Prospectus Supplement No. 7

The Prospectus dated November 14, 1996 (the "Prospectus") relating to the offer
for resale of up to $115,000,000 aggregate principal amount of 5 1/2%
Convertible Subordinated Debentures due 2006 of Aames Financial Corporation
(the "Company") and 4,107,142 shares of the common stock of the Company, par
value $0.001 per share, into which such Debentures are convertible is hereby
amended as follows: 

     (1)  The fourth paragraph appearing on the cover page of the Prospectus is
deleted and replaced in its entirety as follows:

     "The Debentures are general unsecured obligations of the Company,
     subordinated to all existing and future Senior Indebtedness (as defined
     herein), which at October 31, 1996 was approximately $256 million,
     including $23.0 million of the Company's 10.5% Senior Notes due 2002, $150
     million of the Company's 9.125% Senior Notes due 2003 and Company
     guarantees of approximately $82.9 million of warehouse indebtedness
     outstanding on such date incurred by a wholly owned subsidiary of the
     Company.  See 'Description of the Debentures.'"


     (2)  The following entity is hereby named as a Selling Security Holder
as contemplated on page 33 of the Prospectus:

         SELLING SECURITY HOLDER             PRINCIPAL AMOUNT OF DEBENTURES
         -----------------------             ------------------------------

         BT Securities Corp.                              $300,000
         130 Liberty Street
         New York, NY  10006 

BT Securities Corp. and its affiliates have in the past provided to the Company
and its subsidiaries trustee services for which it has received customary 
fees and may in the future provide such services as well as commercial banking
services.


         The date of this Prospectus Supplement is December 31, 1996.