Well, suppose it does happen. It's rare, and the advice to "pay the dealership" is probably erroneous. The course of action is to find out who carries the lease and make arrangements with them for their customer to early terminate and you buy the car.
It amazes me that a dealership would carry consumer debt. Diversification of risk would be difficult unless you could write hundreds, maybe thousands of leases. With customers paying cash, leasing with the captive arm, using bank financing and other methods, it seems that it would be difficult to diversify away the risk associated with the loan portfolio.
I know that the variance of non-payment with respect to used cars, and cars in general tends to be higher than mortgages, but lower than comsumer debt for items like electronics. When I was in banking, we charged higher rates for used cars not only because of the lower security on the loan, but also due to larger amounts of variance (aka risk) in the performance of the loans in general.
Interesting. I suppose if you could beat the crap out of the consumer at the point of purchase (jacking the price) you could mitigate some of the exposure due to depreciation of the asset, typically faster than the payments on the principle portion of the loan.
If you had enough dealerships under ownership, you might be able to diversify the portfolio enough by pooling the paper over a number of dealers located in different geographic areas. Someone like Jimmy Pattison might be able to do it.
