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A personal loan agreement is a legal contract between a lender and a borrower for borrowing money, which can be a bank, credit entity, or individual. This contract is legally binding. Unlike standard loans, which specify how funds must be used (e.g., mortgages, student loans), personal loans offer more flexibility in usage. They are often unsecured, though some may require collateral. Key elements of a personal loan agreement include the names and addresses of the borrower and lender, their signatures, the execution state, the contract date, and the total loan amount.