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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 offers no additional protection for the lender if the borrower defaults, while a secured note requires collateral, such as an asset, to mitigate risk. If a borrower fails to repay an unsecured loan, the lender must pursue legal action for restitution. The primary purpose of both types of notes is to specify the borrower's commitment to repay the borrowed amount, with essential details included in the document.