by operating activities:
    Provision for finance receivable losses          301,220       260,509
    Depreciation and amortization                     73,028        86,561
    Deferral of finance receivable  
      origination costs                              (38,232)      (57,795)
    Deferred federal income tax charge (benefit)       8,481       (26,981)
    Change in other assets and other liabilities      (7,626)      100,504
    Change in insurance claims and
      policyholder liabilities                       (20,585)       21,616 
    Gain on finance receivables sold through
      securitization                                     -          (4,552)
    Other, net                                        59,446        (9,611)
Net cash provided by operating activities            477,119       547,713

Cash Flows from Investing Activities
  Finance receivables originated or purchased     (3,859,686)   (4,482,009)
  Principal collections on finance receivables     3,729,716     3,681,067
  Securitized finance receivables sold                   -         100,000
  Investment securities purchased                   (149,261)     (145,619)
  Investment securities called, matured and sold     138,969        70,862
  Other, net                                         (43,669)      (55,631)
Net cash used for investing activities              (183,931)     (831,330)

Cash Flows from Financing Activities
  Proceeds from issuance of long-term debt            73,031     1,502,604
  Repayment of long-term debt                       (425,584)     (841,695)
  Change in investment certificates                   (2,175)         (515)
  Change in short-term notes payable                 212,917      (186,531)
  Dividends paid                                    (138,590)     (112,540)
Net cash (used for) provided by financing
  activities                                        (280,401)      361,323

Increase in cash and cash equivalents                 12,787        77,706 
Cash and cash equivalents at beginning of period     103,238        52,729

Cash and cash equivalents at end of period          $116,025      $130,435


Supplemental Disclosure of Cash Flow Information
  Income taxes paid                                 $ 13,900      $116,686
  Interest paid                                     $368,720      $364,973


See Notes to Condensed Consolidated Financial Statements.
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              AMERICAN GENERAL FINANCE, INC. AND SUBSIDIARIES
            Notes to Condensed Consolidated Financial Statements
                             September 30, 1996



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.  is hereinafter
referenced  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, 1996  and December  31, 1995,  its consolidated
results of operations  for the three months and nine months ended September
30, 1996  and 1995, and  its consolidated  cash flows for  the nine  months
ended  September 30, 1996 and 1995.  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, 1995.  

To conform  with the 1996 presentation,  certain items in the  prior period
have been reclassified.


Note 3.  Derivative Financial Instruments

The Company's principal  borrowing subsidiary is  American General  Finance
Corporation  (AGFC), a wholly-owned subsidiary of AGFI.  AGFC makes limited
use  of derivative financial  instruments to manage  the cost of  its debt.
AGFC  has used  interest conversion  agreements to  reduce its  exposure to
future  fluctuations in  interest expense  rates by  effectively converting
short-term  and medium-term floating-rate debt  to a fixed-rate  basis.  At
September  30, 1996,  outstanding interest  conversion agreements  in which
AGFC contracted  to pay interest at fixed  rates and receive floating rates
totaled $540 million of notional amount,  with an average fixed pay rate of
8.05% and an average  floating receive rate of  5.94%.  AGFC's use of  such
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 1996
or 1995.
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Note 4.  Accounting Changes
 
In  June  1996, the  Financial  Accounting  Standards  Board (FASB)  issued
Statement of Financial Accounting Standards 125, "Accounting for  Transfers
and Servicing  of Financial  Assets  and Extinguishments  of  Liabilities."
This  statement  provides  accounting  standards  for  determining  whether
transfers of  financial assets are  sales or secured borrowings  and when a
liability should be considered extinguished.  The statement must be applied
prospectively to  all applicable transactions occurring  after December 31,
1996; however, application  of certain  provisions may be  delayed for  one
year pending approval  by the FASB.  Earlier or  retroactive application is
not permitted.  The impact of this statement  on the Company's consolidated
results  of operations  and  financial  position  is  not  expected  to  be
material.
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<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, borrowings under credit facilities, and the sale of
finance receivables  through securitization.  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 $477.1  million for the  nine months  ended
September 30, 1996 compared to $547.7 million for the same  period in 1995.
This cash flow was used principally  to fund the net repayments of  debt of
$141.8 million, to pay dividends of $138.6 million to American General, and
to finance the  net originations  and purchases of  finance receivables  of
$130.0 million  for the  nine months ended  September 30, 1996.   Operating
cash flow combined with the net proceeds of increased debt and the proceeds
of securitized finance receivables sold generated cash flow of $1.1 billion
for the same period  in 1995.  This cash flow was  used principally to fund
the net originations and purchases of finance receivables of $800.9 million
and to pay  dividends of $112.5  million to American  General for the  nine
months ended September 30, 1995.

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 September 30,  1996 was  7.54.  The
ability of AGFI to pay dividends  is substantially dependent on the receipt
of dividends or other funds from its subsidiaries, primarily AGFC.  Certain
of AGFC's financing  agreements effectively limit  the amount of  dividends
AGFC may pay; however,  management does not  expect those limits to  affect
AGFC's  ability to  pay the amount  of dividends necessary  to maintain the
Company's targeted leverage.


Capital Resources

The  Company's capital  requirements vary  directly with  the level  of net
finance  receivables.  The mix of capital  between debt and equity is based
primarily upon  maintaining leverage that supports  cost-effective funding.
At  September  30,  1996,  the  Company's  capital  totaled  $8.6  billion,
consisting of $7.3 billion of debt and $1.3 billion of  equity, compared to
$8.9 billion at September 30, 1995,  consisting of $7.6 billion of debt and
$1.3 billion of equity.

The Company obtains funds through  the issuance of a combination of  fixed-
rate  debt,  principally  long-term, and  floating-rate  debt,  principally
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<PAGE> 8

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.  The remainder  of AGFC's funding is obtained  primarily through
underwritten public  debt offerings with maturities  generally ranging from
three to ten years. 

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  has  used 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

Credit  facilities are  maintained to  support the  issuance of  commercial
paper   and  to  provide  an  additional  source  of  funds  for  operating
requirements.   At  September 30,  1996, the  Company had  committed credit
facilities  of $700.0  million  and was  an  eligible borrower  under  $2.8
billion of  committed credit  facilities extended  to American  General and
certain  of  its subsidiaries  (the  "shared committed  facilities").   The
annual commitment fees  for all  committed facilities ranged  from .05%  to
 .09%.   The Company pays only  an allocated portion of  the commitment fees
for the  shared committed facilities.   At September 30,  1996, the Company
also  had  $601.0  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 amounts  outstanding
thereunder.   At September 30,  1996, Company borrowings  outstanding under
all credit facilities totaled $156.5 million with remaining availability to
the Company of  $3.5 billion in committed facilities and  $609.5 million in
uncommitted facilities.


Securitization

The Company has securitized a portion of its portfolio of private label and
credit card finance receivables to  establish additional sources of funding
and liquidity.   During the second  quarter of 1995, the  Company sold $100
million  of securitized  finance  receivables with  limited  recourse.   At
September 30, 1996,  securitized finance receivables sold remained  at $100
million.
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                       SELECTED FINANCIAL INFORMATION


The following table  sets forth 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,    
                             1996            1995     1996            1995 
                                        (dollars in thousands)
Average finance receivables, 
  net of unearned finance
  charges (average net
  receivables)              $8,042,491  $8,400,456   $8,094,076  $8,239,478

Average borrowings          $7,051,834  $7,473,690   $7,123,268  $7,336,489

Yield - finance charges
  (annualized) as a
  percentage of average
  net receivables               17.80%      18.21%       18.02%      18.04%

Borrowing cost - interest
  expense (annualized) as 
  a percentage of average
  borrowings                     6.87%       7.01%        6.90%       7.02%

Spread between yield
  and borrowing cost            10.93%      11.20%       11.12%      11.02%

Insurance revenues
  (annualized) as a
  percentage of average
  net receivables                2.57%       2.63%        2.55%       2.68%

Operating expenses
  (annualized) as a
  percentage of average
  net receivables                6.14%       5.82%        6.39%       5.59%

Return on average assets 
  (annualized)                   1.91%       2.28%        1.47%       2.51%

Return on average equity
  (annualized)                  13.44%      16.57%       10.33%      18.36%

Charge-off ratio -
  net charge-offs
  (annualized) as a
  percentage of average
  net receivables                5.37%       3.22%        5.40%       2.99%

Allowance ratio - 
  allowance for finance
  receivable losses as a
  percentage of net
  finance receivables              -           -          5.67%       3.62%
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Selected Financial Information (Continued)


                                                       At or for the
                                                     Nine Months Ended
                                                       September 30,  
                                                     1996        1995 

Ratio of earnings to fixed charges (refer to
  Exhibit 12 herein for calculations)                1.42        1.65

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)                              4.28%       3.75%

Debt to tangible equity ratio - debt to
  equity less goodwill and net unrealized
  gains or losses on fixed-maturity
  investment securities                              7.54        7.47

Debt to equity ratio                                 5.82        5.73



                       ANALYSIS OF OPERATING RESULTS

Net income  decreased $11.3  million, or  21%, for the  three months  ended
September 30,  1996 and $76.1  million, or 43%,  for the nine  months ended
September 30, 1996 when compared to the same periods in 1995.  The decrease
in net income  for the quarter was primarily  due to a decrease  in finance
charges and an increase in the provision for income taxes, partially offset
by a decrease in the provision for finance receivable losses.  The decrease
in net income for the  nine month period was primarily  due to increases in
the provision for finance receivable losses and operating expenses, as well
as a decrease in finance charges.

Operating  results  during  1996  have  been  below  Company   expectations
primarily due to the decline in credit fundamentals in the consumer finance
market, including  the record level  of personal bankruptcies.   Operations
have,  however, begun  to benefit  from actions  taken to  stabilize credit
quality, including  the elimination  of certain  underperforming non-branch
marketing programs, the establishment of higher underwriting standards, and
revisions to the field  office incentive compensation system.   The Company
will introduce additional programs  during 1996 and 1997 to  address credit
quality, finance receivable originations, and expense reduction.


Finance Charges

Finance  charge  revenues decreased  $25.0 million,  or  7%, for  the three
months ended  September 30,  1996 and  $20.0 million, or  2%, for  the nine
months ended September 30, 1996  when compared to the same periods  in 1995
primarily due  to a decrease in  average net receivables.   The decrease in
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<PAGE> 11

finance  charge revenues  for the  quarter was  also due  to a  decrease in
yields.   The decrease in finance charge revenues for the nine month period
was partially offset  by an additional day in the 1996 period.  Average net
receivables decreased $358.0  million, or  4%, for the  three months  ended
September 30,  1996 and $145.4 million,  or .2%, for the  nine months ended
September 30, 1996 when compared to the same periods in  1995 primarily due
to  the action  program  to improve  credit quality.    (See Provision  for
Finance  Receivable Losses herein.)   Yields decreased 41  basis points for
the three months ended  September 30, 1996 and 2 basis  points for the nine
months ended September  30, 1996 when compared to the  same periods in 1995
primarily  due to a larger proportion of the  finance  receivable portfolio
in real  estate  secured  loans  and the  increased  proportion of  finance
receivables  90+ days  delinquent  and the  suspension of  accrued  finance
charges  thereon.   The decrease  in yield  for the nine  month  period was
partially  offset by  an increase in yield on  real estate loans, resulting
from the higher interest rate environment and rate management. 


Insurance Revenues

Insurance  revenues decreased  $3.5 million,  or 6%,  for the  three months
ended September  30, 1996 and  $10.9 million,  or 7%, for  the nine  months
ended  September  30, 1996  when  compared  to  the  same periods  in  1995
primarily due to a decrease in earned premiums.   Earned premiums decreased
primarily due to a  decrease in net written premiums.  The  decrease in net
written premiums reflected the decrease in loan volume, which resulted from
the action program to improve credit quality.


Other Revenues

Other revenues  decreased $1.5 million, or  7%, for the  three months ended
September 30,  1996 and $10.2  million, or 17%,  for the nine  months ended
September 30, 1996 when compared to the same periods in 1995.  The decrease
in other  revenues for the nine month period was  primarily due to the gain
recorded  in the  second  quarter  of  1995  for  the  securitized  finance
receivables  sold  and a  decrease in  investment  revenue on  the invested
assets  for the insurance operations.   The decrease  in investment revenue
was primarily due to realized losses on investments of $1.6 million for the
nine months ended  September 30, 1996 compared  to $.7 million of  realized
gains  on investments for the same period  in 1995.  Investment revenue for
the three months  ended September 30, 1996 remained at  near the same level
when  compared  to the  same period  in 1995.    Return on  invested assets
decreased 54 basis points for the three months ended September 30, 1996 and
34 basis points for the nine  months ended September 30, 1996 when compared
to the same periods in 1995, offset by growth in average invested assets of
$55.1 million, or  7%, for the  three months ended  September 30, 1996  and
$69.0 million,  or 9%, for  the nine months  ended September 30,  1996 when
compared to the same periods in 1995.  


Interest Expense

Interest expense  decreased $9.8 million, or 7%, for the three months ended
September 30,  1996 and $17.6  million, or  5%, for the  nine months  ended
September  30,  1996 when  compared  to the  same  periods in  1995  due to
decreases in  average borrowings and  borrowing cost.   Average  borrowings
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<PAGE> 12

decreased $421.9  million, or 6%, for the  three months ended September 30,
1996 and $213.2  million, or 3%,  for the nine  months ended September  30,
1996  when compared  to  the same  periods  in 1995  primarily  due to  the
decrease in average net receivables.  The borrowing cost decreased 14 basis
points for  the three months ended  September 30, 1996 and  12 basis points
for the  nine months  ended September  30, 1996 when  compared to  the same
periods in  1995 due to a decrease in short-term borrowing cost, with long-
term borrowing cost remaining near the same level.


Operating Expenses

Operating  expenses increased  $1.3 million,  or 1%,  for the  three months
ended September 30,  1996 and $42.5  million, or 12%,  for the nine  months
ended September 30,  1996 when compared to  the same periods in 1995.   The
increase in  operating expenses  for the quarter  was primarily due  to the
decrease  in deferral  of finance  receivable origination  costs, partially
offset  by the  action  programs  to  improve  credit  quality  and  reduce
expenses.  The increase in operating expenses for the nine month period was
primarily due to the decrease in deferral of finance receivable origination
costs, growth in the business that occurred in the first three  quarters of
1995  and  in  1994,  and  collection  efforts  on  the increased level  of
delinquent   finance  receivables.   The  fluctuations   in   the  business
experienced in  recent years  have  resulted  in  corresponding  changes in
operational staffing and other operating expenses.   

Since late 1995, certain underperforming marketing initiatives have  either
been  restructured  or  discontinued.    Certain  non-recurring   operating
expenses associated  with the discontinued initiatives  negatively impacted
the  financial  results during  1996 by  $8.5  million.   The comprehensive
review of the Company initiated in fourth quarter 1995 and  the decrease in
finance  receivables  during 1996  resulted  in  a workforce  reduction  of
approximately  800  positions  through  third  quarter  1996.    Management
believes the improvement programs  implemented in late 1995 and  throughout
1996 will lead to improved operating efficiencies.


Provision for Finance Receivable Losses

In recent years,  the Company's  operational strategy had  been focused  on
improving its risk-adjusted returns by  extending credit to customers  with
risk characteristics  somewhat higher than those  traditionally serviced by
the  Company.    As expected,  this  strategy  adversely  influenced credit
quality.  However, beginning in the third quarter  of 1995, the delinquency
ratios  and  the  charge-off  ratios  experienced by  the  Company  sharply
increased  to greater than anticipated  levels.  Due  to these increases in
delinquencies  and net charge-offs,  a comprehensive review  of the Company
was  initiated 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, a $216.0 million  increase in
the  allowance for finance receivable losses was recorded in fourth quarter
1995.  
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<PAGE> 13

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 include
slowing growth,  de-emphasizing some higher risk portfolios, and increasing
the proportion of real estate secured receivables.

At  September 30,  1996, net  finance receivables  totaled $8.2  billion, a
decrease of  $202.1 million from the  balance at December 31,  1995, but an
increase of $155.4 million from the balance at June 30,  1996 primarily due
to an increase in real estate  loans. As part of the Company's strategy  to
rebalance its finance receivable portfolio, the Company  purchased a $200.5
million portfolio and  a $276.1  million portfolio of  real estate  secured
finance  receivables in the second and third quarter of 1996, respectively.
At September  30, 1996, real  estate secured finance  receivables accounted
for 42% of total finance receivables compared to 34% at September 30, 1995.
   
Provision  for finance receivable  losses decreased $23.0  million, or 20%,
for the three months ended September  30, 1996 and increased $40.7 million,
or 16%, for the nine months  ended September 30, 1996 when compared  to the
same periods in  1995.  The  decrease in provision  for finance  receivable
losses  for the  quarter was  primarily due  to a  decrease in  the amounts
provided for  the allowance for finance receivable losses, partially offset
by an increase in net  charge-offs.  The increase in provision  for finance
receivable  losses  for the  nine  month  period was  primarily  due  to an
increase in net charge-offs, partially offset by a decrease  in the amounts
provided for the allowance for finance receivable losses. 

Net charge-offs for the  three months ended September 30, 1996 increased to
$107.6 million from $67.4 million for the same period in 1995.  Net charge-
offs  for the three  months ended June  30, 1996 were  $106.8 million.  The
charge-off ratio for  third quarter 1996  was 5.37% compared  to 5.33%  for
second quarter 1996 and 3.22% for third quarter 1995.

At September 30, 1996, delinquencies were $380.2 million compared to $350.3
million at June  30, 1996 and  $351.3 million at  September 30, 1995.   The
delinquency  ratio increased  from  3.99% at  June  30,  1996 to  4.28%  at
September 30, 1996 (compared to 3.75% at September 30, 1995).

The allowance for  finance receivable losses  decreased $17.0 million  from
$482.2 million  at June 30, 1996  to $465.2 million at  September 30, 1996.
The allowance  ratio at September 30,  1996 was 5.67% compared  to 5.99% at
June  30,  1996.   The  current  allowance  for  finance receivable  losses
reflects  the effects  of  the higher  percentage  of real  estate  secured
finance  receivables.   Based upon  an analysis  of the  finance receivable
portfolio, management believes  that the allowance  for finance  receivable
losses is adequate given the current level of delinquencies and net charge-
offs.

Management believes  the improvement programs  implemented in late 1995 and
throughout  1996, which emphasize  continued improvements  in underwriting,
intensified collections, increased  emphasis on  real estate secured loans,
and investment  in risk  management  technology, will  address  the overall
credit quality issues.  However, delinquencies have remained at higher than
expected levels, indicating that charge-offs  may continue above historical
levels  for the  near term, rather  than moderating  during  fourth quarter
<PAGE>
<PAGE> 14

1996, as  previously  expected.  In  addition,  adverse  changes in  credit
fundamentals  within  the consumer  finance  market,  including  the recent
increase  in the level of  personal bankruptcies, could  negatively  impact
expected results.


Insurance Losses and Loss Adjustment Expenses

Insurance losses  and loss adjustment  expenses decreased $6.3  million, or
20%, for  the three months ended  September 30, 1996 and  $11.0 million, or
12%, for the nine months ended September 30, 1996 when compared to the same
periods in  1995 due to decreases  in provision for future  benefits and in
claims paid.  Provision for future benefits decreased $3.1 million  for the
quarter and $10.1 million for the nine month period due to reduced sales of
non-credit insurance products.  Claims for  the three month and nine  month
periods decreased $3.2 million and $.9 million, respectively, primarily due
to a decrease in loss experience on credit insurance. 


Provision for Income Taxes

The provision  for income taxes increased  $19.1 million, or 352%,  for the
three months ended September 30, 1996 and decreased  $19.6 million, or 25%,
for the  nine months ended  September 30,  1996 when compared  to the  same
periods in  1995.   The  increase in  provision for  income  taxes for  the
quarter was primarily due to a  state income tax adjustment recorded in the
third quarter of 1995 and higher taxable income.  The decrease in provision
for  income taxes  for the  nine month  period was  primarily due  to lower
taxable  income,  partially  offset  by  the  state  income tax  adjustment
previously discussed. 


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 volume is
lower than anticipated or if, despite the Company's initiatives to  improve
credit  quality,  finance  receivable  delinquencies  and  net  charge-offs
increase or remain at current levels for a longer  period than  anticipated
by  management.    Investors   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
1995 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 ultimately  will 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 third quarter  of
     1996.
<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, 1996          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>