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A personal loan agreement is a legally binding contract between a lender (which may be a bank, credit entity, or individual) and a borrower for lending money. Unlike standard loans, which specify how funds must be used (e.g., for education or real estate), personal loans offer flexibility and can be used for various purposes. They are typically unsecured, meaning they are not tied to specific assets, though some may require collateral, which needs to be detailed in the contract. Essential elements of a personal loan include the names, complete addresses, and signatures of both parties, the state of execution, the contract date, and the total loan amount.
