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A personal loan agreement is a legal contract between a lender and a borrower for lending money, making it legally binding. Unlike standard loans, which specify how the funds must be used (e.g., student loans, mortgages), personal loans offer greater flexibility for various purposes. They are typically unsecured and not tied to assets, although some may require collateral, which should be mentioned in the contract. Essential elements of a personal loan include the names and addresses of both parties, their signatures, the state where the loan is executed, the contract date, and the total loan amount.