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A personal loan agreement is a legal contract between a lender and borrower for lending money, which can be a bank, credit entity, or individual. This contract is legally binding. Unlike standard loans that specify fund usage (e.g., student loans, mortgages), personal loans offer more flexibility in their application. Personal loans are usually unsecured, as they are not tied to assets like homes or cars, although some may require collateral. Essential elements of a personal loan include the names and addresses of both parties, their signatures, the state of execution, the contract date, and the total loan amount.