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