Cars are depreciating assets, and it can be easy for a person to become upside-down in their car loan. What this means is that the loan amount that you owe to your car lender is actually higher than what the vehicle is worth. This can be a tough situation to be in, since it means that if you sell the car, you'll have to pay additional money out-of-pocket to the lender on top of whatever the buyer gives you for the car. These are three ways that you can avoid getting yourself in this situation in the first place.

1. Buy a Used Car

First of all, you should think about buying a used car instead of a new car. If you go to a dealership, you can often find used cars that are only a couple of years old, that don't have a lot of miles on them and that are in excellent condition. In many cases, these cars come with some sort of a warranty. Since vehicles depreciate the most when they are new, buying a used car can be a good way to avoid taking the depreciation hit and finding yourself upside-down in your loan.

2. Put Down a Bigger Down Payment

Another way that you can avoid getting upside-down in a car loan is by making a bigger down payment on your vehicle. The more that you put down on the car, the less you will actually have to borrow from a vehicle lender. Plus, putting down a bigger down payment can make it easier for you to qualify for more loans and to get a lower interest rate.

3. Hunt for a Lower Interest Rate

A lot of people find themselves upside-down in their car loans because the loans that they take out have very high interest rates. This means that the amount that you pay for the car will end up being a whole lot higher  than what the car actually cost in the first place. In many cases, people who have poor or average credit can end up paying high interest rates. However, shopping around for a lender that will give you the best possible interest rate can help prevent you from getting upside-down in your loan and can save you a lot of money over the lifetime of your car loan as well.

Many people find themselves in situations in which they owe more on their car than what it is actually worth. However, it is possible to avoid this situation. These are three steps that you can take when buying a car from a Ford dealer.