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A personal loan agreement is a legal contract between a lender and a borrower for borrowing money, which can be a bank, credit entity, or individual. It is legally binding. Unlike standard loans, which specify how funds must be used (like student loans or mortgages), personal loans offer flexibility in spending. Personal loans are usually unsecured and may not require collateral, but if they do, it should be outlined in the contract. Essential elements of a personal loan include the names, addresses, and signatures of both parties, the state of execution, the contract date, and the total loan amount.