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A personal loan agreement is a legal contract between a lender and a borrower for lending money. The lender can be a bank, credit entity, or individual, and the contract is legally binding. Unlike standard loans, which specify how funds must be used (e.g., for education or housing), personal loans offer flexibility in purpose since they are often unsecured. However, some personal loans may require collateral, which should be detailed in the contract. Essential components of a personal loan include the names and addresses of both parties, their signatures, the state where the loan is executed, the date of the contract, and the total loan amount.
