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A promissory note is a legally binding agreement between a borrower and a lender outlining repayment terms. There are two types: secured and unsecured. An unsecured promissory note lacks collateral, leaving the lender at risk if the borrower defaults, necessitating legal action for recovery. In contrast, a secured promissory note includes collateral, such as an asset, providing protection to the lender in the event of non-payment. Both types serve to detail the borrower's commitment to repay the loan, but the secured note offers additional security for the lender. The document typically includes essential information regarding the borrower's obligations.