Promissory Notes

Secured Promissory Note – Includes security, which grants the lender the borrower’s property, a vehicle, or another worthy object if the borrower defaults on the balance.

Unsecured Promissory Note – Does not include security, hence the word ‘unsecured’. If the borrower were to default on the balance, the lender has no direct way to be reimbursed his or her money but has to resort to bringing the borrower to small claims court and/or filing the default on the borrower’s credit.