I think you are liable if it has something really wrong like bad brakes. If you trade it in to a dealer, they will fix it before they sell it, or send it to auction as is.
We were going to trade our old van in the day I made the last payment, but my husband and I decided that $300 to fix the brakes, and suspention was better than 5 or 6 years of $300 payments. We will probably get one at the end of the year, but I have been able to pay down one of our credit cards, pay bills on time, and stay afloat these past few months. Even though I hate the caravan (it's a 2000), I like not having the payment. Our goal is to completely pay off the cards, catch up after disney, pay for another giant tank of propane ($800!), and then get a new car!!! I only hope that they have another great deal on minivans when we go to buy. The last incentive was for $8000 off of a Kia minivan. We heard that if you buy the base model, they don't have too many problems. Also, they come with a 10yr/100k mile warranty.
Good luck.