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A personal loan agreement is a legal contract between a lender and a borrower for lending money, which can be a bank, credit entity, or individual. This contract is binding and differs from standard loans, which dictate how funds are to be used, like student loans or mortgages. Personal loans offer more flexibility for various purposes and are often unsecured, although some may require collateral, which should be specified in the contract. Essential components of a personal loan agreement include the names, complete addresses, and signatures of both parties, the state of execution, the contract date, and the total loan amount.
