There is no big difference between a loan agreement and a promissory note as both documents set out conditions for repayment of debts and are binding and consequently, enforceable. However, a promissory note is generally an unsecured document that does not include protection of the loan such as collateral. It typically includes less specific and strict terms and puts fewer obligations on a borrowing party in comparison to a loan agreement. A promissory note is often created when parties have trust in each other and a relatively small sum of money is involved. But in cases of significant debts and parties being unfamiliar with each other, parties should go with a loan agreement.
In comparison to a loan contract, an IOU also sets a borrower's obligation to pay back lent money, but it makes no promises on how or when the loan will be repaid. This is why it is the best option when it comes to leasing money to friends or family.