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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 extra protection for the lender if the debt remains unpaid, requiring them to pursue legal action for restitution. In contrast, a secured promissory note involves collateral, such as an automobile, that can be claimed if the borrower defaults on payments. Both types serve as simple agreements accompanying loans, with the unsecured note primarily serving to outline the borrower's promise to repay the borrowed amount.