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A personal loan agreement is a legal contract between a lender and a borrower for lending money, which can be a bank or an individual. This contract is legally binding. Unlike standard loans, which specify how funds must be used (like student loans or mortgages), personal loans offer flexibility in usage. While most personal loans are unsecured and not tied to any assets, some may require collateral, which should be detailed in the contract. Essential elements of a personal loan include the names and addresses of both parties, signatures, the state where the loan is executed, the date of the contract, and the total loan amount.