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A personal loan agreement is a legal contract between a lender and a borrower for lending money, which can be a bank, credit entity, or individual. It is a binding agreement, unlike standard loans that dictate specific purposes for fund usage, such as mortgages or student loans. Personal loans offer more flexibility in usage since they are typically unsecured and not tied to assets. Some may require collateral, which should be specified in the contract. Essential components of a personal loan include the names and addresses of both parties, signatures, the execution state, the contract date, and the total loan amount.
