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A personal loan agreement is a legal contract between a lender and a borrower for borrowing money, which can be a bank, credit entity, or individual. This contract is legally binding. Unlike standard loans that specify how funds must be spent (e.g., student or mortgage loans), personal loans offer more flexibility in use. They are often unsecured, meaning they are not tied to assets like homes or cars, though some may require collateral. Essential elements of a personal loan agreement include the names, addresses, and signatures of the borrower and lender, the state of execution, the date of the contract, and the total loan amount.
