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A personal loan agreement is a legal contract between a lender and a borrower for lending money, which may involve a bank, credit entity, or an individual. It is a legally binding document. Unlike standard loans, which specify how funds must be used (e.g., student loans or mortgages), personal loans offer more flexibility and can be used for various purposes. Personal loans are typically unsecured, meaning they aren't tied to assets, but may require collateral in some cases. Essential elements 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.