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A personal loan agreement is a legal contract between a lender and a borrower to lend money. Lenders can include banks, credit entities, or individuals, and the contract is legally binding. Unlike standard loans that specify how funds must be spent (like student loans or mortgages), personal loans offer more flexibility in usage and are often unsecured, although some may require collateral. 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.