Use loath when you mean reluctant or unwilling, as in "she was loath to admit her mistake". Loth is a separate, much older word for a small unit of weight once used in parts of Europe, so it is not just an alternative spelling of loath. If you mean "unwilling", loath is the word you want.
The core difference
Loath is the adjective meaning reluctant; loth is an unrelated word for an old unit of weight.
- loath — reluctant or unwilling to do something: she was loath to admit she had made a mistake.
- loth — a measure of weight formerly used in Germany, the Netherlands and other parts of Europe, equal to half a local ounce.
How to tell them apart
Loath and loth are close enough in spelling that it's easy to assume they're just two ways of writing the same word, but they come from entirely different roots. Loath descends from Old English lāð, meaning "hateful" or "hostile", and shares that ancestry with loathe and loathsome — all built around the idea of resistance or dislike. Loth, on the other hand, comes from the German word for lead, Lot, and named a small unit of weight rather than a feeling.
Because the weight sense is obscure to most modern readers, anyone reaching for a word meaning "reluctant" is safest sticking with loath. It carries the full weight of that meaning on its own, without relying on a spelling that historically pointed somewhere else entirely.