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A promissory note is a legally binding contract between a borrower and a lender, detailing repayment terms for borrowed money. There are two types: secured and unsecured. An unsecured promissory note offers no collateral, meaning the lender lacks additional protection if the debt remains unpaid, requiring legal action for restitution. In contrast, a secured promissory note includes collateral, such as an automobile, to safeguard the lender's interests in case of default. Both note types serve as simple agreements stipulating the borrower's promise to repay the loan, outlining essential terms that the document must include, such as the borrower's commitment to repay the funds.