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A promissory note is a legally binding agreement between a borrower and a lender detailing repayment terms for money owed. There are two types: secured and unsecured. An unsecured promissory note lacks additional protection for the lender if the borrower defaults; it serves as a simple agreement for the loan. Conversely, a secured promissory note requires collateral, such as an automobile or another valuable asset, to protect the lender in case of non-payment. If the borrower defaults on an unsecured note, the lender may pursue restitution through legal channels. The main purpose of the unsecured promissory note is to specify the borrower's promise to repay the loan.