The government is considering putting a cap on interest rates and fees charged by credit agencies to try to crack down on loan sharks.
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It also wants to strengthen enforcement and penalties for irresponsible lending and bring in more prescriptive requirements for affordability assessments and advertising.
Continued predatory behaviour by mobile traders will also be considered in the discussion document released today.
Consumer Affairs Minister Kris Faafoi said he had spoken with people who have been given loans that were clearly unaffordable for them, and others who had been lashed with huge penalties and fees.
"These practices trap people and whānau in an appalling debt spiral that is very difficult to get out of," Mr Faafoi said.
"While [some agencies like Salvation Army and Newtown Ethical lending] are doing what they can to help people, we need to ensure the regulatory settings are right to stop the practices that get people into these terrible situations.
"Also getting the credit settings are right, so that people can borrow appropriately when they need to but are not dragged into a long-term debt spiral is another way we will ensure all New Zealanders benefit from a strong and inclusive economy."
Submissions on the proposals close on 1 August this year.