Vehicular ad-hoc networks (VANETs) technology has emerged as an important research area over the last few years. Being ad-hoc in nature, VANET is a type of networks that is created from the concept of establishing a network of cars for a specific need or situation. VANETs have now been established as reliable networks that vehicles use for communication purpose on highways or urban environments. Along with the benefits, there arise a large number of challenges in VANET such as provisioning of QoS, high connectivity and bandwidth and security to vehicle and individual privacy. This article presents state-of-the-art of VANET and discusses the related issues. Network architecture, signal modeling and propagation mechanism, mobility modeling, routing protocols and network security are discussed in detail. Main findings of this paper are that an efficient and robust VANET is one which satisfies all design parameters such as QoS, minimum latency, low BER and high PDR. Some key research areas and challenges in VANET are presented at the end of the paper.