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




                                                  EXHIBIT 5
November 2, 1998


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

      Re:  5-3/4% Senior Notes due November 1, 2003

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
$400,000,000 aggregate principal amount of the Company's
5-3/4% Senior Notes due November 1, 2003 (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 October 30, 1998,
including the Underwriting Agreement incorporated therein,
among the Company and the Underwriters 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 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