UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C., 20549

                                    FORM 10-Q

(Mark One)
[ X ]          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended                                September 30, 1998

                                       OR

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

For the transition period from                    to


Commission file number                                                   1-11011

                              THE FINOVA GROUP INC.
             (Exact name of registrant as specified in its charter)


DELAWARE                                                              86-0695381
(State or other jurisdiction of                                 (I.R.S. Employer
incorporation or organization)                               Identification No.)


1850 North Central Ave., P. O. Box 2209, Phoenix, AZ                  85002-2209
(Address of principal executive offices)                              (Zip Code)

Registrant's telephone number, including area code                  602/207-6900

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed  by  Section  13 or 15 (d) of the  Securities  Exchange  Act of 1934
during the preceding 12 months,  (or such shorter period that the Registrant was
required  to file  such  report),  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days.

                              YES [X]  NO [ ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

As of October 27, 1998, 55,732,046 shares of Common Stock ($0.01 par value) were
outstanding.
<PAGE>
                              THE FINOVA GROUP INC.


                                TABLE OF CONTENTS


                                                                        Page No.
                                                                        --------
PART I   FINANCIAL INFORMATION.

       Item 1. Financial Statements.
             Condensed Consolidated Financial Information:

             Condensed Consolidated Balance Sheet - September 30, 1998
                   and December 31, 1997                                    1

             Condensed Consolidated Income Statement - Three and
                   Nine Months Ended September 30, 1998 and 1997            2

             Condensed Consolidated Statement of Cash Flows -
                   Nine Months Ended September 30, 1998 and 1997            3

             Notes to Interim Condensed Consolidated Financial            4 - 6
                   Information

       Item 2. Management's Discussion and Analysis of Financial
                   Condition and Results of Operations                    6 - 10


PART II   OTHER INFORMATION.

       Item 6. Exhibits and Reports on Form 8-K                            11


       SIGNATURES                                                          12
<PAGE>
                         PART I - FINANCIAL INFORMATION

ITEM 1.      FINANCIAL STATEMENTS

                              THE FINOVA GROUP INC.
                      CONDENSED CONSOLIDATED BALANCE SHEET
                             (Dollars in Thousands)
                                   (Unaudited)

                                                  September 30,    December 31,
                                                       1998            1997
                                                  -------------    ------------
ASSETS:
Cash and cash equivalents                         $      78,023    $     33,190

Investment in financing transactions:
  Loans and other financing contracts                 6,778,666       5,955,984
  Leveraged leases                                      721,526         619,557
  Operating leases                                      662,087         712,927
  Factored receivables                                  624,199         750,399
  Direct financing leases                               365,123         360,589
  Financing contracts held for sale                     240,928            --
                                                  -------------    ------------
                                                      9,392,529       8,399,456
Less reserve for credit losses                         (187,161)       (177,088)
                                                  -------------    ------------
Investment in financing transactions - net            9,205,368       8,222,368

Goodwill and other assets                               552,071         464,282
                                                  -------------    ------------
                                                  $   9,835,462    $  8,719,840
                                                  =============    ============
LIABILITIES:
Accounts payable and accrued expenses             $     131,017    $    147,280
Due to clients                                          200,824         278,571
Interest payable                                         32,761          52,643
Senior debt                                           7,891,283       6,764,581
Deferred income taxes                                   322,489         274,761
                                                  -------------    ------------
                                                      8,578,374       7,517,836
                                                  -------------    ------------
Company-obligated mandatory redeemable
  convertible preferred securities of subsidiary
  trust solely holding convertible debentures of
  FINOVA, net of expenses (TOPrS)                       111,550         111,550

SHAREOWNERS' EQUITY:
Common stock, $0.01 par value, 100,000,000
  shares authorized, 58,555,000 shares issued               585             585
Additional capital                                      764,079         764,525
Retained income                                         485,072         386,665
Cumulative translation adjustments                         (551)            (10)
Common stock in treasury, 2,702,000 and
  2,273,000 shares, respectively                       (103,647)        (61,311)
                                                  -------------    ------------
                                                      1,145,538       1,090,454
                                                  -------------    ------------
                                                  $   9,835,462    $  8,719,840
                                                  =============    ============

See notes to interim condensed consolidated financial information.

                                       1
<PAGE>
                              THE FINOVA GROUP INC.
                     CONDENSED CONSOLIDATED INCOME STATEMENT
                  (Dollars in Thousands, except per share data)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                            Three Months Ended               Nine Months Ended
                                               September 30,                   September 30,
                                       ----------------------------    ----------------------------

                                           1998            1997            1998            1997
                                       ------------    ------------    ------------    ------------
<S>                                    <C>             <C>             <C>             <C>
Interest and income earned
  from financing transactions          $    232,835    $    197,557    $    654,770    $    571,843
Operating lease income                       24,019          30,253          88,107          85,164
Interest expense                           (122,235)       (105,592)       (347,794)       (304,647)
Depreciation                                (13,875)        (17,727)        (51,540)        (51,786)
                                       ------------    ------------    ------------    ------------
Interest margins earned                     120,744         104,491         343,543         300,574
Volume-based fee income                      16,687           9,546          57,946          25,913
                                       ------------    ------------    ------------    ------------
Operating margin                            137,431         114,037         401,489         326,487
Provision for credit losses                 (19,000)        (22,000)        (44,500)        (48,300)
                                       ------------    ------------    ------------    ------------
Net interest margins earned                 118,431          92,037         356,989         278,187
Gains on disposal of assets                  13,438           8,706          24,243          22,407
                                       ------------    ------------    ------------    ------------
                                            131,869         100,743         381,232         300,594
Selling, administrative and other
  operating expenses                        (61,097)        (44,773)       (175,834)       (137,263)
                                       ------------    ------------    ------------    ------------
Income before income taxes and
  preferred dividends                        70,772          55,970         205,398         163,331
Income taxes                                (26,694)        (20,103)        (79,317)        (59,954)
                                       ------------    ------------    ------------    ------------
Income before preferred dividends            44,078          35,867         126,081         103,377
Dividends on preferred securities
  of subsidiary trust, net of tax              (946)           (946)         (2,837)         (3,047)
                                       ------------    ------------    ------------    ------------
NET INCOME                             $     43,132    $     34,921    $    123,244    $    100,330
                                       ============    ============    ============    ============


Basic earnings per share               $       0.77    $       0.65    $       2.20    $       1.86
                                       ============    ============    ============    ============
Basic average shares outstanding         56,032,000      53,992,000      56,146,000      53,979,000
                                       ============    ============    ============    ============

Diluted earnings per share             $       0.73    $       0.61    $       2.07    $       1.76
                                       ============    ============    ============    ============
Average shares outstanding
  assuming dilution                      60,683,000      58,805,000      60,947,000      58,684,000
                                       ============    ============    ============    ============

Dividends declared per common
  share                                $       0.16    $       0.14    $       0.44    $       0.38
                                       ============    ============    ============    ============
</TABLE>

See notes to interim condensed consolidated financial information.

                                       2
<PAGE>
                              THE FINOVA GROUP INC.
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                             (Dollars in Thousands)
                                   (Unaudited)

                                                          Nine Months Ended
                                                            September 30,
                                                     --------------------------
                                                         1998           1997
                                                     -----------    -----------
OPERATING ACTIVITIES:
 Net income                                          $   123,244    $   100,330
 Adjustments to reconcile net income to net cash
     provided by operating activities:
    Provision for credit losses                           44,500         48,300
    Depreciation and amortization                         69,238         64,620
    Gains on disposal of assets                          (24,243)       (22,407)
    Deferred income taxes                                 47,728         18,063
 Change in assets and liabilities, net of effects
     from subsidiaries purchased                        (141,632)       (61,569)
 Other                                                    (1,581)        (3,546)
                                                     -----------    -----------
     Net cash provided by operating activities           117,254        143,791
                                                     -----------    -----------
INVESTING ACTIVITIES:
 Proceeds from sale of assets                            173,114        157,281
 Proceeds from sale of assets securitized                 77,478         16,150
 Principal collections on financing transactions       1,468,094      1,445,225
 Expenditures for financing transactions              (2,215,432)    (1,691,539)
 Net change in short-term financing transactions
  and financing contracts held for sale                 (559,793)      (747,479)
 Other                                                     1,742          2,229
                                                     -----------    -----------
     Net cash used in investing activities            (1,054,797)      (818,133)
                                                     -----------    -----------
FINANCING ACTIVITIES:
 Net borrowings under commercial paper and
  short-term loans                                       874,741        711,621
 Long-term borrowings                                    915,000        688,625
 Repayment of long-term borrowings                      (663,572)      (748,128)
 Proceeds from exercise of stock options                   9,290          9,726
 Common stock purchased for treasury                     (50,499)       (37,296)
 Dividends                                               (24,837)       (20,713)
 Net change in due to clients                            (77,747)        81,814
                                                     -----------    -----------
     Net cash provided by financing activities           982,376        685,649
                                                     -----------    -----------

INCREASE IN CASH AND CASH EQUIVALENTS                     44,833         11,307
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD            33,190         31,260
                                                     -----------    -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD             $    78,023    $    42,567
                                                     ===========    ===========

See notes to interim condensed consolidated financial information.

                                       3
<PAGE>
                              THE FINOVA GROUP INC.
          NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997


NOTE A   BASIS OF PREPARATION

      The  consolidated  financial  statements  present the financial  position,
results  of  operations  and  cash  flows  of The  FINOVA  Group  Inc.  and  its
subsidiaries (collectively, "FINOVA" or the "Company"), including FINOVA Capital
Corporation and its subsidiaries (collectively, "FINOVA Capital").

      The interim condensed consolidated financial information is unaudited.  In
the opinion of management all adjustments, consisting of normal recurring items,
necessary to present fairly the financial position as of September 30, 1998, the
results of operations  for the quarter and nine months ended  September 30, 1998
and 1997 and cash flows for the nine months ended  September  30, 1998 and 1997,
have been included. Interim results of operations are not necessarily indicative
of the results of operations for the full year.

      Previously, volume-based fees, which represent fees generated by Inventory
Finance,  Commercial Services (formerly "Factoring  Services") and FINOVA Realty
Capital lines of business, were classified as a component of interest and income
earned from financing transactions. Commencing in 1998, the Company has reported
these  amounts  as  a  separate  item  and  reclassified  prior  period  amounts
accordingly.  This change in classification has no effect on previously reported
net income or earnings per share.

NOTE B   SIGNIFICANT ACCOUNTING POLICIES

      In June 1997, the Financial  Accounting  Standards  Board ("FASB")  issued
Statement  of  Financial  Accounting  Standards  ("SFAS")  No.  130,  "Reporting
Comprehensive  Income,"  which is  effective  for fiscal years  beginning  after
December  15,  1997.  The  statement  changes  the  reporting  of certain  items
currently  reported in the shareowners'  equity section of the balance sheet and
establishes  standards for reporting of comprehensive  income and its components
in a full set of general-purpose  financial statements.  The Company has adopted
this standard  effective January 1, 1998. Total  comprehensive  income was $42.3
million and $35.0  million for the three  months  ended  September  30, 1998 and
1997,  respectively  and $122.7  million  and $99.1  million for the nine months
ended  September  30,  1998 and 1997,  respectively.  The primary  component  of
comprehensive income other than net income was foreign currency translation.

NOTE C   PORTFOLIO QUALITY

      The following  table presents a distribution  (by line of business) of the
Company's  investment  in financing  transactions  before the reserve for credit
losses at the dates indicated.

                                       4
<PAGE>
                      INVESTMENT IN FINANCING TRANSACTIONS
                               BY LINE OF BUSINESS
                               SEPTEMBER 30, 1998
                             (Dollars in Thousands)

<TABLE>
<CAPTION>
                                         Revenue Accruing                 Nonaccruing
                                 -------------------------------   ---------------------------
                                                          Repos-
                                                          sessed              Repos-    Leases     Total
                                  Original                Assets              sessed      &       Carrying
                                  Rate (1)     Impaired    (2)     Impaired   Assets    Other      Amount       %
                                 -------------------------------  ----------------------------   ------------------
<S>                              <C>          <C>          <C>          <C>          <C>          <C>          <C>
Transportation Finance (3 & 4)   $1,935,490   $         $         $          $         $ 3,709   $1,939,199    20.6
Resort Finance (4)                1,167,022              16,570               26,390              1,209,982    12.9
Corporate Finance (4)               784,136    13,176               31,738                          829,050     8.8
Rediscount Finance (4)              711,588                          3,796                          715,384     7.6
Specialty Real Estate Finance       634,641    17,002    35,002      6,633     7,654       194      701,126     7.5
Communications Finance (4)          671,220                         26,775                          697,995     7.4
Commercial Equipment Finance        608,779     1,602    20,843     10,008       566     3,787      645,585     6.9
Healthcare Finance                  555,905                          7,022                 482      563,409     6.0
Inventory Finance (4)               524,615                          6,865                          531,480     5.7
Franchise Finance (4)               519,018     1,665                6,115                 280      527,078     5.6
Realty Capital (5)                  292,448                                                         292,448     3.1
Business Credit (4)                 282,290                          6,592                          288,882     3.1
Public Finance                      191,943                                                         191,943     2.0
Commercial Services                 173,252     1,061               22,234     1,061                197,608     2.1
Other (6)                            33,894                                             27,466       61,360     0.7
                                 ----------   -------   -------   --------   -------   -------   ----------   -----
TOTAL (4)                        $9,086,241   $34,506   $72,415   $127,778   $35,671   $35,918   $9,392,529   100.0
                                 ==========   =======   =======   ========   =======   =======   ==========   =====
</TABLE>
----------
NOTES:
(1)  Represents original or renegotiated  market rate terms,  excluding impaired
     transactions.
(2)  The Company earned income totaling $2.7 million on repossessed  assets year
     to date  during  1998,  including  $1.8  million in  Specialty  Real Estate
     Finance,$0.7  million in Resort  Finance  and $0.2  million  in  Commercial
     Equipment Finance.
(3)  Transportation  Finance  includes  $405.3  million  of  aircraft  financing
     business booked through the London office.
(4)  Excludes $516.0 million of assets securitized and participations sold which
     the  Company  manages,  including  securitizations  of  $300.0  million  in
     Corporate   Finance   and  $113.4   million  in   Franchise   Finance   and
     participations  of $54.6  million in Corporate  Finance,  $28.9  million in
     Communications  Finance,  $5.1 in Resort Finance,$7.0 million in Rediscount
     Finance,  $2.8 million in Business Credit,  $2.7 million in  Transportation
     Finance and $1.5 million in Inventory Finance.
(5)  Includes $240.9 million of financing contracts held for sale.
(6)  Primarily includes London-based FINOVA Capital Limited and other.

                                       5
<PAGE>
RESERVE FOR CREDIT LOSSES:

      The reserve for credit losses at September 30, 1998 represents 2.0% of the
Company's  investment in financing  transactions  (excluding financing contracts
held for sale) and securitized assets.  Changes in the reserve for credit losses
were as follows:

                                                        Nine Months Ended
                                                          September 30,
                                                  -----------------------------
                                                      1998             1997
                                                  ------------     ------------
                                                      (Dollars in Thousands)

Balance, beginning of period                      $    177,088     $    148,693
Provision for credit losses                             44,500           48,300
Write-offs                                             (38,672)         (31,263)
Recoveries                                               1,742            2,098
Other                                                    2,503              (74)
                                                  ------------     ------------
Balance, end of period                            $    187,161     $    167,754
                                                  ============     ============

      A specific  impairment  reserve of $34.3  million at  September  30,  1998
applies to $82.6 million of the $162.3 million of impaired loans.  The remaining
$152.9  million of the  reserve  for credit  losses is  designated  for  general
purposes  and  represents  management's  estimate  of  potential  losses  in the
portfolio considering delinquencies,  loss experience and collateral.  Additions
to the  general and  specific  reserves  are  reflected  in current  operations.
Management may transfer  reserves  between the general and specific  reserves as
considered necessary.

ITEM 2.   MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION  AND
          RESULTS OF OPERATIONS.

             COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 1998
                   TO THE NINE MONTHS ENDED SEPTEMBER 30, 1997

      THE  FOLLOWING  DISCUSSION  RELATES  TO THE  FINOVA  GROUP  INC.  AND  ITS
SUBSIDIARIES (COLLECTIVELY, "FINOVA" OR THE "COMPANY"), INCLUDING FINOVA CAPITAL
CORPORATION AND ITS SUBSIDIARIES (COLLECTIVELY, "FINOVA CAPITAL").

RESULTS OF OPERATIONS

      Net income for the nine months ended September 30, 1998 was $123.2 million
($2.07 per diluted  share)  compared to $100.3 million ($1.76 per diluted share)
for the nine months ended September 30, 1997.

      INTEREST MARGINS EARNED.  Interest margins earned represent the difference
between (a) interest and income earned from financing transactions and operating
lease income and (b) interest  expense and  depreciation on operating leases and
other owned assets.  Interest  margins  earned were $343.5  million for the nine
months ended  September 30, 1998 compared to $300.6  million for the nine months
ended  September 30, 1997, a 14%  increase.  The increase was primarily due to a
17% growth in managed  assets to $9.91  billion at September 30, 1998 from $8.45
billion at September 30, 1997.

      VOLUME-BASED FEE INCOME.  Volume-based fee income is generated by FINOVA's
Inventory  Finance,  Commercial  Services  (formerly  "Factoring  Services") and
Realty Capital lines of business.  These fees are predominately  based on volume
originated   business   rather  than  the  balance  of   outstanding   financing
transactions  during the period.  For the nine months ended  September 30, 1998,
volume-based fee income was $57.9 million compared to $25.9 million for the same
period in 1997.

                                       6
<PAGE>
Fee-based volume for the first nine months of 1998 totaled $5.4 billion compared
to $2.7  billion  in the same  period one year ago.  Included  in the first nine
months of 1998 were fees  associated  with FINOVA Realty Capital ("FRC") and the
Inventory  Finance  portfolio  purchased from AT&T Capital Corp.,  both of which
were acquired in the fourth quarter of 1997.

      PROVISION  FOR CREDIT  LOSSES.  The  provision for credit losses was $44.5
million for the nine months ended  September  30, 1998 compared to $48.3 million
for the same period one year ago.  Net  write-offs  during the nine months ended
September  30, 1998 were $36.9  million  compared to $29.2  million for the same
period in 1997.  The 1998 net  write-offs  included  $21.0  million  of  amounts
written off relative to the Commercial  Services line of business,  a portion of
which had previously been specifically reserved.

      GAINS ON  DISPOSAL  OF  ASSETS.  Gains on  disposal  of assets  were $24.2
million for the nine months ended  September  30, 1998 compared to $22.4 million
for the first nine months of 1997.  Gains on disposal of assets include the sale
of assets  coming off lease,  the sale of other assets and the sale of loans via
the commercial  mortgage backed securities  ("CMBS") market. Net losses from the
CMBS market  totaled $4.2 million and included  gains of $10.4 million offset by
hedge losses of $14.6  million.  The other $28.4 million of gains included gains
from the sale of assets  coming  off  lease,  gains  from the sale of  Franchise
Finance loans and other assets,  and the reversal of reserves due to the receipt
of a favorable  resolution  in a bankruptcy.  While,  in the  aggregate,  FINOVA
historically recognizes gains on such disposals,  the timing and amount of these
gains are sporadic in nature.  There can be no assurance  FINOVA will  recognize
such gains in the future,  depending,  in part, on market conditions at the time
of sale.

      SELLING,   ADMINISTRATIVE   AND   OTHER   OPERATING   EXPENSES.   Selling,
administrative  and  other  operating  expenses   ("operating   expenses")  were
generally higher in all major categories and increased to $175.8 million for the
first nine months of 1998  compared to $137.3  million for the first nine months
of 1997.  This  increase  was  partially  attributable  to the growth in managed
assets during the year.  Also  contributing  to the increase was the addition of
FRC, which has a higher operating cost structure than FINOVA,  including over 80
business development officers and associated support staff. Meanwhile, operating
expenses were 43.8% of operating margins for the nine months ended September 30,
1998  compared to 42.0% in the same period in 1997.  Excluding  the  addition of
FRC, FINOVA's  operating expense ratio would have been 40.9% for the nine months
ended September 30, 1998.

      INCOME  TAXES.  Income taxes were higher for the first nine months of 1998
compared  to the  corresponding  period in 1997 due to the  increase  in pre-tax
income and a higher  effective  tax rate in 1998 (38.6% vs 36.7%).  The 1997 tax
rate was lower due to certain tax credits realized in 1997.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

      Managed  assets were $9.91 billion at September 30, 1998 compared to $8.86
billion at December 31, 1997.  Included in managed  assets at September 30, 1998
were $9.39  billion in funds  employed  (including  $240.9  million of financing
contracts held for sale generated by FRC), $413.4 million of securitized  assets
managed by FINOVA and $102.7  million of  participations  sold to third parties.
The  increase in managed  assets was due to funded new  business of $2.7 billion
for the nine months ended  September  30,  1998,  coupled with a net increase in
volume based receivables,  partially offset by normal portfolio amortization and
prepayments.

      The reserve for credit losses increased to $187.2 million at September 30,
1998 from  $177.1  million  at  December  31,  1997,  while  nonaccruing  assets
increased to $199.4 million at September 30, 1998 from $187.4 million at the end
of 1997.  However,  nonaccruing  assets as a percent  of ending  managed  assets
(excluding participations sold) improved to 2.0% as compared to 2.1% at December
31, 1997.

                                       7
<PAGE>
      At  September  30,  1998,  FINOVA had $7.89  billion of debt  outstanding,
representing  6.28 times the Company's  equity base of $1.26 billion  (including
$111.6 million of convertible preferred  securities).  FINOVA Capital,  FINOVA's
principal operating subsidiary,  had a debt to equity ratio of 5.95 at September
30,  1998.  At year-end  1997,  FINOVA's  debt was 5.63 times the equity base of
$1.20 billion.

      Growth in funds  employed is financed  by  FINOVA's  internally  generated
funds and new  borrowings.  During the nine months  ended  September  30,  1998,
FINOVA  issued $915 million of new  long-term  borrowings  and  recognized a net
increase  in  commercial  paper  outstanding  of $875  million.  During the same
period, FINOVA repaid $664 million of long-term borrowings.

      FINOVA  repurchased  1,017,450 shares of its common stock during the first
nine months of 1998.  These shares are  intended to fund awards  under  FINOVA's
stock incentive plan.

YEAR 2000 DATE CONVERSION

      FINOVA  continues to implement  changes  necessary to assure accurate date
recognition  and data  processing with respect to the year 2000. To be year 2000
compliant means (1) significant  computer  systems in use by FINOVA  demonstrate
performance  and  functionality  that is not  materially  affected by processing
dates on or after  January 1, 2000,  (2) customers  and  collateral  included in
FINOVA's  portfolio  of  business  are year 2000  compliant,  and (3) vendors of
services critical to FINOVA's business processes are year 2000 compliant.

      Primary  internal  activities  related to this issue are  modifications to
existing  computer  programs  and  conversions  to new  programs.  FINOVA  has a
five-phase plan for addressing the year 2000 issues for its internal systems:

      1)    Identifying  each  area,  function,  and  application  that could be
            materially affected by the change in century.
      2)    Determining the extent to which each area, function,  or application
            will be affected by the change in century and identifying the proper
            course of action to eliminate material adverse effects.
      3)    Making the  changes  necessary  to bring the  system  into year 2000
            compliance.
      4)    Testing the integrated system.
      5)    Switching to year 2000 compliant applications.

      Costs  incurred  to  bring  FINOVA's   internal  systems  into  year  2000
compliance and incremental costs of accelerating new equipment  acquisitions are
being  expensed as incurred  and are not  expected to have a material  impact on
FINOVA's financial  position.  The necessary  modifications to FINOVA's internal
systems are expected to be completed by the end of calendar 1998.

      FINOVA is communicating  with customers,  software vendors,  and others to
determine  if their  applications  or services  are year 2000  compliant  and to
assess the potential impact on FINOVA related to this issue.  FINOVA's aggregate
cost  estimate  does not include time and costs that may be incurred as a result
of the failure of any third parties to become year 2000 compliant.

      While  FINOVA  believes  all  necessary  work on internal  systems will be
completed in a timely  fashion,  there can be no guarantee that all systems will
be  compliant  by the year 2000 within the  estimated  cost.  Similarly,  FINOVA
cannot  assure that the systems of other  companies and  government  agencies on
which  FINOVA  relies will be  converted  timely.  Risks also include that third
parties may not have accurately assessed their state of readiness, and therefore
may have a material adverse effect on FINOVA's results of operations.

                                       8
<PAGE>
      FINOVA has not currently  established a formal year 2000  contingency plan
but will consider  and, if necessary,  address doing so as part of its year 2000
review  process.  FINOVA  maintains and deploys  contingency  plans  designed to
address various other potential business interruptions.  In some respects, these
plans address  interruptions  resulting from third  parties'  failure to be year
2000 compliant,  but the plans have not been updated to specifically address the
year 2000 issue.

RECENT DEVELOPMENT AND BUSINESS OUTLOOK

      FINOVA  continues to seek new business by  emphasizing  customer  service,
providing  competitive  interest  rates and focusing on selected  market niches.
Additionally,  FINOVA continues to evaluate potential acquisition  opportunities
it believes are consistent with its business strategies.

      During the third quarter of 1998, the global financial markets experienced
significant  volatility  as a result of the  emerging  market  crisis in Russia,
continued  concerns  over  Asia and  volatility  in other  significant  emerging
markets,  e.g. Latin America.  Due primarily to the financial crisis and overall
volatility in the general  international  financial  markets,  US Treasury rates
significantly  declined as  investors  sought the safety of Treasury  securities
over other instruments.  As a result, credit spreads widened between US Treasury
securities and corporate bonds and other fixed income securities such as for the
CMBS market.  FINOVA  participates in the CMBS market through FRC and borrows in
the  commercial  debt markets.  While  referenced  interest  rates (such as U.S.
Treasuries or LIBOR) have declined,  FINOVA along with other lenders, has had to
pay increased  spreads over those referenced rates due to the uncertainty in the
financial markets.

      FRC originates  fixed-rate  loans that it ultimately  anticipates  selling
through the CMBS  market.  Lenders  such as FINOVA base loan  spreads  (premiums
charged to  borrowers)  on the prices  they  expect the loans to sell for in the
CMBS market.  The greater the amount that loan spreads exceed CMBS spreads,  the
greater the potential profit.

      For FRC's  fixed-rate  loans,  the risk is that  interest  rates will rise
before the loans are sold  through the CMBS market.  As rates rise,  not only is
the value of the loans  reduced,  but the net  yield  also  drops as the cost of
funding the loans held on book increases.

      To hedge that risk,  FINOVA has taken  hedging  positions  to offset price
movements  in the long  position  of the  loan  portfolio.  As a result  of this
strategy,  declines in the value of the portfolio should produce equal increases
in the value of the hedged position or vice versa.

      Problems  occur when CMBS rates and Treasury  rates do not move  together.
When that happens,  losses in the value of hedging  instruments may exceed gains
in the market  value of the  underlying  loans.  The wider the  spreads  between
yields on CMBS and Treasury securities become, the more profits are squeezed.

      As noted above,  this anomaly  occurred  during 1998. In response to these
market  conditions,  FRC continues to evaluate  various  instruments in order to
achieve the most effective  hedge.  FRC has also re-priced  business  within its
backlog to reflect the greater spreads,  although there can be no assurance that
future movements in the financial  markets will not reduce spreads further.  The
result  of  these  two  actions  should  help  mitigate  future   volatility  in
transactions within the CMBS market.

      To provide liquidity, the Company has put into place committed programs to
successfully  place FRC  transactions  which the Company can elect to use at its
discretion  to help  provide  alternatives  should  turbulence  continue  in the
traditional CMBS market place. Along those lines,  included in the third quarter
of 1998 was the sale of $146 million of loans for which the Company retained the
servicing rights and obligations and a subordinated interest.

                                       9
<PAGE>
      On October 13, 1998,  FINOVA  consummated the acquisition of United Credit
Corporation,  a New  York-based  provider of  commercial  financing to small and
midsize businesses,  and its Patriot Funding Division. The addition formed a new
division named FINOVA Growth Finance,  which provides  collateral-based  working
capital financing,  primarily secured by accounts  receivable.  The new division
provides  financing  ranging  from  $100,000  to $1 million to small and midsize
businesses with annual sales under $10 million. FINOVA anticipates that this new
division  will serve a market  segment  of  smaller,  growth-oriented  customers
earlier in their maturation cycle.

NEW ACCOUNTING STANDARDS

      In June 1998,  the FASB issued SFAS No. 133,  "Accounting  for  Derivative
Instruments and Hedging Activities",  effective for transactions entered into in
fiscal  quarters of fiscal years that begin after June 15, 1999.  This statement
establishes   standards  for  the   accounting   and  reporting  for  derivative
instruments  and for  hedging  activities.  The future  effect on the  Company's
financial position and the results of operations has not been determined.

                                       10
<PAGE>
                           PART II - OTHER INFORMATION

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K.

       (a)   The following exhibits are filed herewith:

                Exhibit No.   Document
                ----------    --------------------------------------------------

                    11        Computation of Earnings Per Share.

                    12        Computation  of Ratio of Income to Combined  Fixed
                              Charges and  Preferred  Stock  Dividends  (interim
                              period).

                    27        Financial Data Schedule.


       (b)   Reports on Form 8-K:

                   A Report on Form 8-K,  dated  October 13, 1998,  was filed by
             Registrant  which  reported  under Items 5 and 7 the revenues,  net
             income and selected financial data and ratios for the third quarter
             ended September 30, 1998 (unaudited).

                                       11
<PAGE>
                              THE FINOVA GROUP INC.




                                   SIGNATURES



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





                                     THE FINOVA GROUP INC.

                                         (Registrant)



Dated:  October 29 , 1998        By: /s/ Bruno A. Marszowski
                                     -------------------------------------------
                                     Bruno A. Marszowski, Senior Vice President,
                                     Chief Financial Officer and Controller
                                     Principal Financial and Accounting Officer

                                       12
<PAGE>
                              THE FINOVA GROUP INC.
                         COMMISSION FILE NUMBER 1-11011
                                  EXHIBIT INDEX
                          SEPTEMBER 30, 1998 FORM 10-Q


                Exhibit No.   Document
                ----------    --------------------------------------------------

                    11        Computation of Earnings Per Share.

                    12        Computation  of Ratio of Income to Combined  Fixed
                              Charges and  Preferred  Stock  Dividends  (interim
                              period).

                    27        Financial  Data Schedule for the nine months ended
                              September 30, 1998.

                                       13