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A personal loan agreement is a legal contract between a lender and a borrower for lending money, with the lender being a bank, credit entity, or individual. This contract is legally binding. Unlike standard loans, which specify how funds must be spent (e.g., student loans or mortgages), personal loans offer flexibility for various uses and are often unsecured, meaning they are not tied to specific assets. However, some personal loans may require collateral, which should be detailed in the contract. Essential components of a personal loan include the names, addresses, and signatures of both parties, the state of execution, the contract date, and the total loan amount.
