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A promissory note is a legally binding agreement outlining the repayment terms between a borrower and a lender. There are two types: secured and unsecured. An unsecured promissory note offers no additional protection to the lender if the borrower defaults, while a secured note requires collateral (e.g., an asset like a car) to safeguard against default. In the case of an unsecured note, if the borrower fails to repay, the lender must pursue legal action for restitution. Both types serve as agreements detailing the borrower's promise to repay the loan, which typically includes specific terms and conditions related to the repayment process.