Borrowers now pay no more than 0.8% of the amount borrowed per day, and a maximum of 100% of the loan in fees and charges. While default fees are also capped at £15.
The Consumer Finance Association says the new rules will:
- Allow customers to compare loans more easily, to establish the best value.
- Give borrowers a clear explanation of fees and charges, making it easier to establish the cost of missing repayments.
- Make it easier for new lenders to compete with existing players on price.
The, CMA which represents payday lenders, says the price cap has already resulted in 600,000 fewer consumers having access to credit.
It also says the number of loans being approved since 2013 has fallen by 42%.