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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 does not provide the lender with collateral for protection if the borrower defaults, requiring the lender to pursue legal action for restitution. In contrast, a secured promissory note is backed by collateral, such as an automobile or valuable asset, ensuring the lender has recourse in case of default. Both types serve to outline the borrower's commitment to repay the loan, but differ in the level of security provided to the lender.