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A personal loan agreement is a legal contract between a lender and a borrower for money lending, which can involve banks, credit entities, or individuals. This agreement is legally binding. Unlike standard loans, which specify how funds should be used (like student loans or mortgages), personal loans are more flexible and can be used for various purposes. While often unsecured, some personal loans may require collateral, which should be detailed in the contract. Essential elements of a personal loan agreement include the names, addresses, and signatures of both parties, the state of execution, the date, and the total loan amount.