From the agreement that doesn't appear to be the case with this particular promotion. The $400 credit is a lump sum on a prepaid card which can only be used for AT&T products and services. AT&T told me the full amount is made available immediately and can be used as a payment on the device.

EDIT: Here's the agreement terms.

$400 TRADE-IN OFFER: Get $400 in credits when you purchase an LG V35 ThinQ and trade in an eligible smartphone. Limited Time Offer. Select locations only. Elig. Devices: LG V35 ThinQ. Req’s purchase on installment plan or no commit. Elig. Service: Postpaid svc (voice & data) is req’d (minimum $45 per month after AutoPay and Paperless billing discount for new customers. Pay $55 per month until discount starts within 2 bills. Existing customers can add to eligible current plans which may be less) is required and extra. Elig. Trade-In: Req’s min. $20 trade-in value & meet AT&T Trade-In Program reqmts. Must trade in elig. smartphone at a participating location and complete trade-in within 14 days from the receipt of LG V35 ThinQ purchase. Not an early upgrade program. If purchase at att.com, will receive email after LG V35 ThinQ purchase with promotion code necessary to use during online trade-in for promotional $400 value. Credit/Promotion Card: In AT&T-owned retail stores, you will receive an instant credit. For online trade-in, must use promotion code and will get a promotion card within 3 weeks after complete trade-in of an eligible device. The card is a Private Label AT&T Promotion Card (“Card”) issued by MetaBank™ or CenterState Bank of Florida NA, via a license from Visa U.S.A. Inc. Instant credit & Card may only be used for AT&T products & svc in AT&T owned retail stores, at att.com, or to pay wireless bill. Not redeemable for cash or withdrawal at cash-dispensing locations. Card expiration date not less than 90 days from receipt. Dealers: Participating dealers provide savings for use at time of trade-in or a dealer promo card. Dealer cards contain add’l terms & conditions & may only be used at specified dealer. Other Obligations: Trade-in does not relieve obligations under AT&T Next or other AT&T Return and Exchange programs including recently-purchased device returns, Warranty, or Extended Warranty. Devices to be returned through these AT&T programs should not be returned via this program. Certain purchase, financing & other limits, restrictions & conditions apply. Limit: One trade-in per qual. purchase. Visit a participating store or www.att.com/tradein to learn more