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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, credit entity, or individual. This agreement is legally binding. Unlike standard loans, which specify how funds must be used (e.g., student loans or mortgages), personal loans offer more flexibility in usage. They are typically unsecured, meaning they are not tied to specific assets, although some may require collateral, which should be detailed in the contract. Key elements of a personal loan include the names, addresses, and signatures of both parties, the execution state, the contract date, and the total loan amount.
