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A promissory note is a legally binding agreement between a borrower and a lender detailing repayment terms. There are two types: secured and unsecured. An unsecured promissory note lacks collateral, leaving the lender unprotected in the event of non-payment, requiring them to pursue legal action for recovery. In contrast, a secured promissory note includes collateral (like an automobile) to protect the lender in case of default. Both types serve as agreements for loan repayment, but the unsecured version specifies the borrower's promise to repay without offering extra security for the lender.