The Credit Contracts Legislation Amendment Bill, which aims to stop people falling prey to loan sharks, has passed its third reading in Parliament.
Under the changes a credit cap will be introduced, meaning borrowers will not pay more than 100 percent of their loan, including interest and fees.
The bill also introduces a rate cap, so that no one will have to pay more than 0-point-8 percent in interest and fees per day for a high-cost loan.
Commerce and Consumer Affairs Minister Kris Faafoi says the Government will also be putting in place clear new requirements for all lenders to ensure borrowers can afford to repay their loan without falling into hardship.
The new legislation will take full effect in April 2021.