The transition to a tougher regulatory environment for small-amount lenders has hit the bottom line of payday lender Cash Converters. Net profit for the December half was down 60.6 per cent, compared with the previous corresponding period.The big hit was in the Australian cash advance business. There was a drop in volume and also a thinner margin.Under new rules introduced last year, payday lenders must limit their interest rates and charges where a finance contract is worth up to A$2000 and runs for less than two years. There is a limit of 20 per cent on any upfront charge and a limit of four per cent on monthly charges. Lenders are not allowed to refinance small-amount contracts. The aim is to stop debt rolling over and compounding.For larger loans, a credit provider is prohibited from entering into a contract where the annual "cost rate" exceeds 48 per cent.Payday lenders must inform customers of other finance options, such as Centrelink advances, no-interest and low-interest loan schemes run by community organisations and the availability of hardship programs run by credit providers and utilities. Warnings must be provided on lenders' websites and in stores, and must be read during telephone discussions.They must also comply with tougher responsible lending rules, including reviewing clients' bank statements for the previous 90 days to verify their income.These changes have dampened demand and increased administrative costs. Cash Converters said it expected to see an improvement in the June half.Net profit for the half was $7.3 million - down from $18.4 million in the previous corresponding period.Cash Converters acquired 80 per cent of a vehicle leasing business, Green Light Auto, during the half. The new business contributed a pre-tax loss of $3.6 million.