To some extent, all lenders rely on the three C's of credit; Capacity, Collateral, and character. Capacity is the ability to repay a debt. Lenders will want to know where you work, for how long, and how much you make. They'll also want to know your expenses. Collateral is any possession you have that could be used to secure the loan. And character refers to what type of history you have for paying your bills.

Bad credit implies a poor credit history, so bad credit financing usually relies more on the strength of your capacity and collateral. Even a previous bankruptcy that's been discharged is often acceptable.

Bad Credit Financing With Loans
Just as lenders can decide who they'll lend to, you should shop around to see who you'll borrow from. The Truth in Lending Act requires all financing terms to be fully disclosed to allow you to make comparisons. The two most important terms disclosed are the finance charge and the Annual Percentage Rate(APR).

The finance charge is the total of all the fees and cost of interest on the loan and the APR is the annual interest rate of the loan. Naturally you want both of these as low as possible, but you may want to pay a somewhat higher finance charge to get a lower monthly payment.

Bad Credit Financing With Leases
To lower monthly payments even more, you may using lease financing. To be covered under the Consumer Leasing Act, the leasing contract must cover the use of personal property for more than 4 months. The total obligation can't exceed $25,000. If the leasing agreement meets these criteria, the CLA requires that all financing terms and fees are disclosed. This includes your payment upon signing, the monthly payment, any other charges, and the total amount you'll pay over the life of the lease.