Credit Contracts and Consumer Finance Act 2003, ss 45E, 45H, 45I, 45J
There are rules in place to protect consumers from the harm caused by running up excessive debt from not being able to pay high interest loans.
The total cost of borrowing (which includes credit fees, default fees, interest charges and any other fees or charges passed on by the creditor) can’t be more than the first loan advance. For example, if you borrow $500 from a high cost lender, you should not have to pay back more than $1000 in total.
The lender also can’t charge you compound interest. Normal interest is based on the loan amount, and compound interest is based on the loan amount and the interest that is charged in every period (interest on interest).
The maximum rate of interest that can be charged is no more that 0.8% per day.
Default fees for missed or late payments must be $30 or less, unless the lender can prove that a higher fee is not unreasonable.