Two Auckland finance companies have been fined $720,000 for what the judge has described as "cynical" and "deliberate" offending.
Budget Loans Limited and its sister company Evolution Finance have also been ordered to pay $53,000 to nine victims for emotional harm and $38,000 in refunds and credits to borrowers.
The two companies were convicted of 125 charges under the Fair Trading Act.
The Commerce Commission said over six years they continually added costs and interests to loans and then illegally repossessed essential goods.
Commission spokesperson Mary-Anne Borrowdale said the behaviour kept vulnerable borrowers in a cycle of debt and repossession and caused huge financial and emotional distress.
One borrower declared herself bankrupt when told her loan had ballooned from about $9000 to $57,000 - in fact she had less than $2500 to pay.
"Budget Loans attempted to create cash flow by getting Western Bay and National Finance borrowers to pay as much as possible for as long as possible," Ms Borrowdale said.
"Budget Loans' conduct and misrepresentations kept vulnerable borrowers in a cycle of debt and repossession.
"It knowingly engaged in illegal repossessions of essential items from people that it knew were already living in hardship. The financial and emotional distress caused by this conduct to borrowers and their families should not be underestimated," she said.
"They just inflated out of all recognition for those borrowers" - Mary-Anne Borrowdale
The commission is now seeking banning orders against the directors Allan Hawkins and his son Wayne.
Hawkins was one of New Zealand's richest men in the 1980s until his company Equiticorp collapsed in 1989 owing hundreds of millions of dollars to investors.
Two years later he was sentenced to six years jail for fraud.