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A promissory note is a legally binding agreement between a borrower and a lender that specifies repayment terms for borrowed money. There are two types: secured and unsecured. An unsecured promissory note does not offer the lender additional protection if the debt remains unpaid, requiring legal action for restitution. In contrast, a secured promissory note involves collateral, such as an automobile, ensuring protection for the lender if the borrower defaults. The primary purpose of either note is to clearly outline the borrower's promise to repay the loan, detailing repayment terms within the document.