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A personal loan agreement is a legal contract between a lender and a borrower for the purpose of lending money. The lender could be a bank, formal credit entity, or an individual, and the contract is legally binding. Personal loans are more flexible than standard loans as the funds can be used for various purposes and are often unsecured. However, sometimes collateral may be required. Essential components of a personal loan agreement include names, addresses, signatures of both parties, state of execution, date of the contract, total loan amount, and repayment terms.
