<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 1-6155


                   AMERICAN GENERAL FINANCE CORPORATION                  
           (Exact name of registrant as specified in its charter)



                Indiana                              35-0416090         
       (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 10,160,012 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 CORPORATION 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              $323,953   $307,548    $642,970   $619,138
  Insurance                      44,379     46,740      87,340     94,269
  Other                          24,965     22,065      48,618     43,329

Total revenues                  393,297    376,353     778,928    756,736

Expenses
  Interest expense              121,767    110,264     241,071    220,126
  Operating expenses            124,280    114,463     246,895    228,958
  Provision for finance
    receivable losses            49,874     62,134      97,741    127,942
  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                  317,652    350,834     629,475    665,003

Income before provision for
  income taxes                   75,645     25,519     149,453     91,733

Provision for Income Taxes       28,528      9,323      56,330     33,776


Net Income                     $ 47,117   $ 16,196    $ 93,123   $ 57,957


<FN>
<F1>
See Notes to Condensed Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 3
<TABLE>
           AMERICAN GENERAL FINANCE CORPORATION 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                        $4,648,989      $4,067,500
    Non-real estate loans                     2,516,554       2,502,051
    Retail sales finance                      1,272,682       1,257,485

Net finance receivables                       8,438,225       7,827,036
Allowance for finance receivable
  losses                                       (355,626)       (363,126)
Net finance receivables, less allowance
  for finance receivable losses               8,082,599       7,463,910

Investment securities                           955,006         928,411
Cash and cash equivalents                        93,004          91,076
Notes receivable from parent                    183,025         185,028
Other assets                                    642,516         572,180

Total assets                                 $9,956,150      $9,240,605


Liabilities and Shareholder's Equity

Long-term debt                               $4,192,759      $3,941,486
Commercial paper                              3,508,254       3,157,671
Insurance claims and policyholder
  liabilities                                   432,795         436,859
Other liabilities                               333,645         308,601
Accrued taxes                                    24,502          21,073

Total liabilities                             8,491,955       7,865,690

Shareholder's equity:
  Common stock                                    5,080           5,080
  Additional paid-in capital                    740,914         718,914
  Accumulated other comprehensive    
    income                                       34,984          34,512 
  Retained earnings                             683,217         616,409

Total shareholder's equity                    1,464,195       1,374,915

Total liabilities and shareholder's equity   $9,956,150      $9,240,605
<FN>
<F1>
See Notes to Condensed Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 4
<TABLE>
           AMERICAN GENERAL FINANCE CORPORATION 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                                            $ 93,123      $ 57,957
Reconciling adjustments:
  Provision for finance receivable losses               97,741       127,942
  Depreciation and amortization                         47,177        37,840
  Deferral of finance receivable origination costs     (21,287)      (19,051)
  Deferred federal income tax charge                     4,090        57,512
  Change in other assets and other liabilities          15,979       (50,233)
  Change in insurance claims and
    policyholder liabilities                            (4,064)      (23,287)
  Change in taxes receivable and payable                29,432         2,084
  Loss on sale of non-strategic assets                     -          42,225
  Operations related to assets held for sale               -          39,905
  Other, net                                            (7,965)        9,848
Net cash provided by operating activities              254,226       282,742

Cash Flows from Investing Activities
  Finance receivables originated or purchased       (3,017,058)   (2,098,849)
  Principal collections on finance receivables       2,302,872     2,098,915
  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                     (103,393)      (70,746)
  Investment securities called, matured and sold        81,948        70,034
  Change in notes receivable from parent
    and affiliates                                       2,003        (1,085)
  Purchase and transfer of assets from affiliates      (18,844)       (9,536)
  Change in premiums on finance receivables
    purchased and deferred charges                     (66,003)       (1,610)
  Other, net                                            (2,387)            9
Net cash (used for) provided by investing activities  (848,626)      680,593

Cash Flows from Financing Activities
  Proceeds from issuance of long-term debt             872,760       158,691
  Repayment of long-term debt                         (622,700)     (706,500)
  Change in short-term notes payable                   350,583      (315,778)
  Capital contribution from parent                      22,000        16,000
  Dividends paid                                       (26,315)     (115,316)
Net cash provided by (used for) financing activities   596,328      (962,903)

Increase in cash and cash equivalents                    1,928           432 
Cash and cash equivalents at beginning of period        91,076        90,197
Cash and cash equivalents at end of period            $ 93,004      $ 90,629

Supplemental Disclosure of Cash Flow Information
  Income taxes paid                                   $ 22,443      $ 41,062
  Interest paid                                       $235,280      $247,818
<FN>
<F1>
See Notes to Condensed Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 5
<TABLE>
           AMERICAN GENERAL FINANCE CORPORATION 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                      $47,117    $16,196     $93,123    $57,957
                                                                         
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            $48,453    $27,317     $93,595    $56,244


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

           AMERICAN GENERAL FINANCE CORPORATION 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
Corporation  and its  subsidiaries.   American General  Finance Corporation
will  be  referred to  as "AGFC"  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 AGFC is a wholly-owned subsidiary
of  American  General  Finance,  Inc.  (AGFI).    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

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  $137.0  million ($88.1  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  AGFI.
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 $254.2 million for the six months ended June
30, 1998  compared to  $282.7 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 $22.0 million
from AGFI  generated cash flow of  $876.9 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 $742.0  million, to
fund the increase in premiums on finance receivables purchased and deferred
charges of  $66.0 million, and to  pay dividends to AGFI  of $26.3 million.
Operating  cash  flow  combined   with  the  net  collections  of   finance
receivables and  assets held for sale,  the proceeds from the  sale of non-
<PAGE>
<PAGE> 9

strategic assets, and  a capital  contribution of $16.0  million from  AGFI
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
$863.6  million,  to  pay dividends  to  AGFI  of  $115.3 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 6.5  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 6.53  to 1.   Certain AGFC  financing agreements effectively  limit the
amount of dividends AGFC may pay; however, management does not expect those
limits to affect AGFC'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 $7.7 billion of debt and $1.5 billion of  equity, compared to
$7.9 billion at June 30,  1997, consisting of $6.6 billion of debt and $1.3
billion of equity.

The Company issues a combination of fixed-rate debt, principally long-term,
and  floating-rate debt,  principally  short-term.   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
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
<PAGE>
<PAGE> 10

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
$141.0 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, there were no borrowings under any 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 non-performance by significant third-
party  vendors,  lack of qualified personnel to perform the Year 2000 work,
or  other  unforeseen  circumstances in completing the Company's 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)              $8,058,834  $7,273,630   $7,938,661  $7,318,426

Average borrowings          $7,367,790  $7,090,684   $7,241,254  $7,196,614

Yield - finance charges
  (annualized) as a
  percentage of average
  net receivables               16.11%      16.94%       16.29%      17.01%

Borrowing cost - interest
  expense (annualized) as 
  a percentage of average
  borrowings                     6.62%       6.83%        6.67%       6.78%

Interest spread - yield
  less borrowing cost            9.49%      10.11%        9.62%      10.23%

Insurance revenues
  (annualized) as a
  percentage of average
  net receivables                2.20%       2.57%        2.20%       2.58%

Operating expenses
  (annualized) as a
  percentage of average
  net receivables                6.17%       6.29%        6.22%       6.26%

Return on average assets 
  (annualized)                   1.96%        .70%        1.97%       1.25%

Return on average equity
  (annualized)                  13.27%       4.69%       13.23%       8.48%

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              2.63%       3.70%        2.67%       3.77%
<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                                 4.21%       5.20%

Ratio of earnings to fixed charges (refer
  to Exhibit 12 for calculations)                         1.61        1.37

Delinquency ratio - finance receivables 60
  days or more past due as a percentage of
  related receivables                                     3.45%       3.74%

Debt to tangible equity ratio - debt to
  equity less goodwill and net unrealized
  gains or losses on fixed-maturity
  investment securities                                   6.53        6.48

Debt to equity ratio                                      5.26        5.09



                       ANALYSIS OF OPERATING RESULTS


Net Income

Net income  increased $30.9 million,  or 191%,  for the three  months ended
June 30, 1998 and $35.2 million, or 61%, 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 3.45% at June 30, 1998 from 3.74% 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  $16.4 million,  or  5%, for  the three
months ended June  30, 1998 and $23.8  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  $785.2 million, or 11%, for the
three  months ended June  30, 1998 and  $620.2 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 83 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  $2.9 million, or 13%, for  the three months ended
June 30, 1998 and $5.3  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, interest  revenue on notes  receivable from parent,
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  $11.5 million,  or 10%,  for the  three months
ended June  30, 1998 and  $20.9 million, or  10%, 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 21 basis points  for the three
months ended June  30, 1998 and  11 basis points for  the six months  ended
June 30, 1998 when compared to the same periods in 1997.


Operating Expenses

Operating  expenses increased  $9.8 million,  or 9%,  for the  three months
ended June 30, 1998 and $17.9 million, or 8%, 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 580 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  $12.3 million, or  20%,
for the three months ended June 30, 1998 and $30.2 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  $14.8 million  and  $32.7
million, respectively.

Net charge-offs for the three months ended June 30, 1998 decreased to $52.3
million from  $67.1 million for the  same period in 1997.   Net charge-offs
for the three months ended  March 31, 1998 were $52.9 million.  The charge-
off ratio for  second quarter 1998  was 2.63% compared  to 2.71% for  first
quarter 1998 and 3.70% for second quarter 1997.   

At  June 30,  1998, delinquencies  were $312.1  million compared  to $298.5
million at  March  31, 1998  and  $293.5 million  at June  30,  1997.   The
delinquency ratio at June 30, 1998 was 3.45% compared to 3.52% at March 31,
1998 and 3.74% at June 30, 1997. 

The allowance  for finance  receivable losses decreased  to $355.6  million
from $375.6 million at June 30, 1997.  The allowance ratio at June 30, 1998
was 4.21% compared  to 4.55% 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 $19.2 million, or  206%, for the
three months ended June  30, 1998 and  $22.6 million, or  67%, 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, AGFC 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 the Company'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.

     Current Report on  Form 8-K dated April 29, 1998,  with respect to the
     issuance of an Earnings Release announcing certain unaudited financial
     results of the Company for the quarter ended March 31, 1998.
<PAGE>
<PAGE> 17

     Current  Report on Form  8-K dated June  3, 1998, with  respect to the
     authorization for issuance of $200 million aggregate principal  amount
     of the Company's 6% Senior Notes due June 1, 2001.

     Current Report on  Form 8-K dated  July 9, 1998,  with respect to  the
     authorization for issuance of $200 million aggregate principal  amount
     of the Company's 5 7/8% Senior Notes due July 15, 2001.

     Current Report  on Form 8-K dated  July 28, 1998, with  respect to the
     issuance of an Earnings Release announcing certain unaudited financial
     results of the Company for the quarter ended June 30, 1998.
<PAGE>
<PAGE> 18

                                 Signature



Pursuant to  the requirements of the  Securities Exchange Act of  1934, the
registrant has  duly caused this report  to be signed on its  behalf by the
undersigned thereunto duly authorized.


                                  AMERICAN GENERAL FINANCE CORPORATION     
                                              (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> 19

                               Exhibit Index



      Exhibits                                                      Page

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

(27)  Financial Data Schedule.                                       21
<PAGE>