A promissory note is a written promise made by one party to pay a specific amount of money to another party at a designated time. It serves as a legal document that outlines the terms of the loan, including the interest rate and repayment schedule. This note is often used in personal loans, business transactions, or real estate deals, providing security for the lender. In essence, a promissory note is like an IOU, but it carries more legal weight. If the borrower fails to repay, the lender can take legal action to recover the owed amount. This makes it an important tool in financial agreements, ensuring both parties understand their obligations.