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A personal loan agreement is a legal contract between a lender and a borrower for lending money. The lender may be a bank, credit entity, or individual, and the agreement is legally binding. Unlike standard loans that specify how funds must be spent (e.g., student loans, mortgages), personal loans offer more flexibility in their usage and are often unsecured, although some may require collateral stated 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.
