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A promissory note is a legally binding agreement between a borrower and a lender detailing repayment terms for borrowed money. There are two types of promissory notes: secured and unsecured. An unsecured promissory note offers no additional protection for the lender if the debt remains unpaid, making it a straightforward agreement that accompanies a loan. In contrast, a secured promissory note involves collateral from the borrower, such as an asset, to protect the lender in case of default. Should the borrower default on an unsecured loan, the lender must pursue legal action for restitution. The note includes essential details outlining the borrower's commitment to repay the loan.