<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 1-6155 

                    American General Finance Corporation
           (Exact name of registrant as specified in its charter)

             Indiana                           35-0416090   
     (State of incorporation)      (I.R.S. Employer Identification No.)

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

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

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

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

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

                                    None

Indicate by  check mark whether  the registrant: (1) has  filed all reports
required to be filed by Section 13 or  15(d) of the Securities Exchange Act
of 1934 during the  preceding 12 months, and (2)  has been subject to  such
filing requirements for the past 90 days.   Yes  X     No    

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

The registrant  meets  the conditions  set  forth in  General  Instructions
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 10,160,012 shares of the registrant's common
stock, $.50 par value, outstanding.
<PAGE>
<PAGE> 2

                             TABLE OF CONTENTS




           Item                                                     Page

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

            2. Properties . . . . . . . . . . . . . . . . . . . . . . 15

            3. Legal Proceedings  . . . . . . . . . . . . . . . . . . 16

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

Part II     5. Market for Registrant's Common Equity and Related
                 Stockholder Matters  . . . . . . . . . . . . . . . . 17

            6. Selected Financial Data  . . . . . . . . . . . . . . . 17

            7. Management's Discussion and Analysis of Financial 
                 Condition and Results of Operations. . . . . . . . . 18

            8. Financial Statements and Supplementary Data  . . . . . 30

            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  . . . . . . . . . . . . . . . . . . . . 60



      *   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 Corporation  will be referred to in  this document
as "AGFC"  or  collectively, with  its  subsidiaries, whether  directly  or
indirectly  owned, as the "Company".   AGFC was incorporated under the laws
of the State of Indiana in 1927 as successor to a business started in 1920.
All of the common  stock of AGFC is owned by American General Finance, Inc.
(AGFI), which  was incorporated under the  laws of the State  of Indiana in
1974.    Since 1982,  AGFI  has  been  a  direct or  indirect  wholly-owned
subsidiary of  American General Corporation (American  General), the parent
company  of one  of the  nations'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.

AGFC is a financial services holding company, the subsidiaries of which are
engaged  primarily in the  consumer finance and  credit insurance business.
The Company conducts the credit insurance  business as part of the consumer
finance  business through  Merit Life  Insurance Co.  (Merit) and  Yosemite
Insurance Company (Yosemite), which are both subsidiaries of AGFC.
 
At December  31, 1996, the Company  had 1,354 offices in  39 states, Puerto
Rico, and the  U.S. Virgin Islands and approximately 9,100  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 Company  executed  the  private label  and  credit  card  participation
agreement  with AGFC-Utah  on  December 31,  1994;  therefore, average  net
receivables, yield, and finance receivable loss experience information  for
1994 were not affected by the finance receivables acquired pursuant to such
agreement.  See Consumer Finance Operations for further information on this
agreement.

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)         $7,930,169   $8,269,663   $6,146,644

Average borrowings                  $6,989,745   $7,209,923   $6,171,265
<PAGE>
<PAGE> 4

Item 1.  Continued

                                         1996         1995         1994 

Yield - finance charges as a
  percentage of average net
  receivables                           17.84%       18.01%       17.42%

Borrowing cost - interest
  expense as a percentage  
  of average borrowings                  6.90%        7.03%        6.67%

Interest spread - yield 
  less borrowing cost                   10.94%       10.98%       10.75%

Insurance revenues as a
  percentage of average 
  net receivables                        2.60%        2.69%        2.93%

Operating expenses as a
  percentage of average
  net receivables                        6.27%        5.64%        5.44%

Allowance ratio - allowance for 
  finance receivable losses as
  a percentage of net finance 
  receivables                            5.18%        5.88%        2.86%

Charge-off ratio (defined in
  "Consumer Finance Operations -
  Finance Receivable Loss and
  Delinquency Experience" in
  Item 1. herein.)                       5.51%        3.77%        2.20%

Delinquency ratio - 60 days or more
  (defined in "Consumer Finance
  Operations - Finance Receivable
  Loss and Delinquency Experience"
  in Item 1. herein.)                    3.84%        4.15%        2.89%

Return on average assets                  .55%         .98%        2.99%

Return on average equity                 3.55%        6.49%       19.51%

Ratio of earnings to fixed charges
  (refer to Exhibit 12 herein
  for calculations)                      1.16         1.24         1.92

Debt to tangible equity ratio -  
  debt to equity less goodwill 
  and net unrealized gains or 
  losses on fixed-maturity
  investment securities                  7.08         6.43         6.52

Debt to equity ratio                     5.57         5.02         5.19
<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.  On December 31,  1994, the Company entered into a
participation agreement  whereby the Company  purchases all of  the private
label  and credit card  finance receivables originated  by American General
Financial Center (AGFC-Utah), a subsidiary of AGFI.  

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,  91% 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 purchases
private  label   receivables  originated  by  AGFC-Utah   pursuant  to  the
participation  agreement entered into on  December 31, 1994.   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 purchases  MasterCard and VISA
credit   card  receivables   originated  by   AGFC-Utah  pursuant   to  the
participation  agreement entered into on  December 31, 1994.   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  10.
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               $1,314,022   $1,260,673   $1,167,879
    Non-real estate loans            2,179,930    2,950,065    2,979,086
    Retail sales contracts           1,009,482    1,492,393    1,444,821
    Private label (a)                  336,550      624,212      153,639
    Credit cards (a)                   502,379      567,090          -  
    Total originated and renewed     5,342,363    6,894,433    5,745,425
    Net purchased (transferred)
      (a) (b)                          945,193     (171,767)   1,293,944
  Total originated, renewed,
    and purchased                   $6,287,556   $6,722,666   $7,039,369


  (a)  Private label and credit  card  finance receivables  purchased  from
       AGFC-Utah in 1996 and 1995  pursuant to the  participation agreement
       are treated as originations by the Company.  The initial purchase of
       $1.3 billion of such finance  receivables in  1994 was treated  as a
       purchase.
 
  (b)  Includes purchases of finance receivables from  affiliates for 1996,
       1995, and 1994 of $59.4  million, $29.3 million,  and $1.3  billion,
       respectively, and transfer  of finance  receivables of  subsidiaries
       dividended to affiliates for 1995 of $196.4 million.


  Number:

    Real estate loans                   65,647       72,562       70,430
    Non-real estate loans              945,124    1,443,915    1,509,223
    Retail sales contracts             772,365    1,240,157    1,255,599
    Private label                      201,888      433,165      164,094


  Average size (to nearest dollar):

    Real estate loans                  $20,016      $17,374      $16,582
    Non-real estate loans                2,307        2,043        1,974
    Retail sales contracts               1,307        1,203        1,151
    Private label                        1,667        1,441          936
<PAGE>
<PAGE> 7

Item 1.  Continued


                                                December 31,            
                                       1996         1995         1994   
Balance at end of period:

  Amount (in thousands):

    Real estate loans               $3,652,106   $2,817,258   $2,697,980
    Non-real estate loans            2,459,660    2,694,369    2,656,386
    Retail sales contracts             954,975    1,189,272    1,172,099
    Private label                      376,580      942,706      900,732
    Credit cards                          -         557,603      479,480

  Total                             $7,443,321   $8,201,208   $7,906,677


  Number:

    Real estate loans                  194,689      163,803      161,859
    Non-real estate loans            1,214,791    1,426,394    1,430,150
    Retail sales contracts             862,047    1,143,310    1,116,592
    Private label                      276,184      504,184      405,416
    Credit cards                          -         449,591      403,262

  Total                              2,547,711    3,687,282    3,517,279


  Average size (to nearest dollar):

    Real estate loans                  $18,759      $17,199      $16,669
    Non-real estate loans                2,025        1,889        1,857
    Retail sales contracts               1,108        1,040        1,050
    Private label                        1,364        1,870        2,222
    Credit cards                          -           1,240        1,189


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


Average Net Receivables and Yield

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    $3,044,966    $2,839,151    $2,655,771
  Yield                          14.80%        15.01%        14.38%

Non-real estate loans:
  Average net receivables    $2,487,112    $2,743,997    $2,434,290
  Yield                          22.31%        21.83%        21.30%

Total loans:
  Average net receivables    $5,532,078    $5,583,148    $5,090,061
  Yield                          18.18%        18.36%        17.69%

Retail sales contracts:
  Average net receivables    $1,033,800    $1,229,931    $1,011,151
  Yield                          16.88%        17.14%        16.25%

Private label:
  Average net receivables    $  835,191    $  949,979    $   45,432
  Yield                          15.15%        15.35%        13.11%

Total retail sales finance:
  Average net receivables    $1,868,991    $2,179,910    $1,056,583
  Yield                          16.11%        16.36%        16.12%

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

Total:
  Average net receivables    $7,930,169    $8,269,663    $6,146,644
  Yield                          17.84%        18.01%        17.42%
<PAGE>
<PAGE> 9

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                $ 36,352     $ 23,240     $ 15,387
  Charge-off ratio                  1.21%        0.82%        0.58%

Non-real estate loans:
  Net charge-offs                $223,580     $165,087     $ 93,666
  Charge-off ratio                  8.96%        6.11%        3.92%

Total loans:
  Net charge-offs                $259,932     $188,327     $109,053
  Charge-off ratio                  4.72%        3.38%        2.15%

Retail sales contracts:
  Net charge-offs                $ 52,939     $ 35,392     $ 24,319
  Charge-off ratio                  5.07%        2.89%        2.44%

Private label:
  Net charge-offs                $ 72,512     $ 51,115     $    867
  Charge-off ratio                  8.59%        5.39%        2.01%

Total retail sales finance:
  Net charge-offs                $125,451     $ 86,507     $ 25,186
  Charge-off ratio                  6.65%        3.98%        2.42%

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

Total:
  Net charge-offs                $436,769     $311,040     $134,239
  Charge-off ratio (a)              5.51%        3.77%        2.20%
  Allowance for finance
    receivable losses (b)        $385,272     $482,243     $225,922
  Allowance ratio (b)               5.18%        5.88%        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> 10

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.

AGFC'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                $ 83,239     $ 59,517     $ 46,734
  % of related receivables          2.23%        2.01%        1.65%

Non-real estate loans            $179,719     $197,662     $140,535
  % of related receivables          6.43%        6.37%        4.54%

Total loans                      $262,958     $257,179     $187,269
  % of related receivables          4.03%        4.24%        3.16%

Retail sales contracts           $ 33,675     $ 43,171     $ 25,227
  % of related receivables          2.90%        3.01%        1.73%

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

Total retail sales finance       $ 46,242     $ 91,601     $ 49,247
  % of related receivables          3.01%        3.76%        2.13%

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

Total                            $309,200     $377,300     $251,970
  % of related receivables          3.84%        4.15%        2.89%
<PAGE>
<PAGE> 11

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         $4,680,197    $4,840,860    $4,095,132
  Borrowing cost                  7.28%         7.27%         7.33%

Short-term debt:
  Average borrowings         $2,309,548    $2,369,063    $2,076,133
  Borrowing cost                  6.13%         6.54%         5.38%

Total:
  Average borrowings         $6,989,745    $7,209,923    $6,171,265
  Borrowing cost                  6.90%         7.03%         6.67%


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                           $2,342,392        $4,220,174
  1998                            1,399,636           809,569
  1999                              870,329           548,674
  2000                              486,280           933,935
  2001                              304,410            39,881
  2002 and thereafter             2,040,274           880,324

  Total                          $7,443,321        $7,432,557
<PAGE>
<PAGE> 12

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> 13

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> 14

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.  

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
<PAGE>
<PAGE> 15

Item 1.  Continued


against credit worthy applicants), the Fair Credit Reporting Act (governing
the accuracy and  use of credit bureau reports), and  certain Federal Trade
Commission rules.


Insurance

State  authorities   regulate  and   supervise   the  Company's   insurance
subsidiaries.  The extent  of such regulation varies but  relates primarily
to conduct of business,  types of products offered, standards  of solvency,
payment of dividends, licensing,  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.



Item 2.  Properties.


The  Company's investment  in  real estate  and  tangible property  is  not
significant  in relation  to its  total  assets due  to the  nature of  its
business.   AGFI and certain of  its subsidiaries own real  estate on which
AGFC and other affiliates conduct business.  The Company generally conducts
branch  office operations in leased premises.  Lease terms ordinarily range
from three to five years.
<PAGE>
<PAGE> 16

Item 2.  Continued


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

AGFC and certain of  its subsidiaries are parties to various other lawsuits
and proceedings  arising in the ordinary course of business.  Many of these
lawsuits and  proceedings arise  in  jurisdictions, such  as Alabama,  that
permit damage  awards  disproportionate  to  the  actual  economic  damages
incurred.  Based upon information presently available, the Company believes
that  the total amounts that will ultimately  be paid, if any, arising from
these lawsuits and proceedings will 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> 17

                                  PART II


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


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

Quarter Ended                         1996        1995  
                                   (dollars in thousands)

March 31                            $ 29,007    $ 27,534
June 30                               35,358      38,608
September 30                          50,189      42,367
December 31                           33,020         -  

                                    $147,574    $108,509


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



Item 6.  Selected Financial Data.


The  following selected  financial data  are 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    $1,708,673 $1,789,184 $1,388,075 $1,212,917 $1,092,858
 
Net income (b)        50,959     92,293    243,300    189,628    160,171

Total assets       9,502,589  9,485,477  8,918,698  7,504,798  6,999,570

Long-term debt     4,416,637  4,935,894  4,265,226  3,965,772  3,558,401


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

(b)  Per share information is not included because all of the common  stock
     of AGFC is owned by AGFI.
<PAGE>
<PAGE> 18

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 $589.9  million in 1996  compared to $638.1
million in 1995  and $466.8 million in 1994.   Operating cash flow combined
with  the net proceeds  of increased debt,  the change  in notes receivable
from parent and  affiliate, the proceeds of securitized finance receivables
sold in  1995, and a  1995 capital contribution  from AGFI, generated  cash
flow of $766.7 million  in 1996 compared to  $1.2 billion in 1995  and $2.3
billion in 1994.   These cash flows were used  principally to fund the  net
originations and purchases of finance receivables and the net purchases and
transfers  of  assets from  affiliates of  $533.7  million in  1996, $890.9
million in 1995, and $2.1 billion  in 1994 and to pay dividends to  AGFI of
$147.6 million  in 1996,  $28.5 million  in 1995 (net  of an  $80.0 million
capital contribution from AGFI), and $97.5 million in 1994.

Dividends paid  are typically  managed to  maintain the  Company's targeted
leverage of 6.5 to  1 of debt to tangible equity (equity  less goodwill and
net unrealized gains  or losses on  fixed-maturity investment  securities).
The debt to tangible equity ratio at December 31, 1996 was 7.08 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 6.53  to 1.  The Company expects to  return to its targeted leverage in
first  quarter 1997.   Certain of  AGFC's financing  agreements effectively
limit  the amount of  dividends AGFC may pay;  however, management does not
expect those limits to affect AGFC's ability to pay the amount of dividends
necessary to maintain the Company's targeted leverage.  See Note 17. 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 $7.4 billion of debt  and $1.4 billion of equity, compared to
$8.7 billion  at year-end 1995, consisting of $7.3 billion of debt and $1.4
billion of equity.
<PAGE>
<PAGE> 19

Item 7.  Continued


The Company issues a combination of fixed-rate debt, principally long-term,
and  floating-rate debt,  principally  short-term.   AGFC  and one  of  its
subsidiaries  sell commercial paper notes with maturities ranging from 1 to
270 days  directly to banks,  insurance companies, corporations,  and other
institutional  investors.    AGFC may  also  offer  medium-term notes  with
original  maturities of  nine  months or  longer  to certain  institutional
investors.    AGFC obtains  the remainder  of  its funds  primarily through
underwritten public  debt offerings with maturities  generally ranging from
three to ten years.


Credit Ratings

AGFC's  strong  debt and  commercial paper  ratings  enhance its  access to
capital markets.  On February 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  $4.0 billion, with remaining  availability to the  Company of $4.0
billion.  See Note 12. 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,
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
<PAGE>
<PAGE> 20

Item 7.  Continued


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 $41.3 million, or 45%, for 1996 and $151.0 million, or
62%, 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 $7.4  billion, a
decrease of $757.9  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
of $88.1 million was necessary to  reduce the carrying amount of the assets
held  for sale to net realizable value, after considering related expenses.
See  Note 10. of the Notes to  Consolidated Financial Statements in Item 8.
herein for further information on this reclassification.
<PAGE>
<PAGE> 21

Item 7.  Continued


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  34% 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  $74.9 million,  or  5%, for  1996  and
increased $418.7 million, or 39%, 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  $339.5
million, or 4%, during 1996 when compared to 1995 primarily due to the AGFC
dividend of two subsidiaries  operating in Alabama to AGFI  on December 31,
1995 and the action program to improve credit quality.  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 $2.1 billion, or  35%, during 1995  when compared to
1994 primarily due to the addition of participated private label and credit
card  finance  receivables   to  the  Company's  portfolio  pursuant  to  a
participation agreement  entered into on  December 31, 1994  with AGFC-Utah
and growth in the loan  and retail sales finance portfolios  resulting from
business development efforts.   The yield increased 59 basis  points during
<PAGE>
<PAGE> 22

Item 7.  Continued


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
$42.4  million, or 24%, 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 increased  $10.5 million,  or 14%,  for 1996  and decreased
$59.9 million,  or 44%, for 1995  when compared to  the respective previous
year.

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

The decrease in other revenues for 1995 when compared to 1994 was primarily
due  to a  decrease in  interest revenue  on notes  receivable from  parent
partially  offset  by 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 decrease in interest revenue on
<PAGE>
<PAGE> 23

Item 7.  Continued


notes receivable from parent for  1995 when compared to 1994  resulted from
the  participation agreement entered into  on December 31,  1994 with AGFC-
Utah.   Finance receivables under  such agreement totaling  $1.3 billion at
December 31, 1994 were  previously purchased by AGFI with  funding provided
by AGFC  through an intercompany note.   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.  


Interest Expense

Interest expense decreased  $24.3 million,  or 5%, for  1996 and  increased
$94.7 million, or  23%, 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 $220.2 million,  or 3%, for 1996 when compared  to 1995 primarily
due  to  the decrease  in  average  net receivables.    The  borrowing cost
decreased 13 basis points for 1996 when  compared to 1995 due to a decrease
in short-term  borrowing cost, with long-term borrowing cost remaining near
the same level.

The  increase in interest expense for 1995 when compared to 1994 was due to
increases in  average borrowings  and borrowing cost.   Average  borrowings
increased  $1.0 billion,  or 17%, for  1995 when  compared to  1994 to fund
asset growth.   The borrowing cost increased 36 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  $30.8 million,  or 7%,  for 1996  and $131.9
million, or 39%, 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 dividend  of the subsidiaries
operating in Alabama  and 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.
<PAGE>
<PAGE> 24

Item 7.  Continued


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.   During 1995 (prior to the  dividend of the
two  subsidiaries operating in  Alabama to AGFI on  December 31, 1995), the
Company  increased  its  finance  receivable  portfolio  by  over   239,000
accounts,  increased net receivables by $491.0 million, and opened over 100
new  consumer  finance  offices.   During  1995,  the  Company added  1,900
employees, including 1,100  branch employees and  800 employees to  process
the  private label and credit  card finance receivables  resulting from the
participation agreement entered into on December 31, 1994 and the growth in
such  activity.   The  dividend of  the  subsidiaries operating  in Alabama
decreased  the  Company's  finance  receivable  portfolio  by  over  69,000
accounts totaling $196.4  million, consumer finance offices  by 34 offices,
and  branch  employees by  approximately 200  employees.   The  increase in
operating  expenses for 1995 when compared to 1994 also reflected increased
collection efforts on the higher level of delinquent finance receivables.  


Provision for Finance Receivable Losses

Provision  for finance receivable losses  decreased $164.1 million, or 29%,
for 1996 and  increased $418.8 million, or 270%, 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 $436.8 million  from $311.0 million
for  1995 and  $134.2 million  for  1994.   The charge-off  ratio for  1996
increased to 5.51% compared to 3.77% for 1995 and 2.20% for 1994.  

At  year-end 1996,  delinquencies were  $309.2 million  compared to  $377.3
million at 1995 and $252.0 million at 1994.  The delinquency ratio at year-
end 1996 decreased  to 3.84% compared to  4.15% 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 $385.3 million at
December 31,  1996 from $482.2 million at December 31, 1995.  The allowance
ratio  at December  31, 1996 was  5.18% compared  to 5.88%  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
<PAGE>
<PAGE> 25

Item 7.  Continued


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,
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
10. 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
<PAGE>
<PAGE> 26

Item 7.  Continued


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 $4.7 million, or 14%, for 1996 and
$112.3 million, or  77%, 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.

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:
74.28% in  net finance receivables,  less allowance for  finance receivable
losses,  9.25% in  investment securities,  7.04% in  assets held  for sale,
3.89% in  other assets,  2.77%  in acquisition-related  goodwill, 1.82%  in
notes receivable from parent, and .95% 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.
<PAGE>
<PAGE> 27

Item 7.  Continued


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
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.
<PAGE>
<PAGE> 28

Item 7.  Continued


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.

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.
<PAGE>
<PAGE> 29

Item 7.  Continued


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.

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.
<PAGE>
<PAGE> 30

Item 7.  Continued


Competitive Factors

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


                         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> 31


                       REPORT OF INDEPENDENT AUDITORS





The Board of Directors
American General Finance Corporation


We  have audited the  accompanying consolidated balance  sheets of American
General Finance Corporation (a wholly-owned subsidiary of American  General
Finance, Inc.) and  subsidiaries as of December 31, 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  Corporation  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> 32
<TABLE>
           American General Finance Corporation 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                             $3,652,106    $2,817,258
    Non-real estate loans                          2,459,660     2,694,369
    Retail sales contracts                           954,975     1,189,272
    Private label                                    376,580       942,706
    Credit cards                                        -          557,603

Net finance receivables                            7,443,321     8,201,208
Allowance for finance receivable
  losses  (Note 6.)                                 (385,272)     (482,243)
Net finance receivables, less allowance
  for finance receivable losses                    7,058,049     7,718,965

Investment securities  (Note 7.)                     879,133       883,895
Cash and cash equivalents                             90,197        88,297
Notes receivable from parent  (Note 8.)              173,235       187,038
Goodwill  (Note 9.)                                  263,171       279,532
Other assets  (Note 9.)                              370,097       327,750
Assets held for sale  (Note 10.)                     668,707          -   

Total assets                                      $9,502,589    $9,485,477


Liabilities and Shareholder's Equity

Long-term debt  (Note 11.)                        $4,416,637    $4,935,894
Short-term notes payable:
  Commercial paper  (Notes 12. and 13.)            3,015,920     2,194,771
  Banks and other  (Notes 12. and 14.)                  -          135,700
Insurance claims and policyholder 
  liabilities                                        456,430       483,971
Other liabilities                                    263,154       275,683
Accrued taxes                                         15,525        10,962

Total liabilities                                  8,167,666     8,036,981

Shareholder's equity: 
  Common stock  (Note 16.)                             5,080         5,080
  Additional paid-in capital                         691,914       691,914
  Net unrealized gains on investment
    securities  (Note 7.)                             21,454        38,412 
  Retained earnings  (Note 17.)                      616,475       713,090

Total shareholder's equity                         1,334,923     1,448,496

Total liabilities and shareholder's equity        $9,502,589    $9,485,477

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

                     Consolidated Statements of Income




<CAPTION>
                                      Years Ended December 31,  
                                    1996        1995        1994   
                                       (dollars in thousands)
<S>                              <C>         <C>         <C>
Revenues
  Finance charges                $1,414,590  $1,489,466  $1,070,770
  Insurance                         206,170     222,282     179,927
  Other                              87,913      77,436     137,378

Total revenues                    1,708,673   1,789,184   1,388,075

Expenses
  Interest expense                  482,343     506,618     411,875
  Operating expenses                497,204     466,399     334,467
  Provision for finance receivable
    losses                          409,646     573,698     154,914
  Loss on assets held for sale      137,036        -           -   
  Insurance losses and loss
    adjustment expenses             102,811     116,829      97,893

Total expenses                    1,629,040   1,663,544     999,149

Income before provision for income
  taxes                              79,633     125,640     388,926

Provision for Income Taxes
  (Note 15.)                         28,674      33,347     145,626

Net Income                       $   50,959  $   92,293  $  243,300


<FN>
<F1>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 34
<TABLE>
           American General Finance Corporation 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      $    5,080  $    5,080  $    5,080
  Balance at end of year                 5,080       5,080       5,080

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

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         713,090     729,430     551,155
  Net income                            50,959      92,293     243,300
  Common stock dividends              (147,574)   (108,633)    (65,025)
  Balance at end of year               616,475     713,090     729,430

Total Shareholder's Equity          $1,334,923  $1,448,496  $1,328,017 



<FN>
<F1>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 35
<TABLE>
           American General Finance Corporation 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                                      $   50,959   $   92,293   $  243,300 
Reconciling adjustments to net cash 
  provided by operating activities:
    Provision for finance receivable losses        409,646      573,698      154,914 
    Depreciation and amortization                   87,129      107,288      116,091 
    Deferral of finance receivable
      origination costs                            (49,129)     (73,711)     (86,581)
    Deferred federal income tax benefit            (40,681)     (69,570)      (9,720)
    Deferred state income tax benefit               (2,216)     (16,550)         -   
    Change in other assets and other
      liabilities                                  (21,891)      31,693       18,914 
    Change in insurance claims and
      policyholder liabilities                     (27,541)      17,088       51,395 
    Loss on assets held for sale                   137,036          -            -   
    Gain on finance receivables sold
      through securitization                           -         (4,552)         -   
    Other, net                                      46,608      (19,627)     (21,486)
Net cash provided by operating activities          589,920      638,050      466,827 

Cash Flows from Investing Activities
  Finance receivables originated or purchased   (5,249,595)  (5,776,614)  (4,580,616)
  Principal collections on finance receivables   4,778,076    4,916,984    3,678,702 
  Securitized finance receivables sold                 -        100,000          -   
  Investment securities purchased                 (188,657)    (199,587)    (161,144)
  Investment securities called, matured and sold   169,350      108,656       81,161 
  Change in notes receivable from parent
    and affiliate                                   13,803          -        585,385 
  Net purchases and transfers of assets
    from affiliates                                (62,176)     (31,259)  (1,205,945)
  Other, net                                       (64,253)     (45,148)     (19,280)
Net cash used for investing activities            (603,452)    (926,968)  (1,621,737)
    
Cash Flows from Financing Activities
  Proceeds from issuance of long-term debt          77,817    1,567,933    1,075,544 
  Repayment of long-term debt                     (600,260)    (900,760)    (779,350)
  Change in short-term notes payable               685,449     (299,992)     983,002 
  Capital contribution from parent                     -         80,000          -   
  Dividends paid                                  (147,574)    (108,509)     (97,536)
Net cash provided by financing activities           15,432      338,672    1,181,660 

Increase in cash and cash equivalents                1,900       49,754       26,750 
Cash and cash equivalents at beginning of year      88,297       38,543       11,793 
Cash and cash equivalents at end of year        $   90,197   $   88,297   $   38,543 

Supplemental Disclosure of Cash Flow Information
  Income taxes paid                             $   41,187   $  156,506   $  160,116 
  Interest paid                                 $  484,813   $  489,475   $  401,763 

<FN>
<F1>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<PAGE> 36

           American General Finance Corporation and Subsidiaries

                 Notes to Consolidated Financial Statements

                             December 31, 1996



Note 1.  Nature of Operations

American General Finance Corporation will be  referred to in these Notes to
Consolidated  Financial  Statements as  "AGFC"  or  collectively, with  its
subsidiaries, whether directly or indirectly owned, as the "Company".  AGFC
is  a 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.  On
December  31,  1994, the  Company  entered into  a  participation agreement
whereby the  Company purchases  all of  the private label  and credit  card
finance receivables originated by American General Financial Center  (AGFC-
Utah),  another  subsidiary  of  the  Company's  parent,  American  General
Finance, Inc. (AGFI).  At December  31, 1996, the Company had 1,354 offices
in 39 states,  Puerto Rico and  the U.S. Virgin  Islands and  approximately
9,100 employees.

In  its lending operations, the Company makes loans directly to individuals
and  generally takes a security  interest in real  property and/or personal
property of the borrower.  In its retail operations,  the Company purchases
retail sales contracts  arising from the retail sale  of consumer goods and
services  by approximately  15,000 retail  merchants and  purchases private
label  receivables  originated by  AGFC-Utah  (arising  from the  sales  by
approximately 250 retail merchants) pursuant to the participation agreement
entered  into on December 31, 1994.   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 purchases
MasterCard  and  VISA  credit  card  receivables  originated  by  AGFC-Utah
pursuant  to the participation agreement entered into on December 31, 1994.
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 10.
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.  
<PAGE>
<PAGE> 37

Notes to Consolidated Financial Statements, Continued


At  December  31, 1996,  the  Company  had  $7.4  billion  of  net  finance
receivables due from approximately 2.5  million customer accounts and  $6.6
billion  of  credit   and  non-credit  life  insurance  in  force  covering
approximately 1.5 million customer accounts.



Note 2.  Summary of Significant Accounting Policies


                        PRINCIPLES OF CONSOLIDATION

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


                             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.  
<PAGE>
<PAGE> 38

Notes to Consolidated Financial Statements, Continued


Allowance For Finance Receivable Losses

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

AGFC'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
<PAGE>
<PAGE> 39

Notes to Consolidated Financial Statements, Continued


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.  


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  the Company.   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
<PAGE>
<PAGE> 40

Notes to Consolidated Financial Statements, Continued


                           INVESTMENT SECURITIES

Valuation

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


Realized Gains and Losses on Investments

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


                                   OTHER

Cash Equivalents

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


Goodwill

Acquisition-related goodwill is charged to expense in equal amounts over 20
to 40  years.  The  carrying value  of goodwill is  regularly reviewed  for
indicators of  impairment in  value, which  in the view  of management  are
other  than  temporary, including  unexpected  or  adverse changes  in  the
following:   1)  the  economic or  competitive  environments in  which  the
Company operates, 2) profitability analyses, and 3) cash flow analyses.  If
facts and  circumstances suggest  that goodwill  is  impaired, the  Company
assesses  the fair value of the underlying business and reduces goodwill to
an amount that results in the book value of the  Company approximating fair
value.   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.
<PAGE>
<PAGE> 41

Notes to Consolidated Financial Statements, Continued


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


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
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  21.  are  based  on  estimates using
discounted cash flows  when quoted market  prices are not  available.   The
valuation techniques employed are significantly affected by the assumptions
used,  including the discount rate and estimates  of future cash flows.  In
that  regard, the derived fair  value estimates cannot  be substantiated by
comparison to independent markets and, in many cases, could not be realized
in  immediate settlement  of  the  instrument.    The  fair  value  amounts
presented  can be misinterpreted, and  care should be  exercised in drawing
conclusions from such data.
<PAGE>
<PAGE> 42

Notes to Consolidated Financial Statements, Continued


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.

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.  Net Purchases and Transfers of Assets from Affiliates

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

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

On  December 31, 1994, the  Company entered into  a participation agreement
with  AGFC-Utah whereby the Company purchased a 100% participation in AGFC-
Utah's  credit  card  and  private  label  finance  receivables.   (Finance
<PAGE>
<PAGE> 43

Notes to Consolidated Financial Statements, Continued


receivables  purchased  from AGFC-Utah  in 1996  and  1995 pursuant  to the
participation  agreement are treated as originations by the Company and are
not included in the table below.)

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

                                       1996         1995         1994  
                                           (dollars in thousands)
Net finance receivables,
  less allowance for finance
  receivable losses                  $  59,448   $(157,601)  $1,210,815
Other assets (liabilities)               2,728     188,860       (4,870)

Cash paid                            $  62,176   $  31,259   $1,205,945



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.  

Contractual maturities of finance receivables were as follows:

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

 1997                        $2,342,392            31.47%
 1998                         1,399,636            18.81
 1999                           870,329            11.69
 2000                           486,280             6.53
 2001                           304,410             4.09
 2002 and thereafter          2,040,274            27.41 

 Total                       $7,443,321           100.00%
<PAGE>
<PAGE> 44

Notes to Consolidated Financial Statements, Continued


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                   $2,584,894     $2,580,965
  Percent of average net receivables               46.73%         46.23%

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

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


Geographic diversification of finance receivables reduces the concentration
of credit risk  associated with a recession in any one region.  The largest
concentrations  of 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          9.37%    $  886,974         10.82%
N. Carolina        672,021          9.03        737,630          8.99
Florida            534,936          7.19        626,519          7.64
Ohio               454,290          6.10        439,522          5.36
Illinois           452,508          6.08        489,840          5.97
Indiana            397,698          5.34        454,892          5.55
Virginia           350,349          4.71        392,146          4.78
Georgia            312,377          4.20        372,963          4.55
Other            3,571,408         47.98      3,800,722         46.34 

                $7,443,321        100.00%    $8,201,208        100.00%


Unused  credit limits  on  private  label  extended  by  AGFC-Utah  to  its
customers were $3.1 billion and $2.6 billion at December 31, 1996 and 1995,
respectively.  Unused credit  limits on credit cards extended  by AGFC-Utah
to its customers were $2.0 billion at December 31, 1995.  These amounts, in
part or in total, can be cancelled at the discretion of  AGFC-Utah, and are
not indicative of  the amount expected to  be funded.  Any such  amounts of
credit  limits  on private  label  that  would  be funded  would  be  fully
participated to the Company pursuant to the participation agreement.
<PAGE>
<PAGE> 45

Notes to Consolidated Financial Statements, Continued


The Company also extended credit on  private label until the fourth quarter
of 1996, when the accounts were sold to AGFI which subsequently contributed
those  accounts  associated with  active  merchants to  AGFC-Utah.   Unused
credit limits on private label extended by the Company at December 31, 1995
were $910.4 million.

Unused credit limits on loan and retail  sales contracts revolving lines of
credit extended  by the Company  to its customers  were $226.5  million and
$264.5 million at December 31, 1996 and 1995, respectively.  These amounts,
in part or in total, can be cancelled at the discretion of the Company, and
are not indicative of the amount expected to be funded.

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
a portion  of them with  the assets  held for sale.   Although the  Company
continues  to service  these finance  receivables, 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.



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         $482,243     $225,922     $152,696
Provision for finance receivable
  losses                              409,646      573,698      154,914
Allowance reclassified to assets        
  held for sale                       (70,000)        -            -   
Allowance related to net acquired       
  (transferred) receivables and
  other                                   152       (6,337)      52,551
Charge-offs:
  Finance receivables charged off    (487,026)    (351,333)    (168,067)
  Recoveries                           50,257       40,293       33,828
  Net charge-offs                    (436,769)    (311,040)    (134,239)

Balance at end of year               $385,272     $482,243     $225,922
<PAGE>
<PAGE> 46

Notes to Consolidated Financial Statements, Continued


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



Note 7.  Investment Securities

At December 31, 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              167,374    156,188    161,647    148,360
    Other                        45,525     47,186     36,721     35,242
  Redeemable preferred stocks     7,235      6,956      7,135      6,764
Total                           873,862    883,005    840,862    824,215
Non-redeemable preferred
  stocks                          2,271        890      2,264        584
Other long-term investments       3,000        -        3,000        -  

Total investment securities    $879,133   $883,895   $846,126   $824,799


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> 47

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                 $  7,565      $  7,472
    Due after 1 year through 5 years        87,274        84,141
    Due after 5 years through 10 years     427,585       412,527
    Due after 10 years                     148,464       137,240
Mortgage-backed securities                 202,974       199,482

Total                                     $873,862      $840,862

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.  Notes Receivable from Parent and Affiliates

Notes receivable from  AGFI totaled  $173.2 million and  $187.0 million  at
December  31, 1996  and  1995, respectively.    Interest revenue  on  notes
receivable  from parent  and affiliates  for the  years ended  December 31,
1996,  1995, and  1994,  totaled $19.4  million,  $2.2 million,  and  $76.5
million, respectively.  



Note 9.  Costs In Excess of Net Assets Acquired

Goodwill, resulting  from the excess  of the purchase  price paid  over the
fair  value of  separately identified  tangible  and intangible  net assets
acquired,  totaled $263.2 million and  $279.5 million at  December 31, 1996
and 1995, respectively.  Accumulated amortization totaled $75.9 million and
$67.1 million at December 31, 1996 and 1995, respectively.

Included in other assets is a  customer base valuation of $18.5 million and
$20.1 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> 48

Notes to Consolidated Financial Statements, Continued


Note 10.  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  $137.0  million ($88.1  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 11.  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                   $4,416,637   $4,935,894    $4,525,262   $5,180,472


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%        7.27%           7.15%     7.24%
Senior subordinated           -          6.44              -         - 
Total                       7.28         7.27            7.15      7.24
<PAGE>
<PAGE> 49

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                         $1,204,254
1998                            809,569
1999                            548,674
2000                            933,935
2001                             39,881
2002-2006                       582,336
2007-2009                       297,988

Total                        $4,416,637


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 17.).



Note 12.  Short-term Notes Payable and Credit Facilities

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

                                         1996        1995        1994   
                                            (dollars in thousands)

Maximum borrowings at any month end   $3,015,920  $2,644,804  $2,629,886
Average borrowings                    $2,305,848  $2,368,904  $1,993,919
Weighted average interest rate,
  giving effect to interest
  conversion agreements and
  commitment fees                          6.13%       6.54%       5.23%
Weighted average interest rate,
  at December 31,                          5.54%       5.73%       5.84%

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 $346.0  million and $391.0  million, respectively, of  uncommitted
<PAGE>
<PAGE> 50

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, there  were no short-term  borrowings outstanding under
all credit  facilities, compared to  $135.7 million at  year-end 1995.   At
December  31, 1996  and 1995,  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  $502.0 million  and
$371.9 million, respectively, in uncommitted facilities.



Note 13.  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  21. 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> 51

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 14.  Short-term Notes Payable - Parent

Borrowings from  American  General primarily  provide  overnight  operating
liquidity when American General is in a surplus cash position.   Borrowings
from AGFI  primarily provide  operating funds  for lending  activities. All
such borrowings are made on a due on demand basis at short-term rates based
on overnight  bank investment rates or  bank prime rates.   At December 31,
1996,  1995  and 1994,  AGFC had  no  borrowings outstanding  with American
General or AGFI.

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

Maximum borrowings at any month end     $    -      $     -     $450,000
Average borrowings                      $ 3,700     $    159    $ 82,214
Weighted average interest rate (total
  interest expense divided by average
  borrowings)                             5.16%        6.05%       8.97%
<PAGE>
<PAGE> 52

Notes to Consolidated Financial Statements, Continued


Note 15.  Income Taxes

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

Provision for income taxes is summarized as follows:

                                         Years Ended December 31,  
                                       1996        1995        1994  
                                          (dollars in thousands)  
Federal
  Current                            $ 67,675    $121,743    $144,738
  Deferred                            (40,681)    (69,570)     (9,720)
Total federal                          26,994      52,173     135,018
State                                   1,680     (18,826)     10,608

Total                                $ 28,674    $ 33,347    $145,626


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               -        (9.11)         - 
Amortization of goodwill               3.85        2.61        1.14
Nontaxable investment income          (3.25)      (1.94)       (.56)
State income taxes                     1.37        (.63)       1.77
Other, net                             (.96)        .61         .09 

Effective income tax rate             36.01%      26.54%      37.44%


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 $118.1 million was net
of deferred tax liabilities totaling $137.1  million.  The net deferred tax
asset  at December  31,  1995 of  $69.6  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
<PAGE>
<PAGE> 53

Notes to Consolidated Financial Statements, Continued


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.



Note 16.  Capital Stock

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

Special Shares - At December 31, 1996 and 1995, there were no shares issued
and outstanding.

Common Shares - At December 31, 1996 and 1995, there were 10,160,012 shares
issued and outstanding.



Note 17.  Consolidated Retained Earnings

State  laws restrict AGFC's insurance  subsidiaries as to  the amounts they
may  pay as  dividends without  prior  notice to,  or in  some cases  prior
approval from, their  respective state insurance departments.   At December
31, 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, AGFC'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  of AGFC's  financing agreements  effectively  limit the  amount of
dividends AGFC  may pay.    Under the  most restrictive  provision of  such
agreements, $325.3 million of the consolidated retained earnings of AGFC at
December 31, 1996, was free from such restrictions.



Note 18.  Benefit Plans


                          RETIREMENT INCOME PLANS

The Company participates in the  American General Retirement Plans  (AGRP),
which  are  noncontributory defined  benefit  pension  plans covering  most
employees.  Pension benefits are based on the participant's average monthly
compensation and  length of credited  service.  American  General's funding
<PAGE>
<PAGE> 54

Notes to Consolidated Financial Statements, Continued


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.

Pension plan activity allocated to the Company for 1996, 1995, and 1994 was
immaterial.  Because net plan assets are  not calculated separately for the
Company, the remainder of the information presented herein is for AGFI.

AGFI accounts for  its participation in the AGRP as if it had its own 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 
<PAGE>
<PAGE> 55

Notes to Consolidated Financial Statements, Continued


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  


                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.

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

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

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
<PAGE>
<PAGE> 56

Notes to Consolidated Financial Statements, Continued


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 19.  Lease Commitments, Rent Expense and Contingent Liabilities

The  approximate  annual  rental  commitments  for  leased  office   space,
automobiles and  data processing  and  related equipment  accounted for  as
operating  leases,  excluding  leases on  a  month-to-month  basis,  are as
follows:   1997, $35.6 million;  1998, $23.4 million;  1999, $17.7 million;
2000,  $11.3 million;  2001, $6.2  million; and  subsequent to  2001, $14.9
million.

Taxes, insurance and  maintenance expenses are  obligations of the  Company
under certain leases.  In the normal course of business, leases that expire
will  be  renewed or  replaced by  leases  on other  properties; therefore,
future minimum annual rental commitments will probably not be less than the
amount of rental expense incurred in 1996.  Rental expense incurred for the
years  ended December 31,  1996, 1995, and  1994, was  $43.9 million, $44.2
million, and $35.9 million, respectively.

AGFC and certain  of its subsidiaries are  parties to various  lawsuits and
proceedings arising  in the  ordinary course  of business.   Many  of these
lawsuits  and proceedings  arise in  jurisdictions, such  as Alabama,  that
permit damage  awards  disproportionate  to  the  actual  economic  damages
incurred.  Based upon information presently available, the Company believes
that the total  amounts that will ultimately be paid,  if any, arising from
these lawsuits and proceedings  will 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> 57

Notes to Consolidated Financial Statements, Continued


Note 20.  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             $  435,105        $  430,395
    June 30                 427,791           455,739
    September 30            422,755           458,606
    December 31             423,022           444,444

    Total                $1,708,673        $1,789,184


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

    March 31             $   47,428        $   97,529
    June 30                  54,499           102,282
    September 30             72,637            62,620
    December 31             (94,931) (a)     (136,791) (b)

    Total                $   79,633        $  125,640


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

    March 31             $   29,885        $   61,424
    June 30                  34,355            64,188
    September 30             46,569            56,391
    December 31             (59,850) (a)      (89,710) (b)

    Total                $   50,959        $   92,293


(a)  Includes loss on assets held for sale of $137.0 million ($88.1 million
     aftertax).

(b)  Includes increase in allowance for finance receivable losses of $216.0
     million ($140.2 million aftertax).
<PAGE>
<PAGE> 58

Notes to Consolidated Financial Statements, Continued


Note 21.  Fair Value of Financial Instruments  

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

                               December 31, 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         $7,058,049  $7,058,049  $7,718,965  $7,718,965
Investment securities          879,133     879,133     883,895     883,895
Cash and cash equivalents       90,197      90,197      88,297      88,297
Assets held for sale           668,707     668,707           -           -


Liabilities

Long-term debt              (4,416,637) (4,525,262) (4,935,894) (5,180,472)
Short-term notes payable    (3,015,920) (3,015,920) (2,330,471) (2,330,471)


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> 59

Notes to Consolidated Financial Statements, Continued


Investment Securities

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


Cash and Cash Equivalents

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


Assets Held for Sale

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


Long-term Debt

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


Short-term Notes Payable

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


Unused Customer Credit Lines

The  unused  credit  lines  available  to  the  Company's  and  AGFC-Utah's
customers are considered to have no fair value.  The interest rates charged
on these facilities can  either be changed at AGFC-Utah's  discretion, such
as  for 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 and AGFC-Utah.


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> 60

                                  PART IV


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


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

         Consolidated Balance Sheets, December 31, 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

    Current Report on Form 8-K  dated October 22, 1996, with respect to the
    issuance of an Earnings Release announcing  certain unaudited financial
    results of the Company for the quarter ended September 30, 1996.

    Current Report on Form 8-K dated February  4, 1997, with respect to the
    issuance of an Earnings Release announcing  certain unaudited financial
    results of the Company for the year ended December 31, 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> 61

Item 14(d).


Schedule I - Condensed Financial Information of Registrant

<TABLE>
                    American General Finance Corporation

                          Condensed Balance Sheets
<CAPTION>
                                                        December 31,
                                                     1996          1995 
                                                   (dollars in thousands)
<S>                                               <C>           <C>
Assets                                                    
                                                    
Finance receivables, net of unearned               
  finance charges:
    Loans                                         $1,236,881    $1,321,608
    Retail sales finance                             216,182       230,472

Net finance receivables                            1,453,063     1,552,080
Allowance for finance receivable losses              (32,829)      (43,603)
Net finance receivables, less allowance
  for finance receivable losses                    1,420,234     1,508,477

Cash and cash equivalents                             51,470        53,328
Investments in subsidiaries                        2,807,470     2,933,334
Receivable from subsidiaries                       4,400,300     4,024,741
Notes receivable from parent and
  subsidiaries                                       173,235       219,709
Goodwill                                               4,541         2,459
Other assets                                         139,998       110,523

Total assets                                      $8,997,248    $8,852,571


Liabilities and Shareholder's Equity

Senior long-term debt, 4.7% - 10.05%,
  due 1997 - 2009                                 $4,407,637    $4,867,494
Short-term notes payable:
  Commercial paper                                 2,767,189     2,155,279
  Notes payable to subsidiaries                      309,794       245,442
Other liabilities                                    177,705       135,860

Total liabilities                                  7,662,325     7,404,075

Shareholder's equity: 
  Common stock                                         5,080         5,080
  Additional paid-in capital                         691,914       691,914
  Other equity                                        21,454        38,412 
  Retained earnings                                  616,475       713,090

Total shareholder's equity                         1,334,923     1,448,496

Total liabilities and shareholder's equity        $8,997,248    $8,852,571

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

Schedule I, Continued

<TABLE>
                    American General Finance Corporation

                       Condensed Statements of Income



<CAPTION>
                                             Years Ended December 31,  
                                            1996       1995       1994  
                                              (dollars in thousands)
<S>                                       <C>        <C>        <C>
Revenues
  Interest received from affiliates       $578,400   $579,671   $557,742
  Dividends received from subsidiaries      60,970    128,000    235,975
  Finance charges                            1,372        717       - 
  Other                                     19,038     20,481     19,403

Total revenues                             659,780    728,869    813,120

Expenses
  Interest expense                         495,498    513,223    419,805
  Operating expenses                        13,542     13,040      6,541

Total expenses                             509,040    526,263    426,346

Income before income taxes and    
  equity in overdistributed net   
  income of subsidiaries                   150,740    202,606    386,774

Provision for Income Taxes                  31,537     26,179     52,847

Income before equity in overdistributed
  net income of subsidiaries               119,203    176,427    333,927

Equity in Overdistributed Net Income 
  of Subsidiaries                          (68,244)   (84,134)   (90,627)

Net Income                                $ 50,959   $ 92,293   $243,300

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

Schedule I, Continued

<TABLE>
                    American General Finance Corporation

                     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                                     $   50,959  $   92,293  $  243,300 
Reconciling adjustments to net cash 
  provided by operating activities:
    Equity in overdistributed net income    
      of subsidiaries                              68,244      84,134      90,627 
    Change in other assets and other
      liabilities                                  11,109    (142,843)     48,402 
    Other, net                                    (13,999)    (17,782)      1,229 
Net cash provided by operating activities         116,313      15,802     383,558 

Cash Flows from Investing Activities
  Finance receivables originated or purchased
    from subsidiaries                          (1,261,633) (1,358,250)   (120,060)
  Principal collections on finance receivables     85,678      97,243     100,556 
  Finance receivables sold to subsidiaries      1,308,035        -           -    
  Return of capital from subsidiaries, net
    of contributions                               40,662      (5,785) (1,282,421)
  Change in receivable from subsidiaries         (375,559)  1,154,989    (768,082)
  Other, net                                      (27,473)     (5,911)       (710)
Net cash used for investing activities           (230,290)   (117,714) (2,070,717)
    
Cash Flows from Financing Activities
  Proceeds from issuance of long-term debt         77,817   1,532,033     967,744 
  Repayment of long-term debt                    (540,860)   (765,160)   (692,650)
  Change in commercial paper                      611,910    (450,739)    964,049 
  Change in notes receivable or payable 
    with parent and subsidiaries                  110,826    (194,518)    604,887 
  Capital contribution from parent                   -         80,000        -   
  Dividends paid                                 (147,574)   (108,509)    (97,536)
Net cash provided by financing activities         112,119      93,107   1,746,494 

(Decrease) increase in cash and cash equivalents   (1,858)     (8,805)     59,335 
Cash and cash equivalents at beginning of year     53,328      62,133       2,798 
Cash and cash equivalents at end of year       $   51,470  $   53,328  $   62,133 

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

Schedule I, Continued


                    American General Finance Corporation

                  Notes to Condensed Financial Statements

                             December 31, 1996




Note 1.  Accounting Policies

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



Note 2.  Receivable from Subsidiaries

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



Note 3.  Long-Term Debt

Senior  long-term debt  maturities for  the five  years after  December 31,
1996, were as  follows:   1997, $1.2 billion;  1998, $809.6 million;  1999,
$548.7 million; 2000, $933.9 million; and 2001, $39.9 million.
<PAGE>
<PAGE> 65

                                 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 CORPORATION


                                       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/  Larry R. Klaholz
 Principal Financial Officer)               Larry R. Klaholz
                                       (Director)

/s/  George W. Schmidt                 
     George W. Schmidt                 /s/  Jon P. Newton
(Controller and Assistant Secretary         Jon P. Newton
 Principal Accounting Officer)         (Director)


                                       /s/  David C. Seeley
     Robert M. Devlin                       David C. Seeley          
(Director)                             (Director)


/s/  Jerry L. Gilpin             
     Jerry L. Gilpin 
(Director)
<PAGE>
<PAGE> 66

                                 Exhibit Index


Exhibits                                                                   Page

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

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

(4)  a.  The following instruments are filed pursuant to Item 601(b)(4)(ii)
         of Regulation S-K, which requires with certain exceptions that all
         instruments be filed which  define the rights of holders  of long-
         term  debt of the Company  and its consolidated  subsidiaries.  In
         the aggregate,  the  outstanding  issuances  of  debt  under  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 the Company'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  the
                   Company'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  the
                   Company'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  the
                   Company'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  the
                   Company'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  the
                   Company'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  the
                   Company'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  the
                   Company'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  the
                   Company'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
              the    Company's   Registration   Statement   on   Form   S-3
              (Registration No. 33-55803).

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

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

              (c)  Resolutions  and form  of note for senior notes, 7  1/4%
                   due  March  1,  1998.    Incorporated  by  reference  to
                   Exhibits  4(a)  and  4(b)   filed  as   a  part  of  the
                   Company's  Current  Report on  Form 8-K  dated  February
                   27, 1995 (File No. 1-6155).
<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  the
                   Company'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  the
                   Company's Current  Report on Form  8-K dated May 5, 1995
                   (File No. 1-6155).
                  
              (f)  Resolutions  for (senior)  Medium-Term Notes,  Series D.
                   Incorporated by reference  to Exhibit  4 filed as a part
                   of the  Company's  Current  Report  on  Form  8-K  dated
                   November 16, 1995 (File No. 1-6155).

     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>