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A promissory note is a legally binding agreement between a borrower and a lender, detailing the repayment terms for borrowed money. There are two types: secured and unsecured. An unsecured promissory note lacks collateral, meaning the lender has no additional protection if the borrower defaults, which may require legal action for repayment. In contrast, a secured promissory note includes collateral, like an asset, to protect the lender. Both types serve as agreements for repayment, with unsecured notes specifically outlining the borrower’s promise to repay the lender.