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A promissory note is a legally binding agreement between a borrower and a lender that defines 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 is unpaid, whereas a secured note requires collateral from the borrower, such as an automobile or other valuable assets, to protect the lender in case of default. If the borrower defaults on an unsecured note, the lender must pursue legal action for restitution. The primary purpose of an unsecured promissory note is to clearly outline the borrower's commitment to repayment.