An upside down car loan is when you owe more for your car than it is actually worth. New cars tend to depreciate faster than your payments can reduce the debt of the loan. For instance. If you buy a new car for 20,000$ and you pay on it until you owe only 15,000$ then find out your car is worth only 10,000$ "you are upside down" on that car loan.
What do I do?
There is not much that you can do at this point. Trying to get out from under your car by buying a cheaper new car, usually just makes matters worse. You will still have the negative amounts or "what you owe above and beyond your car is worth" that will be added on to the next car loan. You will also be making pretty much the same mistake again by buying another new car that will : depreciate faster than your payments can reduce the debt. Sound familiar?
Accept the facts
When you bought your new car, you bought it for reasons. Perhaps it was because you wanted to finally own a new car. Maybe it was because you were tired of the expense and trouble of constantly having to fix your old car. Possibly it was because you wanted better gas mileage than your older car, but whatever the reasons, you chose to buy a new car. Don't feel stuck with it, make the best of it.
Keep your car
The best advice I can give for being upside down on your car is to keep it. If you are adamant about getting rid of it, sell it yourself. You will probably make more money for it by selling it yourself, than any other way. Know that you will have to get at least the amount you owe on it. Remember that if someone wants to buy it, they will probably need a loan for it. A bank will only loan them,what the car is actually worth, usually determined by a "Kelley book or blue book price". Realistically, you will have to find someone that can pay cash, and that isn't likely, but it doesn't hurt to try.
For sale
Make a small "for sale" sign for your car. Set the price for exactly what you owe on it, and state "cash". Keep making your car payments and learn to appreciate your car. Paying more than your monthly payment requires, will lower the amount of negative equity in your car. Pay more and you will be less upside down. As you owe less on your car, lower that cash price on the for sale sign to reflect that change. It may seem futile, but it's possible that someone could buy your car, for the cash you owe, unless you don't try at all. Paying more than your monthly payment and then lowering your for sale sign amount accordingly will be an active goal you can set and hopefully accomplish.