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A personal loan agreement is a legal contract between a lender and a borrower for lending money, which may involve a bank, credit entity, or individual. This contract is legally binding. Unlike standard loans, which specify how funds must be used (e.g., student loans or mortgages), personal loans offer more flexibility for various purposes. They are often unsecured and may require collateral, as specified in the contract. Essential elements of a personal loan include the names and addresses of both parties, their signatures, the loan execution state, the contract date, and the total loan amount.