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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, which specify how funds must be used (e.g., student loans, mortgages), personal loans are more flexible in their usage and are often unsecured, meaning they aren’t tied to assets like homes or cars. However, some personal loans may require collateral, outlined in the contract. Essential elements of a personal loan agreement include the names and addresses of both parties, their signatures, the state of execution, the contract date, and the total loan amount.
