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A personal loan agreement is a legal contract between a lender and borrower, which can be a bank, credit entity, or individual. It is legally binding and more flexible than a standard loan, as the funds can be used for various purposes. Personal loans are often unsecured but may require collateral. The agreement should include names, addresses, signatures, state of execution, date, total loan amount, terms of repayment, interest rate, and any penalties for default.