BAKER & DANIELS
           300 North Meridian Street, Suite 2700
             Indianapolis, Indiana  46204-1782
                      (317) 237-0300
                    FAX (317) 237-1000
                   www.bakerdaniels.com




                                                 EXHIBIT 5
 June 4, 1998


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

      Re:  6% Senior Notes due June 1, 2001

Ladies and Gentlemen:

      We have acted as counsel to American General Finance Corporation,
an Indiana corporation (the "Company"), in connection with the issuance
and sale by the Company of $200,000,000 aggregate principal amount of the
Company's 6% Senior Notes due June 1, 2001 (the "Notes"), including the
preparation of:

      (a)  The Company's Registration Statement on Form S-3
(Registration No. 333-28925), as amended by Amendment No. 1 on July 1,
1997 (the "Registration Statement"), including the Prospectus, dated July
2, 1997, constituting a part thereof (the "Prospectus").

      (b)  The Pricing Agreement, dated June 3, 1998, including the
Underwriting Agreement incorporated therein, between the Company and the
Underwriter of the Notes (together, the "Pricing Agreement").

      (c)  The Indenture, dated as of May 1, 1997, between the Company
and The First National Bank of Chicago, as Trustee, pursuant to which the
Notes are to be issued (the "Indenture").

      For purposes of this opinion, we have examined originals or
copies, identified to our satisfaction, of such documents, corporate
records, instruments and other relevant materials as we have deemed
advisable; and we have made such examination of statutes and decisions
and reviewed such questions of law as we have considered necessary or
appropriate. In our examination, we have assumed the genuineness of all
signatures, the legal capacity of all natural persons, the authenticity
of all documents submitted to us as originals, the conformity to original
documents of all documents submitted to us as copies,  and the
authenticity of the originals of such copies.  As to facts material to
this opinion, we have relied upon certificates, statements or
representations of public officials, of
American General Finance
  Corporation               --                 June 4, 1998


officers and representatives of the Company and of others, without any
independent verification thereof. 

      The laws covered by the opinions expressed herein are limited to
the laws of the State of Indiana.

      On the basis of and subject to the foregoing, we are of the
opinion that:

      1.   The Company is existing as a corporation under the laws of
the State of Indiana.

      2.   The issuance of the Notes has been duly authorized by all
necessary corporate action of the Company and, when the Notes have been
duly executed, authenticated, sold and delivered in accordance with the
terms of the Indenture and as described in the Registration Statement and
in the Pricing Agreement, the Notes will be valid and binding obligations
of the Company, enforceable against the Company in accordance with their
terms, except as enforcement thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other
laws of general applicability relating to or affecting enforcement of
creditors' rights or by general equity principles.

      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 Securities Act of 1933, as amended, or
the rules or regulations of the Securities and Exchange Commission
thereunder.

                          Yours very truly,

                          /s/ BAKER & DANIELS