A payday loan is 'one of the fastest-growing sources of consumer debt in the U.S.' [Source  Payday Loan Association; see chart below]. These loans provide an instant solution to a money crunch, but the loans often make a person responsible for paying interest and collection costs, which are usually greater than the loan amount. In some cases, these loans can be a significant financial burden for the borrower.

[How to Apply for a Payment Plan]

How much may a payday loan amount you qualify for? If you meet all the requirements for a payday loan, how much can you borrow? Read on to learn more about what a payday loan is, the types of loans available and the possible repayment plans.

Let's start with a simple example. You need $5,000 in cash to put towards an emergency fund. You use a credit card to pay rent, and an ATM line to purchase clothing. You apply a $200 payday loan and get approved for five consecutive payments. Your monthly mortgage payment is $725. You are now paying only $150 toward your emergency fund, and you have $3,700 saved up in your savings. You've now built a small nest egg.

As long as you live within the range of interest rates for each loan type (see chart below), you will earn 1% on your $3,700 in interest payments, bringing your total rate of return to 4%. If you repay the initial loan with a 3-month extension, you can bring the total number of payments made to 5-6, and the total loan amount to 9-18.

[How to Choose the Right Lender]

Why is payday lending so lucrative? Well, if the goal is to cut expenses and boost cash flow, then you are more likely to take advantage of interest rates for payday loans. Payday loans typically are offered on weekends and holiday periods. They also typically go with more expensive credit card debt, such as credit cards with a high balance requirement, expensive installment debt, credit cards for businesses or leases. They also generally go on shorter repayment terms (typically between 90 days to 1 month) and require annual payments. This is a more "budget" loan, in other words, and the interest rate will be lower.

[How Payday Lenders Are Taking Over]

Why Does Debt Consolidation Need to Be a Problem? While a loan can be a very useful solution for short-term financial needs, it can quickly