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A personal loan agreement is a legal contract between a lender and a borrower to lend money, and it can be established by a bank, credit entity, or an individual. Unlike standard loans, which specify how funds must be used (like student loans or mortgages), personal loans offer flexibility in spending. They are often unsecured, meaning they aren’t tied to assets, although some may require collateral, which should be detailed in the contract. Essential elements of a personal loan include the names, addresses, and signatures of both parties, the state where the loan is executed, the contract date, and the total loan amount.
