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Differential oil is a type of oil. Cars have a gearbox connecting the two axles. This gearbox is responsible for the conversion of engine power and its transmission to the wheels, allowing them to turn at varying speeds. This part of the car is called the differential, and lubrication is needed for it to function properly. Differential fluid, also called differential oil, provides the lubrication and cooling of the car’s differential. The fluid is there to protect the gears’ metal surfaces from friction, and to prevent overheating and burning.