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A personal loan agreement is a legal contract between a lender and a borrower, allowing for the lending of money. The lender may be a bank, credit entity, or individual, and the contract is legally binding. Unlike standard loans, which specify how funds must be used (e.g., student loans, mortgages), personal loans offer flexibility in usage, as they are typically unsecured and not tied to specific assets. However, some personal loans 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 of execution, the contract date, and the total loan amount.
