The government along with its left wing parliamentary allies support the agreement, as do opposition parties Liberal, the Danish People’s Party and Ny Borgelige and the unaligned Alternative party.

The agreement aims to clamp down on payday loans which have left a significant number of younger Danes in debt, according to a press statement released on Thursday by the Ministry of Industry, Business and Financial Affairs.

Under the new rules, limits will be set on the maximum annual cost of a consumer loan as well as on the maximum interest and fees payable on loans.

Additionally, commercials and other advertising of pay day loans will be more tightly regulated.

“I am very proud that we are now, for the first time, doing something about the pay day loans which have trapped many, particularly young and underprivileged people, in unmanageable debt,” business minister Simon Kollerup said in the press statement.

“It was high time. We have formed an agreement which protects Danish consumers. This agreement means that our regulation of this area is among the tightest in the EU,” Kollerup added.

Specifically, the new rules will ban all loans with an APR of more than 35 percent. Under current rules, loans with APRs as high as 800 percent exist on the market.

Companies offering loans with APRs higher than 25 percent will be banned from marketing them, meanwhile.

“Companies who behave decently towards their customers can look forward to a relatively easy transition to the new rules, while a number of those who have been the most greedy will have to change their business models. I am happy that parliament is in support of this plan,” Kollerup said.

The agreement also provides funding for counselling for people who find themselves in economic difficulty as a result of the loans, and increased lessons on managing personal economy will be given in schools.

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