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The Personal Loan Agreement is essential for documenting private lending arrangements in India, providing a legally enforceable framework for personal loans between individuals. This document is commonly used when one individual wishes to lend money to another individual, whether for personal expenses, business needs, or other purposes. The agreement must comply with Indian contract law, particularly the Indian Contract Act, 1872, state-specific money lending regulations, and relevant financial legislation. It should be used whenever a personal loan is extended to ensure both parties' rights and obligations are clearly defined, including specific terms about the loan amount, interest rates (conforming to Indian usury laws), repayment schedule, and consequences of default. The document becomes especially important for maintaining clear records for tax purposes and potential legal proceedings.

1. Parties: Identifies and provides full details of the lender and borrower, including names, addresses, and contact information

2. Background: Brief context of the loan arrangement and the parties' intention to enter into the agreement

3. Definitions: Defines key terms used throughout the agreement for clarity and consistency

4. Loan Amount and Purpose: Specifies the principal amount being lent and the stated purpose of the loan

5. Interest Rate: Details the applicable interest rate, calculation method, and compounding frequency

6. Repayment Terms: Specifies the repayment schedule, installment amounts, and payment methods

7. Representations and Warranties: Statements of fact by the borrower about their financial condition and ability to repay

8. Borrower's Covenants: Ongoing obligations of the borrower during the loan term

9. Events of Default: Lists circumstances that constitute default and their consequences

10. Remedies: Lender's rights and remedies in case of default

11. Notices: Process for sending formal communications between parties

12. Governing Law and Jurisdiction: Specifies Indian law as governing law and sets jurisdiction for disputes

13. Execution: Signature blocks and execution formalities