Consumers now safer from dodgy lenders

New laws will help prevent predatory payday lending and protect vulnerable people from falling deeply into debt during a cost of living crisis.

Under the laws, consumers will have stronger protections from payday lenders, which offer consumers fast cash but can commonly charge over 200 per cent in annual interest rates.

The payday lending and consumer lease reforms passed the Senate late on Thursday night.

The Consumer Action Law Centre's Gerard Brody said the measures would stop vulnerable borrowers from repeat lending and falling into debt spirals.

"Cost of living is really affecting individuals and families, and being pushed onto high cost loans and electricity bills is not sustainable," Mr Brody told AAP.

"We should better protect people in that really tough environment we're finding ourselves in at the moment."

Assistant Treasurer Stephen Jones said Australians urgently needed protection from predatory lending over the Christmas period.

"These are long overdue reforms, which will give consumers great protection and ensure that these forms of credit are provided on a fair basis," he said.

The newly enshrined legislation includes a 10 per cent cap on the amount of a person's income that can be taken up in loan repayments.

The financial regulator will also be empowered to crack down on convoluted contract structures used to skirt responsible lending requirements.

The new rules will also aim to stop the predatory marketing of these kinds of loans and consumer leases.

NAB research released in November found one in 10 Australians facing financial hardship accessed a payday loan in the past three months.

The reforms, which have been six years in the making, were split out from a broader financial reform bill that addressed several outstanding recommendations from the royal commission into the banking sector.

The government will debate the remaining parts of the bill next year, which includes a compensation scheme of last resort and the financial accountability regime.