Consumer groups are calling on parliament to pass payday loan changes that will protect vulnerable people from spiralling deep into debt.
Payday lenders offer consumers fast cash but typically charge super-high fees and excessive interest rates.
Government Services Minister Bill Shorten said some lenders of last resort served a useful function, but others were simply doing the wrong thing.
He said blown-out car tyres or a busted washing machine could be enough to plunge struggling households into crisis.
"All of a sudden it doesn't take much to push an Australian perhaps who is doing it tough on the margins right over the edge," Mr Shorten told reporters in Melbourne.
"But that can never excuse predatory lending practices by payday lenders."
The Consumer Action Law Centre and CHOICE appeared at a parliamentary committee on Friday to call for payday lending reforms.
The proposed legislation, which has already passed the lower house, includes a 10 per cent cap on how much of a person's income can be taken up in loan repayments.
The previous cap was 20 per cent and only applied to people on social security payments.
Assistant treasurer Stephen Jones said the reforms were long overdue, with the former coalition government committing to regulate the products in 2016.
However, the changes failed to get off the ground.
"We want to get the balance between protecting vulnerable consumers and allowing credit to be provided in a safe environment," Mr Jones told AAP.
"We are cleaning up what we think are unsafe or unconscionable practices."
Consumer Action's Tania Clarke said hundreds of clients had experienced financial distress due to unregulated credit products in the years since the reforms were first floated.
"The fees and charges are astronomical," she said.
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