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A personal loan agreement is a legal contract between a lender and a borrower for lending money, which can be from a bank, credit entity, or individual. It is legally binding and differs from standard loans, which dictate how funds must be used (e.g., student loans or mortgages). Personal loans offer more flexibility in usage and are typically unsecured, though some may require collateral. Key elements of a personal loan contract include the names, complete addresses, and signatures of both parties, the state of execution, the contract date, and the total loan amount.
