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A promissory note is a legally binding agreement between a borrower and a lender, detailing the repayment terms for money owed. There are two types: secured and unsecured. Secured promissory notes require collateral (e.g., an automobile), providing the lender with protection if the borrower defaults. In contrast, unsecured promissory notes lack collateral, meaning the lender must pursue legal action for restitution if payments are not made. Both types serve as simple agreements accompanying a loan, outlining the borrower's promise to repay the borrowed amount. The document typically includes specifics about the borrower and repayment conditions.