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A personal loan agreement is a legal contract between a lender and a borrower for the purpose of 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., student loans or mortgages), personal loans offer more flexibility in spending. They are typically 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 agreement include the names, addresses, and signatures of both parties, the state's execution, the date of the contract, and the total loan amount.