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




                                                  EXHIBIT 5
 
December 8, 1998


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

      Re:  5-7/8% Senior Notes due December 15, 2005

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 
5-7/8% Senior Notes due December 15, 2005 (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 December 7, 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