<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, 1996 

                                     OR

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

      For the transition period from ________ to ________.

                       Commission File Number 1-7422 

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

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

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

     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
J(1)(a)  and (b) of Form  10-K and is therefore filing  this Form 10-K with
the reduced disclosure format.

At March  20,  1997,  no voting  stock  of the  registrant  was held  by  a
non-affiliate.

At March 20, 1997, 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 . . . . . . . . . . . . . . . . . . . . . . 15

            3. Legal Proceedings  . . . . . . . . . . . . . . . . . . 15

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

Part II     5. Market for Registrant's Common Equity and Related
                 Stockholder Matters  . . . . . . . . . . . . . . . . 16

            6. Selected Financial Data  . . . . . . . . . . . . . . . 16

            7. Management's Discussion and Analysis of Financial 
                 Condition and Results of Operations. . . . . . . . . 17

            8. Financial Statements and Supplementary Data  . . . . . 29

            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  . . . . . . . . . . . . . . . . . . . . 59



      *   Items 4, 10, 11, 12, and 13  are not included, as per  conditions
          met by Registrant  set forth in General Instructions  J(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 under  the laws
of  the State of  Indiana in 1974  to become the parent  holding company of
American  General Finance Corporation (AGFC).   AGFC was incorporated under
the laws of the State of 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,
consumer loans, and life insurance.  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, 1996, the Company  had 1,391 offices in  41 states, Puerto
Rico,  and the U.S. Virgin  Islands and approximately  9,300 employees. The
Company's executive offices are located in Evansville, Indiana.


Selected Financial Information

The  Company reclassified  credit card  and certain  private  label finance
receivables  to assets  held  for sale  on  December 31,  1996;  therefore,
average  net receivables;  yield; finance  receivable loss  experience; and
finance receivables originated,  renewed, and purchased  for 1996 were  not
affected  by this  reclassification.   See Consumer Finance  Operations for
further information on this reclassification.

The following  table shows certain  selected financial  information of  the
Company for the years indicated:

                                       1996         1995         1994   
                                           (dollars in thousands)
Average finance receivables net
  of unearned finance charges
  (average net receivables)         $8,123,947   $8,283,485   $7,096,011

Average borrowings                  $7,170,371   $7,381,504   $6,308,901
<PAGE>
<PAGE> 4

Item 1.  Continued


                                         1996         1995         1994 

Yield - finance charges as a
  percentage of average net
  receivables                           17.85%       18.02%       17.58%

Borrowing cost - interest
  expense as a percentage of
  average borrowings                     6.88%        7.01%        6.60%

Interest spread - yield 
  less borrowing cost                   10.97%       11.01%       10.98%

Insurance revenues as a
  percentage of average 
  net receivables                        2.54%        2.68%        2.55%

Operating expenses as a
  percentage of average
  net receivables                        6.31%        5.64%        5.23%

Allowance ratio - allowance for 
  finance receivable losses as 
  a percentage of net finance 
  receivables                            5.18%        5.85%        2.86%

Charge-off ratio (defined in
  "Consumer Finance Operations -
  Finance Receivable Loss and
  Delinquency Experience" in
  Item 1. herein.)                       5.47%        3.77%        2.45%

Delinquency ratio - 60 days or more
  (defined in "Consumer Finance
  Operations - Finance Receivable
  Loss and Delinquency Experience"
  in Item 1. herein.)                    3.83%        4.13%        2.89%

Return on average assets                  .37%         .90%        3.00%

Return on average equity                 2.63%        6.59%       21.27%

Ratio of earnings to fixed charges
  (refer to Exhibit 12 herein
  for calculations)                      1.11         1.22         1.92

Debt to tangible equity ratio -
  debt to equity less goodwill
  and net unrealized gains or
  losses on fixed-maturity
  investment securities                  8.40         7.44         7.53

Debt to equity ratio                     6.36         5.65         5.85
<PAGE>
<PAGE> 5

Item 1. Continued


                        CONSUMER FINANCE OPERATIONS

Through its 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, 1996, 92%  were secured by  such property. At
December 31, 1996, mortgage  loans (generally  second mortgages)  accounted
for  60% of the aggregate dollar amount of loans outstanding and 14% of the
total number of loans  outstanding, compared to 51% and  10%, respectively,
at  December  31, 1995.    Loans secured  by  real property  generally have
maximum original terms of  180 months.  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  its  credit card  operations, the  Company  issued MasterCard  and VISA
credit cards  to individuals through  branch and  direct mail  solicitation
programs.   Credit cards are unsecured and 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 an  associated allowance for  finance receivable losses  of
$70.0 million to assets held for sale on December 31, 1996.  See Note 9. of
the  Notes to  Consolidated  Financial Statements  in  Item 8.  herein  for
further information on this reclassification.  


Finance Receivables

The  table  on the  following  page  shows certain  information  concerning
finance receivables of  the Company for  the years indicated.   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.
<PAGE>
<PAGE> 6

Item 1.  Continued


                                          Years Ended December 31,      
                                       1996         1995         1994   
Originated, renewed, and purchased:

  Amount (in thousands):
    Real estate loans               $1,347,133   $1,266,725   $1,173,386
    Non-real estate loans            2,224,472    2,953,054    2,983,418
    Retail sales contracts           1,042,134    1,494,903    1,448,031
    Private label                      336,550      624,212      835,530
    Credit cards                       502,379      567,090      537,738
    Total originated and renewed     5,452,668    6,905,984    6,978,103
    Net purchased (a)                  946,168       23,495       60,533
  Total originated, renewed,
    and purchased                   $6,398,836   $6,929,479   $7,038,636

  (a)  Includes purchases of  finance receivables  from affiliate  of $59.4
       million and $29.3 million for 1996 and 1995, respectively.  

  Number:
    Real estate loans                   67,583       72,940       70,823
    Non-real estate loans              965,384    1,445,451    1,511,166
    Retail sales contracts             787,888    1,242,537    1,257,833
    Private label                      201,888      433,165      604,509

  Average size (to nearest dollar):
    Real estate loans                  $19,933      $17,367      $16,568
    Non-real estate loans                2,304        2,043        1,974
    Retail sales contracts               1,323        1,203        1,151
    Private label                        1,667        1,441        1,382


Balance at end of period:          

  Amount (in thousands):
    Real estate loans               $3,734,195   $2,904,016   $2,704,929
    Non-real estate loans            2,516,009    2,765,361    2,660,523
    Retail sales contracts             998,441    1,240,708    1,174,648
    Private label                      376,580      942,706      900,732
    Credit cards                          -         557,603      479,480
  Total                             $7,625,225   $8,410,394   $7,920,312

  Number:
    Real estate loans                  200,420      169,956      162,315
    Non-real estate loans            1,243,204    1,460,714    1,432,054
    Retail sales contracts             885,556    1,176,165    1,118,656
    Private label                      276,184      504,184      405,416
    Credit cards                          -         449,591      403,262
  Total                              2,605,364    3,760,610    3,521,703

  Average size (to nearest dollar):
    Real estate loans                  $18,632      $17,087      $16,665
    Non-real estate loans                2,024        1,893        1,858
    Retail sales contracts               1,127        1,055        1,050
    Private label                        1,364        1,870        2,222
    Credit cards                          -           1,240        1,189
<PAGE>
<PAGE> 7

Item 1.  Continued


Average Net Receivables and Yields

The following table  details average net receivables  and yield by type  of
finance receivable for the years indicated:

                                1996          1995          1994   
                                     (dollars in thousands)

Real estate loans:
  Average net receivables    $3,129,379    $2,846,845    $2,661,440
  Yield                          14.83%        15.02%        14.39%

Non-real estate loans:
  Average net receivables    $2,549,750    $2,747,661    $2,438,502
  Yield                          22.29%        21.83%        21.31%

Total loans:
  Average net receivables    $5,679,129    $5,594,506    $5,099,942
  Yield                          18.18%        18.37%        17.70%

Retail sales contracts:
  Average net receivables    $1,080,527    $1,232,395    $1,013,349
  Yield                          16.95%        17.14%        16.26%

Private label:
  Average net receivables    $  835,191    $  949,979    $  565,172
  Yield                          15.15%        15.35%        16.11%

Total retail sales finance:
  Average net receivables    $1,915,718    $2,182,374    $1,578,521
  Yield                          16.16%        16.36%        16.20%

Credit cards:
  Average net receivables    $  529,100    $  506,605    $  417,548
  Yield                          20.41%        21.28%        21.39%

Total:
  Average net receivables    $8,123,947    $8,283,485    $7,096,011
  Yield                          17.85%        18.02%        17.58%


Geographic Distribution

See Note  5. of the Notes  to Consolidated Financial Statements  in Item 8.
herein for information on geographic distribution of finance receivables.
<PAGE>
<PAGE> 8

Item 1.  Continued


Finance Receivable Loss and Delinquency Experience

The following table details  finance receivable loss experience by  type of
finance receivable for  the years indicated.   See Management's  Discussion
and  Analysis in Item  7. herein and  Note 6. of  the Notes to Consolidated
Financial Statements in Item  8. herein for further information  on finance
receivable loss and delinquency experience and the related allowance.

                                      Years Ended December 31,      
                                   1996         1995         1994  
                                       (dollars in thousands)
Real estate loans:
  Net charge-offs                $ 36,997     $ 23,245     $ 15,408
  Charge-off ratio                  1.19%         .82%         .58%

Non-real estate loans:
  Net charge-offs                $229,109     $165,413     $ 93,790
  Charge-off ratio                  8.95%        6.11%        3.92%

Total loans:
  Net charge-offs                $266,106     $188,658     $109,198
  Charge-off ratio                  4.70%        3.38%        2.15%

Retail sales contracts:
  Net charge-offs                $ 54,565     $ 35,479     $ 24,316
  Charge-off ratio                  5.00%        2.89%        2.43%

Private label:
  Net charge-offs                $ 72,512     $ 51,115     $ 14,088
  Charge-off ratio                  8.59%        5.39%        2.60%

Total retail sales finance:
  Net charge-offs                $127,077     $ 86,594     $ 38,404
  Charge-off ratio                  6.57%        3.98%        2.49%

Credit cards:
  Net charge-offs                $ 51,386     $ 36,206     $ 24,885
  Charge-off ratio                  9.68%        7.19%        6.01%

Total:
  Net charge-offs                $444,569     $311,458     $172,487
  Charge-off ratio (a)              5.47%        3.77%        2.45%
  Allowance for finance
    receivable losses (b)        $395,153     $492,124     $226,226
  Allowance ratio (b)               5.18%        5.85%        2.86%

(a)  The charge-off ratio  represents charge-offs  net of  recoveries as  a
     percentage of the average of the  amount of net finance receivables at
     the beginning of each month during the period.

(b)  Allowance for finance receivable losses represents the  balance at the
     end of the period.  The  allowance ratio represents the  allowance for
     finance receivable losses at the end of the period  as a percentage of
     net finance receivables.
<PAGE>
<PAGE> 9

Item 1.  Continued


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.

AGFI'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.   Credit card and  private label  accounts are
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 value  in excess of that amount is
charged off.  The charge-off period is occasionally extended for individual
accounts when, in the opinion of management, such treatment is warranted.

Based  upon contract terms in  effect at the  respective dates, delinquency
(finance receivables  any portion of  which was  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) was as follows:
                                             December 31,            
                                   1996         1995         1994  
                                       (dollars in thousands)

Real estate loans                $ 84,361     $ 60,585     $ 46,746
  % of related receivables          2.21%        1.99%        1.64%

Non-real estate loans            $184,410     $203,191     $140,615
  % of related receivables          6.45%        6.37%        4.54%

Total loans                      $268,771     $263,776     $187,361
  % of related receivables          4.03%        4.23%        3.15%

Retail sales contracts           $ 35,394     $ 45,043     $ 25,239
  % of related receivables          2.92%        3.00%        1.73%

Private label                    $ 12,567     $ 48,430     $ 24,020
  % of related receivables          3.32%        4.77%        2.76%

Total retail sales finance       $ 47,961     $ 93,473     $ 49,259
  % of related receivables          3.01%        3.73%        2.13%

Credit cards                     $   -        $ 28,520     $ 15,454
  % of related receivables           -  %        4.85%        3.25%

Total                            $316,732     $385,769     $252,074
  % of related receivables          3.83%        4.13%        2.89%
<PAGE>
<PAGE> 10

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.
The spread between the rates charged on finance receivables and the cost of
borrowed  funds is  one  of the  major  factors determining  the  Company's
earnings.  The  Company is limited by  statute in most states  to a maximum
rate which it may charge in its consumer finance operations.


Average Borrowings and Borrowing Cost

The  following table details average  borrowings and interest  expense as a
percentage of average borrowings by type of debt for the years indicated:

                                1996          1995          1994   
                                     (dollars in thousands)
Long-term debt:
  Average borrowings         $4,734,633    $4,885,203    $4,162,229
  Borrowing cost                  7.28%         7.26%         7.33%

Short-term debt:
  Average borrowings         $2,430,620    $2,490,039    $2,138,324
  Borrowing cost                  6.10%         6.51%         5.18%

Investment certificates:
  Average borrowings         $    5,118    $    6,262    $    8,348
  Borrowing cost                  6.27%         6.48%         5.68%

Total:
  Average borrowings         $7,170,371    $7,381,504    $6,308,901
  Borrowing cost                  6.88%         7.01%         6.60%


Contractual Maturities

Contractual maturities of finance receivables and debt at December 31, 1996
were as follows:
                                 Net Finance
                                 Receivables          Debt   
                                  (dollars in thousands)
Due in:
  1997                           $2,406,432        $4,350,439
  1998                            1,440,677           824,577
  1999                              892,334           594,495
  2000                              497,572           937,678
  2001                              311,563            41,715
  2002 and thereafter             2,076,647           880,324

  Total                          $7,625,225        $7,629,228
<PAGE>
<PAGE> 11

Item 1.  Continued


See Note  5. of the Notes  to Consolidated Financial Statements  in Item 8.
herein for  further information on  principal cash  collections of  finance
receivables.  Debt maturities include amounts to fund assets held  for sale
in addition to amounts to fund 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 typically cover
the  life of the borrower  in an amount 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 of  the  installments on  the insured's
obligation to  the lender 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 of the installments on the insured's obligation to
the lender 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  property damage
coverage for  automobiles, large equipment, dwellings,  and commercial 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 has from time to time  entered into reinsurance agreements with other
insurance companies, including certain other American General subsidiaries,
for assumptions of various  shares of annuities and non-credit,  group, and
credit life 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, 1996,  life reserves on
the  books of  Merit attributable  to these reinsurance  agreements totaled
$69.2 million.
<PAGE>
<PAGE> 12

Item 1.  Continued


The following  tables show information concerning  the insurance operations
for the years indicated:


Life Insurance in Force                          December 31,          
                                        1996        1995        1994   
                                           (dollars in thousands)       

Credit life                          $2,629,019  $3,053,300  $2,899,124
Non-credit life                       3,936,856   3,564,214   2,773,928

Total                                $6,565,875  $6,617,514  $5,673,052



Premiums Earned                           Years Ended December 31,     
                                       1996         1995         1994  
                                           (dollars in thousands)
Insurance premiums earned in
  connection with affiliated
  finance and loan activities:
    Credit life                      $ 39,005     $ 44,682     $ 39,398
    Credit accident and health         52,379       59,442       51,983
    Property                           57,895       51,438       37,847
Other insurance premiums earned: 
    Non-credit life                    47,325       50,116       26,685
    Premiums assumed under
      coinsurance agreements            4,750       11,006       18,599

Total                                $201,354     $216,684     $174,512



Premiums Written                          Years Ended December 31,     
                                       1996         1995         1994  
                                           (dollars in thousands)
Insurance premiums written in
  connection with affiliated
  finance and loan activities:
    Credit life                      $ 28,864     $ 44,086     $ 47,864
    Credit accident and health         39,217       56,175       64,395
    Property                           52,230       65,059       55,086
Other insurance premiums written:
    Non-credit life                    47,325       50,116       26,685
    Premiums assumed under
      coinsurance agreements            4,750       11,006       18,599

Total                                $172,386     $226,442     $212,629
<PAGE>
<PAGE> 13

Item 1.  Continued


Investments and Investment Results

The  following table  summarizes the  investment results  of  the Company's
insurance subsidiaries for the years indicated:

                                         Years Ended December 31,      
                                     1996          1995          1994  
                                          (dollars in thousands)       

Net investment revenue (a)         $ 64,860      $ 62,880      $ 56,795

Average invested assets (b)        $885,741      $817,254      $730,368

Adjusted portfolio yield (c)          8.07%         8.41%         8.53%

Net realized gains (losses)
  on investments (d)               $   (909)     $    876      $   (141)

(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.
herein 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. In  general,  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.
In addition,  certain of these  laws prohibit the  taking of liens  on real
estate except liens resulting from judgments.  
<PAGE>
<PAGE> 14

Item 1.  Continued


The  Company  also  is subject  to  various  types  of federal  regulation,
including  the  Federal Consumer  Credit Protection  Act  and the  Truth In
Lending  Act  (governing disclosure  of applicable  charges and  other loan
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,  nature of and limitations on investments,
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.

The investment portfolio of the Company's insurance subsidiaries is subject
to state insurance laws and regulations which prescribe the nature, quality
and  percentage  of various  types  of investments  which  may  be made  by
insurance companies.


                                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. herein 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> 15

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 other affiliates conduct business.  The Company generally conducts
branch  office operations in leased premises.  Lease terms ordinarily range
from three to five years.

The  Company's  exposure  to  environmental  regulation  arises  from   its
ownership of  such properties and properties  obtained through foreclosure.
The  Company monitors  properties  for compliance  with  federal and  local
environmental  guidelines.   The  Company  estimates  that potential  costs
related to 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 have  no material adverse effect on the
Company's  consolidated  results  of  operations  and  financial  position.
However,  it should  be noted that  the frequency  of large  damage awards,
including  large punitive damage awards, that bear little or no relation to
actual economic  damages  incurred  by  plaintiffs  in  jurisdictions  like
Alabama  continues   to  increase   and  creates   the  potential  for   an
unpredictable judgment in any given suit.
<PAGE>
<PAGE> 16

                                  PART II


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


No trading market  exists for  AGFI common stock  because American  General
owns all AGFI common stock.   AGFI declared the following cash dividends on
its common stock for the years indicated:

Quarter Ended                         1996        1995  
                                   (dollars in thousands)

March 31                            $ 27,000    $ 31,000
June 30                               30,088      39,200
September 30                          81,502      42,340
December 31                              -           -  

                                    $138,590    $112,540


See Management's Discussion and Analysis in Item 7. herein, as well as Note
16. of Notes to  Consolidated Financial Statements in Item 8.  herein, 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 derived from  the consolidated
financial  statements  of  the  Company.    The  data  should  be  read  in
conjunction with  the consolidated financial statements  and related notes,
Management's Discussion and Analysis in Item 7. herein, and other financial
information included herein.

                          At or for the Years Ended December 31,        
                     1996       1995       1994      1993(a)     1992   
                                  (dollars in thousands)

Total revenues    $1,724,948 $1,791,494 $1,491,239 $1,288,777 $1,170,371
 
Net income (b)        34,146     85,655    244,988    195,741    161,908

Total assets       9,563,696  9,561,350  8,980,728  7,658,775  7,210,763

Long-term debt     4,498,530  4,979,883  4,312,932  4,018,797  3,604,371


(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 the common  stock
     of AGFI is owned by American General.
<PAGE>
<PAGE> 17

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

                      LIQUIDITY AND CAPITAL RESOURCES

Overview

The Company's sources of funds  include operations, issuances of fixed-rate
and floating-rate debt, borrowings under credit facilities, and the sale of
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 $590.1  million in 1996  compared to $657.9
million in 1995  and $511.5 million in 1994.   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 and $1.8 billion  in 1994.  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, $888.5  million  in 1995,  and $1.5  billion in  1994 and  to pay
dividends to American  General of $138.6 million in  1996, $32.5 million in
1995  (net of an $80.0 million capital contribution from American General),
and $140.0 million in 1994.

Dividends paid  are typically  managed to  maintain the  Company's targeted
leverage of 7.5 to  1 of debt to tangible equity (equity  less goodwill and
net unrealized gains  or losses on  fixed-maturity investment  securities).
The debt to tangible equity ratio at December 31, 1996 was 8.40 to 1.   The
Company  exceeded targeted  leverage due  to the  loss associated  with the
fourth  quarter  1996 decision  to  offer for  sale  certain non-strategic,
underperforming finance receivables.  Excluding the impact of recording the
valuation charge  to income  associated with the  assets held  for sale  on
December  31, 1996, the debt to tangible  equity ratio at December 31, 1996
was 7.62  to 1.  The Company expects to  return to its targeted leverage in
first  quarter  1997.   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 pay the amount
of dividends necessary to maintain targeted  leverage.  See Note 16. of the
Notes  to  Consolidated   Financial  Statements  in  Item  8.   herein  for
information on dividend restrictions.


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  year-end 1996,  the Company's capital  totaled $8.8  billion,
consisting of $7.6 billion of debt and $1.2 billion of  equity, compared to
<PAGE>
<PAGE> 18

Item 7.  Continued


$8.8 billion at year-end 1995, consisting  of $7.5 billion of debt and $1.3
billion of equity.

The Company issues a combination of fixed-rate debt, principally long-term,
and floating-rate debt,  principally short-term.   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 14, 1997, AGFC's ratings (some  of which were
under  review  by  the rating  agencies,  along  with  certain of  American
General's ratings, resulting  from American General's  planned merger  with
USLIFE Corporation (USLIFE)  which is expected  to close by June  30, 1997)
were as follows:

                          Long-term Debt        Commercial Paper

Moody's                   A1  (Strong)          P-1   (Highest)
Standard & Poor's         A+  (Strong)          A-1   (Strong)
Duff & Phelps             A+  (Strong)          D-1+  (Highest)
Fitch                         -                 F-1+  (Highest)

On  March 11, 1997,  Standard & Poor's  Ratings Services  indicated that it
expects to reduce its long-term debt ratings of AGFC, along with certain of
American  General's ratings,  by one  notch upon  completion of  the USLIFE
merger into American General.  Also, as of this date, Duff  & Phelps Credit
Rating Co.  has affirmed AGFC's  ratings, while Moody's  Investors Service,
Inc. continues to review AGFC's ratings for possible downgrade.


Credit Facilities

The  Company  maintains  credit  facilities  to  support  the  issuance  of
commercial  paper by AGFC and to provide  an additional source of funds for
operating  requirements.   At year-end  1996, credit  facilities, including
facilities shared  with American General  and certain of  its subsidiaries,
totaled  $4.3 billion, with remaining  availability to the  Company of $4.1
billion.  See Note 11. of the Notes to Consolidated Financial Statements in
Item 8. herein for additional information on credit facilities.


Securitization

The Company  securitized a portion  of its  portfolio of private  label and
credit card finance receivables to  establish additional sources of funding
and liquidity.   During 1995, the Company  sold $100 million of securitized
finance  receivables  with  limited  recourse.    At  December   31,  1996,
<PAGE>
<PAGE> 19

Item 7.  Continued


securitized finance receivables sold remained at $100 million.  The Company
plans to  reacquire these finance  receivables and  sell a portion  of them
with the assets  held for sale.   See Note 5. of the  Notes to Consolidated
Financial  Statements  in  Item  8. herein  for  additional  information on
securitization.

                       ANALYSIS OF OPERATING RESULTS

See Selected Financial  Information in  Item 1. herein  for information  on
important aspects of the Company's business and as a frame of reference for
the discussion following.


Net Income

Net income decreased $51.5 million, or 60%, for 1996 and $159.3 million, or
65%, for 1995 when compared to the respective previous year.

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

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.

At  December  31, 1996,  net finance  receivables  totaled $7.6  billion, a
decrease of  $785.2 million  from December  31, 1995  primarily due  to the
reclassification of certain  finance receivables to  assets held for  sale,
partially offset by an increase in real estate loans.

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  an  associated
allowance for finance receivable losses of $70.0 million 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, the Company determined that an aftertax write-down
<PAGE>
<PAGE> 20

Item 7.  Continued


of $93.5 million was necessary to reduce the carrying amount  of the assets
held for sale to  net realizable value, after considering related expenses.
See Note  9. of the Notes  to Consolidated Financial Statements  in Item 8.
herein for further information on this reclassification.  

As  part  of the  Company's strategy  to  rebalance its  finance receivable
portfolio, the Company emphasized real estate loan growth during 1996.   At
December 31,  1996, real estate  secured finance receivables  accounted for
49% of total finance receivables  compared to 35% at December 31,  1995 due
to  the purchases  of  five real  estate  loan portfolios  totaling  $753.7
million, the  emphasis  on real  estate loan  growth in  the branches,  the
reclassification  of certain finance  receivables to assets  held for sale,
and the substantial liquidation of underperforming receivables during 1996.

Operating results for 1996 were below Company expectations primarily due to
the valuation charge  to income associated with  the assets held  for sale,
the  above-historical loss  rates on  finance receivables  generated during
1994  and  1995, and  the decline  in credit  fundamentals in  the consumer
finance market,  including  the  record  level  of  personal  bankruptcies.
During  1996, the  Company  eliminated  certain underperforming  non-branch
marketing  programs, established higher underwriting standards, revised the
field office incentive  compensation system,  and increased  use of  credit
scoring.  The Company plans to introduce additional programs during 1997 to
further  address  credit  quality,  finance  receivable  originations,  and
expense reduction.   In addition to  the increased use  of industry  credit
scoring models, custom scoring models will be implemented during 1997.  

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


Finance Charges

Finance  charge revenues  decreased  $42.5 million,  or  3%, for  1996  and
increased $244.7 million, or 20%, for 1995 when  compared to the respective
previous year.

The decrease in finance charge revenues  for 1996 when compared to 1995 was
due to decreases in average net receivables and yields, partially offset by
an  additional day  in  1996.   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.   Due to  this action  program,
finance receivables originated and renewed decreased when compared to 1995.
This was partially offset  by an increase in finance  receivables purchased
(primarily  real estate secured receivables).  The yield decreased 17 basis
points during  1996  when compared  to  1995 primarily  due to  the  action
program to improve  credit quality  (including a larger  proportion of  the
finance receivable portfolio  in real estate secured  loans which generally
have lower yields) and  the increased proportion of  non-accrual delinquent
finance receivables during 1996.

The increase in finance charge revenues for 1995 when compared  to 1994 was
due to  increases  in average  net  receivables and  yields.   Average  net
receivables  increased $1.2 billion, or  17%, during 1995  when compared to
1994  primarily  due  to growth  in  the  retail  sales  finance  and  loan
<PAGE>
<PAGE> 21

Item 7.  Continued


portfolios  resulting  from  business  development  efforts.    The   yield
increased 44 basis points during  1995 when compared to 1994 primarily  due
to higher yield  on loans and retail  sales contracts.  The  loan yield for
1995 increased when compared to 1994  primarily due to higher yield on real
estate  loans, resulting from the higher interest rate environment and rate
management.  The increase in loan yield for 1995 also  reflected the change
in the  amortization of premiums  on certain purchased  finance receivables
which were fully amortized in the second quarter of 1994.  The retail sales
contracts'  yield  for 1995  increased  when compared  to  1994, reflecting
improved pricing strategies and market conditions.


Insurance Revenues

Insurance revenues decreased $16.1  million, or 7%, for 1996  and increased
$41.4 million, or  23%, for 1995 when  compared to the  respective previous
year.

The decrease  in insurance  revenues for  1996 when  compared  to 1995  was
primarily due to a decrease in  earned premiums.  Earned premiums decreased
primarily due to  a decrease in  net written  premiums which reflected  the
decrease in loan volume resulting from the action program to improve credit
quality.

The  increase in  insurance revenues  for 1995  when compared  to  1994 was
primarily due to an increase in earned premiums.  Earned premiums increased
primarily  due to  an increase  in net  written premiums  reflecting higher
credit insurance  sales on increased loan volume  and the introduction of a
new non-credit insurance product in 1995. 


Other Revenues

Other revenues decreased $8.0 million, or 10%, for 1996 and increased $14.2
million, or 23%, for 1995 when compared to the respective previous year. 

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.  The increase  in investment
revenue  for 1996  when compared  to 1995  was primarily  due to  growth in
average invested assets for  the insurance operations of $68.5  million, or
8%, partially offset by  realized losses on investments of $.9  million for
1996 compared to $.9 million of  realized gains on investments for 1995 and
a decrease in adjusted portfolio yield of 34 basis points.

The increase in other revenues for 1995 when compared to 1994 was primarily
due  to an increase  in investment revenue  on the invested  assets for the
insurance  operations and  the gain  recorded in  1995 for  the securitized
finance receivables sold.  The increase in investment revenue for 1995 when
compared to 1994 was primarily due to growth in average invested assets for
the insurance operations  of $86.9 million, or  12%, and realized  gains on
investments of  $.9 million for  1995 compared  to $.1 million  of realized
losses on investments for 1994, partially offset  by a decrease in adjusted
portfolio yield of 12 basis points.  
<PAGE>
<PAGE> 22

Item 7.  Continued


Interest Expense

Interest expense decreased  $24.4 million,  or 5%, for  1996 and  increased
$101.2 million, or 24%, for  1995 when compared to the respective  previous
year.

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.

The increase in interest expense  for 1995 when compared to 1994 was due to
increases in  average borrowings  and borrowing cost.   Average  borrowings
increased  $1.1 billion,  or 17%, for  1995 when  compared to  1994 to fund
asset growth.   The borrowing cost increased 41 basis  points for 1995 when
compared to 1994 due to an increase in short-term borrowing cost, partially
offset by a decrease in long-term borrowing cost.


Operating Expenses

Operating  expenses increased  $45.2 million,  or 10%,  for 1996  and $96.4
million, or 26%, for 1995 when compared to the respective previous year.

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, 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.

Since late 1995, certain underperforming marketing initiatives have  either
been  restructured  or  discontinued.    Certain  non-recurring   operating
expenses  associated  with  these programs  negatively  impacted  operating
expenses  during 1996 by  $8.9 million.  The  action program implemented in
fourth  quarter 1995 (which  included emphasizing real  estate loan growth)
contributed to a workforce  reduction of approximately 700 positions  and a
net decrease of 19 branch offices during 1996.

The  increase  in operating  expenses for  1995 when  compared to  1994 was
primarily due to growth in the business, including growth  that occurred in
1994, which  resulted in  operational staffing increases  and increases  in
other  growth-related expenses.  In 1995, the Company increased its finance
receivable portfolio by over 230,000 accounts, increased net receivables by
$490.1 million, and  opened over 100 new consumer finance  offices.  During
1995, the  Company added 1,350 employees, including  1,100 branch employees
and  250 employees  to process the  private label  and credit  card finance
receivables.   The increase in operating expenses for 1995 when compared to
1994 also reflected  increased collection  efforts on the  higher level  of
delinquent finance receivables.   
<PAGE>
<PAGE> 23

Item 7.  Continued


Provision for Finance Receivable Losses

Provision for  finance receivable losses decreased $156.7  million, or 27%,
for 1996 and  increased $360.2 million, or 168%, for  1995 when compared to
the respective previous year.

The  decrease  in provision  for finance  receivable  losses for  1996 when
compared  to 1995 was  due to a  decrease in  the amounts provided  for the
allowance for finance receivable losses, partially offset by an increase in
net charge-offs.  The  increase in provision for finance  receivable losses
for 1995 when compared to 1994 was due to increases in amounts provided for
the  allowance  for finance  receivable losses  and  net charge-offs.   The
decline  in  credit  quality beginning  in  1995  and  management's related
actions have caused net income  to fluctuate over the past two  years.  See
Analysis of Operating  Results - Net Income for further  information on the
decline in credit quality and management's related actions.

Net  charge-offs for 1996 increased  to $444.6 million  from $311.5 million
for  1995 and  $172.5 million  for  1994.   The charge-off  ratio for  1996
increased to 5.47% compared to 3.77% for 1995 and 2.45% for 1994.

At  year-end 1996,  delinquencies were  $316.7 million  compared  to $385.8
million at 1995 and $252.1 million at 1994.  The delinquency ratio at year-
end 1996  decreased to 3.83% compared  to 4.13% at 1995 and  2.89% at 1994.
The   decrease  in   delinquency  in   1996  was   primarily  due   to  the
reclassification of certain finance receivables to assets held for sale.

The  allowance for finance receivable losses decreased to $395.2 million at
December 31, 1996 from $492.1 million  at December 31, 1995.  The allowance
ratio at  December 31, 1996  was 5.18%  compared to 5.85%  at December  31,
1995.  The  decrease in allowance  for finance receivable  losses for  1996
reflects  management's  expected results  from  the  credit quality  action
program  including the increased  proportion of  real estate  secured loans
which generally  have lower  net  charge-offs and  the reclassification  of
certain  finance  receivables to  assets  held  for sale.    Based  upon an
analysis of the finance receivable  portfolio, management believes that the
allowance for finance receivable losses is adequate given the current level
of delinquencies and net charge-offs.

Improvement  in credit  quality  in the  core  U.S. branch  operations  and
benefits  from the  increased proportion  of finance  receivables that  are
secured by real estate were somewhat offset by the general deterioration of
credit fundamentals within  the consumer  finance market.   Growth in  U.S.
consumer  debt moderated  in the  second  half of  1996  but still  remains
strong,  challenging individuals'  abilities  to  honor their  obligations.
U.S. credit card  delinquencies are at  record levels,  as is consumer  and
mortgage  debt as a percentage of  household income.  The liberalization of
bankruptcy  laws late in 1995  have been cited as  a principal reason for a
30% increase in personal bankruptcies in 1996 to a number  in excess of 1.1
million filings.

Management   believes  that   the  planned   sale  of   the  non-strategic,
underperforming  finance receivable  portfolios  combined with  the ongoing
action  program will address the  overall credit quality  issues.  However,
<PAGE>
<PAGE> 24

Item 7.  Continued


delinquencies have remained at higher than expected levels, indicating that
charge-offs may  continue above historical  levels for  the near term.   In
addition, adverse  changes  in  credit  fundamentals  within  the  consumer
finance market, including  the current high level of personal bankruptcies,
could negatively impact expected results.


Loss on Assets Held for Sale

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.  See Analysis of Operating Results - Net Income and Note
9. of the Notes to Consolidated Financial Statements in Item  8. herein for
further information on this reclassification.


Insurance Losses and Loss Adjustment Expenses

Insurance  losses and loss adjustment  expenses decreased $14.0 million, or
12%, for 1996  and increased $18.9 million, or 19%,  for 1995 when compared
to the respective previous year.

The decrease in insurance losses and loss adjustment expenses for 1996 when
compared to 1995 was due to  decreases in provision for future benefits and
in claims paid.   Provision for future benefits decreased $9.2  million for
1996 due  to reduced sales  of non-credit insurance  products.   Claims for
1996 decreased $4.8 million primarily due to a decrease in loss  experience
on credit insurance.

The increase in insurance losses and loss adjustment expenses for 1995 when
compared to  1994 was  due to an  increase in claims  and in  provision for
future benefits.  Claims for 1995 increased $11.8 million reflecting higher
credit  insurance sales.    Provision for  future  benefits increased  $7.1
million for 1995 primarily due to  a new non-credit insurance product  sold
beginning in 1995.


Provision for Income Taxes

The provision for income  taxes decreased $10.6 million,  or 35%, for  1996
and  $117.1 million,  or  80%, for  1995 when  compared  to the  respective
previous year.

The  decrease in the provision for income  taxes for 1996 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 state
net  operating loss (NOL) carryforwards 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, 1996 and
1995,  the state NOL carryforwards remaining were $634.7 million and $650.9
million, respectively, which expire in the years 2005 and 2006.
<PAGE>
<PAGE> 25

Item 7.  Continued


The decrease  in the provision for  income taxes for 1995  when compared to
1994  was primarily due to lower taxable income and the non-recurring state
income tax adjustment previously discussed.


                      ANALYSIS OF FINANCIAL CONDITION

At December 31,  1996, the  Company's assets were  distributed as  follows:
75.60% in net  finance receivables, less  allowance for finance  receivable
losses,  9.20% in  investment securities,  6.98% in  assets held  for sale,
4.29%  in other assets, 2.83% in acquisition-related goodwill, and 1.10% 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, 93% of  the
loans, retail  sales contracts, and  private label outstanding  at December
31, 1996 are secured by real property or personal property.

During 1995, the Company increased  the allowance ratio due to the  higher-
than-anticipated increase  in delinquencies  and  net charge-offs.    While
delinquencies  and net charge-offs have  remained at higher than historical
levels during 1996,  the allowance for finance  receivable losses decreased
reflecting  management's expected  results from  the credit  quality action
program including  the increased  proportion of  real estate secured  loans
which  generally have  lower net  charge-offs and  the reclassification  of
certain  finance  receivables to  assets held  for sale.   See  Analysis of
Operating  Results  for  further  information  on  allowance  for   finance
receivable losses,  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.  herein  for
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> 26

Item 7.  Continued


available to the Company are expected to be more than sufficient to satisfy
operating requirements in 1997.


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, surplus  operating cash,  and proceeds  from the  sale of
assets held for sale.


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 has used interest conversion agreements to synthetically create fixed-
rate debt by altering the nature of floating-rate funding, thereby limiting
its exposure to interest rate movements.


                        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.  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.   During 1996,  interest rates in  the United
States generally decreased from 1995, compared to increases during 1995 and
1994 from the historically low levels experienced during 1993.

The Company pursues  opportunities created by  market conditions  regarding
both  finance receivable mix  and funding  alternatives to  manage interest
spreads.   During  1996, the Company's  interest spread  decreased slightly
when  compared to  1995 due  to  a decrease  in  finance receivable  yield,
partially  offset by  a  decrease  in borrowing  cost.    Growth in  higher
yielding  receivables in 1995 and 1994 and  a decrease in borrowing cost in
1994 caused the Company's interest spread to increase during 1995 and 1994.
<PAGE>
<PAGE> 27

Item 7.  Continued


The Company's finance receivable yield decreased during 1996, but increased
during 1995 and 1994.  The yield decreased during 1996 primarily due to the
effects of the action program to improve credit quality (including a larger
proportion of the finance receivable portfolio in real estate secured loans
which  generally  have lower  yields).   Decreases  in interest  rates also
facilitated the  decrease in yield  for 1996.   During 1994  and the  first
three  quarters of 1995, the Company took advantage of market opportunities
to originate  non-real estate loans  and retail  sales finance  receivables
with  higher  yields.   Increases in  interest  rates also  facilitated the
increase  in yield  for 1995  and 1994.   The  1995  increase in  yield was
partially offset  by the  aforementioned action  program to  improve credit
quality.

The  movement in  interest  rates also  contributed to  a  decrease in  the
Company's borrowing cost during 1996 and 1994 and  an increase during 1995.
Rates on short-term  debt, principally commercial  paper, decreased  during
1996, but increased during 1995 and  1994.  During 1996, rates on long-term
debt remained relatively flat, but decreased during 1995 and 1994.

The  Company's  insurance subsidiaries'  average  invested  assets and  net
investment revenue increased in each  of the last three years.   The return
on  invested assets for  the insurance operations  declined in each  of the
last  three  years  primarily due  to  the  generally  lower interest  rate
environment and the Company's conservative investment policy, both of which
have resulted in lower yielding securities.

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 that may or  may not exist at the time such a movement
occurs for  both investment and funding  alternatives, 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.    However,  market
expectations of  inflation apparently contributed  to significant increases
in interest rates (particularly short-term rates) during 1994 and the first
half of 1995.

Revenue  generated from  interest rates  charged on  most of  the Company's
finance receivables (other  than real estate  secured loans) is  relatively
insensitive to movements in interest rate levels caused by inflation.  Real
estate secured finance receivables 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.
<PAGE>
<PAGE> 28

Item 7.  Continued


Economic  Cycle.   The  Company believes  that  its implementation  of more
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.

Recent  economic statistics  suggest that  the U. S.  economy remains  in a
somewhat  expansionary  mode  and  that  employment is  improving  in  both
absolute and relative  terms.   However, other data  suggest consumers  are
becoming overextended in their ability to repay obligations as evidenced by
increased  consumer debt  outstanding and  increased frequency  of personal
bankruptcies.  The  Company believes  that there will  be limited  economic
growth for  the country  in general  during 1997.   This economic  outlook,
combined  with  the  Company's  more  conservative  lending  policies   and
portfolio restructuring, indicate  that net growth  of finance  receivables
from internally generated sources will, at best, be minimal for 1997.


Regulatory Factors

The regulatory environment of the consumer finance and insurance industries
is described  in Item 1.  herein.   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.


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
improvement, 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.
<PAGE>
<PAGE> 29

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.    Actual results  may  differ
materially  from those included  in the forward-looking  statements.  These
forward-looking statements  involve risks and uncertainties  including, but
not limited to,  the following:   changes in  general economic  conditions,
including the  performance of  financial markets,  interest rates,  and the
level  of personal  bankruptcies; competitive,  regulatory, or  tax changes
that  affect the  cost of  or demand  for the  Company's products;  adverse
litigation results; and failure to achieve the Company's anticipated levels
of  expense savings  from cost-saving  initiatives.   The  Company's future
results  also could be adversely  affected if finance  receivable volume is
lower  than anticipated or if, despite the Company's initiatives to improve
credit  quality,  finance  receivable  delinquencies  and  net  charge-offs
increase or remain  at current levels for a longer  period than anticipated
by  management.  Failure  to dispose of  assets held for  sale for carrying
value  could also adversely affect  the Company's future  results.  Readers
are also directed to  other risks and uncertainties discussed  in documents
filed by the Company with the Securities and Exchange Commission.



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> 30
 

                       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, 1996  and 1995, 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, 1996.
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,
1996 and 1995, and  the consolidated results of their operations  and their
cash  flows for each of  the three years  in the period  ended December 31,
1996, 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 14, 1997
<PAGE>
<PAGE> 31
<TABLE>
              American General Finance, Inc. and Subsidiaries

                        Consolidated Balance Sheets
<CAPTION>
                                                        December 31,
                                                     1996          1995
                                                   (dollars in thousands)
<S>                                               <C>           <C>   
Assets  

Finance receivables, net of unearned  
  finance charges  (Note 5.):
    Real estate loans                             $3,734,195    $2,904,016
    Non-real estate loans                          2,516,009     2,765,361
    Retail sales contracts                           998,441     1,240,708
    Private label                                    376,580       942,706
    Credit cards                                        -          557,603

Net finance receivables                            7,625,225     8,410,394
Allowance for finance receivable
  losses  (Note 6.)                                 (395,153)     (492,124)
Net finance receivables, less allowance
  for finance receivable losses                    7,230,072     7,918,270

Investment securities  (Note 7.)                     880,033       884,775
Cash and cash equivalents                            105,493       103,238
Goodwill  (Note 8.)                                  270,989       279,995
Other assets  (Note 8.)                              410,102       375,072
Assets held for sale  (Note 9.)                      667,007          -   

Total assets                                      $9,563,696    $9,561,350


Liabilities and Shareholder's Equity

Long-term debt  (Note 10.)                        $4,498,530    $4,979,883
Short-term notes payable:
  Commercial paper  (Notes 11. and 12.)            3,015,920     2,194,771
  Banks and other  (Notes 11. and 13.)               111,000       289,100
Investment certificates                                3,778         6,197
Insurance claims and policyholder 
  liabilities                                        456,430       483,971
Other liabilities                                    260,284       273,485
Accrued taxes                                         17,273        12,162

Total liabilities                                  8,363,215     8,239,569

Shareholder's equity: 
  Common stock  (Note 15.)                             1,000         1,000
  Additional paid-in capital                         696,230       696,128
  Net unrealized gains on investment
    securities  (Note 7.)                             21,454        38,412 
  Retained earnings  (Note 16.)                      481,797       586,241

Total shareholder's equity                         1,200,481     1,321,781

Total liabilities and shareholder's equity        $9,563,696    $9,561,350

<FN>
<F1>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 32
<TABLE>
              American General Finance, Inc. and Subsidiaries

                     Consolidated Statements of Income




<CAPTION>
                                      Years Ended December 31,  
                                    1996        1995        1994   
                                       (dollars in thousands)
<S>                              <C>         <C>         <C>
Revenues
  Finance charges                $1,449,968  $1,492,467  $1,247,727
  Insurance                         206,170     222,264     180,913
  Other                              68,810      76,763      62,599

Total revenues                    1,724,948   1,791,494   1,491,239

Expenses
  Interest expense                  493,051     517,475     416,233
  Operating expenses                512,698     467,475     371,125
  Provision for finance receivable
    losses                          417,446     574,166     213,987
  Loss on assets held for sale      145,459        -           -   
  Insurance losses and loss
    adjustment expenses             102,811     116,829      97,893

Total expenses                    1,671,465   1,675,945   1,099,238

Income before provision for income
  taxes                              53,483     115,549     392,001

Provision for Income Taxes
  (Note 14.)                         19,337      29,894     147,013

Net Income                       $   34,146  $   85,655  $  244,988


<FN>
<F1>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 33
<TABLE>
              American General Finance, Inc. and Subsidiaries

              Consolidated Statements of Shareholder's Equity



<CAPTION>
                                         Years Ended December 31,     
                                       1996        1995        1994   
                                          (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         696,128     616,021     616,021
  Capital contribution from parent
    and other                              102      80,107        -   
  Balance at end of year               696,230     696,128     616,021

Net Unrealized Gains (Losses)
  on Investment Securities
    Balance at beginning of year        38,412     (18,407)     33,740
    Change during year                 (16,958)     56,819     (52,147)
    Balance at end of year              21,454      38,412     (18,407)

Retained Earnings 
  Balance at beginning of year         586,241     613,126     459,939
  Net income                            34,146      85,655     244,988
  Common stock dividends              (138,590)   (112,540)    (91,801)
  Balance at end of year               481,797     586,241     613,126

Total Shareholder's Equity          $1,200,481  $1,321,781  $1,211,740 



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

                   Consolidated Statements of Cash Flows
<CAPTION>
                                                       Years Ended December 31,
                                                    1996         1995         1994
                                                        (dollars in thousands)
<S>                                             <C>          <C>          <C>
Cash Flows from Operating Activities
Net Income                                      $   34,146   $   85,655   $  244,988 
Reconciling adjustments to net cash 
  provided by operating activities:
    Provision for finance receivable losses        417,446      574,166      213,987 
    Depreciation and amortization                   98,032      114,789      124,287 
    Deferral of finance receivable
      origination costs                            (50,303)     (73,829)     (91,420)
    Deferred federal income tax benefit            (43,659)     (69,572)     (17,020)
    Deferred state income tax benefit               (2,216)     (16,550)         -   
    Change in other assets and other
      liabilities                                  (29,983)      49,800       13,817 
    Change in insurance claims and
      policyholder liabilities                     (27,541)      17,088       51,395 
    Loss on assets held for sale                   145,459          -            -   
    Gain on finance receivables sold
      through securitization                           -         (4,552)         -   
    Other, net                                      48,718      (19,136)     (28,576)
Net cash provided by operating activities          590,099      657,859      511,458 

Cash Flows from Investing Activities
  Finance receivables originated or purchased   (5,338,928)  (5,785,976)  (5,826,776)
  Principal collections on finance receivables   4,886,420    4,926,756    4,322,592 
  Securitized finance receivables sold                 -        100,000          -   
  Investment securities purchased                 (188,732)    (200,112)    (161,239)
  Investment securities called, matured and sold   169,405      108,701       81,221
  Purchase of assets from affiliates               (62,176)     (29,291)         -   
  Other, net                                       (70,542)     (69,513)     (26,338)
Net cash used for investing activities            (604,553)    (949,435)  (1,610,540)
    
Cash Flows from Financing Activities
  Proceeds from issuance of long-term debt         124,228    1,576,530    1,136,208 
  Repayment of long-term debt                     (609,559)    (913,909)    (846,468)
  Change in investment certificates                 (2,419)        (404)      (2,805)
  Change in short-term notes payable               643,049     (287,592)     956,502 
  Capital contribution from parent                     -         80,000          -   
  Dividends paid                                  (138,590)    (112,540)    (140,000)
Net cash provided by financing activities           16,709      342,085    1,103,437 

Increase in cash and cash equivalents                2,255       50,509        4,355 
Cash and cash equivalents at beginning of year     103,238       52,729       48,374 
Cash and cash equivalents at end of year        $  105,493   $  103,238   $   52,729 

Supplemental Disclosure of Cash Flow Information
  Income taxes paid                             $   34,167   $  153,137   $  169,543 
  Interest paid                                 $  497,084   $  501,830   $  407,647 

<FN>
<F1>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 35

              American General Finance, Inc. and Subsidiaries

                 Notes to Consolidated Financial Statements

                             December 31, 1996



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". The
subsidiaries  include  American  General  Finance  Corporation  (AGFC)  and
American  General  Financial  Center  (AGFC-Utah).    AGFI  is  a financial
services holding  company with subsidiaries  that are 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, 1996, the Company had 1,391 offices in 41  states, Puerto Rico
and the U.S. Virgin Islands and approximately 9,300 employees.

In  its lending operations, the Company makes loans directly to individuals
and  generally takes a security  interest in real  property and/or personal
property of the borrower.  In its retail operations,  the Company purchases
retail sales contracts  arising from the retail sale  of consumer goods and
services by  approximately 15,000  retail  merchants and  provides  private
label  services  for approximately  250  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  credit card  operations, the
Company issued  MasterCard and  VISA  credit cards  to individuals  through
branch  and direct mail solicitation programs.  Credit cards are unsecured.
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.

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  an associated allowance  for finance receivable  losses of
$70.0 million to  assets held for sale  on December 31, 1996.   See Note 9.
for further information on this reclassification.  

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,  1996, the  Company  had  $7.6  billion  of  net  finance
receivables due from approximately  2.6 million customer accounts and  $6.6
billion  of  credit  and  non-credit   life  insurance  in  force  covering
approximately 1.5 million customer accounts.
<PAGE>
<PAGE> 36

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).


                             FINANCE OPERATIONS

Revenue Recognition

Revenue on finance receivables is accounted for as follows:

(1)  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 credit cards and private label.

(2)  Extension  fees  and  late  charges  are  recognized  as revenue  when
     received. 

(3)  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.  


Origination Costs

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.  


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
<PAGE>
<PAGE> 37

Notes to Consolidated Financial Statements, Continued


composition  of  the  finance  receivable portfolio,  and  an  estimate  of
anticipated finance receivable losses.

AGFI'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.   Credit  card and  private label  accounts are
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 value in excess of that amount 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
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.
<PAGE>
<PAGE> 38

Notes to Consolidated Financial Statements, Continued


Reinsurance

The  Company's  insurance subsidiaries  enter  into reinsurance  agreements
among themselves and other insurers, including other insurance subsidiaries
of  American General.  The  annuity reserves attributable  to this business
with  the subsidiaries  of American  General were  $60.8 million  and $61.0
million  at  December  31, 1996  and  1995,  respectively.   The  Company's
insurance  subsidiaries assumed  from other  insurers $47.5  million, $59.9
million, and $51.4 million  of reinsurance premiums during 1996,  1995, and
1994, 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,    
                          1996     1995     1994      1996        1995  
                                       (dollars in thousands)
Statutory accounting
  practices              $79,157  $42,006  $35,466  $394,708    $319,413

Generally accepted
  accounting principles   59,625   58,245   46,903   539,307     496,640


                           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.
<PAGE>
<PAGE> 39

Notes to Consolidated Financial Statements, Continued


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.   The  Company determines  the fair  value based  on an  independent
appraisal.


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.

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.


Interest Conversion Agreements

The interest differential  to be  paid or received  on interest  conversion
agreements is recorded on the accrual basis and is recognized over the life
of the agreements as an adjustment to interest expense.  The related amount
<PAGE>
<PAGE> 40

Notes to Consolidated Financial Statements, Continued


payable  to   or  receivable  from  counterparties  is  included  in  other
liabilities or other assets.

The fair values of interest conversion agreements are not recognized in the
consolidated balance sheet, which  is consistent with the treatment  of the
related funding that is hedged.

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


Use of Estimates

Management  makes  estimates   and  assumptions   in  preparing   financial
statements in conformity with generally accepted accounting principles that
affect  (1) the reported amounts of assets and liabilities, (2) disclosures
of  contingent assets  and  liabilities and  (3)  the reported  amounts  of
revenues and expenses during the reporting periods.  Ultimate results could
differ from those 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.



Note 3.  Accounting Changes

In  June  1996,  the Financial  Accounting  Standards  Board  (FASB) issued
Statement  of Financial  Accounting Standards  (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.   The
statement  must  be  applied   prospectively  to  applicable   transactions
occurring after  December 31, 1996; however,  certain provisions addressing
secured borrowings with a  pledge of collateral and transfers  of financial
assets  that are  part of  repurchase agreements, dollar  rolls, securities
lendings,  and similar  transactions are  effective for  transactions after
December  31, 1997.  Earlier  or retroactive application  is not permitted.
The Company does not  anticipate a material effect on  consolidated results
of operations and financial position related to adoption of this statement.
<PAGE>
<PAGE> 41

Notes to Consolidated Financial Statements, Continued


During 1995, the Company  adopted SFAS 121, "Accounting for  the Impairment
of Long-Lived  Assets and for Long-Lived  Assets to Be Disposed  Of."  This
statement establishes  accounting standards for (1) the impairment of long-
lived  assets, certain  identifiable intangibles,  and goodwill  related to
those assets to be held and used in the business, and (2) long-lived assets
and certain identifiable intangibles  to be disposed of.   Adoption of this
standard  did  not have  a material  impact  on the  consolidated financial
statements.

During 1994, the  Company adopted  SFAS 118, "Accounting  by Creditors  for
Impairment of a  Loan - Income Recognition and  Disclosures," and SFAS 119,
"Disclosure about  Derivative  Financial  Instruments  and  Fair  Value  of
Financial  Instruments."   SFAS 118 requires disclosures about the recorded
investment  in  certain  impaired  loans  and the  recognition  of  related
interest income.  SFAS 119 requires additional disclosures about derivative
financial   instruments  and   amends   existing   fair  value   disclosure
requirements.   Adoption of these standards did not impact the 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.  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 are unsecured  and require minimum monthly payments
based upon current  balances.  Of  the loans, retail  sales contracts,  and
private label  outstanding at December  31, 1996, 93%  were secured by  the
real or personal property of the  borrower.  At December 31, 1996, mortgage
loans  (generally second  mortgages)  accounted for  60%  of the  aggregate
dollar amount of  loans outstanding and  14% of the  total number of  loans
outstanding.
<PAGE>
<PAGE> 42

Notes to Consolidated Financial Statements, Continued


Contractual maturities of finance receivables were as follows:

                                    December 31, 1996        
                           Net Receivables       Percent of
                                Amount        Net Receivables
                                 (dollars in thousands)

1997                         $2,406,432            31.56%
1998                          1,440,677            18.89
1999                            892,334            11.70
2000                            497,572             6.53
2001                            311,563             4.09
2002 and thereafter           2,076,647            27.23 

Total                        $7,625,225           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  for the  years indicated  were  as follows  (retail sales
contracts and private label comprise retail sales finance):

                                                  1996           1995   
                                                (dollars in thousands)
Loans:
  Principal cash collections                   $2,653,457     $2,587,659
  Percent of average net receivables               46.72%         46.25%

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

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

Unused  credit  limits on  private label  extended  by the  Company  to its
customers were $3.1 billion and $3.5 billion at December 31, 1996 and 1995,
respectively.  Unused credit limits on credit cards extended by the Company
to  its customers were  $2.0 billion at  December 31, 1995.   Unused credit
limits  on  loan  and retail  sales  contracts  revolving  lines of  credit
extended by  the Company  to its customers  were $227.6 million  and $266.4
million at  December 31, 1996  and 1995,  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.

During 1995,  the Company securitized a portion of its portfolio of private
label and credit  card finance receivables to  establish additional sources
of funding and liquidity.  On May 17, 1995, the Company sold $100.0 million
of  securitized finance receivables with limited recourse.  At December 31,
1996 and  1995, securitized  finance receivables  sold  remained at  $100.0
million.  The Company plans to reacquire these finance receivables and sell
<PAGE>
<PAGE> 43

Notes to Consolidated Financial Statements, Continued


a  portion of them  with the  assets held for  sale.   Although the Company
continues  to service these finance receivables  and maintains the customer
relationships, the securitized  finance receivables sold were treated  as a
sale  with   an  immaterial   gain   for  financial   reporting   purposes.
Accordingly, the securitized finance receivables  sold are not reflected on
the Company's  balance sheet.  In addition, the sale of securitized finance
receivables results in  effectively recording finance  charge revenues  and
provision for finance receivable losses on such finance receivables sold in
other revenues.

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

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

California      $  697,734          9.15%    $  886,974         10.55%
N. Carolina        672,021          8.81        737,630          8.77
Florida            534,936          7.02        626,519          7.45
Ohio               454,290          5.96        439,522          5.23
Illinois           452,508          5.93        489,840          5.82
Indiana            397,698          5.22        454,892          5.41
Virginia           350,349          4.59        392,146          4.66
Georgia            312,377          4.10        372,963          4.43
Other            3,753,312         49.22      4,009,908         47.68 

                $7,625,225        100.00%    $8,410,394        100.00%



Note 6.  Allowance for Finance Receivable Losses

The changes in  the allowance for finance  receivable losses for  the years
indicated  are detailed below.  See Management's Discussion and Analysis in
Item 7. herein for discussion of activity.

                                       1996         1995         1994  
                                           (dollars in thousands)

Balance at beginning of year         $492,124     $226,226     $183,756
Provision for finance receivable
  losses                              417,446      574,166      213,987
Allowance reclassified to assets        
  held for sale                       (70,000)        -            -   
Allowance related to net acquired
  receivables and other                   152        3,190          970 
Charge-offs:
  Finance receivables charged off    (495,699)    (351,876)    (209,340)
  Recoveries                           51,130       40,418       36,853
  Net charge-offs                    (444,569)    (311,458)    (172,487)

Balance at end of year               $395,153     $492,124     $226,226
<PAGE>
<PAGE> 44

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, 1996 and 1995, 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  
                                 1996       1995       1996       1995  
                                        (dollars in thousands)
Fixed-maturity investment
  securities:
  Bonds:
    Corporate securities       $450,754   $438,527   $435,877   $409,898
    Mortgage-backed securities  202,974    234,148    199,482    223,951
    States and political
      subdivisions              168,274    157,068    162,547    149,240
    Other                        45,525     47,186     36,721     35,242
  Redeemable preferred stocks     7,235      6,956      7,135      6,764
Total                           874,762    883,885    841,762    825,095
Non-redeemable preferred
  stocks                          2,271        890      2,264        584
Other long-term investments       3,000       -         3,000       -   

Total investment securities    $880,033   $884,775   $847,026   $825,679


At  December  31,  the gross  unrealized  gains  and  losses on  investment
securities were as follows:
                                      Gross                Gross
                                Unrealized Gains      Unrealized Losses 
                                 1996       1995       1996       1995  
                                         (dollars in thousands)
Fixed-maturity investment               
  securities:               
  Bonds:
    Corporate securities       $17,175     $30,050   $ 2,298     $ 1,421
    Mortgage-backed securities   4,687      10,356     1,195         159
    State and political
      subdivisions               6,106       7,895       379          67
    Other                        8,851      11,944        47         -
  Redeemable preferred stocks      138         270        38          78
Total                           36,957      60,515     3,957       1,725
Non-redeemable preferred
  stocks                             7         306       -           -  
Other long-term investments        -           -         -           -  

Total investment securities    $36,964     $60,821   $ 3,957     $ 1,725
<PAGE>
<PAGE> 45

Notes to Consolidated Financial Statements, Continued


During  the years  ended  December 31,  1996,  1995, and  1994,  investment
securities with a fair  value of $169.4 million, $108.7  million, and $81.2
million, respectively, were  sold or redeemed.  The gross realized gains on
such investment securities sales or redemptions totaled $1.8  million, $1.3
million,  and  $.3 million,  respectively.   The  gross realized  losses on
investments  totaled   $3.1  million,   $.6   million  and   $.6   million,
respectively.

The  contractual maturities  of fixed-maturity  securities at  December 31,
1996 were as follows:
                                            Fair       Amortized
                                            Value         Cost  
                                          (dollars in thousands)
Fixed maturities, excluding               
  mortgage-backed securities:
    Due in 1 year or less                 $  7,800      $  7,707
    Due after 1 year through 5 years        87,819        84,686
    Due after 5 years through 10 years     427,705       412,647
    Due after 10 years                     148,464       137,240
Mortgage-backed securities                 202,974       199,482

Total                                     $874,762      $841,762


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  $8.3 million  and  $8.2  million at
December 31, 1996 and 1995, 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 $271.0 million and  $280.0 million at  December 31, 1996
and 1995, respectively.  Accumulated amortization totaled $77.8 million and
$68.8 million at December 31, 1996 and 1995, respectively. 

Included in  other assets is a customer base valuation of $18.5 million and
$28.6 million at  December 31, 1996 and 1995, respectively,  which is being
amortized to operating expenses on a straight-line basis over 25 years.
<PAGE>
<PAGE> 46

Notes to Consolidated Financial Statements, Continued


Note 9.  Assets Held for Sale

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 an associated  allowance for finance  receivable losses of
$70.0 million 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,  the
Company  determined that  a  write-down of  $145.5  million ($93.5  million
aftertax)  was necessary to  reduce the carrying amount  of the assets held
for sale to net realizable value, after considering related expenses.

Management believes the adequacy of the  valuation on assets held for  sale
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  could influence  the  amount realized  on  the
anticipated sale.

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



Note 10.  Long-term Debt

At December  31, 1996 and  1995, long-term debt  consisted of  senior debt.
The carrying  value  and fair  value  of the  Company's  long-term debt  at
December 31 were as follows: 

                              Carrying Value               Fair Value      
                            1996         1995          1996         1995   
                                       (dollars in thousands)

Senior                   $4,498,530   $4,979,883    $4,607,540   $5,225,034


The  weighted average  interest  rates on  long-term debt  by type  were as
follows:
                          Years Ended December 31,        December 31, 
                            1996         1995            1996      1995 

Senior                      7.28%        7.26%           7.16%     7.26%
Senior subordinated           -          6.44              -         - 
Total                       7.28         7.26            7.16      7.26
<PAGE>
<PAGE> 47

Notes to Consolidated Financial Statements, Continued


Maturities of long-term debt at December 31, 1996 were as follows:

Maturity                   Carrying Value    
                       (dollars in thousands)        

1997                         $1,219,741
1998                            824,577
1999                            594,495
2000                            937,678
2001                             41,715
2002-2006                       582,336
2007-2009                       297,988

Total                        $4,498,530


A certain debt issue of the Company is repayable prior to maturity  at par,
at the  option of the  holder.  If  this issue was  so repaid,  the amounts
above  would  increase $149.1  million in  1999  and would  decrease $149.1
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:

                                         1996        1995        1994   
                                            (dollars in thousands)

Maximum borrowings at any month end   $3,126,920  $2,764,804  $2,770,886
Average borrowings                    $2,426,920  $2,489,880  $2,138,124
Weighted average interest rate,
  giving effect to interest 
  conversion agreements and 
  commitment fees                          6.10%       6.52%       5.18%
Weighted average interest rate,
  at December 31,                          5.57%       5.74%       5.85%

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, 1996  and 1995, the  Company had committed
credit facilities of  $700.0 million and $800.0 million,  respectively, and
was an eligible borrower under $2.8 billion and $2.4 billion, respectively,
of  committed credit facilities extended to American General and certain of
its  subsidiaries   (the  "shared  committed  facilities").     The  annual
commitment fees for all committed facilities ranged from .05% to .09%.  The
Company pays  only an  allocated portion  of the  commitment  fees for  the
shared committed  facilities.  At December  31, 1996 and 1995,  the Company
also had $576.0  million and $621.0  million, respectively, of  uncommitted
<PAGE>
<PAGE> 48

Notes to Consolidated Financial Statements, Continued


credit facilities and  was an  eligible borrower under  $165.0 million  and
$185.0 million, respectively, of uncommitted credit facilities extended  to
American General  and certain  of its  subsidiaries.  Available  borrowings
under all facilities are reduced by any amounts outstanding thereunder.  At
December 31, 1996 and 1995, Company short-term borrowings outstanding under
all  credit  facilities   totaled  $111.0  million   and  $289.1   million,
respectively, and Company long-term borrowings outstanding under all credit
facilities  totaled  $9.0 million  and  $68.4  million, respectively,  with
remaining availability to  the Company  of $3.5 billion  and $3.2  billion,
respectively, in committed facilities and $621.0 million and $448.5 
million, respectively, in uncommitted facilities.



Note 12.  Derivative Financial Instruments 

The  Company uses interest  conversion agreements as one  of its methods to
manage  the Company's exposure to market interest rate risk associated with
funding  activities.   The Company  is  neither a  dealer nor  a trader  in
derivative financial instruments.  

The  Company's objective  for using  interest conversion  agreements is  to
synthetically  modify a portion  of the Company's  floating-rate funding to
fixed rates.   The Company  carries such floating-rate  obligations in  the
consolidated financial statements at amortized cost.

Fixed  interest  rates  contracted  to  be   paid  on  interest  conversion
agreements  approximated the rates on fixed-rate  term debt with maturities
similar  to the derivative financial  instruments at the  date of contract.
Accordingly, the Company's  use of interest  conversion agreements did  not
have  a material effect on  the weighted-average interest  rate or reported
interest expense in any of the three years ended December 31, 1996.

Interest  conversion  agreements in  which  the Company  contracted  to pay
interest at fixed rates and receive  interest at floating rates were $540.0
million, $590.0 million, and $390.0 million in notional amounts at December
31, 1996, 1995, and 1994, respectively.  The weighted average interest rate
paid was  8.08%, 8.28%, and  8.77% for the  years ended December  31, 1996,
1995,  and 1994, respectively.  The weighted average interest rate received
was 5.72%,  6.10%, and 4.64% for  the years ended December  31, 1996, 1995,
and  1994, respectively.  See  Note 20. for the fair  value of the interest
conversion  agreements.  These agreements  mature at various  dates and had
the  respective fixed  rates at  December 31,  1996 as  shown in  the table
below:
                       Notional     Weighted Average
Maturity                Amount       Interest Rate  
                     (dollars in 
                      thousands)

  1997                 $ 25,000          7.17%
  1998                  265,000          7.08
  1999                   50,000          9.39
  2000                  200,000          9.10

                       $540,000          8.05%
<PAGE>
<PAGE> 49

Notes to Consolidated Financial Statements, Continued


The rollforward of notional amounts  for interest conversion agreements for
the years indicated was as follows:

                                            Notional Amounts           
                                     1996         1995         1994    
                                         (dollars in thousands)        

Balance at beginning of year      $ 590,000    $ 390,000    $ 290,000 
New contracts                          -         200,000      200,000 
Expired contracts                   (50,000)        -        (100,000)

Balance at end of year            $ 540,000    $ 590,000    $ 390,000


The Company  is exposed to credit  risk in the event  of non-performance by
counterparties to interest conversion agreements.   The Company limits  its
exposure  to credit  risk by entering  into interest  conversion agreements
with counterparties having high credit ratings and by basing the amount and
term  of an agreement  on these credit  ratings.   Furthermore, the Company
regularly monitors counterparty credit  ratings throughout the term  of the
agreements.

The Company's credit  exposure on interest conversion agreements is limited
to the fair value  of interest conversion agreements that are  favorable to
the Company.  The Company 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.

The  Company's exposure  to  market risk  is  mitigated by  the  offsetting
effects  of changes in  the value of interest  conversion agreements and of
the underlying funding 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, 1996, 1995 and 1994, AGFI
had no borrowings outstanding with American General.

Information concerning  such  borrowings for  the  years indicated  was  as
follows:
                                          1996        1995        1994  
                                             (dollars in thousands)

Maximum borrowings at any month end      $   -       $   -       $   - 
Average borrowings                       $3,700      $  159      $  200
Weighted average interest rate (total
  interest expense divided by average
  borrowings)                             5.16%       6.05%       4.35%
<PAGE>
<PAGE> 50

Notes to Consolidated Financial Statements, Continued


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,  
                                       1996        1995        1994  
                                          (dollars in thousands)  
Federal
  Current                            $ 61,702    $118,171    $152,968
  Deferred                            (43,659)    (69,572)    (17,020)
Total federal                          18,043      48,599     135,948
State                                   1,294     (18,705)     11,065

Total                                $ 19,337    $ 29,894    $147,013

The  U.S.  statutory federal  income tax  rate  differs from  the effective
income tax rate as follows:
                                         Years Ended December 31,    
                                       1996        1995        1994 

Statutory federal income tax rate     35.00%      35.00%      35.00%
Benefit of state net operating
  loss (NOL) carryforwards               -        (9.90)         - 
Amortization of goodwill               5.89        2.85        1.13
Nontaxable investment income          (4.84)      (2.10)       (.55)
State income taxes                     1.57        (.62)       1.83
Other, net                            (1.46)        .64         .09 

Effective income tax rate             36.16%      25.87%      37.50%

During 1995, the  Company recognized state NOL carryforwards 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, 1996  and 1995,  the state  NOL carryforwards  remaining were
$634.7  million and $650.9 million, respectively, which expire in the years
2005 and 2006.

The net deferred tax  asset at December 31, 1996 of  $121.3 million was net
of deferred tax liabilities totaling $137.1 million.  The net  deferred tax
asset  at December  31,  1995 of  $69.8  million was  net  of deferred  tax
liabilities  totaling $141.9 million.   The  most significant  deferred tax
assets relate to the  provision for finance receivable losses,  the benefit
of  the loss on assets  held for sale 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, the valuation allowance remained at $39.5 million.
<PAGE>
<PAGE> 51

Notes to Consolidated Financial Statements, Continued


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, 1996 and 1995, there were no shares issued
and outstanding.

Common Shares - At  December 31, 1996 and 1995, there were 2 million shares
issued and outstanding.



Note 16.  Consolidated 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, 1996, the
maximum amount of dividends which the Company's insurance  subsidiaries can
pay in  1997 without prior  approval was  $78.7 million.   At December  31,
1996, the  Company's  insurance  subsidiaries  had  statutory  capital  and
surplus of $394.7 million.  Merit had $52.7 million of accumulated earnings
at December 31, 1996 for  which no federal income tax provisions  have been
required.  Merit would be liable for federal income taxes  on such earnings
if  they are  distributed as dividends  or exceed limits  prescribed by tax
laws.  No distributions are presently contemplated from these earnings.  If
such earnings  were to  become taxable  at December  31, 1996,  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,  $258.0 million of  the consolidated retained  earnings of AGFI
and $325.3 million  of the consolidated retained earnings of AGFC were free
from  such restrictions  at December  31, 1996.   At  that same  date, $8.7
million  of  the  retained  earnings  of  AGFI's  industrial  loan  company
subsidiaries was 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 average monthly
<PAGE>
<PAGE> 52

Notes to Consolidated Financial Statements, Continued


compensation  and length of  credited service.   American General's funding
policy  is to contribute annually no more  than the maximum amount that can
be deducted for federal income tax purposes.

Equity and fixed-maturity securities were 60% and 35%, respectively, of the
plans' assets at  the plans' most recent balance sheet  dates.  The pension
plans have  purchased annuity contracts from  American General subsidiaries
to  provide benefits to certain retirees.  These annuity contracts provided
$2.1 million, $2.2 million, and $2.3 million for benefits  to the Company's
retirees for the years ended December 31, 1996, 1995, and 1994.

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

                                                  December 31,        
                                           1996       1995       1994 
                                             (dollars in thousands)   

Accumulated benefit obligation (a)       $51,936    $46,406    $31,591

Projected benefit obligation             $62,887    $56,395    $38,778 
Plan assets at fair value                 71,450     60,968     50,247
Plan assets in excess of projected
  benefit obligation                       8,563      4,573     11,469 
Other unrecognized items, net             (2,709)     2,894     (4,664)

Prepaid pension expense                  $ 5,854    $ 7,467    $ 6,805

(a)  Accumulated benefit obligation is over 85% vested.


Net pension expense included  the following components for the  years ended
December 31:
                                           1996       1995       1994  
                                             (dollars in thousands)    

Service cost (benefits earned)           $ 3,194    $ 2,241    $ 2,960 
Interest cost                              4,480      3,624      3,084 
Actual return on plan assets             (11,288)   (11,283)      (237)
Net amortization and deferral              5,417      5,233     (5,523)

Total pension expense (income)           $ 1,803    $  (185)   $   284 


Additional assumptions concerning  the determination of  net pension  costs
were as follows:
                                           1996       1995       1994 
 
Weighted average discount rate             7.50%      7.25%      8.50%  
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> 53

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 fully insured.  A portion  of the retiree
medical  and  dental  plans  are  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,     
                                              1996            1995 
                                             (dollars in thousands)
Actuarial present value of benefit
  obligation:

Retirees                                     $1,152          $1,545
Active plan participants                      4,461           4,939
Accumulated postretirement benefit
  obligation                                  5,613           6,484
Plan assets at fair value                        90              89
Accumulated postretirement benefit
  obligation in excess of plan 
  assets at fair value                        5,523           6,395
Unrecognized net gain                         1,512             247

Accrued postretirement benefit cost          $7,035          $6,642


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



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:   1997, $29.4 million;  1998, $24.1 million;  1999, $18.2 million;
2000,  $11.5 million;  2001, $6.3  million; and  subsequent to  2001, $14.8
million.
<PAGE>
<PAGE> 54

Notes to Consolidated Financial Statements, Continued


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 1996.  Rental expense incurred for the
years ended December  31, 1996,  1995, and 1994,  was $36.0 million,  $38.5
million, and $32.2 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 have no material adverse effect on  the
Company's  consolidated  results  of  operations  and  financial  position.
However, it  should be  noted that  the frequency  of large damage  awards,
including large punitive damage awards, that  bear little or no relation to
actual economic  damages  incurred  by  plaintiffs  in  jurisdictions  like
Alabama   continues  to   increase  and   creates  the  potential   for  an
unpredictable judgment in any given suit.
<PAGE>
<PAGE> 55

Notes to Consolidated Financial Statements, Continued


Note 19.  Interim Financial Information (Unaudited)

Unaudited interim information for 1996 and 1995 is summarized below:


                                Total Revenues       
Three Months Ended          1996              1995   
                            (dollars in thousands)

    March 31             $  438,958        $  430,748
    June 30                 429,904           449,149
    September 30            429,313           459,380
    December 31             426,773           452,217

    Total                $1,724,948        $1,791,494


                            Income Before Provision
                               for Income Taxes      
Three Months Ended          1996              1995   
                            (dollars in thousands)

    March 31             $   44,235        $   95,530
    June 30                  47,410            99,559
    September 30             68,124            60,380
    December 31            (106,286) (a)     (139,920) (b)

    Total                $   53,483        $  115,549


                                  Net Income         
Three Months Ended          1996              1995   
                            (dollars in thousands)

    March 31             $   28,188        $   60,101
    June 30                  29,588            62,405
    September 30             43,611            54,956
    December 31             (67,241) (a)      (91,807) (b)

    Total                $   34,146        $   85,655


(a)  Includes loss on assets held for sale of $145.5 million ($93.5 million
     aftertax).

(b)  Includes increase in allowance for finance receivable losses of $216.0
     million ($140.2 million aftertax).
<PAGE>
<PAGE> 56

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, 1996       December 31, 1995  
                             Carrying        Fair    Carrying        Fair
                              Value         Value     Value         Value 
Assets                                   (dollars in thousands)

Net finance receivables,
  less allowance for finance
  receivable losses         $7,230,072  $7,230,072  $7,918,270  $7,918,270 
Investment securities          880,033     880,033     884,775     884,775 
Cash and cash equivalents      105,493     105,493     103,238     103,238 
Assets held for sale           667,007     667,007           -           -


Liabilities

Long-term debt              (4,498,530) (4,607,540) (4,979,883) (5,225,034)
Short-term notes payable    (3,126,920) (3,126,920) (2,483,871) (2,483,871)
Investment certificates         (3,778)     (3,796)     (6,197)     (6,264)


Off-Balance Sheet Financial
  Instruments

Unused credit limits                 -           -           -           -
Interest conversion agreements       -     (30,314)          -     (50,232)


                  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> 57

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.


Investment Certificates

Fair values for fixed-rate  time deposits are estimated using  a discounted
cash flow calculation  that applies interest rates  currently being offered
on time deposits to a schedule of aggregated expected monthly maturities on
time deposits.    The  carrying  amounts for  variable-rate  time  deposits
approximate their fair values at  the reporting date.  The fair  values for
demand  deposits are, by definition, equal  to the amount payable on demand
at the reporting date.


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 credit cards and
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.
<PAGE>
<PAGE> 58

Notes to Consolidated Financial Statements, Continued


Interest Conversion Agreements

Fair values for the  Company's interest conversion agreements are  based on
estimates,  obtained from  the individual  counterparties, of  the  cost or
benefit of terminating the agreements at the balance sheet date.
<PAGE>
<PAGE> 59

                                  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, 1996 and 1995

         Consolidated Statements of Income,  years ended December 31, 1996,
         1995, and 1994

         Consolidated  Statements  of  Shareholder's  Equity,  years  ended
         December 31, 1996, 1995, and 1994

         Consolidated  Statements  of Cash  Flows, years ended December 31,
         1996, 1995, and 1994

         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 66
         herein.

(b) Reports on Form 8-K

    No Current  Reports on  Form 8-K  were filed  during the fourth quarter
    of 1996. 

(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> 60

Item 14(d).


Schedule I - Condensed Financial Information of Registrant

<TABLE>
                       American General Finance, Inc.

                          Condensed Balance Sheets

<CAPTION>
                                                        December 31,      
                                                     1996          1995   
                                                   (dollars in thousands)
<S>                                               <C>           <C>
Assets

Cash                                              $      601    $      441
Investments in subsidiaries                        1,355,896     1,470,410
Notes receivable from subsidiaries                   173,235       187,038
Other assets                                          40,156        49,332

Total assets                                      $1,569,888    $1,707,221


Liabilities and Shareholder's Equity

Senior long-term debt, 5.0% - 9.75%,
  due 1997-2001                                   $   81,893    $   43,989
Notes payable to banks                               111,000       153,400
Notes payable to subsidiaries                        173,331       187,038
Other liabilities                                      3,183         1,013

Total liabilities                                    369,407       385,440

Shareholder's equity:
  Common stock                                         1,000         1,000
  Additional paid-in capital                         696,230       696,128
  Other equity                                        21,454        38,412 
  Retained earnings                                  481,797       586,241

Total shareholder's equity                         1,200,481     1,321,781

Total liabilities and shareholder's equity        $1,569,888    $1,707,221

<FN>
<F1>
See Notes to Condensed Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 61

Schedule I, Continued

<TABLE>
                       American General Finance, Inc.

                       Condensed Statements of Income



<CAPTION>
                                               Years Ended December 31,  
                                               1996      1995      1994  
                                                (dollars in thousands)
<S>                                          <C>       <C>       <C>
Revenues
  Dividends received from subsidiaries       $150,574  $108,633  $119,145
  Finance charges                                -         -      151,246
  Interest and other                           25,850     6,703    13,816

Total revenues                                176,424   115,336   284,207

Expenses
  Interest expense                             29,802    12,639    83,070
  Operating expenses                           23,844     8,386    41,638
  Provision for finance
    receivable losses                            -         -       51,492

Total expenses                                 53,646    21,025   176,200

Income before income taxes and equity    
  in (overdistributed) undistributed
  net income of subsidiaries                  122,778    94,311   108,007

Income Tax Credit                               9,751     5,026     3,925

Income before equity in (overdistributed)
  undistributed net income of subsidiaries    132,529    99,337   111,932

Equity in (Overdistributed) Undistributed
  Net Income of Subsidiaries                  (98,383)  (13,682)  133,056

Net Income                                   $ 34,146  $ 85,655  $244,988

<FN>
<F1>
See Notes to Condensed Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 62

Schedule I, Continued

<TABLE>
                       American General Finance, Inc.

                     Condensed Statements of Cash Flows

<CAPTION>
                                                Years ended December 31,
                                              1996        1995        1994
                                                 (dollars in thousands)  
<S>                                        <C>         <C>          <C>
Cash Flows from Operating Activities
Net Income                                 $  34,146   $  85,655    $244,988
Reconciling adjustments to net cash 
  provided by operating activities:
    Equity in overdistributed  
      (undistributed) net income 
      of subsidiaries                         98,383      13,682    (133,056)
    Provision for finance receivable
      losses                                    -           -         51,492
    Change in dividends receivable              -           -         32,512 
    Change in other assets and other 
      liabilities                                812      16,685       6,653 
    Other, net                                 8,263       7,801      (5,546)
Net cash provided by operating activities    141,604     123,823     197,043

Cash Flows from Investing Activities
  Capital contribution to subsidiaries          -        (80,228)     (6,667)
  Return of capital from subsidiary             -           -          7,435
  Participation in finance receivables          -           -     (1,246,417)
  Cash collections on participated
    finance receivables                         -           -        548,384
  Sale of participated finance receivables      -           -      1,205,945
  Transfer of subsidiary                        -          1,871        -   
  Net additions to fixed assets               (6,085)    (14,615)     (7,955)
  Other, net                                   8,423      (9,168)      4,175
Net cash provided by (used for)
  investing activities                         2,338    (102,140)    504,900

Cash Flows from Financing Activities
  Proceeds from issuance of
    long-term debt                            46,411       8,597       5,664
  Repayment of long-term debt                 (9,299)    (13,149)    (12,118)
  Change in notes receivable or payable
    with parent and subsidiaries                  96       3,299    (576,555)
  Change in notes payable to banks           (42,400)     12,400      21,000
  Capital contribution from parent              -         80,000        -  
  Common stock dividends paid               (138,590)   (112,540)   (140,000)
Net cash used for financing activities      (143,782)    (21,393)   (702,009)

Increase (decrease) in cash                      160         290         (66)
Cash at beginning of year                        441         151         217
Cash at end of year                         $    601    $    441    $    151

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

Schedule I, Continued


                       American General Finance, Inc.

                  Notes to Condensed Financial Statements

                             December 31, 1996




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,
1996, were  as follows:   1997, $15.5  million; 1998, $15.0  million; 1999,
$45.8 million; 2000, $3.8 million; and 2001, $1.8 million.



Note 3.  Participation Agreement

On May  1, 1992, AGFI entered  into a participation agreement  whereby AGFI
purchased finance receivables from a subsidiary.  The servicing fee expense
recorded  by  AGFI for  the participation  transaction  for the  year ended
December   31,  1994  was  $30.1  million.    On  December  31,  1994,  the
participation agreement was transferred to a subsidiary of AGFI.
<PAGE>
<PAGE> 64

                                 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
20, 1997.

                                          AMERICAN GENERAL FINANCE, INC.


                                          By: /s/  John S. Poelker  
                                                   John S. Poelker
                                          (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 20, 1997.


/s/  Frederick W. Geissinger              /s/  Philip M. Hanley
     Frederick W. Geissinger                   Philip M. Hanley
(Chairman, President, and Chief           (Director)
 Executive Officer and Director -
 Principal Executive Officer)
                                          /s/  Bennie D. Hendrix
                                               Bennie D. Hendrix
/s/  John S. Poelker                      (Director)
     John S. Poelker
(Senior Vice President and Chief
 Financial Officer and Director -         /s/  Harold S. Hook
 Principal Financial Officer)                  Harold S. Hook
                                          (Director)

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


                                          /s/  Jon P. Newton
     Robert M. Devlin                          Jon P. Newton
(Director)                                (Director)


/s/  Jerry L. Gilpin                     /s/  David C. Seeley       
     Jerry L. Gilpin                          David C. Seeley
(Director)                               (Director)
<PAGE>
<PAGE> 65

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> 66

                              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  each
         Indenture referred to under items (1) and (2)  below exceed 10% of
         the total assets of the Company on a consolidated basis.

         (1)  Senior Indenture dated as  of February 1, 1993 from  American
              General Finance  Corporation to Citibank, N.A.   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. 33-57910).

              (a)  Resolutions  and form  of note for senior notes,  6 3/8%
                   due  March  1, 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 March 4, 1993 (File No. 1-6155).

              (b)  Resolutions  and form  of note for senior  notes, 5 7/8%
                   due  July  1,  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 June 29, 1993 (File No. 1-6155).

              (c)  Resolutions and  form of  note for  senior  notes, 5.80%
                   due   April  1, 1997.    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 March 22, 1994 (File No. 1-6155).

              (d)  Resolutions  and form of  note for  senior notes, 6 5/8%
                   due  June  1,  1997.    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 17, 1994 (File No. 1-6155).
<PAGE>
<PAGE> 67

Exhibit Index, Continued


Exhibits                                                                   Page

              (e)  Resolutions  and form  of note for  senior notes, 6 7/8%
                   due  July  1,  1999.    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 June 8, 1994 (File No. 1-6155).

              (f)  Resolutions  and form  of note for senior notes, 7%  due
                   October  1,  1997.     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 26, 1994 (File No. 1-6155).

              (g)  Resolutions  and  form  of note for  senior notes, 7.70%
                   due November  15, 1997.  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 November 10, 1994 (File No. 1-6155).

              (h)  Resolutions  and form  of note for  senior notes, 8 1/4%
                   due  January 15,  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 January 6, 1995 (File No. 1-6155).

         (2)  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).
<PAGE>
<PAGE> 68

Exhibit Index, Continued


Exhibits                                                                   Page

              (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).

              (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).

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

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

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

(27)       Financial Data Schedule                                          71
<PAGE>