PCP car purchase APR calculation

[carbuyer]

I am looking to buy a car using the PCP option (Personal contract option) Can anyone tell me how the APR is calculated, taking into account the miles per year and final ballon payment, is there a method i can use? I assume there must be as companies quote APR rates but I cannot get this to equate when using a loan calculator. many thanks

[medway26]

The APR charged will have nothing to do with the estimated mileage or the residual payment. It will have more to do with your credit scoring. Effectively you are borrowing the whole cost of the car less your deposit. You pay interest on that amount. The part of your monthly repayment which is "paying back" the loan will be the difference between the total loan and the residual payment. The residual payment is based on the projected value of the car at the end of the loan and will take into account the estimated mileage. That's why there will be an excess mileage charge as the value of the car with higher mileage may be less than the residual payment.