BAKER & DANIELS

300 NORTH MERIDIAN STREET, SUITE 2700
INDIANAPOLIS, INDIANA 46204-1782
(317) 237-0300 -FAX (317) 237-1000






August 5, 1997


American General Finance Corporation
601 N.W. Second Street
Evansville, Indiana 47708

      Re:  Medium-Term Notes, Series E, 
           Due Nine Months or More from Date of Issue

Ladies and Gentlemen:

      We have acted as counsel for American General Finance
Corporation, an Indiana corporation (the "Company"), in connection
with the issuance and sale by the Company of up to $1,000,000,000
aggregate principal amount of the Company's Medium-Term Notes, Series
E, due nine months or more from date of issue (the "Notes"), including
the preparation of: 

      (a)  the Company's Registration Statement on Form S-3,
 Registration No. 333-28925, as amended by Pre-effective Amendment
 No. 1 (the "Registration Statement"), and the Prospectus
 constituting a part thereof, dated July 2, 1997, relating to the
 issuance from time to time of up to $3,050,000,000 aggregate
 principal amount of debt securities of the Company and warrants to
 purchase such debt securities pursuant to Rule 415 promulgated under
 the Securities Act of 1933, as amended (the "1933 Act"); and

      (b)  the Prospectus Supplement, dated August 5, 1997 to the
 above-mentioned Prospectus relating to the Notes and filed with the
 Securities and Exchange Commission (the "Commission") pursuant to
 Rule 424 promulgated under the 1933 Act (the Prospectus dated
 July 2, 1997 and the Prospectus Supplement dated August 5, 1997,
 including the documents incorporated by reference therein pursuant
 to Item 12 of Form S-3 under the 1933 Act, being hereinafter
 collectively referred to as the "Prospectus").  

      You have requested our opinion regarding certain federal
income tax matters in connection with the offering of the Notes.  The
terms of the Notes are described in the Prospectus.

      We are of the opinion that the information set forth in the
Prospectus under the caption "UNITED STATES TAX CONSIDERATIONS" is an
accurate summary of the United States federal income tax consequences
purported to be described therein, all based on laws, regulations,
rulings and decisions in effect on the date hereof.

      We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the heading
"Legal Opinions" in the Prospectus.  In giving such consent, we do not
admit that we come within the category of persons whose consent is
required under Section 7 of the 1933 Act or the rules or regulations
of the Commission thereunder.

                          Yours very truly,

                          /s/ BAKER & DANIELS