Will the Stipulated Loss Value (SLV) Table look good with two chairs or four in my office?
That’s a crazy question! The SLV Table is not something you sit at. But you will wish it was an expensive oak table if you ever have to pay off a leasing company for damaged or missing equipment.
You say you’ve never received the SLV Table with your lease contracts. No surprise. Unless you ask for it, you won’t receive it.
Some leasing companies act shocked at your request. They say, “No one ever asks us for that, why do you want it?” A bunch of baloney there! Don’t fall for it. You need to see and understand the SLV Table before signing a lease.
Every leasing company has this information. It’s part of their internal documentation files. How else can they determine how much you owe if equipment is damaged or disappears? And of course, the SLV protects their return on investment. Big time protection as you will learn.
Sometimes the Stipulated Loss Value Table is contained in a lease paragraph. Confusing language abounds. Hire an Einstein to decipher the pay off puzzle. No Einstein on your staff? Then you need to require a copy of the SLV clearly spelled out.
What is the SLV Table? Holy Guacamole! (That’s another of my technical terms.) It means you are in deep poo if your equipment is damaged, lost or unavailable to return at lease end.
Day one of the lease, if the equipment is damaged after the lease commences but before you make the 2nd lease payment, you owe 110% of the equipment purchase price.
That means on a $1,000,000 lease, after making one payment of $84,440, you owe the leasing company $1,100,000. Now that’s a quick profit for them.
Worse yet, after making 12 quarterly payments of $86,440, you’ve paid out $1,037,280. If all assets are destroyed, you still owe the leasing company an additional $350,000 Stipulated Loss Value. You have no equipment. You’ve paid out $1,387,280. That is comparable to 19.95% interest rate at the bank.
TIP: Get a copy of the Stipulated Loss Value Table. Negotiate it. Always!
REAL LIFE: In my workshop at the Association of Legal Administrators Annual Conference in May of this year, I asked the audience how many knew of or received the SLV Table with their stack of lease contracts. Out of 70 law firm administrators, only one in the room said he received the table. His table showed the value of the equipment at 35% of the purchase price after the 36th month of a 60-month lease.
He called us in to help negotiate fair lease terms and a reasonable SLV. On his firm’s $500,000 technology lease, we negotiated the SLV down from 35% to 15%. Should there be a total loss of equipment, the firm or their insurance company would owe the leasing company $75,000, not $175,000. In my book that is serious loss prevention savings.
Moral of the story: 1) Always ask for a copy of the Stipulated Loss Value Table and negotiate it. 2) Everything is negotiable, even the leases you already have if only you ask.