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A personal loan agreement is a legal contract between a lender and a borrower for borrowing money, which can involve banks, credit entities, or individuals. Unlike standard loans, which specify how funds must be used (like student loans or mortgages), personal loans offer greater flexibility for various purposes. They are often unsecured but may require collateral, detailed in the contract. Essential components of a personal loan include the names and addresses of both parties, their signatures, the state of execution, the contract date, and the total loan amount. The agreement is legally binding under all circumstances.