<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 1-7422 

                       American General Finance, Inc.
           (Exact name of registrant as specified in its charter)

             Indiana                            35-1313922   
     (State of incorporation)      (I.R.S. Employer Identification No.)

     601 N.W. Second Street, Evansville, IN             47708   
     (Address of principal executive offices)         (Zip code)

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

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

                                    None

        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 2,000,000 shares of the registrant's  common
stock, $.50 par value, outstanding.
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<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 III  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, Inc. will  be referred  to in  this document  as
"AGFI"  or  collectively,  with  its  subsidiaries,  whether  directly   or
indirectly owned,  as the "Company".   AGFI was incorporated  in Indiana in
1974  to  become the  parent holding  company  of American  General Finance
Corporation (AGFC).  AGFC was incorporated  in Indiana in 1927 as successor
to  a business started  in 1920.   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.

AGFI is a  financial services holding company whose  principal subsidiaries
are AGFC and American General Financial Center (AGFC-Utah).  AGFC is also a
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.  AGFC-Utah is an industrial loan company engaged
primarily  in the consumer finance business.  AGFC-Utah partially funds its
operations  by accepting  public  deposits insured  by the  Federal Deposit
Insurance Corporation.  

At December  31, 1997, the Company  had 1,354 offices in  41 states, Puerto
Rico,  and the U.S. Virgin  Islands and approximately  8,500 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)        $7,522,841    $8,123,947    $8,283,485

Average borrowings                 $7,123,397    $7,170,371    $7,381,504
<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                        16.81%        17.85%        18.02%

Borrowing cost - interest
  expense as a percentage of
  average borrowings                  6.80%         6.88%         7.01%

Interest spread - yield 
  less borrowing cost                10.01%        10.97%        11.01%

Insurance revenues as a
  percentage of average 
  net receivables                     2.51%         2.54%         2.68%

Operating expenses as a
  percentage of average
  net receivables                     6.31%         6.31%         5.64%

Allowance ratio - allowance for 
  finance receivable losses as 
  a percentage of net finance 
  receivables                         4.65%         5.18%         5.85%

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        3.60%         5.47%         3.77%

Delinquency ratio - finance 
  receivables 60 days or more 
  past due as a percentage
  of related receivables              3.60%         3.83%         4.13%

Return on average assets              1.42%          .37%          .90%

Return on average equity             10.49%         2.63%         6.59%

Ratio of earnings to fixed charges
  (refer to Exhibit 12 herein
  for calculations)                   1.41          1.11          1.22

Debt to tangible equity ratio -
  debt to equity less goodwill
  and net unrealized gains or
  losses on fixed-maturity
  investment securities               7.52          8.40          7.44

Debt to equity ratio                  5.75          6.36          5.65
<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, 93%  were secured by such  property.  At
December 31, 1997,  mortgage loans accounted for 62% of the amount of loans
outstanding and 13% 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 provides
private  label  services  for  various  business  entities.   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 9.  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  issued MasterCard and VISA credit cards to
individuals through branch and direct  mail solicitation programs.   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 $255.0  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                $1,584,101   $1,347,133   $1,266,725
  Non-real estate loans             2,437,266    2,224,472    2,953,054
  Retail sales contracts            1,200,867    1,042,134    1,494,903
  Private label                       255,485      336,550      624,212
  Credit cards                           -         502,379      567,090

  Total originated and renewed      5,477,719    5,452,668    6,905,984
  Net purchased (a)                   598,608      946,168       23,495

Total originated, renewed,
  and purchased                    $6,076,327   $6,398,836   $6,929,479


Number:

  Real estate loans                    59,927       67,583       72,940
  Non-real estate loans               906,756      965,384    1,445,451
  Retail sales contracts              831,520      787,888    1,242,537
  Private label                       137,361      201,888      433,165

Total                               1,935,564    2,022,743    3,194,093


Average size (to nearest dollar):

  Real estate loans                   $26,434      $19,933      $17,367
  Non-real estate loans                 2,688        2,304        2,043
  Retail sales contracts                1,444        1,323        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 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                 $4,155,167   $3,734,195   $2,904,016
  Non-real estate loans              2,554,888    2,516,009    2,765,361
  Retail sales contracts             1,050,442      998,441    1,240,708
  Private label                        250,691      376,580      942,706
  Credit cards                            -            -         557,603

Total                               $8,011,188   $7,625,225   $8,410,394


Number:

  Real estate loans                    163,119      200,420      169,956
  Non-real estate loans              1,132,039    1,243,204    1,460,714
  Retail sales contracts               864,775      885,556    1,176,165
  Private label                        200,505      276,184      504,184
  Credit cards                            -            -         449,591

Total                                2,360,438    2,605,364    3,760,610


Average size (to nearest dollar):

  Real estate loans                    $25,473      $18,632      $17,087
  Non-real estate loans                  2,257        2,024        1,893
  Retail sales contracts                 1,215        1,127        1,055
  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       $3,711,444    $3,129,379    $2,846,845
  Yield                             13.71%        14.83%        15.02%

Non-real estate loans:
  Average net receivables       $2,542,651    $2,549,750    $2,747,661
  Yield                             21.84%        22.29%        21.83%

Total loans:
  Average net receivables       $6,254,095    $5,679,129    $5,594,506
  Yield                             17.02%        18.18%        18.37%

Retail sales contracts:
  Average net receivables       $  967,189    $1,080,527    $1,232,395
  Yield                             16.08%        16.95%        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       $1,268,746    $1,915,718    $2,182,374
  Yield                             15.80%        16.16%        16.36%

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

Total:
  Average net receivables       $7,522,841    $8,123,947    $8,283,485
  Yield                             16.81%        17.85%        18.02%
<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                 $ 32,240     $ 36,997     $ 23,245
  Charge-off ratio                    .87%        1.19%         .82%

Non-real estate loans:
  Net charge-offs                 $182,371     $229,109     $165,413
  Charge-off ratio                   7.15%        8.95%        6.11%

Total loans:
  Net charge-offs                 $214,611     $266,106     $188,658
  Charge-off ratio                   3.44%        4.70%        3.38%

Retail sales contracts:
  Net charge-offs                 $ 38,309     $ 54,565      $35,479
  Charge-off ratio                   3.97%        5.00%        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                 $ 55,872     $127,077      $86,594
  Charge-off ratio                   4.40%        6.57%        3.98%

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

Total:
  Net charge-offs                 $270,483     $444,569     $311,458
  Charge-off ratio                   3.60%        5.47%        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                $108,277     $ 84,361     $ 60,585
  % of related receivables          2.56%        2.21%        1.99%

Non-real estate loans            $163,942     $184,410     $203,191
  % of related receivables          5.72%        6.45%        6.37%

Total loans                      $272,219     $268,771     $263,776
  % of related receivables          3.84%        4.03%        4.23%

Retail sales contracts           $ 29,480     $ 35,394     $ 45,043
  % of related receivables          2.32%        2.92%        3.00%

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

Total retail sales finance       $ 37,504     $ 47,961     $ 93,473
  % of related receivables          2.46%        3.01%        3.73%

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

Total                            $309,723     $316,732     $385,769
  % of related receivables          3.60%        3.83%        4.13%


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        $395,153      $492,124      $226,226
Provision for finance receivable
  losses                             247,983       417,446       574,166
Allowance reclassified to assets
  held for sale                         -          (70,000)         -   
Allowance related to net acquired
  receivables                           -              152         3,190 
Charge-offs, net of recoveries      (270,483)     (444,569)     (311,458)

Balance at end of year              $372,653      $395,153      $492,124

Allowance ratio                        4.65%         5.18%         5.85%


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  10.52%   $  697,734   9.15%   $  886,974  10.55%
N. Carolina    696,261   8.69       672,021   8.81       737,630   8.77
Florida        518,837   6.48       534,936   7.02       626,519   7.45
Ohio           465,489   5.81       454,290   5.96       439,522   5.23
Indiana        438,369   5.47       397,698   5.22       454,892   5.41
Illinois       434,029   5.42       452,508   5.93       489,840   5.82
Virginia       356,928   4.46       350,349   4.59       392,146   4.66
Georgia        310,485   3.88       312,377   4.10       372,963   4.43
Other        3,948,100  49.27     3,753,312  49.22     4,009,908  47.68 

            $8,011,188 100.00%   $7,625,225 100.00%   $8,410,394 100.00%
<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         $4,100,324     $4,734,633     $4,885,203
  Borrowing cost                  7.32%          7.28%          7.26%

Short-term debt:
  Average borrowings         $3,019,808     $2,430,620     $2,490,039
  Borrowing cost                  6.10%          6.10%          6.51%

Investment certificates:
  Average borrowings         $    3,265     $    5,118     $    6,262
  Borrowing cost                  5.73%          6.27%          6.48%

Total:
  Average borrowings         $7,123,397     $7,170,371     $7,381,504
  Borrowing cost                  6.80%          6.88%          7.01%

The Company's use of interest rate  swap agreements, which are included  in
short-term  borrowing cost above, is described in  Note 12. 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                           $2,386,458         $4,080,487
  1999                            1,475,226            609,764
  2000                              927,288          1,277,077
  2001                              515,684             41,774
  2002                              322,388            547,823
  2003 and thereafter             2,384,144            709,777

  Total                          $8,011,188         $7,266,702
<PAGE>
<PAGE> 13

Item 1.  Continued


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


                            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.   AGFC-Utah, which
engages in the consumer  finance business and accepts insured  deposits, is
subject  to regulation by and reporting requirements of the Federal Deposit
Insurance Corporation  and is subject to  regulatory codes in the  state of
Utah. 


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
AGFI and its subsidiaries 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 

AGFI and certain of its subsidiaries are parties to  various other lawsuits
and proceedings arising in the ordinary  course of business.  Many of these
lawsuits and  proceedings  arise in  jurisdictions, such  as Alabama,  that
permit damage  awards  disproportionate  to  the  actual  economic  damages
incurred.  Based upon information presently available, the Company believes
that the total amounts that  will ultimately be paid, if any,  arising from
these lawsuits  and proceedings will not have  a material adverse effect on
the Company's consolidated  results of operations  and financial  position.
However,  it should  be noted  that the  frequency of large  damage awards,
including large punitive damage awards, that  bear little or no relation to
actual economic  damages  incurred  by  plaintiffs  in  jurisdictions  like
Alabama   continues  to  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 AGFI's common stock because  American General
owns all AGFI's common  stock.  AGFI declared the  following cash dividends
on its common stock:

Quarter Ended                         1997         1996  
                                    (dollars in thousands)

March 31                            $    -       $ 27,000
June 30                              106,000       30,088
September 30                          20,500       81,502
December 31                              -            -  

                                    $126,500     $138,590


See Management's Discussion and Analysis in Item 7., as well as Note 16. of
Notes  to Consolidated  Financial Statements  in Item  8., with  respect to
limitations on the ability of AGFI 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    $1,524,105 $1,724,948 $1,791,494 $1,491,239 $1,288,777
 
Net income (b)       129,433     34,146     85,655    244,988    195,741

Total assets       9,289,500  9,563,696  9,561,350  8,980,728  7,658,775

Long-term debt     4,011,457  4,498,530  4,979,883  4,312,932  4,018,797


(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 $12.7 million.  

(b)  Per share  information is  not included  because all of  AGFI's common
     stock is owned by American General.
<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 $516.1  million in 1997  compared to $590.1
million in 1996 and $657.9  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
American General generated cash flow  of $1.4 billion for 1997.   This cash
flow was used principally to finance  the net originations and purchases of
finance receivables of $692.9 million,  to fund the net repayments of  debt
of $366.0 million, to pay dividends to American General of  $126.5 million,
and to repurchase $100.0 million of securitized finance receivables.

Operating cash flow  combined with the net proceeds of  increased debt, the
proceeds  of securitized  finance  receivables sold  in  1995, and  a  1995
capital  contribution from American General, generated  cash flow of $745.4
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 purchases  of assets from affiliates of  $514.7 million
in 1996 and $888.5 million in 1995 and to pay dividends to American General
of $138.6 million in 1996 and $112.5 million in 1995.

Dividends have  been paid to manage  the Company's leverage to  a target of
7.5  to 1  of  debt  to  tangible  equity (equity  less  goodwill  and  net
unrealized  gains or losses on fixed-maturity  investment securities).  The
debt to  tangible equity ratio at December 31, 1997  was 7.52 to 1.  AGFI's
ability  to  pay dividends  is substantially  dependent  on the  receipt of
dividends  or other funds from  its subsidiaries, primarily  AGFC.  Certain
AGFI  and  AGFC  financing  agreements  effectively  limit  the  amount  of
dividends the entity  may pay;  however, management does  not expect  those
limits to affect the Company's ability  to maintain targeted leverage.  See
Note 16. 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  $7.3 billion of debt and $1.2 billion of equity, compared to
$8.8  billion at December 31, 1996, consisting  of $7.6 billion of debt and
$1.2 billion of equity.

The Company issues a combination of fixed-rate debt, principally long-term,
and floating-rate debt,  principally short-term.   The Company's  principal
borrowing  subsidiary, AGFC, and  one of  its subsidiaries  sell commercial
paper  notes with maturities ranging from 1  to 270 days directly to banks,
insurance companies, corporations, and other institutional investors.  AGFC
may also offer medium-term notes with original maturities of nine months or
longer to certain institutional  investors.  AGFC obtains the  remainder of
its  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,  totaled  $4.5  billion,  with
remaining availability to the Company of $4.4 billion.  See Note 11. 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 $95.3 million, or 279%,  for 1997 and decreased $51.5
million, or 60%, 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  $70.0 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 an aftertax charge to operations of $93.5
million was necessary to reduce the carrying amount of the  assets held for
sale to net  realizable value.  This charge was  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  9. 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  $8.0 billion  at  December 31,  1997, an
increase of  $386.0 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  187 basis point improvement  in the charge-off
ratio.   The delinquency ratio also improved  to 3.60% at December 31, 1997
from 3.83% a year earlier. 

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


Finance Charges

Finance  charge revenues  decreased $185.2  million, or  13%, for  1997 and
$42.5 million,  or 3%, 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  $601.1 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 $159.5 million,  or 2%, during 1996 when  compared to
1995  primarily  due  to 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 $1.9 million, or  3%, for 1997 and decreased  $8.0
million, or 10%, 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.  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 decrease in other revenues for 1996 when compared to 1995 was primarily
due to  the gain recorded in  1995 for the securitized  finance receivables
sold, partially offset  by a slight increase  in investment revenue  on the
invested assets for the insurance operations.  Investment revenue increased
for 1996  when compared to 1995 primarily due to growth in average invested
assets for the insurance  operations 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.


Interest Expense

Interest  expense  decreased  $31.8 million,  or  6%,  for  1997 and  $24.4
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  $47.0 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 $211.1 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 $37.9  million, or 7%, for 1997  and increased
$45.2  million, or 10%, 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 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 37  branch offices during 1997
and 19 branch offices during 1996.


Provision for Finance Receivable Losses

Provision for finance receivable  losses decreased $169.5 million, or  41%,
for  1997  and $156.7  million,  or  27%, 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 $174.1 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  $270.5
million  from $444.6  million for 1996  and $311.5  million for  1995.  The
charge-off ratio for 1997 decreased to 3.60% compared to 5.47% for 1996 and
3.77% for  1995.  Excluding  the portfolios held  for sale, the  charge-off
ratio was 4.70% for 1996.

At  December 31, 1997, delinquencies were $309.7 million compared to $316.7
million at the  end of 1996  and $385.8 million  at the end  of 1995.   The
delinquency ratio at December 31, 1997 decreased to 3.60% compared to 3.83%
<PAGE>
<PAGE> 25

Item 7.  Continued


at the end  of 1996 and  4.13% 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 $372.7 million at
December 31, 1997 from $395.2 million  at December 31, 1996.  The allowance
ratio at  December 31, 1997  was 4.65%  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
9. 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 $55.6 million,  or 287%, for 1997 and
decreased $10.6 million,  or 35%, 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:
82.23% in net  finance receivables, less  allowance for finance  receivable
losses;  10.00% in investment securities;  3.81% in other  assets; 2.82% in
acquisition-related goodwill; and 1.14% 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,
and  borrowings under  credit  facilities.   The  overall sources  of  cash
<PAGE>
<PAGE> 27

Item 7.  Continued


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,
2) market opportunities for both investment and  funding alternatives  that
<PAGE>
<PAGE> 28

Item 7.  Continued


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           $2,137 $1,370 $  855 $  468 $  288 $2,013 $7,131  $7,234
  Avg. interest rate   21.40% 20.95% 18.55% 15.55% 13.05% 13.05% 17.89%

  Variable rate        $   44 $   35 $   28 $   23 $   19 $  250 $  399  $  405
  Avg. interest rate   12.46% 12.51% 12.48% 12.45% 12.41% 12.09% 12.23%  

Fixed-maturity securities
  Fixed rate           $   23 $   31 $   41 $   53 $   93 $  669 $  910  $  914
  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           $  825 $  570 $1,279 $   42 $  550 $  713 $3,979  $4,077
  Avg. interest rate    7.54%  7.33%  6.79%  6.24%  6.77%  7.48%  7.14%

  Variable rate        $  -   $   40 $  -   $  -   $  -   $  -   $   40  $   40
  Avg. interest rate      - %  6.10%    - %    - %    - %    - %  6.10%  

Short-term debt        $3,253 $  -   $  -   $  -   $  -   $  -   $3,253  $3,253
  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, Inc.


We  have audited the  accompanying consolidated balance  sheets of American
General Finance,  Inc.  (a  wholly-owned  subsidiary  of  American  General
Corporation) 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, Inc. 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, Inc. 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                             $4,155,167    $3,734,195
    Non-real estate loans                          2,554,888     2,516,009
    Retail sales contracts                         1,050,442       998,441
    Private label                                    250,691       376,580

Net finance receivables                            8,011,188     7,625,225
Allowance for finance receivable
  losses  (Note 6.)                                 (372,653)     (395,153)
Net finance receivables, less allowance
  for finance receivable losses                    7,638,535     7,230,072

Investment securities  (Note 7.)                     929,311       880,033
Cash and cash equivalents                            105,695       105,493
Goodwill  (Note 8.)                                  261,985       270,989
Other assets  (Note 8.)                              353,974       410,102
Assets held for sale  (Note 9.)                         -          667,007

Total assets                                      $9,289,500    $9,563,696


Liabilities and Shareholder's Equity

Long-term debt  (Note 10.)                        $4,011,457    $4,498,530
Short-term notes payable:
  Commercial paper  (Notes 11. and 12.)            3,157,671     3,015,920
  Banks and other  (Notes 11. and 13.)                95,000       111,000
Investment certificates                                2,574         3,778
Insurance claims and policyholder 
  liabilities                                        436,859       456,430
Other liabilities                                    300,342       260,284
Accrued taxes                                         22,272        17,273

Total liabilities                                  8,026,175     8,363,215

Shareholder's equity: 
  Common stock  (Note 15.)                             1,000         1,000
  Additional paid-in capital                         743,083       696,230
  Net unrealized gains on investment
    securities  (Note 7.)                             34,512        21,454 
  Retained earnings  (Note 16.)                      484,730       481,797

Total shareholder's equity                         1,263,325     1,200,481

Total liabilities and shareholder's equity        $9,289,500    $9,563,696

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



<CAPTION>
                                           Years Ended December 31,  
                                        1997         1996         1995   
                                            (dollars in thousands)
<S>                                  <C>          <C>          <C>
Revenues
  Finance charges                    $1,264,798   $1,449,968   $1,492,467
  Insurance                             188,574      206,170      222,264
  Other                                  70,733       68,810       76,763

Total revenues                        1,524,105    1,724,948    1,791,494

Expenses
  Interest expense                      461,275      493,051      517,475
  Operating expenses                    474,822      512,698      467,475
  Provision for finance receivable
    losses                              247,983      417,446      574,166
  Loss on non-strategic assets           42,225      145,459         -   
  Insurance losses and loss
    adjustment expenses                  93,447      102,811      116,829

Total expenses                        1,319,752    1,671,465    1,675,945

Income before provision for income
  taxes                                 204,353       53,483      115,549

Provision for Income Taxes
  (Note 14.)                             74,920       19,337       29,894

Net Income                           $  129,433   $   34,146   $   85,655



<FN>
<F1>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 35
<TABLE>
              American General Finance, Inc. 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      $    1,000  $    1,000  $    1,000
  Balance at end of year                 1,000       1,000       1,000

Additional Paid-in Capital
  Balance at beginning of year         696,230     696,128     616,021
  Capital contributions from parent
    and other                           46,853         102      80,107
  Balance at end of year               743,083     696,230     696,128

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         481,797     586,241     613,126
  Net income                           129,433      34,146      85,655
  Common stock dividends              (126,500)   (138,590)   (112,540)
  Balance at end of year               484,730     481,797     586,241

Total Shareholder's Equity          $1,263,325  $1,200,481  $1,321,781 



<FN>
<F1>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 36
<TABLE>
              American General Finance, Inc. 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                                       $  129,433   $   34,146   $   85,655
Reconciling adjustments to net cash 
  provided by operating activities:
    Provision for finance receivable losses         247,983      417,446      574,166
    Depreciation and amortization                    86,330       98,032      114,789
    Deferral of finance receivable
      origination costs                             (39,134)     (50,303)     (73,829)
    Deferred federal income tax charge (benefit)     60,860      (43,659)     (69,572)
    Deferred state income tax charge (benefit)        1,760       (2,216)     (16,550)
    Change in other assets and other liabilities    (38,861)     (29,983)      49,800
    Change in insurance claims and
      policyholder liabilities                      (19,571)     (27,541)      17,088
    Loss on non-strategic assets                     42,225      145,459         -
    Gain on securitized finance receivables sold       -            -          (4,552)
    Operations related to assets held for sale       39,905         -            -
    Other, net                                        5,154       48,718      (19,136)
Net cash provided by operating activities           516,084      590,099      657,859

Cash Flows from Investing Activities
  Finance receivables originated or purchased    (5,035,973)  (5,338,928)  (5,785,976)
  Principal collections on finance receivables    4,343,120    4,886,420    4,926,756
  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                  (129,468)    (188,732)    (200,112)
  Investment securities called, matured and sold    104,801      169,405      108,701
  Purchase of assets from affiliates                   -         (62,176)     (29,291)
  Other, net                                        (46,175)     (70,542)     (69,513)
Net cash used for investing activities              (69,925)    (604,553)    (949,435)
    
Cash Flows from Financing Activities
  Proceeds from issuance of long-term debt          730,566      124,228    1,576,530
  Repayment of long-term debt                    (1,221,070)    (609,559)    (913,909)
  Change in investment certificates                  (1,204)      (2,419)        (404)
  Change in short-term notes payable                125,751      643,049     (287,592)
  Capital contribution from parent                   46,500         -          80,000
  Dividends paid                                   (126,500)    (138,590)    (112,540)
Net cash (used for) provided by 
  financing activities                             (445,957)      16,709      342,085

Increase in cash and cash equivalents                   202        2,255       50,509
Cash and cash equivalents at beginning of year      105,493      103,238       52,729
Cash and cash equivalents at end of year         $  105,695   $  105,493   $  103,238

Supplemental Disclosure of Cash Flow Information
  Income taxes paid                              $   30,165   $   34,167   $  153,137
  Interest paid                                  $  485,067   $  497,084   $  501,830

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

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



Note 1.  Nature of Operations

American  General Finance,  Inc. will  be  referred to  in  these Notes  to
Consolidated  Financial  Statements as  "AGFI"  or  collectively, with  its
subsidiaries, whether directly or indirectly owned, as the "Company".  AGFI
is a  wholly-owned subsidiary  of  American General  Corporation  (American
General).  The  subsidiaries include American  General Finance  Corporation
(AGFC)  and American  General  Financial Center  (AGFC-Utah).   AGFI  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 1,354 offices in 41 states, Puerto Rico
and the U.S. Virgin Islands and approximately 8,500 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  provides  private
label  services  for approximately  300  retail  merchants.   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 9. for further information on the reclassification and subsequent sale
of non-strategic assets.  

Prior to  such sale, the Company issued MasterCard and VISA credit cards to
individuals through  branch and direct mail solicitation  programs.  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 $8.0  billion  of  net  finance
receivables due from approximately 2.4  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 AGFI
and  its subsidiaries.    The subsidiaries  are  all wholly-owned  and  all
intercompany items have been eliminated.  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 $255.0  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  20.  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.  Purchase of Assets from Affiliates

Subsidiaries of AGFI purchased assets, primarily finance receivables,  from
subsidiaries  of American General for  $62.2 million during  1996 and $29.3
million during 1995.



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
<PAGE>
<PAGE> 44

Notes to Consolidated Financial Statements, Continued


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 13% of the number of loans outstanding.

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

                           Amount       Percent  
                          (dollars in thousands)

1998                    $2,386,458         29.79%
1999                     1,475,226         18.41
2000                       927,288         11.58
2001                       515,684          6.44
2002                       322,388          4.02
2003 and thereafter      2,384,144         29.76 

                        $8,011,188        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.

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          $2,859,121  $2,653,457  $2,587,659
  Percent of average net receivables      45.72%      46.72%      46.25%

Retail sales finance:
  Principal cash collections          $1,483,999  $1,776,688  $1,884,972
  Percent of average net receivables     116.97%      92.74%      86.37%

Credit cards:
  Principal cash collections          $     -     $  456,275  $  454,125
  Percent of average net receivables        -  %      86.24%      89.64%
<PAGE>
<PAGE> 45

Notes to Consolidated Financial Statements, Continued


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         10.52%    $  697,734          9.15%
N. Carolina        696,261          8.69        672,021          8.81
Florida            518,837          6.48        534,936          7.02
Ohio               465,489          5.81        454,290          5.96
Indiana            438,369          5.47        397,698          5.22
Illinois           434,029          5.42        452,508          5.93
Virginia           356,928          4.46        350,349          4.59
Georgia            310,485          3.88        312,377          4.10
Other            3,948,100         49.27      3,753,312         49.22 

                $8,011,188        100.00%    $7,625,225        100.00%


Unused  credit limits  on  private label  extended by  the  Company to  its
customers were $2.7 billion and $3.1 billion at December 31, 1997 and 1996,
respectively.   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  $227.6  million  at  December  31,  1997  and  1996,
respectively.   All unused  credit  limits, in  part or  in  total, can  be
cancelled at the  discretion of the Company, and are  not indicative of the
amounts expected to be funded.



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        $395,153      $492,124      $226,226
Provision for finance receivable
  losses                             247,983       417,446       574,166
Allowance reclassified to assets
  held for sale                         -          (70,000)         -   
Allowance related to net acquired
  receivables                           -              152         3,190 
Charge-offs, net of recoveries      (270,483)     (444,569)     (311,458)

Balance at end of year              $372,653      $395,153      $492,124
<PAGE>
<PAGE> 46

Notes to Consolidated Financial Statements, Continued


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              173,981    168,274    164,515    162,547
    Other                        45,222     45,525     34,018     36,721
  Redeemable preferred stocks    18,737      7,235     18,400      7,135
Total                           923,511    874,762    870,482    841,762
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    $929,311   $880,033   $876,214   $847,026


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
<PAGE>
<PAGE> 47

Notes to Consolidated Financial Statements, Continued


During  the years  ended  December 31,  1997,  1996, and  1995,  investment
securities with a fair value of  $104.8 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                 $ 13,940      $ 13,777
    Due after 1 year through 5 years       141,129       135,306
    Due after 5 years through 10 years     477,687       450,493
    Due after 10 years                     113,028        99,977
Mortgage-backed securities                 177,727       170,929

Total                                     $923,511      $870,482


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.

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.  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 $262.0 million and  $271.0 million at  December 31, 1997
and 1996, respectively.  Accumulated amortization totaled $86.8 million and
$77.8 million at December 31, 1997 and 1996, respectively. 

Included in other assets is a  customer base valuation of $31.0 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.
<PAGE>
<PAGE> 48

Notes to Consolidated Financial Statements, Continued


Note 9.  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  $145.5  million ($93.5  million
aftertax) at December  31, 1996 was necessary to reduce the carrying amount
of the  assets held  for sale  to net  realizable value,  after considering
related expenses.

In April 1997, the Company repurchased $100.0 million of private label  and
credit   card   receivables  that   previously   had   been  sold   through
securitization.  No  gain or  loss resulted from  this transaction.   These
repurchased  credit card receivables were  offered for sale  along with the
Company's  other  credit card  receivables,  which  increased the  carrying
amount  of assets  held for sale  by approximately  $70.0 million  in April
1997.

In June 1997,  the Company  sold all of  the assets held  for sale (with  a
remaining balance of  $658.1 million)  and $81.4 million  of other  private
label finance receivables.   In  connection with these  sales, the  Company
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 the
Company  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 the
Company, 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 10.  Long-term Debt

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

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

Senior debt            $4,011,457   $4,498,530   $4,117,243   $4,607,540
<PAGE>
<PAGE> 49

Notes to Consolidated Financial Statements, Continued


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                7.32%   7.28%   7.26%         7.18%    7.16%
Senior subordinated debt     -       -     6.44            -        -
Total                      7.32%   7.28%   7.26%         7.18%    7.16%


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

                             Carrying Value    
                         (dollars in thousands)        

1998                           $  825,242
1999                              609,764
2000                            1,277,077
2001                               41,774
2002                              547,823
2003-2007                         411,643
2008-2009                         298,134

Total                          $4,011,457


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 16.).



Note 11.  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   $3,256,805  $3,126,920  $2,764,804
Average borrowings                    $3,017,332  $2,426,920  $2,489,880
Weighted average interest rate,
  at December 31:
    Stated rate on face of note            5.80%       5.57%       5.74%
    Semi-annual bond equivalent rate       5.87%       5.63%       5.84%
Weighted average interest rate,
  giving effect to interest 
  rate swap agreements and 
  commitment fees at December 31,          6.45%       6.03%       6.41%
<PAGE>
<PAGE> 50

Notes to Consolidated Financial Statements, Continued


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  $321.0  million  and  $576.0 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, Company short-term borrowings outstanding  under all
credit facilities totaled  $95.0 million with remaining availability to the
Company  of  $4.0 billion  in committed  facilities  and $426.0  million in
uncommitted  facilities.     At  December  31,   1996,  Company  borrowings
outstanding under all  credit facilities totaled  $111.0 million in  short-
term  borrowings and  $9.0 million  in long-term borrowings  with remaining
availability to the  Company of  $3.5 billion in  committed facilities  and
$621.0 million in uncommitted facilities. 



Note 12.  Derivative Financial Instruments 

The Company's principal borrowing  subsidiary is AGFC.  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.
<PAGE>
<PAGE> 51

Notes to Consolidated Financial Statements, Continued


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%


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 20. 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.
<PAGE>
<PAGE> 52

Notes to Consolidated Financial Statements, Continued


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 13.  Short-term Notes Payable - Parent

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

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 14.  Income Taxes

AGFI and  all of its  subsidiaries file a  consolidated federal income  tax
return with American  General and the majority  of its subsidiaries.   AGFI
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                            $  8,588      $ 61,702      $118,171
  Deferred                             60,860       (43,659)      (69,572)
Total federal                          69,448        18,043        48,599
State                                   5,472         1,294       (18,705)

Total                                $ 74,920      $ 19,337      $ 29,894
<PAGE>
<PAGE> 53

Notes to Consolidated Financial Statements, Continued


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               -             -          (9.90)
Amortization of goodwill               1.54          5.89          2.85
Nontaxable investment income          (1.37)        (4.84)        (2.10)
State income taxes                     1.74          1.57          (.62)
Other, net                             (.25)        (1.46)          .64 

Effective income tax rate             36.66%        36.16%        25.87%


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 $194.8 million was net
of deferred  tax liabilities totaling $150.8 million.  The net deferred tax
asset  at  December 31,  1996 of  $121.3 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 15.  Capital Stock

AGFI 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 2  million shares
issued and outstanding.
<PAGE>
<PAGE> 54

Notes to Consolidated Financial Statements, Continued


Note 16.  Retained Earnings

AGFI's ability to pay  dividends is substantially dependent on  the receipt
of dividends or other funds from its subsidiaries.  State laws restrict the
Company'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, the  Company'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.

Certain  AGFI and AGFC financing agreements effectively limit the amount of
dividends the entity may pay.  Under the most restrictive provision of such
agreements,  $366.8 million  of the  retained earnings  of AGFI  and $335.9
million of the retained earnings of  AGFC were free from such  restrictions
at  December 31, 1997.   At  that same date,  $4.8 million of  the retained
earnings of  AGFI's industrial loan company  subsidiaries were unrestricted
as to the payment of dividends.



Note 17.  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.
<PAGE>
<PAGE> 55

Notes to Consolidated Financial Statements, Continued


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.


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  
<PAGE>
<PAGE> 56

Notes to Consolidated Financial Statements, Continued


                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.

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.  
<PAGE>
<PAGE> 57

Notes to Consolidated Financial Statements, Continued


Note 18.  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, $30.6 million;  1999, $24.7 million;  2000, $17.3 million;
2001,  $9.4  million; 2002,  $4.0 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 $32.4 million,  $36.0
million, and $38.5 million, respectively.

AGFI 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.
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> 58

Notes to Consolidated Financial Statements, Continued


Note 19.  Interim Financial Information (Unaudited)

Unaudited interim information is summarized below:


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

    March 31             $  384,748        $  438,958
    June 30                 379,470           429,904
    September 30            379,618           429,313
    December 31             380,269           426,773

    Total                $1,524,105        $1,724,948


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

    March 31             $   61,697        $   44,235
    June 30                  21,641 (a)        47,410
    September 30             64,345            68,124
    December 31              56,670          (106,286) (b)

    Total                $  204,353        $   53,483


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

    March 31             $   38,794        $   28,188
    June 30                  13,622 (a)        29,588
    September 30             40,689            43,611
    December 31              36,328           (67,241) (b)

    Total                $  129,433        $   34,146


(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 $145.5 million ($93.5 million
     aftertax).
<PAGE>
<PAGE> 59

Notes to Consolidated Financial Statements, Continued


Note 20.  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         $7,638,535  $7,638,535  $7,230,072  $7,230,072 
Investment securities          929,311     929,311     880,033     880,033 
Cash and cash equivalents      105,695     105,695     105,493     105,493 
Assets held for sale              -           -        667,007     667,007


Liabilities

Long-term debt              (4,011,457) (4,117,243) (4,498,530) (4,607,540)
Short-term notes payable    (3,252,671) (3,252,671) (3,126,920) (3,126,920)


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.


Short-term Notes Payable

The carrying value of short-term notes payable approximates the fair value.


Unused Customer Credit Lines

The unused credit lines available to the Company's customers are considered
to have no fair value.  The interest rates  charged on these facilities can
either be changed at the Company'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.   The
interest  rates charged  on credit  cards  could have  been changed  at the
Company's discretion, and the unused credit lines could have been cancelled
at the discretion of the Company.


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, Inc. 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 68
         herein.

(b) Reports on Form 8-K

    No Current  Reports on Form 8-K were filed during the fourth quarter of
    1997. 

(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, Inc.
                          Condensed Balance Sheets

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

Cash                                               $      161    $      601
Investments in subsidiaries                         1,388,325     1,355,896
Notes receivable from subsidiaries                    183,301       173,235
Other assets                                           47,311        40,156

Total assets                                       $1,619,098    $1,569,888


Liabilities and Shareholder's Equity

Senior long-term debt, 5.35% - 9.75%,
    due 1998-2002                                  $   69,971    $   81,893
Notes payable to banks                                 95,000       111,000
Notes payable to subsidiaries                         185,112       173,331
Other liabilities                                       5,690         3,183

Total liabilities                                     355,773       369,407

Shareholder's equity:
    Common stock                                        1,000         1,000
    Additional paid-in capital                        743,083       696,230
    Other equity                                       34,512        21,454 
    Retained earnings                                 484,730       481,797

Total shareholder's equity                          1,263,325     1,200,481

Total liabilities and shareholder's equity         $1,619,098    $1,569,888

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

Schedule I, Continued

<TABLE>
                       American General Finance, Inc.
                       Condensed Statements of Income



<CAPTION>
                                                Years Ended December 31,  
                                                1997      1996      1995  
                                                 (dollars in thousands)
<S>                                           <C>       <C>       <C>
Revenues
  Dividends received from subsidiaries        $147,136  $150,574  $108,633
  Interest and other                            25,560    25,850     6,703

Total revenues                                 172,696   176,424   115,336

Expenses
  Interest expense                              26,950    29,802    12,639
  Operating expenses                            12,130    23,844     8,386

Total expenses                                  39,080    53,646    21,025

Income before income taxes and equity    
  in overdistributed net income of
  subsidiaries                                 133,616   122,778    94,311

Income Tax Credit                                4,883     9,751     5,026

Income before equity in overdistributed
  net income of subsidiaries                   138,499   132,529    99,337

Equity in Overdistributed Net Income
  of Subsidiaries                               (9,066)  (98,383   (13,682)

Net Income                                    $129,433  $ 34,146  $ 85,655

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

Schedule I, Continued

<TABLE>
                       American General Finance, Inc.
                     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                                     $129,433    $ 34,146    $ 85,655
Reconciling adjustments to net cash 
  provided by operating activities:
    Equity in overdistributed net income
      of subsidiaries                             9,066      98,383      13,682
    Change in other assets and other 
      liabilities                               (11,203)        812      16,685
    Other, net                                   13,437       8,263       7,801
Net cash provided by operating activities       140,733     141,604     123,823

Cash Flows from Investing Activities
  Capital contributions to subsidiaries         (27,000)       -        (80,228)
  Transfer of subsidiary                           -           -          1,871
  Net additions to fixed assets                  (7,184)     (6,085)    (14,615)
  Other, net                                       -          8,423      (9,168)
Net cash (used for) provided by
  investing activities                          (34,184)      2,338    (102,140)

Cash Flows from Financing Activities
  Proceeds from issuance of long-term debt        3,616      46,411       8,597
  Repayment of long-term debt                   (16,320)     (9,299)    (13,149)
  Change in notes receivable or payable
    with parent and subsidiaries                  1,715          96       3,299
  Change in notes payable to banks              (16,000)    (42,400)     12,400
  Capital contributions from parent              46,500        -         80,000
  Dividends paid                               (126,500)   (138,590)   (112,540)
Net cash used for financing activities         (106,989)   (143,782)    (21,393)

(Decrease) increase in cash                        (440)        160         290
Cash at beginning of year                           601         441         151
Cash at end of year                            $    161    $    601    $    441

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

Schedule I, Continued


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




Note 1.  Accounting Policies

AGFI'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 AGFI's consolidated financial statements.



Note 2.  Long-Term Debt

Senior  long-term debt  maturities for  the five  years after  December 31,
1997, were  as follows:   1998, $15.1 million;  1999, $47.7 million;  2000,
$4.0 million; 2001, $1.9 million; and 2002, $1.3 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, INC.   


                                         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

SUPPLEMENTAL INFORMATION TO  BE FURNISHED  WITH REPORTS  FILED PURSUANT  TO
SECTION 15(D)  OF THE SECURITIES EXCHANGE ACT  OF 1934 BY REGISTRANTS WHICH
HAVE NOT REGISTERED  SECURITIES PURSUANT  TO SECTION 12  OF THE  SECURITIES
EXCHANGE ACT OF 1934.

No annual report  to security-holders or  proxy material  has been sent  to
security-holders.
<PAGE>
<PAGE> 68

                              Exhibit Index


Exhibits                                                                    Page

(3)  a.  Restated Articles  of Incorporation  of American  General Finance,
         Inc. (formerly Credithrift Financial, Inc.) dated May 27, 1988 and
         amendments  thereto dated  September 7,  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. 1-7422).

     b.  By-laws  of   American  General  Finance,  Inc.   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.
         1-7422).

(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
              American General Finance Corporation'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  American
                   General  Finance  Corporation'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
                   American General Finance  Corporation'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  American
                   General  Finance  Corporation'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  American
                   General Finance  Corporation's  Current Report  on  Form
                   8-K dated April 11, 1995 (File No. 1-6155).
<PAGE>
<PAGE> 69

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  American
                   General Finance  Corporation'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   American   General   Finance   Corporation'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  American
                   General Finance  Corporation'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  American
                   General Finance  Corporation'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.                   70

(23)     Consent of Ernst & Young LLP, Independent Auditors                   71

(27)     Financial Data Schedule                                              72
<PAGE>