<PAGE>

                     SECURITIES AND EXCHANGE COMMISSION
                           Washington, DC  20549

                                 FORM 10-K

  X   ANNUAL  REPORT PURSUANT  TO  SECTION 13  OR  15(d) OF  THE SECURITIES
      EXCHANGE ACT OF 1934

      For the fiscal year ended December 31, 1997 

                                     OR

      TRANSITION REPORT PURSUANT TO SECTION 13  OR 15(d) OF THE  SECURITIES
      EXCHANGE ACT OF 1934

      For the transition period from ________ to ________.

                       Commission File Number 1-6155 

                    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)

     Registrant's telephone number, including area code: (812) 424-8031

        Securities registered pursuant to Section 12(b) of the Act:

                                                  Name of each exchange
         Title of each class                       on which registered  
6-3/8% Senior Notes due March 1, 2003             New York Stock Exchange
8.45% Senior Notes due October 15, 2009           New York Stock Exchange

        Securities registered pursuant to Section 12(g) of the Act:

                                    None

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, and (2)  has been subject to  such
filing requirements for the past 90 days.   Yes  X     No    

Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405  of Regulation S-K is not contained  herein, and will not be contained,
to the best of  registrant's knowledge, in definitive proxy  or information
statements incorporated by reference in  Part III of this Form 10-K  or any
amendment to this Form 10-K [ ].  Not applicable.

The registrant  meets  the conditions  set  forth in  General  Instructions
I(1)(a) and  (b) of Form 10-K and  is therefore filing this  Form 10-K with
the reduced disclosure format.

At  March 19,  1998,  no common  stock  of the  registrant  was held  by  a
non-affiliate.

At  March 19, 1998, there were 10,160,012 shares of the registrant's common
stock, $.50 par value, outstanding.
<PAGE>
<PAGE> 2

                             TABLE OF CONTENTS




          Item                                                      Page

Part I     1.  Business . . . . . . . . . . . . . . . . . . . . . . .  3

           2.  Properties . . . . . . . . . . . . . . . . . . . . . . 17

           3.  Legal Proceedings  . . . . . . . . . . . . . . . . . . 17

           4.  Submission of Matters to a Vote of Security Holders. .  *

Part II    5.  Market for Registrant's Common Equity and Related
                 Stockholder Matters  . . . . . . . . . . . . . . . . 18

           6.  Selected Financial Data  . . . . . . . . . . . . . . . 18

           7.  Management's Discussion and Analysis of Financial 
                 Condition and Results of Operations. . . . . . . . . 19

          7A.  Quantitative and Qualitative Disclosures About
                 Market Risk  . . . . . . . . . . . . . . . . . . . . 30

           8.  Financial Statements and Supplementary Data  . . . . . 31

           9.  Changes in and Disagreements with Accountants
                 on Accounting and Financial Disclosure . . . . . . . **

Part II   10.  Directors and Executive Officers of the Registrant . .  *

          11.  Executive Compensation . . . . . . . . . . . . . . . .  *

          12.  Security Ownership of Certain Beneficial Owners
                 and Management . . . . . . . . . . . . . . . . . . .  *

          13.  Certain Relationships and Related Transactions . . . .  *

Part IV   14.  Exhibits, Financial Statement Schedules, and Reports
                 on Form 8-K  . . . . . . . . . . . . . . . . . . . . 61



      *   Items 4, 10, 11, 12, and 13  are not included, as per  conditions
          met by Registrant  set forth in General Instructions  I(1)(a) and
          (b) of Form 10-K.

     **   Item 9 is not  included, as no information  was required by  Item
          304 of Regulation S-K.
<PAGE>
<PAGE> 3

                                   PART I

Item 1.  Business.

                                  GENERAL

American General Finance Corporation  will be referred to in  this document
as "AGFC"  or  collectively, with  its  subsidiaries, whether  directly  or
indirectly owned,  as the "Company".   AGFC was incorporated  in Indiana in
1927 as successor to  a business started in 1920.  All  of the common stock
of AGFC  is owned  by  American General  Finance,  Inc. (AGFI),  which  was
incorporated  in Indiana in  1974.  Since  1982, AGFI has been  a direct or
indirect wholly-owned  subsidiary of American General Corporation (American
General), the parent  company of  one of the  nation's largest  diversified
financial  services  organizations.     Headquartered  in  Houston,  Texas,
American  General's   operating  subsidiaries  are   leading  providers  of
retirement services, life insurance, and consumer loans.  American General,
a  Texas  corporation,  is  the  successor  to  American  General Insurance
Company, an insurance company incorporated in Texas in 1926.

AGFC  is  a financial  services holding  company with  subsidiaries engaged
primarily  in  the consumer  finance and  credit  insurance business.   The
Company  conducts the  credit insurance  business as  part of  the consumer
finance  business through  Merit Life  Insurance Co.  (Merit)  and Yosemite
Insurance Company (Yosemite), which are both subsidiaries of AGFC.
 
At December  31, 1997, the Company  had 1,322 offices in  40 states, Puerto
Rico, and the U.S. Virgin Islands  and approximately 8,300 employees.   The
Company's executive offices are located in Evansville, Indiana.


Selected Financial Information

The  Company reclassified  credit card  and certain  private label  finance
receivables to  assets held for  sale on  December 31, 1996.   Because  the
reclassification  was effective  on the  last day  of the  year, it  had no
effect  on   average  net  receivables;  yield;   finance  receivable  loss
experience; and finance receivables originated, renewed, and purchased  for
1996.   See  Consumer Finance  Operations for  further information  on this
reclassification.

The following table shows selected financial information of the Company:

                                          Years Ended December 31,       
                                      1997          1996          1995   
                                           (dollars in thousands)

Average finance receivables net
  of unearned finance charges
  (average net receivables)        $7,340,902    $7,930,169    $8,269,663

Average borrowings                 $6,949,021    $6,989,745    $7,209,923
<PAGE>
<PAGE> 4

Item 1.  Continued


                                               At or for the
                                          Years Ended December 31,     
                                      1997          1996          1995 

Yield - finance charges as a
  percentage of average net
  receivables                        16.80%        17.84%        18.01%

Borrowing cost - interest
  expense as a percentage  
  of average borrowings               6.82%         6.90%         7.03%

Interest spread - yield 
  less borrowing cost                 9.98%        10.94%        10.98%

Insurance revenues as a
  percentage of average 
  net receivables                     2.57%         2.60%         2.69%

Operating expenses as a
  percentage of average
  net receivables                     6.36%         6.27%         5.64%

Allowance ratio - allowance for 
  finance receivable losses as
  a percentage of net finance 
  receivables                         4.64%         5.18%         5.88%

Charge-off ratio - charge-offs net 
  of recoveries as a percentage of
  the average of net finance
  receivables at the beginning of
  each month during the period        3.62%         5.51%         3.77%

Delinquency ratio - finance 
  receivables 60 days or more 
  past due as a percentage
  of related receivables              3.61%         3.84%         4.15%

Return on average assets              1.51%          .55%          .98%

Return on average equity             10.16%         3.55%         6.49%

Ratio of earnings to fixed charges
  (refer to Exhibit 12 herein
  for calculations)                   1.44          1.16          1.24

Debt to tangible equity ratio -  
  debt to equity less goodwill 
  and net unrealized gains or 
  losses on fixed-maturity
  investment securities               6.54          7.08          6.43

Debt to equity ratio                  5.16          5.57          5.02
<PAGE>
<PAGE> 5

Item 1.  Continued


                        CONSUMER FINANCE OPERATIONS

Through its  finance  subsidiaries, the  Company  makes loans  directly  to
individuals,  purchases retail  sales contract obligations  of individuals,
and offers private label services.

In  its lending operations, the Company generally takes a security interest
in real  property and/or personal property  of the borrower.   Of the loans
outstanding at  December 31, 1997, 92%  were secured by such  property.  At
December 31, 1997, mortgage loans accounted for 62% of the  amount of loans
outstanding and 12% of the number of loans outstanding, compared to 60% and
14%, respectively,  at December 31, 1996.   Loans secured  by real property
generally  have maximum  original terms  of 180  months.   Such  loans with
maximum  original  terms  exceeding  180  months  generally  contain   call
provisions  at various  times throughout  the contract.   Loans  secured by
personal property  or that  are unsecured  generally have maximum  original
terms of 60 months.  

In its  retail operations,  the  Company purchases  retail sales  contracts
arising from the retail  sale of consumer goods and services  and purchases
private label  receivables originated by American  General Financial Center
(AGFC-Utah), a subsidiary of  AGFI, pursuant to a  participation agreement.
Retail sales contracts are primarily closed-end accounts which consist of a
single purchase.  Private label are open-end revolving accounts that can be
used for  repeated purchases.   Retail sales  contracts are secured  by the
real  property or  personal  property  giving  rise  to  the  contract  and
generally  have a maximum  original term of  60 months.   Private label are
secured  by a purchase money  security interest in  the goods purchased and
generally require minimum monthly payments based on current balances.

In  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.   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.  See
Note 10. of the Notes  to Consolidated Financial Statements in Item  8. for
further information on  the reclassification  and subsequent  sale of  non-
strategic assets.  

Prior  to such sale, the Company  purchased MasterCard and VISA credit card
receivables originated by AGFC-Utah pursuant to a participation  agreement.
Credit  cards were unsecured and required minimum monthly payments based on
current balances.
<PAGE>
<PAGE> 6

Item 1.  Continued


Finance Receivables

All  finance receivable data in this report (except as otherwise indicated)
is  calculated on  a net  basis  -- that  is, after  deduction of  unearned
finance charges but before deduction of an allowance for finance receivable
losses.

Effective January 1,  1997, certain  real estate loans  having advances  of
less than $10,000 and high loan-to-value ratios were reclassified from real
estate  to  non-real  estate  loans.    From  a  servicing  and  collection
standpoint,  these loans are  administered more like  non-real estate loans
than real estate loans.   This reclassification affected $251.8  million of
loans at January 1, 1997.

The  following table shows the amount, number,  and average size of finance
receivables originated, renewed, and purchased during the period by type of
finance receivable:
                                         Years Ended December 31,      
                                      1997         1996         1995   
Amount (in thousands):

  Real estate loans                $1,542,498   $1,314,022   $1,260,673
  Non-real estate loans             2,392,730    2,179,930    2,950,065
  Retail sales contracts            1,163,867    1,009,482    1,492,393
  Private label                       255,485      336,550      624,212
  Credit cards                           -         502,379      567,090

  Total originated and renewed      5,354,580    5,342,363    6,894,433
  Net purchased (transferred) (a)     600,174      945,193     (171,767)

Total originated, renewed,
  and purchased                    $5,954,754   $6,287,556   $6,722,666


Number:

  Real estate loans                    58,136       65,647       72,562
  Non-real estate loans               888,382      945,124    1,443,915
  Retail sales contracts              811,958      772,365    1,240,157
  Private label                       137,361      201,888      433,165

Total                               1,895,837    1,985,024    3,189,799


Average size (to nearest dollar):

  Real estate loans                   $26,533      $20,016      $17,374
  Non-real estate loans                 2,693        2,307        2,043
  Retail sales contracts                1,433        1,307        1,203
  Private label                         1,860        1,667        1,441


  (a)  See Note 4.  of the  Notes to Consolidated  Financial  Statements in
       Item 8.  for  information  on  purchases  and  transfers of  finance
       receivables from affiliates.
<PAGE>
<PAGE> 7

Item 1.  Continued


The  following table shows the amount,  number, and average size of finance
receivables at the end of the period by type of finance receivable:

                                                December 31,            
                                       1997         1996         1995   

Amount (in thousands):

  Real estate loans                 $4,067,500   $3,652,106   $2,817,258
  Non-real estate loans              2,502,051    2,459,660    2,694,369
  Retail sales contracts             1,006,794      954,975    1,189,272
  Private label                        250,691      376,580      942,706
  Credit cards                            -            -         557,603

Total                               $7,827,036   $7,443,321   $8,201,208


Number:

  Real estate loans                    158,034      194,689      163,803
  Non-real estate loans              1,107,869    1,214,791    1,426,394
  Retail sales contracts               841,349      862,047    1,143,310
  Private label                        200,505      276,184      504,184
  Credit cards                            -            -         449,591

Total                                2,307,757    2,547,711    3,687,282


Average size (to nearest dollar):

  Real estate loans                    $25,738      $18,759      $17,199
  Non-real estate loans                  2,258        2,025        1,889
  Retail sales contracts                 1,197        1,108        1,040
  Private label                          1,250        1,364        1,870
  Credit cards                            -            -           1,240


Average Net Receivables and Yield

Finance charges on discounted finance receivables and interest on interest-
bearing  finance receivables are recognized as revenue on the accrual basis
using the  interest method.  The  accrual of revenue is  suspended when the
fourth  contractual payment  becomes past  due for  loans and  retail sales
contracts  and  when the  sixth contractual  payment  becomes past  due for
private label.  For credit cards, the accrual of revenue was suspended when
the sixth contractual  payment became past  due.   Extension fees and  late
charges are recognized as revenue when received. 

Nonrefundable  points and  fees on loans  are recognized as  revenue on the
accrual basis using the  interest method over the lesser of the contractual
term or  the estimated life  based upon prepayment  experience.  If  a loan
liquidates  before  amortization is  completed,  any  unamortized fees  are
recognized as revenue at the date of liquidation. 
<PAGE>
<PAGE> 8

Item 1.  Continued


The Company defers costs associated with the origination of certain finance
receivables.    Deferred   origination  costs  are   included  in   finance
receivables and  are amortized to  revenue on the  accrual basis  using the
interest method over the  lesser of the  contractual term or the  estimated
life  based upon prepayment experience.  If a finance receivable liquidates
before  amortization is  completed, any  unamortized costs  are charged  to
revenue at the date of liquidation.  

The  following table  shows average net  receivables and  yield by  type of
finance receivable:

                                       Years Ended December 31,        
                                   1997          1996          1995   
                                        (dollars in thousands)

Real estate loans:
  Average net receivables       $3,627,736    $3,044,966    $2,839,151
  Yield                             13.69%        14.80%        15.01%

Non-real estate loans:
  Average net receivables       $2,486,771    $2,487,112    $2,743,997
  Yield                             21.88%        22.31%        21.83%

Total loans:
  Average net receivables       $6,114,507    $5,532,078    $5,583,148
  Yield                             17.02%        18.18%        18.36%

Retail sales contracts:
  Average net receivables       $  924,838    $1,033,800    $1,229,931
  Yield                             15.97%        16.88%        17.14%

Private label:
  Average net receivables       $  301,557    $  835,191    $  949,979
  Yield                             14.92%        15.15%        15.35%

Total retail sales finance:
  Average net receivables       $1,226,395    $1,868,991    $2,179,910
  Yield                             15.71%        16.11%        16.36%

Credit cards:
  Average net receivables       $     -       $  529,100    $  506,605
  Yield                               -  %        20.41%        21.28%

Total:
  Average net receivables       $7,340,902    $7,930,169    $8,269,663
  Yield                             16.80%        17.84%        18.01%
<PAGE>
<PAGE> 9

Item 1.  Continued


Finance Receivable Credit Quality Information

The Company's  policy is  to charge  off each  month loan  accounts, except
those secured by  real estate, on which little or  no collections were made
in the prior six-month period.  Retail sales contracts are charged off when
six installments are  past due, and private label  accounts are charged off
when  180 days past due.   Credit card  accounts were charged  off when 180
days past due.   In the case of  loans secured by real  estate, foreclosure
proceedings are instituted  when four  monthly installments  are past  due.
When  foreclosure is completed  and the Company  has obtained  title to the
property, the  real estate is established as an asset valued at fair value,
and any loan amount in excess of that value is charged off.  The charge-off
period  is  occasionally extended  for  individual  accounts when,  in  the
opinion of management, such treatment is warranted.

The following table  shows finance  receivable loss experience  by type  of
finance receivable:  

                                       Years Ended December 31,     
                                   1997          1996          1995 
                                        (dollars in thousands)
Real estate loans:
  Net charge-offs                 $ 31,849     $ 36,352     $ 23,240
  Charge-off ratio                    .88%        1.21%        0.82%

Non-real estate loans:
  Net charge-offs                 $178,644     $223,580     $165,087
  Charge-off ratio                   7.17%        8.96%        6.11%

Total loans:
  Net charge-offs                 $210,493     $259,932     $188,327
  Charge-off ratio                   3.45%        4.72%        3.38%

Retail sales contracts:
  Net charge-offs                 $ 36,897     $ 52,939     $ 35,392
  Charge-off ratio                   4.00%        5.07%        2.89%

Private label:
  Net charge-offs                 $ 17,563     $ 72,512     $ 51,115
  Charge-off ratio                   5.76%        8.59%        5.39%

Total retail sales finance:
  Net charge-offs                 $ 54,460     $125,451     $ 86,507
  Charge-off ratio                   4.44%        6.65%        3.98%

Credit cards:
  Net charge-offs                 $   -        $ 51,386     $ 36,206
  Charge-off ratio                    -  %        9.68%        7.19%

Total:
  Net charge-offs                 $264,953     $436,769     $311,040
  Charge-off ratio                   3.62%        5.51%        3.77%
<PAGE>
<PAGE> 10

Item 1.  Continued


The  following table shows delinquency (finance receivables 60 days or more
past  due  including  unearned  finance  charges  and  excluding   deferred
origination  costs, a  fair value  adjustment on  finance receivables,  and
accrued interest) based on contract terms in effect at the respective dates
by type of finance receivable:

                                             December 31,            
                                   1997         1996         1995  
                                       (dollars in thousands)

Real estate loans                $107,066     $ 83,239     $ 59,517
  % of related receivables          2.59%        2.23%        2.01%

Non-real estate loans            $160,700     $179,719     $197,662
  % of related receivables          5.71%        6.43%        6.37%

Total loans                      $267,766     $262,958     $257,179
  % of related receivables          3.85%        4.03%        4.24%

Retail sales contracts           $ 27,906     $ 33,675     $ 43,171
  % of related receivables          2.30%        2.90%        3.01%

Private label                    $  8,024     $ 12,567     $ 48,430
  % of related receivables          3.17%        3.32%        4.77%

Total retail sales finance       $ 35,930     $ 46,242     $ 91,601
  % of related receivables          2.45%        3.01%        3.76%

Credit cards                     $   -        $   -        $ 28,520
  % of related receivables           -  %         -  %        4.85%

Total                            $303,696     $309,200     $377,300
  % of related receivables          3.61%        3.84%        4.15%


The  Company maintains  the allowance  for finance  receivable losses  at a
level  based on periodic evaluation of the finance receivable portfolio and
reflects an amount  that, in  management's opinion, is  adequate to  absorb
anticipated losses in the existing portfolio.  In evaluating the portfolio,
management   considers   numerous   factors   including   current  economic
conditions, prior  finance receivable loss and  delinquency experience, the
composition  of the  finance  receivable  portfolio,  and  an  estimate  of
anticipated finance receivable losses.
<PAGE>
<PAGE> 11

Item 1.  Continued


The following table shows  changes in the allowance for  finance receivable
losses:

                                               At or for the 
                                          Years Ended December 31,      
                                      1997          1996          1995  
                                           (dollars in thousands)

Balance at beginning of year        $385,272      $482,243      $225,922
Provision for finance receivable
  losses                             242,453       409,646       573,698
Allowance reclassified to assets
  held for sale                         -          (70,000)         -   
Allowance related to net acquired
  (transferred) receivables              354           152        (6,337)
Charge-offs, net of recoveries      (264,953)     (436,769)     (311,040)

Balance at end of year              $363,126      $385,272      $482,243

Allowance ratio                        4.64%         5.18%         5.88%


See Management's Discussion and Analysis in Item 7. for further information
on finance  receivable  loss and  delinquency  experience and  the  related
allowance for finance receivable losses.


Geographic Distribution

Geographic diversification of finance receivables reduces the concentration
of credit risk associated with a recession in any one  region.  The largest
concentrations of net finance receivables were as follows:

                                    December 31,                        
                   1997                 1996                 1995        
             Amount   Percent     Amount   Percent     Amount   Percent    
                               (dollars in thousands)

California  $  842,690  10.77%   $  697,734   9.37%   $  886,974  10.82%
N. Carolina    696,261   8.90       672,021   9.03       737,630   8.99
Florida        518,837   6.63       534,936   7.19       626,519   7.64
Ohio           465,489   5.95       454,290   6.10       439,522   5.36
Indiana        438,369   5.60       397,698   5.34       454,892   5.55
Illinois       434,029   5.55       452,508   6.08       489,840   5.97
Virginia       356,928   4.56       350,349   4.71       392,146   4.78
Georgia        310,485   3.97       312,377   4.20       372,963   4.55
Other        3,763,948  48.07     3,571,408  47.98     3,800,722  46.34 

            $7,827,036 100.00%   $7,443,321 100.00%   $8,201,208 100.00%
<PAGE>
<PAGE> 12

Item 1.  Continued


Sources of Funds

The Company funds  its consumer finance operations  principally through net
cash flows from operating activities,  issuances of long-term debt,  short-
term  borrowings in the commercial paper market, and borrowings from banks.


Average Borrowings and Borrowing Cost

The  following table  shows average  borrowings and  interest expense  as a
percentage of average borrowings by type of debt:

                                     Years Ended December 31,        
                                1997           1996           1995   
                                      (dollars in thousands)

Long-term debt:
  Average borrowings         $4,022,819     $4,680,197     $4,840,860
  Borrowing cost                  7.34%          7.28%          7.27%

Short-term debt:
  Average borrowings         $2,926,202     $2,309,548     $2,369,063
  Borrowing cost                  6.12%          6.13%          6.54%

Total:
  Average borrowings         $6,949,021     $6,989,745     $7,209,923
  Borrowing cost                  6.82%          6.90%          7.03%

The Company's use of  interest rate swap agreements, which are  included in
short-term borrowing cost  above, is described in Note 13.  of the Notes to
Consolidated Financial Statements in Item 8.


Contractual Maturities

Contractual  maturities of net finance receivables and debt at December 31,
1997 were as follows:

                                 Net Finance
                                 Receivables           Debt   
                                    (dollars in thousands)
Due in:
  1998                           $2,324,819         $3,967,848
  1999                            1,436,886            562,089
  2000                              906,835          1,273,033
  2001                              504,978             39,907
  2002                              315,324            546,503
  2003 and thereafter             2,338,194            709,777

  Total                          $7,827,036         $7,099,157


See Note  5. of the Notes  to Consolidated Financial Statements  in Item 8.
for  further  information   on  principal  cash   collections  of   finance
receivables. 
<PAGE>
<PAGE> 13

Item 1.  Continued


                            INSURANCE OPERATIONS

Merit is  a life  and health  insurance  company domiciled  in Indiana  and
licensed  in 43  states, the  District  of Columbia,  and  the U.S.  Virgin
Islands.   Merit writes  or assumes (through  affiliated and non-affiliated
insurance  companies) credit  life, credit  accident and  health,  and non-
credit insurance coverages.

Yosemite  is  a  property  and  casualty  insurance  company  domiciled  in
California and  licensed in 42  states and principally  underwrites credit-
related property and casualty coverages.

Both  Merit and Yosemite market their products through the consumer finance
network of the Company.  The credit life insurance policies insure the life
of  the borrower in an amount typically equal  to the unpaid balance of the
obligation and provide  for payment in full to the  lender of the insured's
obligation in the event of death.  The credit accident and health insurance
policies  provide for the payment to the  lender of the installments on the
insured's  obligation coming  due  during a  period  of disability  due  to
illness or injury.   The credit-related property and casualty  insurance is
written to protect  property pledged as security for  the obligation and to
provide for the payment to the  lender of the installments on the insured's
obligation coming due during a period of unemployment.  The purchase by the
borrower  of credit life, credit  accident and health,  and credit property
and casualty insurance is  voluntary with the exception of  creditor placed
property damage  coverage for automobiles, large  equipment, dwellings, and
real estate pledged  as collateral.   In these  instances, property  damage
coverage  is provided  under the  terms  of the  lending  agreement if  the
borrower  does not  provide  evidence of  coverage  with another  insurance
carrier.  The  non-credit insurance  policies are  primarily ordinary  life
level term coverage.  The purchase of this coverage is voluntary.  Premiums
for  insurance products are  most often financed  as part of  the insured's
obligation to the lender but may be paid in cash by the borrower.

Merit  and Yosemite  have  from  time  to  time  entered  into  reinsurance
agreements with other insurance companies, including certain other American
General subsidiaries, for assumptions of various annuities and  non-credit,
group, credit life,  credit accident  and health, and  credit property  and
casualty  insurance on a coinsurance  basis.  The  reserves attributable to
this business fluctuate  over time and in certain instances  are subject to
recapture  by the ceding  company.  At  December 31, 1997,  reserves on the
books of Merit  and Yosemite attributable  to these reinsurance  agreements
totaled $109.2 million.
<PAGE>
<PAGE> 14

Item 1.  Continued


The following tables show information concerning the insurance operations: 


Life Insurance in Force                          December 31,          
                                        1997        1996        1995   
                                           (dollars in thousands)      
 
Credit life                          $2,387,084  $2,629,019  $3,053,300
Non-credit life                       3,910,534   3,936,856   3,564,214

Total                                $6,297,618  $6,565,875  $6,617,514



Premiums Earned                           Years Ended December 31,     
                                       1997         1996         1995  
                                           (dollars in thousands)
Credit insurance premiums earned
  in connection with consumer
  finance operations:
    Credit life                      $ 33,269     $ 39,005     $ 44,682
    Credit accident and health         45,687       52,379       59,442
    Property                           54,292       57,895       51,438
Other insurance premiums earned: 
    Non-credit life                    46,190       47,325       50,116
    Premiums assumed under
      coinsurance agreements            5,177        4,750       11,006

Total                                $184,615     $201,354     $216,684



Premiums Written                          Years Ended December 31,     
                                       1997         1996         1995  
                                           (dollars in thousands)
Credit insurance premiums 
  written in connection with 
  consumer finance operations:
    Credit life                      $ 28,057     $ 28,864     $ 44,086
    Credit accident and health         39,401       39,217       56,175
    Property                           47,029       52,230       65,059
Other insurance premiums written:
    Non-credit life                    46,190       47,325       50,116
    Premiums assumed under
      coinsurance agreements            5,177        4,750       11,006

Total                                $165,854     $172,386     $226,442
<PAGE>
<PAGE> 15

Item 1.  Continued


Investments and Investment Results

The  following  table  shows  the  investment  results   of  the  insurance
operations:

                                         Years Ended December 31,      
                                     1997          1996          1995  
                                          (dollars in thousands)

Net investment revenue (a)         $ 67,837      $ 64,860      $ 62,880

Average invested assets (b)        $924,411      $885,741      $817,254

Adjusted portfolio yield (c)          8.07%         8.07%         8.41%

Net realized gains (losses)  
  on investments (d)               $  1,071      $   (909)     $    876 


(a)  Net investment revenue is  after deduction  of investment  expense but
     before net realized gains or  losses on investments  and provision for
     income taxes.

(b)  Average invested assets excludes the effect of  Statement of Financial
     Accounting Standards (SFAS) 115.

(c)  Adjusted portfolio yield is  calculated based upon  the definitions of
     net investment revenue and average  invested assets listed  in (a) and
     (b) above and also includes an adjustment for tax-exempt investments.

(d)  Includes net realized gains  or  losses on  investment securities  and
     other invested assets before provision for income taxes.


See Note  7. of the Notes  to Consolidated Financial Statements  in Item 8.
for information regarding  investment securities for all operations  of the
Company.


                                 REGULATION

Consumer Finance

Various state laws regulate the consumer lending and retail sales financing
businesses. The degree and nature of  such regulation varies from state  to
state.  The laws under which a substantial amount of the Company's business
is conducted provide for  state licensing of lenders; impose  maximum term,
amount, interest rate, and other charge limitations;  and enumerate whether
and  under what circumstances insurance and other ancillary products may be
sold  in connection  with a  lending transaction.    Certain of  these laws
prohibit the taking  of liens  on real estate  except liens resulting  from
judgments.  
<PAGE>
<PAGE> 16

Item 1.  Continued


The Company also is  subject to various federal regulations,  including the
Federal Consumer Credit Protection Act (governing disclosure of  applicable
charges  and other finance receivable  terms), the Equal Credit Opportunity
Act (prohibiting discrimination against credit-worthy applicants), the Fair
Credit  Reporting  Act (governing  the accuracy  and  use of  credit bureau
reports), and certain Federal Trade Commission rules.


Insurance

State  authorities   regulate   and  supervise   the  Company's   insurance
subsidiaries.  The extent  of such regulation varies but  relates primarily
to conduct of business,  types of products offered, standards  of solvency,
payment  of dividends, licensing, deposits of securities for the benefit of
policyholders,  the approval  of policy forms  and premium  rates, periodic
examination  of the  affairs  of insurers,  form  and content  of  required
financial reports and  establishment of reserves required  to be maintained
for  unearned premiums, losses, and  other purposes.   Substantially all of
the  states in  which the Company  operates regulate the  rates of premiums
charged for credit life  and credit accident and  health insurance.   State
insurance  laws  and regulations  also  prescribe the  nature,  quality and
percentage of  various types of  investments which the  Company's insurance
subsidiaries may make.


                                COMPETITION

Consumer Finance

The  consumer finance industry is highly competitive.  The Company competes
with other consumer  finance companies, industrial  banks, industrial  loan
companies, commercial  banks, sales  finance  companies, savings  and  loan
associations, credit unions,  mutual or cooperative  agencies, and  others.
See Competitive Factors in Item 7. for more information.


Insurance

The  Company's  insurance operations  are  primarily  supplementary to  the
consumer  finance  operations.   As  such,  competition for  the  insurance
operations is relatively limited.
<PAGE>
<PAGE> 17

Item 2.  Properties.


The  Company's investment  in  real estate  and  tangible property  is  not
significant in  relation to  its  total assets  due to  the  nature of  its
business.   AGFI and certain of  its subsidiaries own real  estate on which
AGFC and other affiliates conduct business.  The Company generally conducts
branch  office operations in leased premises.  Lease terms ordinarily range
from three to five years.

The  Company's  exposure  to  environmental  regulation  arises  from   its
ownership of  such properties and properties  obtained through foreclosure.
The  Company monitors  properties  for compliance  with  federal and  local
environmental  guidelines.   The  Company  estimates  that potential  costs
related to any environmental clean-up are immaterial.



Item 3.  Legal Proceedings.


California v. Ochoa

In March 1994, a subsidiary of AGFI and a subsidiary of AGFC were  named as
defendants   in  a  lawsuit,  The   People  of  the   State  of  California
("California") V.  Luis Ochoa, Skeeters Automotive,  Morris Plan, Creditway
of America, Inc., and American General Finance, filed in the Superior Court
of California,  County of  San  Joaquin, Case  No. 271130.   California  is
seeking injunctive relief, a civil penalty of not less than  $5,000 per day
or not  less than $250,000 for violation  of its Health and  Safety Code in
connection  with the  failure to  register and  remove underground  storage
tanks on property acquired through a foreclosure proceeding by a subsidiary
of AGFI, and  a civil penalty of $2,500 for each  act of unfair competition
prohibited  by its  Business  and  Professions  Code,  but  not  less  than
$250,000,  plus costs.   The Company  believes that the  total amounts that
would ultimately be  paid, if  any, arising from  this environmental  claim
would  have no  material effect  on the  Company's consolidated  results of
operations and financial position.


Other

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  increase   and  creates   the  potential   for  an
unpredictable judgment in any given suit.
<PAGE>
<PAGE> 18

                                  PART II


Item 5.  Market  for  Registrant's  Common Equity and  Related  Stockholder
         Matters.


No  trading market  exists for AGFC's  common stock  because AGFI  owns all
AGFC's common  stock.  AGFC  declared the following  cash dividends on  its
common stock:

Quarter Ended                         1997         1996  
                                    (dollars in thousands)

March 31                            $    -       $ 29,007
June 30                              115,317       35,358
September 30                          21,820       50,189
December 31                              -         33,020

                                    $137,137     $147,574


See Management's Discussion and Analysis in Item 7., as well as Note 17. of
Notes  to Consolidated  Financial Statements  in Item  8., with  respect to
limitations on the ability of AGFC and its subsidiaries to pay dividends.



Item 6.  Selected Financial Data.


The  following  selected  financial  data  are  taken  from  the  Company's
consolidated  financial statements.  The data should be read in conjunction
with  the consolidated financial statements  and related notes  in Item 8.,
Management's Discussion  and  Analysis  in  Item 7.,  and  other  financial
information in Item 1.

                          At or for the Years Ended December 31,        
                     1997       1996       1995       1994      1993(a) 
                                  (dollars in thousands)               

Total revenues    $1,511,943 $1,708,673 $1,789,184 $1,388,075 $1,212,917
 
Net income (b)       137,071     50,959     92,293    243,300    189,628

Total assets       9,240,605  9,502,589  9,485,477  8,918,698  7,504,798

Long-term debt     3,941,486  4,416,637  4,935,894  4,265,226  3,965,772


(a)  The Company adopted three new accounting  standards through cumulative
     adjustments as  of January 1, 1993, resulting  in a one-time reduction
     of net income of $12.6 million.  

(b)  Per share  information is  not included  because all of  AGFC's common
     stock is owned by AGFI.
<PAGE>
<PAGE> 19

Item 7.  Management's  Discussion and  Analysis of  Financial Condition and
         Results of Operations.


Management's  Discussion and Analysis of Financial Condition and Results of
Operations should be  read in conjunction  with the consolidated  financial
statements and related  notes in Item 8. and other financial information in
Item 1.


                      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
securitized finance  receivables.   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 $514.3  million in 1997  compared to $589.9
million in 1996 and $638.1  million in 1995.  Operating cash  flow combined
with   the  proceeds  from  the  sale  of  non-strategic  assets,  the  net
collections  on assets held for  sale, and capital  contributions from AGFI
generated cash  flow of  $1.3 billion for  1997.   This cash flow  was used
principally to  finance  the  net originations  and  purchases  of  finance
receivables and the net  purchases and transfers of assets  from affiliates
of $685.9 million, to fund the net repayments of debt of $336.0 million, to
pay dividends to AGFI  of $137.1 million, and to  repurchase $100.0 million
of securitized finance receivables.

Operating cash flow combined  with the net proceeds of increased  debt, the
change in notes receivable from parent, the proceeds of securitized finance
receivables  sold in  1995,  and a  1995  capital contribution  from  AGFI,
generated  cash flow of $766.7 million in  1996 compared to $1.2 billion in
1995.  These cash flows were  used principally to fund the net originations
and purchases of finance receivables and the net purchases and transfers of
assets from affiliates of $533.7 million in 1996 and $890.9 million in 1995
and  to pay dividends to AGFI of  $147.6 million in 1996 and $108.5 million
in 1995.

Dividends are typically  paid 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 December 31, 1997 was 6.54 to 1.   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  maintain the Company's targeted leverage.   See Note 17.
of   the  Notes  to  Consolidated  Financial  Statements  in  Item  8.  for
information on dividend restrictions.
<PAGE>
<PAGE> 20

Item 7.  Continued


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 December 31, 1997, the Company's capital totaled $8.5 billion,
consisting of  $7.1 billion of debt and $1.4 billion of equity, compared to
$8.8  billion at December 31, 1996, consisting  of $7.4 billion of debt and
$1.4 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 funds  primarily through
underwritten public  debt offerings with maturities  generally ranging from
three to ten years. 


Credit Ratings

AGFC's  strong  debt and  commercial paper  ratings  enhance its  access to
capital markets.  On February 23, 1998, AGFC's ratings were as follows:

                          Long-term Debt      Commercial Paper

Duff & Phelps             A+  (Strong)        D-1+  (Highest)
Fitch                          -              F-1+  (Highest)
Moody's                   A2  (Strong)        P-1   (Highest)
Standard & Poor's         A+  (Strong)        A-1   (Strong)


Credit Facilities

The  Company  maintains  credit  facilities  to  support  the  issuance  of
commercial paper and to provide an additional source of funds for operating
requirements.     At  December  31,  1997,   credit  facilities,  including
facilities  shared with American  General and  AGFI, totaled  $4.3 billion,
with  remaining availability to the Company of  $4.3 billion.  See Note 12.
of the Notes to Consolidated Financial Statements in Item 8. for additional
information on credit facilities.


Securitization

In April 1997, the  Company repurchased all  $100.0 million of the  private
label and credit  card receivables  that had previously  been sold  through
securitization.   No gain or loss resulted from the repurchase transaction.
Of  the  $100.0  million  repurchased,  approximately  $70.0  million   was
classified  as  assets  held  for  sale  in  April 1997.    The  repurchase
facilitated the  sale of the credit card  portfolio included in assets held
for sale and sold in June 1997.  
<PAGE>
<PAGE> 21

Item 7.  Continued


                       ANALYSIS OF OPERATING RESULTS

Net Income

Net  income increased $86.1 million, or 169%,  for 1997 and decreased $41.3
million, or 45%, for 1996 when compared to the respective previous year.

Net income has fluctuated over the past two years due to the decline in the
Company's  finance   receivable  credit  quality  beginning   in  1995  and
management's  related actions  to address  credit quality.   The  Company's
strategy in prior years of emphasizing higher-yielding finance receivables,
which are characterized by higher credit risk, combined with the decline in
consumer credit quality throughout the  industry, resulted in the Company's
delinquencies  and net  charge-offs increasing  to higher  than anticipated
levels beginning in the  third quarter of 1995.  Due  to these increases in
delinquencies  and net  charge-offs, management  initiated a  comprehensive
review of the Company in the fourth quarter of 1995.  This review consisted
of  extensive  internal analysis,  together  with  finance receivable  loss
development projections  supplied  by  outside  credit  consultants.    The
results of the analysis indicated  a need for an increase in  the allowance
for  finance receivable losses.  Accordingly, the Company recorded a $216.0
million increase in the  allowance for finance receivable losses  in fourth
quarter 1995.  

In addition, the  Company adopted  an action program  for improving  credit
quality that included raising underwriting  standards, expanding the use of
credit scoring, slowing branch expansion, stressing  collections, improving
branch office training,  and rebalancing the  finance receivable  portfolio
credit risk.  Strategies for rebalancing the portfolio credit risk included
slowing growth, de-emphasizing some higher risk portfolios, and  increasing
the proportion of real estate secured receivables.

To increase its focus on core operations, the Company decided in the fourth
quarter  of 1996  to  offer  for  sale  $874.8  million  of  non-strategic,
underperforming finance receivable portfolios, consisting of $520.3 million
of credit card  and $354.5  million of private  label finance  receivables.
The  Company reclassified  these  finance receivables  and  $70 million  of
allowance for finance receivable losses to assets held for sale on December
31,  1996.  The Company hired an  outside advisor to market the portfolios.
Based on  negotiations with prospective  purchasers subsequent to  year end
1996, the Company determined that an aftertax charge to operations of $88.1
million was necessary to reduce the carrying amount of the  assets held for
sale to net  realizable value.  This charge was  recorded in fourth quarter
1996.  In June 1997, the Company sold all of the assets held for sale (with
a remaining balance of $658.1 million)  and $81.4 million of other  private
label finance receivables.   In  connection with these  sales, the  Company
took an  aftertax charge of  $27.0 million  in second quarter  1997.   This
additional loss  primarily  resulted  from  establishing  a  liability  for
estimated future payments  to the  purchaser of the  credit card  portfolio
under a five-year  loss sharing arrangement.  See Note 10.  of the Notes to
Consolidated Financial Statements in Item 8. for further information on the
reclassification and subsequent sale of non-strategic assets.
<PAGE>
<PAGE> 22

Item 7.  Continued


Net  finance  receivables totaled  $7.8 billion  at  December 31,  1997, an
increase of  $383.7 million from  December 31,  1996 primarily due  to real
estate  loan growth  during 1997,  partially offset  by the  liquidation of
underperforming receivables.    At December  31,  1997, real  estate  loans
accounted  for 52%  of total  net  finance receivables  compared to  49% at
December 31, 1996.  

Results of the  action program to improve credit quality  became evident in
1997.  Although  yield decreased 104 basis points in  1997 when compared to
1996, this  was offset by a  189 basis point improvement  in the charge-off
ratio.   The delinquency ratio also improved  to 3.61% at December 31, 1997
from 3.84% a year earlier.

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


Finance Charges

Finance  charge revenues  decreased $181.2  million, or  13%, for  1997 and
$74.9 million,  or 5%, for  1996 when  compared to the  respective previous
year  due to  decreases in  both average  net receivables  and yield.   The
exclusion  of finance charges related to the  assets held for sale for 1997
totaled $75.0 million.

Average net receivables decreased  $589.3 million, or 7%, during  1997 when
compared to 1996 primarily  due to the action program for  improving credit
quality, which included  the reclassification and sales  of certain finance
receivables  and the liquidation  of underperforming receivables, partially
offset by growth during 1997, primarily  in real estate loans.  Average net
receivables decreased $339.5 million,  or 4%, during 1996 when  compared to
1995 primarily  due to the AGFC  dividend of two subsidiaries  operating in
Alabama to  AGFI on  December 31,  1995 and the  action program  to improve
credit  quality.   Finance  receivables  originated  and renewed  decreased
during  1996  when compared  to  1995.   This  was partially  offset  by an
increase in finance receivables purchased, primarily real estate loans.

Yield decreased 104  basis points during  1997 and  17 basis points  during
1996 when  compared to the  respective previous year  primarily due  to the
action  program  to  improve  credit  quality,  including  increasing   the
proportion  of  finance receivables  that  are  real  estate  loans,  which
generally have lower yields.


Insurance Revenues

Insurance  revenues  decreased $17.6  million, or  9%,  for 1997  and $16.1
million, or 7%, for 1996 when compared to the respective previous year.

The decreases in insurance revenues for 1997 and 1996 when  compared to the
respective  previous  year  were  primarily  due  to  decreases  in  earned
premiums.  Earned premiums decreased primarily due to a decrease in related
loan volume during 1996 resulting from the action program to improve credit
quality.
<PAGE>
<PAGE> 23

Item 7.  Continued


Other Revenues

Other revenues increased $2.1 million, or  2%, for 1997 and $10.5  million,
or 14%, for 1996 when compared to the respective previous year.

The increase in other revenues for 1997 when compared to 1996 was primarily
due to an increase in investment revenue, partially offset by a decrease in
interest  revenue on  notes  receivable from  parent.   Investment  revenue
increased for 1997 when compared to 1996 primarily due to growth in average
invested  assets for the insurance operations of $38.7 million and realized
gains on  investments of $1.1 million  for 1997 compared to  $.9 million of
realized losses on investments for 1996.  Adjusted portfolio yield remained
at near the same level for 1997 when compared to 1996.

The increase in other revenues for 1996 when compared to 1995 was primarily
due  to an  increase in  interest revenue  on notes receivable  from parent
resulting from  the AGFC dividend of  the common stock of  two subsidiaries
operating  in Alabama  to AGFI  on December  31, 1995.   AGFI  supports the
transferred assets with  funding provided by  AGFC through an  intercompany
note.   The increase  in other  revenues for 1996  also reflected  a slight
increase in investment  revenue on  the invested assets  for the  insurance
operations  primarily due  to growth  in average  invested assets  of $68.5
million,  partially offset by realized losses on investments of $.9 million
for 1996  compared to $.9 million of realized gains on investments for 1995
and  a  decrease in  adjusted  portfolio yield  of  34 basis  points.   The
increase  in other  revenues  for 1996  was  partially offset  by  the gain
recorded in 1995 for the securitized finance receivables sold.    


Interest Expense

Interest  expense  decreased  $31.4 million,  or  7%,  for  1997 and  $24.3
million, or 5%, for 1996 when compared to the respective previous year.

The decrease in interest expense for 1997 when compared  to 1996 was due to
the exclusion  of interest  expense  related to  the assets  held for  sale
totaling  $23.2 million, the decline  in borrowing cost,  and a decrease in
average borrowings.   Borrowing cost decreased 8 basis points for 1997 when
compared to 1996  primarily due  to an increased  proportion of  short-term
debt at lower  rates.  Average borrowings  decreased $40.7 million, or  1%,
for  1997 when  compared to  1996  primarily due  to the  sales of  certain
finance  receivables during  second quarter  1997, substantially  offset by
growth in real estate loans during 1997.  

The decrease in interest expense for 1996  when compared to 1995 was due to
decreases  in average  borrowings and borrowing  cost.   Average borrowings
decreased $220.2  million, or 3%, for 1996  when compared to 1995 primarily
due to  the  decrease  in average  net  receivables.   The  borrowing  cost
decreased  13 basis points for 1996 when compared to 1995 due to a decrease
in short-term borrowing cost, with long-term borrowing cost  remaining near
the same level.
<PAGE>
<PAGE> 24

Item 7.  Continued


Operating Expenses

Operating expenses decreased $30.4  million, or 6%, for 1997  and increased
$30.8 million,  or 7%, for  1996 when compared  to the respective  previous
year.

The  decrease  in operating  expenses for  1997 when  compared to  1996 was
primarily due to the exclusion  of expenses to service the assets  held for
sale  totaling  $18.2  million,  certain non-recurring  operating  expenses
associated  with discontinued  initiatives  that  negatively  impacted  the
financial  results for  1996 by  $8.9 million,  and the  action  program to
improve credit quality and reduce expenses.  

The increase  in operating  expenses  for 1996  when compared  to 1995  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, certain non-recurring operating  expenses associated with
discontinued initiatives, and  increased collection efforts  on the  higher
level  of  delinquent finance  receivables during  1996.   The  increase in
operating expenses for  1996 was partially  offset by  the dividend of  the
subsidiaries  operating in Alabama and the action program to improve credit
quality and reduce expenses.

The  action program  implemented in  fourth quarter  1995 contributed  to a
workforce  reduction of  approximately  800 positions  during 1997  and 700
positions during 1996 and a  net decrease of 32 branch offices  during 1997
and 19 branch offices during 1996.


Provision for Finance Receivable Losses

Provision for finance  receivable losses decreased $167.2  million, or 41%,
for  1997  and $164.1  million,  or  29%, for  1996  when  compared to  the
respective previous year.

The  decrease  in provision  for finance  receivable  losses for  1997 when
compared to  1996  was primarily  due  to  a decrease  in  net  charge-offs
totaling $171.8 million.  The decrease in net charge-offs was primarily due
to reductions  in charge-off levels  for the core  branch network and  also
reflected the exclusion of net charge-offs  related to the assets held  for
sale totaling $58.6 million.  

The  decrease  in provision  for finance  receivable  losses for  1996 when
compared to  1995 was  due to the  large provision  for finance  receivable
losses  required in  fourth  quarter 1995  to  increase the  allowance  for
finance receivable losses by $216.0 million as previously discussed.

Net  charge-offs  from finance  receivables  for 1997  decreased  to $265.0
million from  $436.8 million  for 1996  and $311.0 million  for 1995.   The
charge-off ratio for 1997 decreased to 3.62% compared to 5.51% for 1996 and
3.77% for  1995.   Excluding the portfolios  held for sale,  the charge-off
ratio was 4.72% for 1996.

At  December 31, 1997, delinquencies were $303.7 million compared to $309.2
million at  the end of  1996 and $377.3  million at the  end of 1995.   The
<PAGE>
<PAGE> 25

Item 7.  Continued


delinquency ratio at December 31, 1997 decreased to 3.61% compared to 3.84%
at the end  of 1996 and  4.15% at  the end of  1995.  The  decrease in  the
delinquency ratio for  1996 when compared to 1995 was  primarily due to the
reclassification of certain finance receivables to assets held for sale.

The  allowance for finance receivable losses decreased to $363.1 million at
December 31,  1997 from $385.3 million at December 31, 1996.  The allowance
ratio  at December  31, 1997 was  4.64% compared  to 5.18%  at December 31,
1996.  The decrease in the allowance ratio for 1997 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  and reflects an amount  that, in management's
opinion,  is  adequate  to  absorb  anticipated   losses  in  the  existing
portfolio.


Loss on Non-strategic Assets

In  conjunction  with the  action program  to  improve credit  quality, the
Company decided  in fourth quarter 1996  to offer for sale  credit card and
certain  private label finance  receivables.  Effective  December 31, 1996,
the Company  reclassified  these  finance  receivables  and  an  associated
allowance  for  finance  receivable losses  to  assets  held  for sale  and
recognized  a loss.  In June 1997, the  Company sold all of the assets held
for  sale and  other  private label  finance  receivables and  recorded  an
additional loss.   See Analysis of Operating Results -  Net Income and Note
10. of  the  Notes to  Consolidated  Financial Statements  in Item  8.  for
further information  on the  reclassification and  subsequent sale of  non-
strategic assets.


Insurance Losses and Loss Adjustment Expenses

Insurance losses and  loss adjustment expenses  decreased $9.4 million,  or
9%, for  1997 and  $14.0 million,  or 12%,  for 1996  when compared  to the
respective  previous year due to decreases in provision for future benefits
and in claims paid.

Provision  for future  benefits decreased  $3.7 million  for 1997  and $9.2
million for 1996  due to  reduced sales of  non-credit insurance  products.
Claims decreased $5.7  million for 1997 and $4.8 million for 1996 primarily
due  to  favorable  loss  experience  on  credit  insurance  and  decreased
business.


Provision for Income Taxes

Provision for income  taxes increased $50.4 million, or 176%,  for 1997 and
decreased  $4.7 million, or  14%, for 1996 when  compared to the respective
previous year. 

The increase  in the provision for  income taxes for 1997  when compared to
1996 was primarily due to higher taxable income.
<PAGE>
<PAGE> 26

Item 7.  Continued


The decrease  in the provision for  income taxes for 1996  when compared to
1995 was primarily due to lower  taxable income, partially offset by a non-
recurring state income tax adjustment  recorded in 1995.  During  1995, the
Company recognized  net operating loss (NOL) carryforwards  with respect to
one state  resulting from  the state's  audit of a  return and  the state's
acceptance of an amended return.  The Company recognized a net reduction of
$16.6 million  in 1995 state income tax  expense primarily related to these
carryforwards.   At December 31, 1997 and 1996, the state NOL carryforwards
remaining  were  $627.9 million  and  $634.7  million, respectively,  which
expire in the years 2005 and 2006.


                      ANALYSIS OF FINANCIAL CONDITION

At December 31,  1997, the  Company's assets were  distributed as  follows:
80.77% in net  finance receivables, less  allowance for finance  receivable
losses;  10.05% in investment securities;  3.44% in other  assets; 2.75% in
acquisition-related goodwill; 2.00%  in notes receivable  from parent;  and
 .99% in cash and cash equivalents.
 

Asset Quality

The Company believes that its  geographic diversification reduces the  risk
associated with  a recession in  any one region.   In addition, 94%  of the
finance receivables at  December 31, 1997 were secured  by real property or
personal property.

The Company's allowance ratio decrease for 1997 reflects the results of the
action  program   to  improve  credit  quality,   including  the  increased
proportion of real  estate loans.   See Analysis of  Operating Results  for
further information  on allowance ratio, delinquency  ratio, and charge-off
ratio.   While finance receivables  have some exposure  to further economic
uncertainty,  management  believes that  in  the  present environment,  the
allowance for finance receivable  losses is adequate to absorb  anticipated
losses in the existing portfolio.

Investment securities principally represent the investment portfolio of the
Company's insurance  operations.   The investment strategy  is to  optimize
after-tax returns on invested assets, subject to the constraints of safety,
liquidity, diversification, and regulation.  

The  largest  intangible asset  is  acquisition-related  goodwill which  is
charged to expense in  equal amounts over 20 to  40 years.  See Note  2. of
the  Notes  to Consolidated  Financial Statements  in  Item 8.  for further
information on goodwill.


Operating Requirements

The  Company's principal  operating requirements  for cash  include funding
finance receivables, payment of interest, payment of operating expenses and
income taxes,  and contractual obligations to policyholders.  The principal
sources  of cash  include collections  of finance  receivables and  finance
charges, proceeds from the issuances of  fixed-rate and floating-rate debt,
<PAGE>
<PAGE> 27

Item 7.  Continued


and  borrowings under  credit  facilities.   The  overall sources  of  cash
available to the Company are expected to be more than sufficient to satisfy
operating requirements in 1998.


Capital Requirements

The Company  expects to  finance long-term  debt repayments  and maturities
plus  normal refinancing  of  short-term debt  and  any funds  required  to
support growth in finance receivables through the issuance of long-term and
short-term debt and surplus operating cash.


Asset/Liability Management

The Company manages anticipated cash flows of its assets and liabilities in
an  effort  to  reduce the  risk  associated  with  unfavorable changes  in
interest rates.  The Company's mix  of fixed-rate and floating-rate debt is
determined by management based, in part,  on the nature of the assets being
supported.    The  Company limits  its  exposure  to  market interest  rate
increases  by fixing  interest rates that  it pays  for term  periods.  The
primary  means  by  which the  Company  accomplishes  this  is through  the
issuance of fixed-rate debt.  To supplement fixed-rate debt issuances, AGFC
also uses interest  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.


                        BUSINESS ENVIRONMENT FACTORS

The  Company  operates in  a business  environment  in which  effective and
efficient managerial  performance, and  a  prudent lending  and  investment
strategy are  essential.   The  three most  relevant environmental  factors
affecting the Company are economic, regulatory, and competitive.


Economic Factors

The three key economic factors  that affect the results of the  Company are
interest rates, inflation, and recession/recovery.

Interest Rates.  Interest rates in the United States generally  remained at
nearly the same levels in 1997 when  compared to 1996 and decreased in 1996
from 1995.  The Company's finance receivables, investment securities, long-
term  debt, and  short-term  debt react  over varying  periods  of time  to
movements in interest rates.  See Analysis of Operating Results for further
information  on  the  changes  in  yield,  adjusted  portfolio  yield,  and
borrowing cost.  

The Company believes that it is  difficult to assess or predict the overall
effects  of  any given  change  in  interest  rates  due to  the  following
uncertainties:   1)  whether  such a  movement  results in  a  convergence,
divergence,  or tandem movement  in the long-term/short-term  yield curves,
<PAGE>
<PAGE> 28

Item 7.  Continued


2) market opportunities for both investment  and funding  alternatives that
may or may not exist  at the time such a  movement occurs, and 3) the level
of interest  rates relative  to the finance receivable portfolio yield, the
return on invested assets, and  the borrowing cost when such a  movement in
interest rates occurs.

Inflation.   Inflation and  inflationary expectations  are factors that  to
some  extent  affect the  Company's revenue  and  expenses and  are factors
implicit  in interest  rates.   During each  of the  last three  years, the
Company operated in a low inflation environment.

Revenue  generated from  interest rates  charged on  most of  the Company's
finance receivable types is relatively insensitive to movements in interest
rate   levels  caused  by  inflation.    However,  real  estate  loans  are
particularly subject to refinancing when market interest rates trend lower.
Net  investment revenue  and  realized gains  or  losses on  the  Company's
investment securities,  and borrowing cost  on the Company's  long-term and
short-term debt, are relatively  sensitive over varying periods of  time to
movements  in  general  interest rate  levels  caused  by  inflation.   The
Company's operating expenses are no  more or less sensitive to  the effects
of inflation than would be experienced by businesses in general.

Economic  Cycle.   The  Company believes  that its  relatively conservative
lending policies,  its conservative  insurance underwriting  and investment
policies, and its geographic diversification mitigate the potential  impact
of defaults on finance receivables and  investments in any downturn of  the
U.S. economic cycle.

During 1997, the rate of increase in U.S. consumer debt  moderated from the
rates of increase during 1996 and  1995.  Lenders are beginning to exercise
restraint in extending  credit as a  result of  the increased frequency  of
personal bankruptcy  filings, and consumers are  apparently lessening their
credit  demands.     The  recently  lower  interest  rate  environment  may
accelerate refinancings  on real  estate loans  in the  Company's portfolio
during 1998.   The Company  believes that there  will be moderate  economic
growth for  the country  in general  during 1998.   Although  this economic
outlook suggests that  growth in net receivables from  internal initiatives
will also be moderate during 1998, management anticipates that improvements
in loan  production and  portfolio acquisitions  will favorably  impact net
receivable growth in 1998.


Regulatory Factors

The regulatory environment of the consumer finance and insurance industries
is described in Item  1.  Taxation is  another regulatory factor  affecting
the Company.  A  risk to any business is that changes  in state and federal
tax  laws or regulations  may affect  the way  that the  business operates.
Since tax laws affect not  only the way that the Company is  taxed but also
the design of many of its products,  these laws and regulations and the way
they are interpreted  are of concern to the Company.   The Company monitors
federal  and  state  tax  legislation and  responds  with  appropriate  tax
planning in order to minimize the impact of taxation.
<PAGE>
<PAGE> 29

Item 7.  Continued


Competitive Factors

Consumer  finance  companies   compete  with  other   types  of   financial
institutions which  offer similar  products and  services.  Competition  in
financial services markets also  continues to intensify due to  an increase
in  the  number and  sophistication  of  financial products,  technological
improvements, and more rapid communication.

The  Company  has positioned  itself to  meet  the continuing  challenge of
competition in three primary ways:

Customer  Focus.  The Company focuses on selling financial service products
to low- to middle-income consumers.

Customer Service.  The Company  concentrates on delivering quality  service
to  its customers.   This  is done  through one  of the  industry's largest
domestic branch networks.

Productivity.    The  Company  continuously  monitors  performance  of  its
branches and  products and makes  organizational and procedural  changes as
necessary to manage marketing and cost effectiveness.


Year 2000 Contingency

The Company is in the  process of modifying its computer systems to be Year
2000 compliant.  During 1997, the Company incurred and expensed $.5 million
related to this project.   The Company estimates that it will  incur future
costs  in excess of $6.6 million for additional internal staff, third-party
vendors, and other expenses to render its systems Year 2000 compliant.

The Company expects  to substantially  complete this  project during  1998.
However,  risks  and  uncertainties  exist  in  most  significant   systems
development  projects.   If  conversion of  the  Company's systems  is  not
completed on a timely  basis, due to nonperformance by  third-party vendors
or  other  unforeseen  circumstances, the  Year  2000  issue  could have  a
material adverse impact on the operations of the Company.
<PAGE>
<PAGE> 30

Item 7.  Continued


                         FORWARD-LOOKING STATEMENTS

The  statements contained  in  this  filing  on  Form  10-K  that  are  not
historical facts are  forward-looking statements within the meaning  of the
Private Securities  Litigation Reform Act.   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:  changes in general economic conditions,
including the  performance of  financial markets,  interest rates,  and the
level  of personal  bankruptcies; competitive,  regulatory, or  tax changes
that  affect the  cost of  or demand  for the  Company's products;  adverse
litigation  results; the Company's  ability to render  its computer systems
Year  2000  compliant; and  the  Company's failure  to  achieve anticipated
levels of expense savings  from cost-saving initiatives.  Readers  are also
directed to other risks  and uncertainties discussed in documents  filed by
the Company with the Securities and Exchange Commission.



Item 7A.  Quantitative and Qualitative Disclosures About Market Risk.


The  following  table  provides  information  on  the  Company's  financial
instruments   at  December  31,   1997,  including   derivative   financial
instruments,  that are  sensitive to  changes in interest rates.  Projected
principal  cash  flows and  weighted  average  interest  rates  for finance
receivables  and fixed-maturity  securities  are presented  by  contractual
maturities.  Projected principal cash flows and  weighted average  interest
rates for long-term debt are presented by expected maturity date.  Notional
amounts  and  weighted  average  interest  rates  for  interest  rate  swap
agreements  are presented  by contractual maturity dates.  Notional amounts
and weighted  average interest  rates for treasury rate lock agreements are
presented by maturity dates of the underlying securities.  Notional amounts
are used to calculate the contractual  cash flows to be exchanged under the
contracts.  Weighted  average  variable  rates are based on rates in effect
at December 31, 1997.
<PAGE>
<PAGE> 31

Item 7A.  Continued


<TABLE>
<CAPTION>
                                     Maturity Date                       Fair
                                                          There-         Value
                        1998   1999   2000   2001   2002  after  Total 12/31/97
                                         (dollars in millions)
<S>                    <C>    <C>    <C>    <C>    <C>    <C>    <C>    <C>   
Assets
Net finance receivables
  Fixed rate           $2,081 $1,334 $  836 $  458 $  281 $1,969 $6,959  $7,063
  Avg. interest rate   21.38% 20.93% 18.53% 15.53% 13.04% 13.04% 17.87%  

  Variable rate        $   43 $   34 $   28 $   23 $   18 $  249 $  395  $  401
  Avg. interest rate   12.46% 12.50% 12.48% 12.45% 12.41% 12.09% 12.23%

Fixed-maturity securities
  Fixed rate           $   23 $   31 $   40 $   53 $   93 $  669 $  909  $  913
  Avg. interest rate    6.70%  7.86%  7.21%  7.46%  7.40%  6.39%  6.65%

  Variable rate        $  -   $  -   $  -   $  -   $    3 $    7 $   10  $   10
  Avg. interest rate      - %    - %    - %    - %  7.70%  5.24%  5.99%

Liabilities
Long-term debt
  Fixed rate           $  810 $  563 $1,275 $   40 $  548 $  713 $3,949  $4,047
  Avg. interest rate    7.55%  7.33%  6.79%  6.21%  6.77%  7.48%  7.14%

Short-term debt        $3,158 $  -   $  -   $  -   $  -   $  -   $3,158  $3,158
  Avg. interest rate    5.87%    - %    - %    - %    - %    - %  5.87%

Derivatives
Interest rate swaps
  Pay fixed/receive variable
    Notional amount    $  265 $   50 $  225 $  -   $  200 $  200 $  940  $  (30)
    Avg. receive rate   5.62%  5.72%  5.70%    - %  5.72%  5.72%  5.69%
    Avg. pay rate       7.08%  9.39%  8.80%    - %  6.93%  6.16%  7.39%

Treasury rate locks
    Notional amount    $  -   $  -   $  -   $  -   $  198 $  192 $  390  $   (2)
    Avg. interest rate    - %    - %    - %    - %  5.86%  5.77%  5.82%  
</TABLE>



Item 8.  Financial Statements and Supplementary Data.


The Report of  Independent Auditors and the  related consolidated financial
statements are presented on the following pages.
<PAGE>
<PAGE> 32


                       REPORT OF INDEPENDENT AUDITORS





The Board of Directors
American General Finance Corporation


We  have audited the  accompanying consolidated balance  sheets of American
General Finance Corporation (a wholly-owned subsidiary of American  General
Finance, Inc.) and  subsidiaries as of December 31, 1997  and 1996, and the
related consolidated statements  of income, shareholder's  equity and  cash
flows for  each of the three  years in the period ended  December 31, 1997.
Our  audit also  included the  financial statement  schedule listed  in the
Index  at Item  14(a).   These financial  statements and  schedule  are the
responsibility  of  the Company's  management.   Our  responsibility  is to
express an opinion on these financial statements and  schedule based on our
audits.

We conducted  our audits  in accordance  with  generally accepted  auditing
standards.  Those standards require  that we plan and perform the  audit to
obtain reasonable assurance about whether the financial statements are free
of material  misstatement.  An  audit includes examining, on  a test basis,
evidence  supporting  the   amounts  and  disclosures   in  the   financial
statements.   An audit  also includes  assessing the accounting  principles
used  and significant estimates made  by management, as  well as evaluating
the overall financial statement  presentation.  We believe that  our audits
provide a reasonable basis for our opinion.

In our  opinion, the  consolidated financial  statements referred  to above
present fairly,  in  all  material  respects,  the  consolidated  financial
position of  American  General  Finance  Corporation  and  subsidiaries  at
December  31,  1997  and  1996,  and  the  consolidated  results  of  their
operations and their cash flows for  each of the three years in the  period
ended December 31,  1997, in conformity with  generally accepted accounting
principles.    Also,  in  our  opinion,  the  related  financial  statement
schedule,  when considered  in relation to  the basic  financial statements
taken   as  a  whole,  presents  fairly,  in  all  material  respects,  the
information set forth therein.


                                              ERNST & YOUNG, LLP

Indianapolis, Indiana
February 23, 1998
<PAGE>
<PAGE> 33
<TABLE>
           American General Finance Corporation and Subsidiaries
                        Consolidated Balance Sheets

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

Finance receivables, net of unearned
  finance charges  (Note 5.):
    Real estate loans                             $4,067,500    $3,652,106
    Non-real estate loans                          2,502,051     2,459,660
    Retail sales contracts                         1,006,794       954,975
    Private label                                    250,691       376,580

Net finance receivables                            7,827,036     7,443,321
Allowance for finance receivable
  losses  (Note 6.)                                 (363,126)     (385,272)
Net finance receivables, less allowance
  for finance receivable losses                    7,463,910     7,058,049

Investment securities  (Note 7.)                     928,411       879,133
Cash and cash equivalents                             91,076        90,197
Notes receivable from parent  (Note 8.)              185,028       173,235
Goodwill  (Note 9.)                                  254,417       263,171
Other assets  (Note 9.)                              317,763       370,097
Assets held for sale  (Note 10.)                        -          668,707

Total assets                                      $9,240,605    $9,502,589


Liabilities and Shareholder's Equity

Long-term debt  (Note 11.)                        $3,941,486    $4,416,637
Commercial paper  (Notes 12. and 13.)              3,157,671     3,015,920
Insurance claims and policyholder 
  liabilities                                        436,859       456,430
Other liabilities                                    308,601       263,154
Accrued taxes                                         21,073        15,525

Total liabilities                                  7,865,690     8,167,666

Shareholder's equity: 
  Common stock  (Note 16.)                             5,080         5,080
  Additional paid-in capital                         718,914       691,914
  Net unrealized gains on investment
    securities  (Note 7.)                             34,512        21,454 
  Retained earnings  (Note 17.)                      616,409       616,475

Total shareholder's equity                         1,374,915     1,334,923

Total liabilities and shareholder's equity        $9,240,605    $9,502,589

<FN>
<F1>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 34
<TABLE>
           American General Finance Corporation and Subsidiaries
                     Consolidated Statements of Income



<CAPTION>
                                           Years Ended December 31,  
                                        1997         1996         1995   
                                            (dollars in thousands)
<S>                                  <C>          <C>          <C>
Revenues
  Finance charges                    $1,233,387   $1,414,590   $1,489,466
  Insurance                             188,574      206,170      222,282
  Other                                  89,982       87,913       77,436

Total revenues                        1,511,943    1,708,673    1,789,184

Expenses
  Interest expense                      450,914      482,343      506,618
  Operating expenses                    466,791      497,204      466,399
  Provision for finance receivable
    losses                              242,453      409,646      573,698
  Loss on non-strategic assets           42,225      137,036         -   
  Insurance losses and loss
    adjustment expenses                  93,447      102,811      116,829

Total expenses                        1,295,830    1,629,040    1,663,544

Income before provision for income
  taxes                                 216,113       79,633      125,640

Provision for Income Taxes
  (Note 15.)                             79,042       28,674       33,347

Net Income                           $  137,071   $   50,959   $   92,293



<FN>
<F1>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 35
<TABLE>
           American General Finance Corporation and Subsidiaries
              Consolidated Statements of Shareholder's Equity



<CAPTION>
                                         Years Ended December 31,     
                                       1997        1996        1995   
                                          (dollars in thousands)      
<S>                                 <C>         <C>         <C>
Common Stock 
  Balance at beginning of year      $    5,080  $    5,080  $    5,080
  Balance at end of year                 5,080       5,080       5,080

Additional Paid-in Capital
  Balance at beginning of year         691,914     691,914     611,914
  Capital contributions from parent     27,000        -         80,000
  Balance at end of year               718,914     691,914     691,914

Net Unrealized Gains (Losses) 
  on Investment Securities
    Balance at beginning of year        21,454      38,412     (18,407)
    Change during year                  13,058     (16,958)     56,819 
    Balance at end of year              34,512      21,454      38,412 

Retained Earnings 
  Balance at beginning of year         616,475     713,090     729,430
  Net income                           137,071      50,959      92,293
  Common stock dividends              (137,137)   (147,574)   (108,633)
  Balance at end of year               616,409     616,475     713,090

Total Shareholder's Equity          $1,374,915  $1,334,923  $1,448,496 



<FN>
<F1>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 36
<TABLE>
           American General Finance Corporation and Subsidiaries
                   Consolidated Statements of Cash Flows
<CAPTION>
                                                       Years Ended December 31,
                                                    1997         1996         1995
                                                        (dollars in thousands)
<S>                                              <C>          <C>          <C>
Cash Flows from Operating Activities
Net Income                                       $  137,071   $   50,959   $   92,293
Reconciling adjustments to net cash 
  provided by operating activities:
    Provision for finance receivable losses         242,453      409,646      573,698
    Depreciation and amortization                    75,971       87,129      107,288
    Deferral of finance receivable
      origination costs                             (38,218)     (49,129)     (73,711)
    Deferred federal income tax charge (benefit)     57,807      (40,681)     (69,570)
    Deferred state income tax charge (benefit)        1,760       (2,216)     (16,550)
    Change in other assets and other liabilities    (29,080)     (21,891)      31,693
    Change in insurance claims and
      policyholder liabilities                      (19,571)     (27,541)      17,088
    Loss on non-strategic assets                     42,225      137,036         -
    Gain on securitized finance receivables sold       -            -          (4,552)
    Operations related to assets held for sale       39,905         -            -
    Other, net                                        4,014       46,608      (19,627)
Net cash provided by operating activities           514,337      589,920      638,050

Cash Flows from Investing Activities
  Finance receivables originated or purchased    (4,927,348)  (5,249,595)  (5,776,614)
  Principal collections on finance receivables    4,251,026    4,778,076    4,916,984
  Net collections on assets held for sale            61,266         -            -
  Securitized finance receivables (purchased) sold (100,000)        -         100,000
  Sale of non-strategic assets                      732,504         -            -
  Investment securities purchased                  (129,158)    (188,657)    (199,587)
  Investment securities called, matured and sold    104,491      169,350      108,656
  Change in notes receivable from parent            (11,793)      13,803         -
  Net purchases and transfers of assets
    from affiliates                                  (9,536)     (62,176)     (31,259)
  Other, net                                        (38,724)     (64,253)     (45,148)
Net cash used for investing activities              (67,272)    (603,452)    (926,968)
    
Cash Flows from Financing Activities
  Proceeds from issuance of long-term debt          726,950       77,817    1,567,933
  Repayment of long-term debt                    (1,204,750)    (600,260)    (900,760)
  Change in short-term notes payable                141,751      685,449     (299,992)
  Capital contribution from parent                   27,000         -          80,000
  Dividends paid                                   (137,137)    (147,574)    (108,509)
Net cash (used for) provided by 
  financing activities                             (446,186)      15,432      338,672

Increase in cash and cash equivalents                   879        1,900       49,754
Cash and cash equivalents at beginning of year       90,197       88,297       38,543
Cash and cash equivalents at end of year         $   91,076   $   90,197   $   88,297

Supplemental Disclosure of Cash Flow Information
  Income taxes paid                              $   38,363   $   41,187   $  156,506
  Interest paid                                  $  473,452   $  484,813   $  489,475

<FN>
<F1>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 37

           American General Finance Corporation and Subsidiaries
                 Notes to Consolidated Financial Statements
                             December 31, 1997



Note 1.  Nature of Operations

American General  Finance Corporation will be referred to in these Notes to
Consolidated  Financial  Statements as  "AGFC"  or  collectively, with  its
subsidiaries, whether directly or indirectly owned, as the "Company".  AGFC
is  a wholly-owned  subsidiary of  American  General Finance,  Inc. (AGFI).
AGFC  is a  financial services  holding company  with  subsidiaries engaged
primarily in the consumer  finance and credit insurance business.   In this
business, the Company makes loans directly to individuals, purchases retail
sales contract  obligations of individuals, offers  private label services,
and  markets insurance products through  the consumer finance  network.  At
December 31,  1997, the Company had 1,322 offices in 40 states, Puerto Rico
and the U.S. Virgin Islands and approximately 8,300 employees.

In  its lending operations, the Company makes loans directly to individuals
and  generally takes a security  interest in real  property and/or personal
property of the borrower.  In its retail  operations, the Company purchases
retail sales  contracts arising from the retail  sale of consumer goods and
services  by approximately  15,000 retail  merchants and  purchases private
label receivables originated  by American General  Financial Center  (AGFC-
Utah), a  subsidiary of AGFI, arising  from the sales by  approximately 300
retail  merchants  pursuant to  a  participation agreement.    Retail sales
contracts are secured by the real property or personal property giving rise
to the  contract.  Private label  are secured by a  purchase money security
interest in  the goods purchased.  In its insurance operations, the Company
writes  and assumes  credit life,  credit accident  and health,  non-credit
insurance coverages  and credit-related property and  casualty insurance on
its consumer finance customers and property pledged as collateral.

In  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.  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.  See
Note  10. for  further information  on the reclassification  and subsequent
sale of non-strategic assets.  

Prior to such sale,  the Company purchased MasterCard and  VISA credit card
receivables originated by AGFC-Utah pursuant to a participation  agreement.
Credit cards were unsecured.

The  Company funds its operations  principally through net  cash flows from
operating activities, issuances of long-term debt, short-term borrowings in
the commercial paper market, and borrowings from banks.  

At  December  31,  1997,  the  Company had  $7.8  billion  of  net  finance
receivables  due from approximately 2.3 million  customer accounts and $6.3
billion   of  credit  and  non-credit  life  insurance  in  force  covering
approximately 1.3 million customer accounts.
<PAGE>
<PAGE> 38

Notes to Consolidated Financial Statements, Continued


Note 2.  Summary of Significant Accounting Policies


                        PRINCIPLES OF CONSOLIDATION

The consolidated financial statements have been prepared in accordance with
generally accepted accounting principles  and include the accounts of  AGFC
and  its subsidiaries.    The subsidiaries  are  all wholly-owned  and  all
intercompany items have been eliminated.  All of the issued and outstanding
common  stock of  AGFC is  owned by  AGFI, a  holding company  organized to
acquire AGFC  in  a reorganization  during 1974.   AGFI  is a  wholly-owned
subsidiary of American General Corporation (American General).


                             RECLASSIFICATIONS

Effective January 1,  1997, certain  real estate loans  having advances  of
less than $10,000 and high loan-to-value ratios were reclassified from real
estate  to  non-real  estate  loans.    From  a  servicing  and  collection
standpoint,  these loans are  administered more like  non-real estate loans
than real estate loans.   This reclassification affected $251.8  million of
loans at January 1, 1997.


                             FINANCE OPERATIONS

Revenue Recognition

Finance charges on discounted finance receivables and interest on interest-
bearing  finance receivables are recognized as revenue on the accrual basis
using the  interest method.  The  accrual of revenue is  suspended when the
fourth  contractual payment  becomes past  due for  loans and  retail sales
contracts  and  when the  sixth contractual  payment  becomes past  due for
private label.  For credit cards, the accrual of revenue was suspended when
the sixth  contractual payment became  past due.   Extension fees and  late
charges are recognized as revenue when received. 

Nonrefundable points and  fees on loans  are recognized  as revenue on  the
accrual basis using the interest method over the lesser  of the contractual
term or  the estimated life  based upon prepayment  experience.  If  a loan
liquidates  before  amortization is  completed,  any  unamortized fees  are
recognized as revenue at the date of liquidation. 

The Company defers costs associated with the origination of certain finance
receivables.    Deferred   origination  costs  are   included  in   finance
receivables and  are amortized to  revenue on the  accrual basis using  the
interest method over  the lesser of the  contractual term or  the estimated
life  based upon prepayment experience.  If a finance receivable liquidates
before  amortization is  completed, any  unamortized costs  are charged  to
revenue at the date of liquidation.  
<PAGE>
<PAGE> 39

Notes to Consolidated Financial Statements, Continued


Allowance For Finance Receivable Losses

The  Company maintains  the allowance  for finance  receivable losses  at a
level  based on periodic evaluation of the finance receivable portfolio and
reflects an amount  that, in  management's opinion, is  adequate to  absorb
anticipated losses in the existing portfolio.  In evaluating the portfolio,
management   considers   numerous  factors,   including   current  economic
conditions, prior  finance receivable loss and  delinquency experience, the
composition  of  the  finance  receivable portfolio,  and  an  estimate  of
anticipated finance receivable losses.

The  Company's policy is  to charge  off each  month loan  accounts, except
those  secured by real estate, on which  little or no collections were made
in the prior six-month period.  Retail sales contracts are charged off when
six installments are past due, and  private label accounts are charged  off
when 180  days past due.   Credit card  accounts were charged  off when 180
days  past due.  In  the case of loans  secured by real estate, foreclosure
proceedings are  instituted when  four monthly  installments are  past due.
When  foreclosure is completed  and the Company  has obtained title  to the
property, the real estate is established  as an asset valued at fair value,
and any loan amount in excess of that value is charged off.  The charge-off
period is  occasionally  extended  for individual  accounts  when,  in  the
opinion of management, such treatment is warranted.


                            INSURANCE OPERATIONS

Revenue Recognition

The Company's  insurance  subsidiaries write  and  assume credit  life  and
credit accident and  health insurance, non-credit  insurance, and  property
and casualty insurance.   Premiums on credit life insurance  are recognized
as  revenue using the sum-of-the-digits or actuarial methods, except in the
case of level-term  contracts, which  are recognized as  revenue using  the
straight-line method over  the lives of  the policies.  Premiums  on credit
accident and health insurance are recognized as revenue using an average of
the  sum-of-the-digits  and the  straight-line  methods.   Non-credit  life
insurance premiums are recognized  when collected but not before  their due
dates.    Premiums on  property and  casualty  insurance are  recognized as
revenue using  the straight-line method  over the terms of  the policies or
appropriate shorter periods.


Policy Reserves

Policy  reserves for credit life  and credit accident  and health insurance
equal  related  unearned premiums.   Claim  reserves  are based  on Company
experience.    Liabilities  for  future  life  insurance  policy   benefits
associated with non-credit  life contracts are accrued when premium revenue
is recognized and are computed on the basis of assumptions as to investment
yields,  mortality, and surrenders.   Annuity reserves are  computed on the
basis of assumptions  as to investment yields and  mortality.  Reserves for
losses and loss adjustment expenses for property and casualty insurance are
estimated based upon  claims reported  plus estimates of  incurred but  not
reported claims.  Non-credit  life, group annuity, and accident  and health
<PAGE>
<PAGE> 40

Notes to Consolidated Financial Statements, Continued


insurance reserves assumed under coinsurance agreements are established  on
the bases of various tabular and unearned premium methods.


Acquisition Costs

Insurance acquisition costs, principally commissions, reinsurance fees, and
premium taxes,  are deferred and charged  to expense over the  terms of the
related policies or reinsurance agreements.  


Reinsurance

The  Company's  insurance  subsidiaries enter  into  reinsurance agreements
among themselves and other insurers, including other insurance subsidiaries
of American General.   The annuity,  credit life, and  credit accident  and
health  reserves attributable  to this  business with  the subsidiaries  of
American General were  $61.0 million and $60.8 million at December 31, 1997
and 1996, respectively.  The Company's insurance subsidiaries assumed  from
other  insurers   $38.6  million,  $47.5  million,  and  $59.9  million  of
reinsurance  premiums  during 1997,  1996,  and  1995, respectively.    The
Company's ceded reinsurance activities were not significant during the last
three years.  


GAAP vs. Statutory Accounting

Statutory accounting  practices differ  from generally accepted  accounting
principles, primarily  in the  following  respects: credit  life  insurance
reserves are maintained on  the basis of mortality tables;  non-credit life
and group annuity insurance  reserves are based on  statutory requirements;
insurance acquisition costs are expensed when incurred rather than expensed
over the related contract period; deferred income taxes are not recorded on
temporary differences in  the recognition of  revenue and expense;  certain
intangible assets  resulting from a  purchase and the  related amortization
are not reflected in statutory financial statements;  investments in fixed-
maturity securities are carried  at amortized cost; and an  asset valuation
reserve  and  interest  maintenance reserve  are  required  for  Merit Life
Insurance  Co. (Merit), a wholly-owned  subsidiary of AGFC.   The following
compares  net income  and shareholder's  equity determined  under statutory
accounting  practices  with  those  determined   under  generally  accepted
accounting principles:

                                 Net Income         Shareholder's Equity
                          Years Ended December 31,      December 31,    
                          1997     1996     1995      1997        1996  
                                       (dollars in thousands)           
Statutory accounting
  practices              $58,157  $79,157  $42,006  $457,702    $394,708

Generally accepted
  accounting principles   62,312   59,625   58,245   614,679     539,307
<PAGE>
<PAGE> 41

Notes to Consolidated Financial Statements, Continued


                           INVESTMENT SECURITIES

Valuation

All  investment securities  are currently classified  as available-for-sale
and recorded at fair value.  After adjusting related balance sheet accounts
as if  the unrealized gains  and losses  on investment securities  had been
realized, the net  adjustment is recorded in net unrealized gains or losses
on investment securities within shareholder's equity.  If the fair value of
an investment security classified as available-for-sale declines below  its
cost  and this  decline  is considered  to  be  other than  temporary,  the
investment security  is reduced  to its fair  value, and  the reduction  is
recorded as a realized loss.


Realized Gains and Losses on Investments

Realized  gains and losses on investments are recognized using the specific
identification  method and include  declines in  fair value  of investments
below cost  that are considered other  than temporary.  Realized  gains and
losses on investments are included in other revenues.


                                   OTHER

Cash Equivalents

The Company considers all short-term investments with a maturity at date of
purchase of three months or less to be cash equivalents.


Goodwill

Acquisition-related goodwill is charged to expense in equal amounts over 20
to  40 years.   The carrying  value of  goodwill is  regularly reviewed for
indicators of  impairment in  value, which  in the  view of management  are
other  than  temporary,  including  unexpected or  adverse  changes  in the
following:   1)  the  economic or  competitive  environments in  which  the
Company operates, 2) profitability analyses, and 3) cash flow analyses.  If
facts  and circumstances  suggest that  goodwill is  impaired, the  Company
assesses the fair  value of the underlying business and reduces goodwill to
an amount that results in the  book value of the Company approximating fair
value.


Income Taxes

Deferred  tax   assets  and  liabilities  are   established  for  temporary
differences  between the  financial reporting  basis and  the tax  basis of
assets  and liabilities, at the enacted tax  rates expected to be in effect
when the temporary differences reverse. The  effect of a tax rate change is
recognized in income in the period of enactment.
<PAGE>
<PAGE> 42

Notes to Consolidated Financial Statements, Continued


A valuation  allowance for deferred tax  assets is provided if  all or some
portion of the  deferred tax asset  may not  be realized.   An increase  or
decrease  in  a  valuation   allowance  that  results  from  a   change  in
circumstances  that causes a change in judgement about the realizability of
the related deferred tax asset  is included in income.  A change related to
fluctuations in  fair value of available-for-sale  investment securities is
included  in net  unrealized gains  or losses  on investment  securities in
shareholder's equity.


Derivative Financial Instruments

The  Company accounts for  its derivative financial  instruments as hedges.
Hedge accounting requires a high correlation between changes in fair values
or cash flows of the derivative financial instrument and the specific  item
being hedged, both at inception and throughout the life of the hedge.

The difference between amounts payable and receivable on interest rate swap
agreements  is recorded on  the accrual basis as  an adjustment to interest
expense over the life of the agreements.  The related amount  payable to or
receivable from  counterparties is included  in other liabilities  or other
assets.   The net  settlement amount for  treasury rate lock  agreements is
deferred  and included  in the measurement  of the  anticipated transaction
when it occurs.

The fair values of interest rate swap and treasury rate lock agreements are
not  recognized in the consolidated balance sheet, which is consistent with
the treatment of the related debt that is hedged.

Any gain or loss from early  termination of an interest rate swap agreement
is  deferred  and amortized  into  income over  the  remaining term  of the
related debt.  If the underlying debt is extinguished, any  related gain or
loss on interest rate swap agreements is recognized in income.


Use of Estimates

Management  makes  estimates   and  assumptions   in  preparing   financial
statements that  affect amounts  reported in  the financial  statements and
disclosures of contingent assets and  liabilities.  Ultimate results  could
differ from these estimates.


Fair Value of Financial Instruments

The  fair  values  disclosed in  Note  21.  are  based  on estimates  using
discounted cash  flows when quoted  market prices are  not available.   The
valuation techniques employed are significantly affected by the assumptions
used, including the discount rate  and estimates of future cash flows.   In
that  regard, the derived fair  value estimates cannot  be substantiated by
comparison to independent markets and, in many cases, could not be realized
in  immediate settlement  of  the  instrument.    The  fair  value  amounts
presented  can be misinterpreted, and  care should be  exercised in drawing
conclusions from such data.
<PAGE>
<PAGE> 43

Notes to Consolidated Financial Statements, Continued


Note 3.  Accounting Changes       

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

In June 1997, the FASB also issued SFAS 131, "Disclosures about Segments of
an  Enterprise and  Related Information"  which changes  the way  companies
report  segment  information.    This  statement  is  effective  for  years
beginning  after December  15,  1997, but  need not  be applied  to interim
financial  statements in the initial  year of application.   Restatement of
comparative information  for all  periods presented  will be  required upon
adoption.   Adoption  of  this  statement  will  result  in  more  detailed
disclosures  but  will not  have an  impact  on the  Company's consolidated
results of operations or financial position.

During  1997, the Company adopted  SFAS 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 treated as sales or secured  borrowings and when a
liability should be considered extinguished.  Adoption of this standard did
not  have  a  material  impact  on  the  Company's  consolidated  financial
statements.



Note 4.  Net Purchases and Transfers of Assets from Affiliates

A subsidiary of  AGFC purchased finance receivables and other assets from a
subsidiary of  AGFI for  $9.5 million  during 1997.   Subsidiaries  of AGFC
purchased  assets,  primarily  finance  receivables,  from  subsidiaries of
American General for  $62.2 million  during 1996 and  $29.3 million  during
1995.

During 1995, AGFI transferred  one of its subsidiaries  to a subsidiary  of
AGFC.    On December  31, 1995,  AGFC dividended  the  common stock  of two
subsidiaries  operating in Alabama to AGFI.  AGFI supported the transferred
assets  with funding  provided by AGFC  through an  intercompany note.   At
December 31,  1995, such subsidiaries  had 34 offices  and total assets  of
$188.4 million, including net  finance receivables of $196.4 million.   See
Note 8. for information on notes receivable from AGFI.
<PAGE>
<PAGE> 44

Notes to Conolidated Financial Statements, Continued


The cash paid for the net purchases and transfers of assets from affiliates
as  shown in  the Consolidated  Statements of Cash  Flows consisted  of the
following:

                                       1997         1996         1995  
                                           (dollars in thousands)
Net finance receivables,
  less allowance for finance
  receivable losses                  $ 8,281     $ 59,448     $(157,601)
Other assets                           1,255        2,728       188,860 

Cash paid                            $ 9,536    $  62,176     $  31,259



Note 5.  Finance Receivables

Loans  collateralized by security  interests in real  estate generally have
maximum original  terms of 180  months.  Such  loans with  maximum original
terms  exceeding 180  months generally  contain call provisions  at various
times throughout  the contract.   Loans  collateralized by  consumer goods,
automobiles  or  other  chattel security,  and  loans  that are  unsecured,
generally have maximum original terms of 60 months.  Retail sales contracts
are  collateralized  principally by  consumer  goods  and automobiles,  and
generally  have maximum  original terms of  60 months.   Private  label are
secured  by a purchase money  security interest in  the goods purchased and
generally  require minimum  monthly payments  based upon  current balances.
Credit  card  receivables  were  unsecured  and  required  minimum  monthly
payments based  upon current balances.   At December  31, 1997, 94%  of the
finance  receivables were secured by  the real and/or  personal property of
the borrower.   At December 31,  1997, mortgage loans accounted  for 62% of
the amount of loans outstanding and 12% of the number of loans outstanding.

Contractual  maturities of finance receivables at December 31, 1997 were as
follows:

                           Amount       Percent  
                          (dollars in thousands)

1998                    $2,324,819         29.70%
1999                     1,436,886         18.36
2000                       906,835         11.59
2001                       504,978          6.45
2002                       315,324          4.03
2003 and thereafter      2,338,194         29.87 

                        $7,827,036        100.00%


Experience of the Company  has shown that a substantial portion  of finance
receivables will be renewed, converted, or paid in full  prior to maturity.
Accordingly, the preceding information as to contractual maturities  should
not be considered as a forecast of future cash collections.
<PAGE>
<PAGE> 45

Notes to Consolidated Financial Statements, Continued


Principal  cash collections and such collections as a percentage of average
net receivables were as  follows (retail sales contracts and  private label
comprise retail sales finance):

                                         1997        1996        1995   
                                            (dollars in thousands)
Loans:
  Principal cash collections          $2,802,268  $2,584,894  $2,580,965
  Percent of average net receivables      45.83%      46.73%      46.23%

Retail sales finance:
  Principal cash collections          $1,448,758  $1,736,907  $1,881,894
  Percent of average net receivables     118.13%      92.93%      86.33%

Credit cards:
  Principal cash collections          $     -     $  456,275  $  454,125
  Percent of average net receivables        -  %      86.24%      89.64%


Geographic diversification of finance receivables reduces the concentration
of credit  risk associated with a recession in any one region.  The largest
concentrations of net finance receivables were as follows:

                    December 31, 1997            December 31, 1996    
                   Amount       Percent         Amount       Percent  
                  (dollars in thousands)       (dollars in thousands)

California      $  842,690         10.77%    $  697,734          9.37%
N. Carolina        696,261          8.90        672,021          9.03
Florida            518,837          6.63        534,936          7.19
Ohio               465,489          5.95        454,290          6.10
Indiana            438,369          5.60        397,698          5.34
Illinois           434,029          5.55        452,508          6.08
Virginia           356,928          4.56        350,349          4.71
Georgia            310,485          3.97        312,377          4.20
Other            3,763,948         48.07      3,571,408         47.98 

                $7,827,036        100.00%    $7,443,321        100.00%


Unused  credit limits  on  private  label  extended  by  AGFC-Utah  to  its
customers were $2.7 billion and $3.1 billion at December 31, 1997 and 1996,
respectively.  These amounts, in part or in  total, can be cancelled at the
discretion  of AGFC-Utah, and are not  indicative of the amount expected to
be funded.   Any such amounts of credit  limits on private label that would
be  funded  would  be  fully participated  to  the  Company  pursuant to  a
participation agreement.

Unused credit limits on loan and retail sales  contracts revolving lines of
credit extended by  the Company to  its customers were  $225.3 million  and
$226.5 million at December 31, 1997 and 1996, respectively.  These amounts,
in part or in total, can be cancelled at the discretion of the Company, and
are not indicative of the amount expected to be funded.
<PAGE>
<PAGE> 46

Notes to Consolidated Financial Statements, Continued


Note 6.  Allowance for Finance Receivable Losses

Changes  in the allowance for finance receivable losses are detailed below.
See  Management's  Discussion and  Analysis in  Item  7. for  discussion of
activity.

                                          Years Ended December 31,      
                                      1997          1996          1995  
                                           (dollars in thousands)

Balance at beginning of year        $385,272      $482,243      $225,922
Provision for finance receivable
  losses                             242,453       409,646       573,698
Allowance reclassified to assets
  held for sale                         -          (70,000)         -   
Allowance related to net acquired
  (transferred) receivables              354           152        (6,337)
Charge-offs, net of recoveries      (264,953)     (436,769)     (311,040)

Balance at end of year              $363,126      $385,272      $482,243


Management believes  the adequacy of  the allowance for  finance receivable
losses is a material estimate and that it is reasonably possible a material
change to such  estimate could occur in the near term due to changes in the
economy and  other conditions that influence the Company's net charge-offs.
See  Note 2.  for information  on the  determination  of the  allowance for
finance receivable losses.



Note 7.  Investment Securities

At December 31, 1997 and 1996, all investment securities were classified as
available-for-sale and  reported at fair value.  Investment securities were
as follows at December 31:
                                   Fair Value           Amortized Cost  
                                 1997       1996       1997       1996  
                                        (dollars in thousands)
Fixed-maturity investment              
  securities:              
  Bonds:
    Corporate securities       $507,844   $450,754   $482,620   $435,877
    Mortgage-backed securities  177,727    202,974    170,929    199,482
    States and political
      subdivisions              173,081    167,374    163,615    161,647
    Other                        45,222     45,525     34,018     36,721
  Redeemable preferred stocks    18,737      7,235     18,400      7,135
Total                           922,611    873,862    869,582    840,862
Non-redeemable preferred
  stocks                          2,332      2,271      2,264      2,264
Other long-term investments       3,468      3,000      3,468      3,000

Total investment securities    $928,411   $879,133   $875,314   $846,126
<PAGE>
<PAGE> 47

Notes to Consolidated Financial Statements, Continued


At  December  31,  the gross  unrealized  gains  and  losses on  investment
securities were as follows:
                                      Gross                Gross
                                 Unrealized Gains     Unrealized Losses 
                                  1997       1996      1997       1996  
                                         (dollars in thousands)
Fixed-maturity investment
  securities:
  Bonds:
    Corporate securities       $25,730     $17,175   $   506     $ 2,298
    Mortgage-backed securities   6,932       4,687       134       1,195
    State and political
      subdivisions               9,466       6,106      -            379
    Other                       11,210       8,851         6          47
  Redeemable preferred stocks      431         138        94          38
Total                           53,769      36,957       740       3,957
Non-redeemable preferred
  stocks                            68           7      -           -   

Total investment securities    $53,837     $36,964   $   740     $ 3,957


During  the years  ended  December 31,  1997,  1996, and  1995,  investment
securities with a  fair value of $104.5 million, $169.4 million, and $108.7
million, respectively, were sold or redeemed.   The gross realized gains on
such investment securities sales or redemptions totaled  $1.5 million, $1.8
million,  and $1.3  million, respectively.   The  gross realized  losses on
investments  totaled   $.4  million,   $3.1   million  and   $.6   million,
respectively.

The  contractual maturities  of fixed-maturity  securities at  December 31,
1997 were as follows:
                                            Fair       Amortized
                                            Value         Cost  
                                          (dollars in thousands) 
Fixed maturities, excluding
  mortgage-backed securities:
    Due in 1 year or less                 $ 13,675      $ 13,512
    Due after 1 year through 5 years       140,529       134,706
    Due after 5 years through 10 years     477,652       450,458
    Due after 10 years                     113,028        99,977
Mortgage-backed securities                 177,727       170,929

Total                                     $922,611      $869,582


Actual maturities may  differ from contractual  maturities since  borrowers
may have the right to call or prepay obligations.  Company requirements and
investment  strategies  may  result  in  the  sale  of  investments  before
maturity.  
<PAGE>
<PAGE> 48

Notes to Consolidated Financial Statements, Continued


Certain  of the  bonds were  on deposit with  regulatory authorities.   The
carrying  values  of such  bonds  were  $8.4 million  and  $8.3 million  at
December 31, 1997 and 1996, respectively.



Note 8.  Notes Receivable from Parent

Notes receivable from  AGFI totaled  $185.0 million and  $173.2 million  at
December  31, 1997  and  1996, respectively.    Interest revenue  on  notes
receivable  from parent for  the years ended  December 31,  1997, 1996, and
1995, totaled $16.8 million, $19.4 million, and $2.2 million, respectively.



Note 9.  Costs In Excess of Net Assets Acquired

Goodwill,  resulting from the  excess of the  purchase price paid  over the
fair value  of separately  identified tangible  and  intangible net  assets
acquired,  totaled $254.4 million and  $263.2 million at  December 31, 1997
and 1996, respectively.  Accumulated amortization totaled $84.7 million and
$75.9 million at December 31, 1997 and 1996, respectively.

Included in other assets is a customer base valuation of  $30.5 million and
$18.5 million at December 31, 1997  and 1996, respectively, which is  being
amortized  to operating  expenses on  a straight-line  basis over  6 to  25
years.



Note 10.  Assets Held for Sale

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.

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   receivables  that   previously   had   been  sold   through
securitization.   No gain  or loss resulted  from this transaction.   These
repurchased  credit card receivables were  offered for sale  along with the
Company's  other  credit card  receivables,  which  increased the  carrying
amount of  assets held for  sale by  approximately $70.0  million in  April
1997.
<PAGE>
<PAGE> 49

Notes to Consolidated Financial Statements, Continued


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.

Unused credit  limits on credit card assets held for sale extended by AGFC-
Utah to  its customers  were  $2.2 billion  at December  31,  1996.   These
amounts, in part or in total, could be cancelled at the discretion of AGFC-
Utah, and were not  indicative of the  amount expected to  be funded.   The
unused credit limits on private label assets held for sale  were terminated
during 1996.



Note 11.  Long-term Debt

Long-term debt consisted of senior debt at December 31, 1997 and 1996.  The
carrying value  and fair value of AGFC's long-term debt at December 31 were
as follows: 

                               Carrying Value              Fair Value      
                             1997         1996         1997         1996   
                                        (dollars in thousands)

Senior debt               $3,941,486   $4,416,637   $4,047,006   $4,525,262


The weighted average interest rates on long-term debt were as follows:

                         Years Ended December 31,         December 31, 
                           1997    1996    1995          1997     1996 

Senior debt                7.34%   7.28%   7.27%         7.18%    7.15%
Senior subordinated debt     -       -     6.44            -        -
Total                      7.34%   7.28%   7.27%         7.18%    7.15%


Maturities of long-term debt at December 31, 1997 were as follows:

                             Carrying Value    
                         (dollars in thousands)        

1998                           $  810,177
1999                              562,089
2000                            1,273,033
2001                               39,907
2002                              546,503
2003-2007                         411,643
2008-2009                         298,134

Total                          $3,941,486
<PAGE>
<PAGE> 50

Notes to Consolidated Financial Statements, Continued


A certain debt issue of AGFC is repayable prior  to maturity at par, at the
option of the holder.  If this issue was so repaid, the amounts above would
increase $149.2 million in 1999 and would decrease $149.2 million in 2009.

Certain debt  agreements  contain  restrictions  on  consolidated  retained
earnings for certain purposes (see Note 17.).



Note 12.  Short-term Notes Payable and Credit Facilities

AGFC and one of its subsidiaries  issue commercial paper with terms ranging
from 1 to  270 days.  Information concerning short-term  notes payable  for
commercial paper and to banks was as follows:

                                         1997        1996        1995   
                                            (dollars in thousands)

Maximum borrowings at any month end   $3,176,805  $3,015,920  $2,644,804
Average borrowings                    $2,923,726  $2,305,848  $2,368,904
Weighted average interest rate,
  at December 31:
    Stated rate on face of note            5.80%       5.54%       5.73%
    Semi-annual bond equivalent rate       5.87%       5.60%       5.83%
Weighted average interest rate,
  giving effect to interest
  rate swap agreements and
  commitment fees at December 31,          6.47%       6.01%       6.44%


The  Company  maintains  credit  facilities  to  support  the  issuance  of
commercial paper and to provide an additional source of funds for operating
requirements.   At December 31, 1997 and  1996, the Company was an eligible
borrower under  $4.0 billion and  $2.8 billion, respectively,  of committed
credit  facilities  extended  to  American   General  and  certain  of  its
subsidiaries (the "shared  committed facilities").   At December 31,  1996,
the  Company also had committed credit  facilities totaling $700.0 million.
The annual commitment fees for all committed facilities ranged from .05% to
 .07%.   The Company pays only  an allocated portion of  the commitment fees
for the  shared committed facilities.   At December 31, 1997  and 1996, the
Company  also  had  $141.0  million and  $346.0  million,  respectively, of
uncommitted  credit facilities  and was an  eligible borrower  under $200.0
million and $165.0 million, respectively, 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 December 31, 1997, there were no borrowings under any credit facilities.
At December  31, 1996,  long-term borrowings outstanding  under all  credit
facilities totaled $9.0  million with remaining availability to the Company
of $3.5 billion in  committed facilities and $502.0 million  in uncommitted
facilities.
<PAGE>
<PAGE> 51

Notes to Consolidated Financial Statements, Continued


Note 13.  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.
Such floating-rate obligations are recorded at amortized cost.

Fixed interest rates contracted to be paid on interest rate swap agreements
approximated the rates on  fixed-rate term debt with maturities  similar to
the derivative financial instruments at the date of contract.  Accordingly,
AGFC's use of interest rate swap agreements did not have  a material effect
on the  Company's  weighted-average  interest  rate  or  reported  interest
expense in any of the three years ended December 31, 1997.

Interest rate swap agreements  in which AGFC contracted to pay  interest at
fixed rates and  receive interest  at floating rates  were $940.0  million,
$540.0  million, and  $590.0 million  in notional  amounts at  December 31,
1997, 1996, and  1995, respectively.   The weighted  average interest  rate
payable was 7.39%, 8.05%, and  8.07% at December 31, 1997, 1996,  and 1995,
respectively.  The  weighted average  interest rate  receivable was  5.69%,
5.92%, and 5.90% at December 31, 1997, 1996, and 1995, respectively.

These agreements mature at various dates and had the respective fixed rates
at December 31, 1997 as shown in the table below:

              Notional       Weighted Average
               Amount         Interest Rate  
            (dollars in 
             thousands)

  1998        $265,000            7.08%
  1999          50,000            9.39
  2000         225,000            8.80
  2002         200,000            6.93
  2004         200,000            6.16

              $940,000            7.39%
<PAGE>
<PAGE> 52

Notes to Consolidated Financial Statements, Continued


The rollforward of notional  amounts for interest rate swap  agreements was
as follows:

                                             Notional Amounts          
                                      1997         1996         1995   
                                          (dollars in thousands)       

Balance at beginning of year        $540,000     $590,000     $390,000 
New contracts                        425,000         -         200,000 
Expired contracts                    (25,000)     (50,000)        -    

Balance at end of year              $940,000     $540,000     $590,000


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  1997,  AGFC  entered  into  treasury  rate  lock
agreements  with settlement  dates  in 1998.    At December  31,  1997, the
notional  amount of  these agreements  was $390.0  million.  AGFC's  use of
treasury  rate lock  agreements  did  not have  a  material  effect on  the
Company's weighted-average interest  rate or reported  interest expense  in
1997.

AGFC  is exposed  to  credit  risk  in  the  event  of  non-performance  by
counterparties to  derivative  financial  instruments.    AGFC  limits  its
exposure to credit  risk by  entering into  agreements with  counterparties
having  strong credit  ratings and  by  basing the  amount and  term of  an
agreement  on these credit  ratings.  Furthermore,  AGFC regularly monitors
counterparty credit ratings throughout the term of the agreements.

AGFC's  credit exposure on  derivative financial instruments  is limited to
the  fair value of the  agreements that are favorable  to the Company.  See
Note  21. for the fair values  of the interest rate  swap and treasury rate
lock agreements.  AGFC does not expect any counterparty to fail to meet its
obligation; however, non-performance  would not have  a material impact  on
the  consolidated  results  of operations  and  financial  position  of the
Company.

AGFC's exposure  to market risk is  mitigated by the offsetting  effects of
changes in the value of the agreements  and of the underlying debt to which
they relate.



Note 14.  Short-term Notes Payable - Parent

Borrowings from  American  General primarily  provide  overnight  operating
liquidity when  American General is in a surplus cash position.  Borrowings
from AGFI  primarily provide  operating funds for  lending activities.  All
such borrowings are made on a due on demand basis at short-term rates based
on overnight  bank investment rates or  bank prime rates.   At December 31,
1997,  1996  and 1995,  AGFC had  no  borrowings outstanding  with American
General or AGFI.
<PAGE>
<PAGE> 53

Notes to Consolidated Financial Statements, Continued


Information concerning such borrowings was as follows:

                                          1997        1996        1995  
                                             (dollars in thousands)

Maximum borrowings at any month end      $ -         $ -         $ -   
Average borrowings                       $2,476      $3,700      $  159
Weighted average interest rate (total
  interest expense divided by average
  borrowings)                             5.24%       5.16%       6.05%



Note 15.  Income Taxes

AGFC and all  of its  subsidiaries file a  consolidated federal income  tax
return with  American General and the  majority of its subsidiaries.   AGFC
and its  subsidiaries  provide for  federal  income taxes  as if  filing  a
separate tax return, and pay such amounts to American General in accordance
with a tax sharing agreement.  

Provision for income taxes is summarized as follows:

                                           Years Ended December 31,  
                                       1997          1996          1995  
                                            (dollars in thousands)  
Federal
  Current                            $ 15,679      $ 67,675      $121,743
  Deferred                             57,807       (40,681)      (69,570)
Total federal                          73,486        26,994        52,173
State                                   5,556         1,680       (18,826)

Total                                $ 79,042      $ 28,674      $ 33,347


The  U.S.  statutory federal  income tax  rate  differs from  the effective
income tax rate as follows:
                                           Years Ended December 31,    
                                       1997          1996          1995 
 
Statutory federal income tax rate     35.00%        35.00%        35.00%
Benefit of state net operating
  loss (NOL) carryforwards               -             -          (9.11)
Amortization of goodwill               1.42          3.85          2.61
Nontaxable investment income          (1.28)        (3.25)        (1.94)
State income taxes                     1.67          1.37          (.63)
Other, net                             (.24)         (.96)          .61 

Effective income tax rate             36.57%        36.01%        26.54%
<PAGE>
<PAGE> 54

Notes to Consolidated Financial Statements, Continued


During 1995, the Company  recognized NOL carryforwards with respect  to one
state  resulting  from the  state's  audit  of  a  return and  the  state's
acceptance of an amended return.  The Company recognized a net reduction of
$16.6  million in 1995 state income  tax expense primarily related to these
carryforwards.  At December 31, 1997 and 1996, the state NOL  carryforwards
remaining  were  $627.9 million  and  $634.7  million, respectively,  which
expire in the years 2005 and 2006.

The net  deferred tax asset at December 31, 1997  of $194.5 million was net
of deferred tax liabilities totaling $150.8 million.  The net  deferred tax
asset  at  December 31,  1996 of  $118.1 million  was  net of  deferred tax
liabilities totaling $137.1  million.   The most  significant deferred  tax
assets relate to the  provision for finance receivable losses,  the benefit
of  the  loss  on  the  sale of  non-strategic  assets  and  the  state NOL
carryforwards, and  insurance  premiums recorded  for  financial  reporting
purposes.   A valuation allowance of $39.5 million ($25.7 million aftertax)
was recognized at December 31, 1995 related to the state NOL carryforwards.
At December 31, 1996  and 1997, the valuation  allowance remained at  $39.5
million.



Note 16.  Capital Stock

AGFC has two classes of capital  stock:  special shares (without par value,
25  million shares  authorized)  which may  be issued  in series  with such
dividend, liquidation,  redemption, conversion, voting and  other rights as
the board of directors may  determine prior to issuance; and  common shares
($.50 par  value, 25  million shares  authorized).   Issued shares were  as
follows:

Special Shares - At December 31, 1997 and 1996, there were no shares issued
and outstanding.

Common Shares - At December 31, 1997 and 1996, there were 10,160,012 shares
issued and outstanding.



Note 17.  Retained Earnings

State  laws restrict AGFC's insurance  subsidiaries as to  the amounts they
may  pay as  dividends without  prior  notice to,  or in  some cases  prior
approval from, their  respective state insurance departments.   At December
31, 1997, the  maximum amount  of dividends which  the Company's  insurance
subsidiaries may pay in 1998 without  prior approval was $59.9 million.  At
December 31, 1997, AGFC's insurance subsidiaries had  statutory capital and
surplus of $457.7 million.  Merit had $52.7 million of accumulated earnings
at December 31,  1997 for which no federal income  tax provisions have been
required.   Merit would be liable for federal income taxes on such earnings
if they were distributed as dividends or exceeded limits prescribed by  tax
laws.  No distributions are presently contemplated from these earnings.  If
such earnings  were to  become taxable  at December  31, 1997, the  federal
income tax would approximate $18.4 million.
<PAGE>
<PAGE> 55

Notes to Consolidated Financial Statements, Continued


Certain of  AGFC's  financing agreements  effectively limit  the amount  of
dividends AGFC  may pay.   Under  the  most restrictive  provision of  such
agreements, $335.9 million of the retained earnings of AGFC at December 31,
1997, was free from such restrictions.



Note 18.  Benefit Plans


                          RETIREMENT INCOME PLANS

The Company participates  in the American General  Retirement Plans (AGRP),
which  are  noncontributory defined  benefit  pension  plans covering  most
employees.   Pension benefits are  based on the  participant's compensation
and length of  credited service.  American  General's funding policy is  to
contribute  annually no more than the maximum deductible for federal income
tax purposes.  

Equity and fixed-maturity securities were 63% and 28%, respectively, of the
plans' assets at the plans' most recent balance sheet dates.  Additionally,
5% of plan assets were invested in general  investment accounts of American
General  subsidiaries through  deposit administration  insurance contracts.
The pension  plans have purchased  annuity contracts from  American General
subsidiaries to provide  benefits to  certain retirees.   Benefits paid  to
retirees  under these contracts were  $2.1 million, $2.1  million, and $2.2
million   for  the  years  ended   December  31,  1997,   1996,  and  1995,
respectively.

Pension plan activity allocated to the Company for 1997, 1996, and 1995 was
immaterial.  Because net  plan assets are not calculated separately for the
Company, the remainder of the information presented herein is for AGFI.

AGFI accounts for its participation in the AGRP as if it had its own plans.
The following table shows AGFI's portion of the plans' funded status:

                                                  December 31,        
                                           1997       1996       1995 
                                             (dollars in thousands)   

Accumulated benefit obligation (a)       $59,655    $51,936    $46,406

Projected benefit obligation             $70,864    $62,887    $56,395 
Plan assets at fair value                 86,418     71,450     60,968
Plan assets in excess of projected
  benefit obligation                      15,554      8,563      4,573 
Other unrecognized items, net            (10,905)    (2,709)     2,894 

Prepaid pension expense                  $ 4,649    $ 5,854    $ 7,467

(a)  Accumulated benefit obligation is over 92% vested.
<PAGE>
<PAGE> 56

Notes to Consolidated Financial Statements, Continued


Net pension expense included  the following components for the  years ended
December 31:
                                           1997       1996       1995  
                                             (dollars in thousands)    

Service cost                             $ 3,150    $ 3,194    $ 2,241 
Interest cost                              4,800      4,480      3,624 
Actual return on plan assets             (16,300)   (11,288)   (11,283)
Net amortization and deferral             10,113      5,417      5,233 

Total pension expense (income)           $ 1,763    $ 1,803    $  (185)


Additional assumptions concerning  the determination of  net pension  costs
were as follows:
                                           1997       1996       1995 
 
Weighted average discount rate             7.25%      7.50%      7.25%  
Expected long-term rate of
  return on plan assets                   10.00      10.00      10.00  
Rate of increase in 
  compensation levels                      4.00       4.00       4.00  


                POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

The Company participates in American General's life, medical,  supplemental
major medical, and dental plans for certain  retired employees.  Most plans
are  contributory, with  retiree contributions  adjusted annually  to limit
employer contributions to predetermined amounts.  American General and  its
subsidiaries  have reserved the right to change or eliminate these benefits
at any time.

American General's life plans are insured for a two-year period.  A portion
of the  retiree medical  and  dental plans  is funded  through a  voluntary
employees' beneficiary association  (VEBA); the remainder  is unfunded  and
self-insured.  All of the retiree  medical and dental plans' assets held in
the VEBA were invested in readily  marketable securities at the plans' most
recent balance sheet date.

Postretirement  benefits other than  pension plan activity  incurred by the
Company  for 1997,  1996, and 1995  was $.5  million, $.5  million, and $.6
million, respectively.

Because  plan information is not calculated separately for the Company, the
remainder of the information presented herein is for AGFI.
<PAGE>
<PAGE> 57

Notes to Consolidated Financial Statements, Continued


AGFI  accounts for  its participation  in the  plans as  if it had  its own
plans.   The following  table shows AGFI's  portion of  the plans' combined
funded status:
                                                  December 31,     
                                              1997            1996 
                                             (dollars in thousands)
Actuarial present value of benefit
  obligation:

Retirees                                     $1,081          $1,152
Active plan participants                      5,487           4,461
Accumulated postretirement benefit
  obligation                                  6,568           5,613
Plan assets at fair value                       133              90
Accumulated postretirement benefit
  obligation in excess of plan 
  assets at fair value                        6,435           5,523
Other unrecognized items, net                   970           1,512

Accrued postretirement benefit cost          $7,405          $7,035


The weighted-average  discount rate  used  in determining  the  accumulated
postretirement benefit obligation for the years ended December 31, 1997 and
1996  was 7.25% and 7.50%, respectively.  Postretirement benefit expense in
1997, 1996,  and  1995  was $.7  million,  $.7 million,  and  $.6  million,
respectively.  



Note 19.  Lease Commitments, Rent Expense and Contingent Liabilities

The  approximate  annual  rental  commitments  for  leased  office   space,
automobiles  and  data processing  and related  equipment accounted  for as
operating leases,  excluding  leases  on  a month-to-month  basis,  are  as
follows:   1998, $36.8 million;  1999, $23.7 million;  2000, $16.4 million;
2001,  $9.1  million; 2002,  $3.9 million;  and  subsequent to  2002, $12.7
million.

Taxes, insurance and  maintenance expenses are  obligations of the  Company
under certain leases.  In the normal course of business, leases that expire
will  be  renewed or  replaced by  leases  on other  properties; therefore,
future minimum annual rental commitments will probably not be less than the
amount of rental expense incurred in 1997.  Rental expense incurred for the
years  ended December  31, 1997, 1996,  and 1995, was  $40.8 million, $43.9
million, and $44.2 million, respectively.

AGFC  and certain of  its subsidiaries are parties  to various 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.
<PAGE>
<PAGE> 58

Notes to Consolidated Financial Statements, Continued


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.



Note 20.  Interim Financial Information (Unaudited)

Unaudited interim information is summarized below:


                                Total Revenues       
Three Months Ended          1997              1996   
                            (dollars in thousands)

    March 31             $  380,383        $  435,105
    June 30                 376,353           427,791
    September 30            378,010           422,755
    December 31             377,197           423,022

    Total                $1,511,943        $1,708,673


                            Income Before Provision
                               for Income Taxes      
Three Months Ended          1997              1996   
                            (dollars in thousands)

    March 31             $   66,214        $   47,428
    June 30                  25,519 (a)        54,499
    September 30             68,657            72,637
    December 31              55,723           (94,931) (b)

    Total                $  216,113        $   79,633


                                  Net Income         
Three Months Ended          1997              1996   
                            (dollars in thousands)

    March 31             $   41,761        $   29,885
    June 30                  16,196 (a)        34,355
    September 30             43,511            46,569
    December 31              35,603           (59,850) (b)

    Total                $  137,071        $   50,959


(a)  Includes loss on sale of non-strategic assets of $42.2  million ($27.0
     million aftertax).

(b)  Includes loss on assets held for sale of $137.0 million ($88.1 million
     aftertax).
<PAGE>
<PAGE> 59

Notes to Consolidated Financial Statements, Continued


Note 21.  Fair Value of Financial Instruments  

The carrying values and estimated  fair values of certain of  the Company's
financial instruments are presented below.  The reader should exercise care
in drawing conclusions based on fair value, since the fair values presented
below do not include the value  associated with all of the Company's assets
and liabilities.

                               December 31, 1997       December 31, 1996  
                             Carrying        Fair    Carrying        Fair
                              Value         Value     Value         Value 
Assets                                   (dollars in thousands)          

Net finance receivables,
  less allowance for finance
  receivable losses         $7,463,910  $7,463,910  $7,058,049  $7,058,049
Investment securities          928,411     928,411     879,133     879,133
Cash and cash equivalents       91,076      91,076      90,197      90,197
Assets held for sale              -           -        668,707     668,707


Liabilities

Long-term debt              (3,941,486) (4,047,006) (4,416,637) (4,525,262)
Commercial paper            (3,157,671) (3,157,671) (3,015,920) (3,015,920)


Off-Balance Sheet Financial
  Instruments

Unused credit limits                 -           -           -           -
Interest rate swap agreements        -     (29,690)          -     (30,314)
Treasury rate lock agreements        -      (1,610)          -           - 



                  VALUATION METHODOLOGIES AND ASSUMPTIONS

The  following methods  and assumptions  were used  in estimating  the fair
value of the Company's financial instruments.


Finance Receivables

Fair  value of net finance  receivables (which approximates carrying amount
less allowance for finance receivable losses) was estimated using projected
cash flows, computed by  category of finance receivable, discounted  at the
weighted-average interest rates currently being offered for similar finance
receivables.  Cash flows  were based on contractual payment  terms adjusted
for delinquencies and finance  receivable losses.  The fair  value estimate
does not reflect the  value of the underlying customer relationships or the
related distribution system.
<PAGE>
<PAGE> 60

Notes to Consolidated Financial Statements, Continued


Investment Securities

Fair values of  investment securities  are based on  quoted market  prices,
where  available.   For  investment  securities not  actively  traded, fair
values were  estimated  using  values  obtained  from  independent  pricing
services  or,  in  the case  of  some  private  placements, by  discounting
expected future cash flows using a current market rate applicable to yield,
credit quality, and average life of the investments.


Cash and Cash Equivalents

The carrying amounts reported  in the Consolidated Balance Sheets  for cash
and cash equivalents approximate those assets' fair values.


Assets Held for Sale

The carrying amounts reported in the Consolidated Balance Sheets for assets
held for sale approximate the assets' fair value.


Long-term Debt

The fair values of  the Company's long-term borrowings are  estimated using
cash flows discounted at current borrowing rates.


Commercial Paper

The carrying value of commercial paper approximates the fair value.


Unused Customer Credit Lines

The  unused  credit  lines  available  to  the  Company's  and  AGFC-Utah's
customers are considered to have no fair value.  The interest rates charged
on these facilities can  either be changed at AGFC-Utah's  discretion, such
as for private label, or are adjustable and reprice frequently, such as for
loan  and retail sales contracts  revolving lines of  credit.  Furthermore,
these amounts,  in part or in total, can  be cancelled at the discretion of
the  Company and  AGFC-Utah.  The  interest rates  charged on  credit cards
could  have been changed at  AGFC-Utah's discretion, and  the unused credit
lines could have been cancelled at the discretion of AGFC-Utah.  


Derivative Financial Instruments

Fair values for  the Company's interest  rate swap  and treasury rate  lock
agreements are  estimated using  cash  flows discounted  at current  market
rates.
<PAGE>
<PAGE> 61

                                  PART IV


Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K


(a) (1) and (2) The following consolidated financial statements of American
    General Finance Corporation and subsidiaries are included in Item 8:

         Consolidated Balance Sheets, December 31, 1997 and 1996

         Consolidated  Statements of Income, years ended December 31, 1997,
         1996, and 1995

         Consolidated  Statements  of  Shareholder's  Equity,  years  ended
         December 31, 1997, 1996, and 1995

         Consolidated  Statements of Cash  Flows, years ended  December 31,
         1997, 1996, and 1995

         Notes to Consolidated Financial Statements

    Schedule I--Condensed Financial  Information of Registrant  is included
    in Item 14(d).

    All  other  schedules for  which provision  is  made in  the applicable
    accounting regulations  of the Securities and  Exchange Commission have
    been  omitted,  because   they  are  inapplicable,   or  the   required
    information  is included  in the  consolidated financial  statements or
    notes.

    (3)  Exhibits:

         Exhibits  are listed  in the  Exhibit Index  beginning on  page 67
         herein.

(b) Reports on Form 8-K

    Current Report on Form 8-K dated October 22, 1997, with respect  to the
    issuance of an Earnings Release announcing  certain unaudited financial
    results of the Company for the quarter ended September 30, 1997.

    Current Report on Form 8-K dated  January 9, 1998, with  respect to the
    authorization  for issuance of  $200 million aggregate principal amount
    of the Company's 5.90% Senior Notes due January 15, 2003.

    Current Report on Form 8-K dated January 27, 1998,  with respect to the
    issuance of an Earnings Release announcing  certain unaudited financial
    results of the Company for the year ended December 31, 1997.

    Current Report on Form 8-K  dated March  5, 1998, with  respect to  the
    authorization for  issuance of  $200 million aggregate principal amount
    of the Company's 6.20% Senior Notes due March 15, 2003.

(c) Exhibits

    The exhibits required to  be included in  this portion of  Item 14. are
    submitted as a separate section of this report.
<PAGE>
<PAGE> 62

Item 14(d).


Schedule I - Condensed Financial Information of Registrant

<TABLE>
                    American General Finance Corporation
                          Condensed Balance Sheets
<CAPTION>             
                                                         December 31,      
                                                      1997          1996  
                                                    (dollars in thousands)
<S>                                                <C>           <C>
Assets

Finance receivables, net of unearned
  finance charges:
    Loans                                          $  716,277    $1,236,881
    Retail sales finance                              111,848       216,182

Net finance receivables                               828,125     1,453,063
Allowance for finance receivable losses               (14,988)      (32,829)
Net finance receivables, less allowance
  for finance receivable losses                       813,137     1,420,234

Cash and cash equivalents                              51,496        51,470
Investments in subsidiaries                         2,668,839     2,807,470
Receivable from parent and subsidiaries             5,255,541     4,400,300
Notes receivable from parent and
  subsidiaries                                        185,027       173,235
Other assets                                          112,961       144,539

Total assets                                       $9,087,001    $8,997,248


Liabilities and Shareholder's Equity

Senior long-term debt, 5.09% - 10.05%,
  due 1998 - 2009                                  $3,941,486    $4,407,637
Short-term notes payable:
  Commercial paper                                  2,914,743     2,767,189
  Notes payable to subsidiaries                       676,449       309,794
Other liabilities                                     179,408       177,705

Total liabilities                                   7,712,086     7,662,325

Shareholder's equity: 
  Common stock                                          5,080         5,080
  Additional paid-in capital                          718,914       691,914
  Other equity                                         34,512        21,454 
  Retained earnings                                   616,409       616,475

Total shareholder's equity                          1,374,915     1,334,923

Total liabilities and shareholder's equity         $9,087,001    $8,997,248

<FN>
<F1>
See Notes to Condensed Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 63

Schedule I, Continued

<TABLE>
                    American General Finance Corporation
                       Condensed Statements of Income



<CAPTION>
                                               Years Ended December 31,  
                                               1997      1996      1995  
                                                (dollars in thousands)
<S>                                          <C>       <C>       <C>
Revenues
  Interest received from affiliates          $728,068  $578,400  $579,671
  Dividends received from subsidiaries        195,334    60,970   128,000
  Finance charges                                 992     1,372       717
  Other                                        15,446    19,038    20,481

Total revenues                                939,840   659,780   728,869

Expenses
  Interest expense                            524,462   495,498   513,223
  Operating expenses                           10,815    13,542    13,040

Total expenses                                535,277   509,040   526,263

Income before income taxes and    
  equity in overdistributed net   
  income of subsidiaries                      404,563   150,740   202,606

Provision for Income Taxes                     73,348    31,537    26,179

Income before equity in overdistributed
  net income of subsidiaries                  331,215   119,203   176,427

Equity in Overdistributed Net Income 
  of Subsidiaries                            (194,144)  (68,244)  (84,134)

Net Income                                   $137,071  $ 50,959  $ 92,293

<FN>
<F1>
See Notes to Condensed Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 64

Schedule I, Continued

<TABLE>
                    American General Finance Corporation
                     Condensed Statements of Cash Flows

<CAPTION>
                                                   Years Ended December 31,
                                                 1997        1996        1995
                                                    (dollars in thousands)
<S>                                          <C>         <C>         <C>
Cash Flows from Operating Activities
Net Income                                   $  137,071  $   50,959  $   92,293
Reconciling adjustments to net cash 
  provided by operating activities:
    Equity in overdistributed net income    
      of subsidiaries                           194,144      68,244      84,134
    Change in other assets and other
      liabilities                                43,066      11,109    (142,843)
    Other, net                                   (5,192)    (13,999)    (17,782)
Net cash provided by operating activities       369,089     116,313      15,802

Cash Flows from Investing Activities
  Finance receivables originated or purchased
    from subsidiaries                          (720,788) (1,261,633) (1,358,250)
  Principal collections on finance receivables   78,274      85,678      97,243
  Finance receivables sold to subsidiaries    1,253,983   1,308,035        -
  Capital contributions to subsidiaries,  
    net of return of capital                    (42,456)     40,662      (5,785)
  Change in receivable from parent
    and subsidiaries                           (855,241)   (375,559)  1,154,989
  Purchase of assets from affiliate              (9,536)       -           -    
  Other, net                                      3,221     (27,473)     (5,911)
Net cash used for investing activities         (292,543)   (230,290)   (117,714)
    
Cash Flows from Financing Activities
  Proceeds from issuance of long-term debt      726,950      77,817   1,532,033
  Repayment of long-term debt                (1,195,750)   (540,860)   (765,160)
  Change in commercial paper                    147,554     611,910    (450,739)
  Change in notes receivable or payable 
    with parent and subsidiaries                354,863     110,826    (194,518)
  Capital contributions from parent              27,000        -         80,000
  Dividends paid                               (137,137)   (147,574)   (108,509)
Net cash (used for) provided by 
  financing activities                          (76,520)    112,119      93,107

Increase (decrease) in cash and cash equivalents     26      (1,858)     (8,805)
Cash and cash equivalents at beginning of year   51,470      53,328      62,133
Cash and cash equivalents at end of year     $   51,496  $   51,470  $   53,328

<FN>
<F1>
See Notes to Condensed Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 65

Schedule I, Continued


                    American General Finance Corporation
                  Notes to Condensed Financial Statements
                             December 31, 1997




Note 1.  Accounting Policies

AGFC's investments in  subsidiaries are stated  at cost plus the  equity in
undistributed net income of subsidiaries since the date of the acquisition.
The  condensed financial  statements of  the registrant  should be  read in
conjunction with AGFC's consolidated financial statements.



Note 2.  Receivable from Subsidiaries

AGFC provides funding  to its  subsidiaries for lending  activities.   Such
funding is made at 215 basis points over the borrowing cost rate.



Note 3.  Long-Term Debt

Senior  long-term debt  maturities for  the five  years after  December 31,
1997, were as  follows:  1998, $810.2 million;  1999, $562.1 million; 2000,
$1.3 billion; 2001, $39.9 million; and 2002, $546.5 million.
<PAGE>
<PAGE> 66

                                 Signatures


Pursuant to  the requirements  of Section  13 or  15(d)  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 on March
19, 1998.

                                       AMERICAN GENERAL FINANCE CORPORATION


                                       By: /s/  Robert A. Cole                 
                                                Robert A. Cole  
                                       (Senior Vice President and 
                                        Chief Financial Officer)

Pursuant to the requirements  of the Securities Exchange Act of  1934, this
report has  been signed below  by the  following persons on  behalf of  the
registrant and in the capacities indicated on March 19, 1998.


/s/  Frederick W. Geissinger            /s/  Jerry L. Gilpin
     Frederick W. Geissinger                 Jerry L. Gilpin
(President and Chief Executive          (Director)
 Officer and Director - Principal
 Executive Officer)                     
                                        /s/  Philip M. Hanley
                                             Philip M. Hanley
/s/  Robert A. Cole                     (Director)
     Robert A. Cole 
(Senior Vice President and
 Chief Financial Officer and            /s/  Bennie D. Hendrix
 Director - Principal Financial              Bennie D. Hendrix
 Officer)                               (Director)


/s/  George W. Schmidt                  /s/  Larry R. Klaholz
     George W. Schmidt                       Larry R. Klaholz
(Controller and Assistant Secretary -   (Director)
 Principal Accounting Officer)

                          
/s/  W. Tal Bratton                          Jon P. Newton          
     W. Tal Bratton                     (Director)
(Director)

                                        /s/  Ray W. Sims            
                                             Ray W. Sims
     James S. D'Agostino Jr.            (Director)
(Director)
<PAGE>
<PAGE> 67

                                Exhibit Index


Exhibits                                                                    Page

(3)  a.  Restated  Articles of  Incorporation of  American General  Finance
         Corporation  (formerly  Credithrift  Financial Corporation)  dated
         July 22, 1988  and amendments  thereto dated August  25, 1988  and
         March 20, 1989.   Incorporated by reference to Exhibit  (3)a filed
         as a part of the Company's Annual Report on Form 10-K for the year
         ended December 31, 1988 (File No. 1-6155).

     b.  By-laws of American General Finance Corporation.  Incorporated  by
         reference  to Exhibit (3)b filed as a part of the Company's Annual
         Report on Form 10-K for the year ended December 31, 1992 (File No.
         1-6155). 

(4)  a.  The following instruments are filed pursuant to Item 601(b)(4)(ii)
         of Regulation S-K, which requires with certain exceptions that all
         instruments be filed which  define the rights of holders  of long-
         term  debt of the Company  and its consolidated  subsidiaries.  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  October 1, 1994 from American  General
              Finance   Corporation   to   The   Chase    Manhattan   Bank.
              Incorporated  by reference to Exhibit 4(a) filed as a part of
              the   Company's   Registration    Statement   on   Form   S-3
              (Registration No. 33-55803).

              (a)  Resolutions and  form of note  for senior  notes, 8% due
                   February  15,  2000.    Incorporated   by  reference  to
                   Exhibits   4(a)  and  4(b)  filed   as  a  part  of  the
                   Company's  Current Report on  Form 8-K dated February 3,
                   1995 (File No. 1-6155).

              (b)  Resolutions  and forms  of  notes  for (senior)  Medium-
                   Term  Notes, Series  D.  Incorporated  by  reference  to
                   Exhibits  4(a),  4(b) and 4(c)  filed as a  part  of the
                   Company's  Current  Report on  Form 8-K  dated  February
                   13, 1995 (File No. 1-6155).

              (c)  Resolutions  and  form of note for  senior notes, 7 1/4%
                   due   March  1, 1998.    Incorporated  by  reference  to
                   Exhibits   4(a)  and  4(b)  filed  as  a  part   of  the
                   Company's  Current  Report on  Form 8-K  dated  February
                   27, 1995 (File No. 1-6155).

              (d)  Resolutions and  form of note  for senior  notes, 7 1/4%
                   due  April  15, 2000.    Incorporated  by  reference  to
                   Exhibits  4(a)  and  4(b)   filed  as  a  part   of  the
                   Company's Current  Report  on Form 8-K  dated  April 11,
                   1995 (File No. 1-6155).
<PAGE>
<PAGE> 68

Exhibit Index, Continued


Exhibits                                                                    Page

              (e)  Resolutions  and form of note for  senior  notes, 7 1/4%
                   due  May  15,  2005.    Incorporated   by  reference  to
                   Exhibits   4(a)  and  4(b)  filed   as  a  part  of  the
                   Company's  Current Report on  Form 8-K dated May 5, 1995
                   (File No. 1-6155).
                  
              (f)  Resolutions  for (senior)  Medium-Term Notes,  Series D.
                   Incorporated by  reference to  Exhibit 4 filed as a part
                   of  the  Company's  Current  Report  on Form  8-K  dated
                   November 16, 1995 (File No. 1-6155).

              (g)  Resolutions  and form of  note for senior  notes, 6 1/8%
                   due  September 15, 2000.  Incorporated  by reference  to
                   Exhibits  4(a)  and   4(b)  filed   as  a  part  of  the
                   Company's  Current  Report  on Form 8-K  dated September
                   17, 1997 (File No. 1-6155).

              (h)  Resolutions  and  form of note for  senior  notes, 5.90%
                   due  January 15,  2003.  Incorporated  by  reference  to
                   Exhibits  4(a)  and  4(b)   filed  as  a   part  of  the
                   Company's  Current Report  on Form 8-K dated January  9,
                   1998 (File No. 1-6155).

     b.  In  accordance  with   Item  601(b)(4)(iii)  of  Regulation   S-K,
         certain  other  instruments  defining  the  rights  of  holders of
         long-term  debt of  the  Company  and its  subsidiaries  have  not
         been  filed  as  exhibits to  this  Annual  Report  on  Form  10-K
         because  the   total   amount   of   securities   authorized   and
         outstanding  under  each such  instrument  does  not exceed 10% of
         the total  assets of  the Company  on a  consolidated  basis.  The
         Company hereby agrees to furnish a  copy of each  such  instrument
         to   the   Securities  and   Exchange   Commission   upon  request
         therefor.

(12)     Computation of ratio of earnings to fixed charges.                   69

(23)     Consent of Ernst & Young LLP, Independent Auditors                   70

(27)     Financial Data Schedule                                              71
<PAGE>