Loans come in all shapes and sizes, from personal loans to mortgages to credit card balances. The interest rate on a loan is crucial because it determines how much you’ll end up paying back over time. High-interest loans can quickly snowball into debt traps, while low-interest loans can help you make big purchases without excessive financial burden.

Different types of loans offer different interest rates depending on factors like the level of risk to the lender, the loan term, and whether the loan is secured by collateral. Understanding the distinctions between these types of loans can save you significant amounts of money over time.

But do you know which type of loan typically offers the lowest interest rates? Let’s find out!