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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 dictate how funds must be used (e.g., student loans or mortgages), personal loans offer more flexibility in terms of spending. They are often unsecured, meaning they are not tied to assets like homes or cars, though some may require collateral. Essential elements of a personal loan include the names, addresses, and signatures of both parties, the state of execution, the date of the contract, and the total loan amount.
