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A promissory note is a legally binding agreement between a borrower and a lender detailing the repayment terms for owed money. There are two types: secured and unsecured. An unsecured promissory note lacks collateral, meaning the lender has no extra protection if the borrower defaults; restitution must be sought through legal channels. In contrast, a secured promissory note includes collateral, such as an automobile or valuable asset, offering the lender security against non-payment. Both types serve to outline the borrower's commitment to repay, detailing the repayment obligations.