8 Signs Of A Bad Transfer Case (+ Symptoms, Reasons & Repair Costs)

If you own a 4WD and everything is working perfectly fine, you might not even know that your vehicle uses something called a “transfer case”. As soon as you start experiencing any problems with your 4-wheel-drive vehicle, your mechanic will surely remind you that your vehicle indeed has a transfer case and that it is a usual suspect when it comes to 4WD problems. 

We will do our best to explain what a transfer case is (in plain English), what types of transfer cases exist, what are the common signs of a bad transfer case, signs of a bad transfer case module, signs of a bad transfer case switch and how much it costs to repair these components. By listing all the possible signs of a bad transfer case, we are sure that you will be able to identify and compare some of your 4WD issues with our list of transfer case problems.

What exactly is a transfer case and why do you have one?

A transfer case is a mechanical module that is installed exclusively in 4WD vehicles. It is linked to the gearbox, which allows the driver to engage 4×4 mode by efficiently distributing engine power between the rear and front axles/wheels. Without a working transfer case, 4×4 mode cannot be activated. A transfer case allows the driver of both automatic and manual cars to choose between 4WD mode and 2WD mode.

The transfer case works on the same principle as a differential and offers two gear modes. The “normal” function corresponds to the “high range” gears which are the ones used in normal road conditions such as driving on the highway. While the “low range” gears are useful when you tackle steep slopes or obstacles that require maximum caution and low speed.

Put simply, you control the gears of the transfer case so that your vehicle’s all-wheel-drive functions adapt to the situation. Depending on your vehicle’s configuration, you must either operate a lever to engage the desired gear ratio or in the case of automatic vehicles the transfer case modes are activated by a simple push of a button. However, if your car is a newer model, it probably has an electronic system that controls the transfer case by analyzing driving conditions.

What types of transfer cases exist? Four-wheel drive vs All-wheel Drive

As you might have noticed in car commercials or during your purchasing journey, some cars have four-wheel-drive and others have all-wheel-drive. This is where the difference in the transfer cases comes along as well.

Four-wheel-drive transfer case

This transfer case in a four-wheel-drive sends the engine power to the front and the back axle. This allows the 4WD cars to switch between 2WD mode or 4WD mode. Having the option of selecting a two-wheel-drive mode improves the vehicle’s economy in day-to-day driving. However, vehicles with such a transfer case are still incredible off-roaders. Having the freedom to do both efficiently is the reason why there are so many four-wheel-drive vehicles on the market today.

All-wheel-drive transfer case

All-wheel-drive cars or AWD cars have the ability to transfer the engine’s power to all four wheels constantly. An example of such a system is Subaru. All Subaru vehicles come with the Symmetrical AWD system. This is an amazing system for driving in icy, rainy, and slippery conditions. It also performs great in snow and mud. With certain AWD systems, you still have the ability to switch to 2WD mode with a click of a button or by switching a lever.

Why do transfer cases fail or malfunction?

Before we get deep into the signs and symptoms of a bad transfer case, let look at why they fail in the first place.

Impact damage

If you actually use your vehicle off-road, there is a chance that your transfer case gets “beaten up” as you climb over rocks or roots. Any hard impact to the transfer case can lead to catastrophic damage of the transfer case. Dropping or hitting the transfer case during repairs can be just as dangerous. Your transfer case might also get damaged in a car accident. 


Just like with an automatic transmission or a differential, overheating the transfer case is an event you want to avoid at all costs. Overheating will wreck all the seals, gaskets and bearings inside the transfer case. Overheating usually comes as a result of low transfer case fluid and overuse.

Poor repairs

Trusting a non-professional to open up your transfer case and do repairs is like trusting a knee operation to a bartender. Transfer cases are extremely fine-tuned devices, meaning only a professional that knows what he is doing should be executing repairs. We have heard a dozen stories of big transfer case problems after repairs.

Due to the positioning of the transfer case, the accumulation of dirt and salt eventually lead to rusting and other environmental damage. This can lead to transfer case problems or fluid leaks.

Worn out seals, gaskets, and bearings

Seals and gaskets should be replaced on a regular interval, do not wait on leaks to remind you that a transfer case gasket needs replacement. Bearings in the transfer case also have a finite life span which is why they need to be replaced as soon as they start giving out symptoms of wear.

Low transfer case fluid and pressure

We wrote a lot of articles on automatic transmissions on lifeonfour.co, and we usually have one thing to say when it comes to automatic transmissions; CHANGE the fluid regularly. It is just the same with transfer cases. The fluid that keeps all the moving pieces of a transfer case cool and running should be regularly replaced in order to avoid big problems.

Overstressing the transfer case

Cars that are frequently used for off-roading have a bigger chance for developing transfer case problems. It is only logical. If you do a lot of difficult terrain driving, make sure you are not overheating the transfer case and make sure that the transfer case fluid is replaced on a shorter interval.

Common signs of a bad transfer case

Before we get into the list, you should know where your transfer case is located so you can distinguish weird engine noises from weird transfer case noises. Why are we talking about weird noises? Because a weird noise or a fluid leak is usually the first symptom of problems with the transfer case. 

The transfer case is located almost at the center of your car, behind the transmission or at the back of the transmission, click here for a visual representation.

Unusual noises and sounds

Any weird noises and sounds such as clicking, squeaking or grinding are not something you want to hear coming from your transfer case. Unusual sounds are usually a sign of bigger trouble to come, so do not ignore them and think they will go away on their own. Worn-out components of the transfer case tend to make weird sounds, especially worn-out bearings or worn-out gears. Unusual sounds and noises are amongst the earliest and most common signs of a bad transfer case.

It is hard to engage and disengage the 4WD mode

A healthy transfer case has no problem switching between 2WD and 4WD mode, it should make the switch almost instantly. Any hesitation to do so or delayed engagement indicates transfer case problems. If your transfer case gets stuck or if it shifts to a low-range gear mid-drive it can be a serious safety hazard so get your transfer case checked out as soon as possible.

The car disengages the 4WD mode on its own

Unless your car has terrain recognition, which means it engages and disengages the 4WD mode on its own, based on the road conditions, your transfer case should not disengage the 4WD mode unless you command it.

Your car struggles to shift gears

Both manual and automatic transmissions can work with transfer cases. With that being said, a bad transfer case can actually cause rough and difficult gear changes on both manual and automatic transmissions. These problems are usually caused by a lack of transfer case fluid or if the fluid is completely worn out. It can also be caused by slippage between the gears.

There are fluid leaks underneath your transfer case

We already covered where the transfer case is located just a few paragraphs above, so you should be able to differentiate between engine oil leaks and transfer case leaks. However, transmission fluid leaks and transfer case leaks can be easily replaced. Good thing is that no matter where the leaks is coming from, you should take care of it immediately! Loss of transfer case or transmission fluid can lead to complete failure of each component.

Transfer case/Automatic transmission/4WD warning light comes on

Depending on the model of your car, if there is electronic damage or a serious lack of transfer case fluid, your car should light up the 4WD warning light, some cars will light up the automatic transmission warning light as well. Never ignore any of these warning lights and have the reason for them diagnosed as soon as possible.

Transfer case refuses to shift

When there is serious mechanical or electrical damage to the transfer case, it will stop operating/shifting completely. In most cases this leaves your car unable to drive or it will drive horribly, leaving no doubt that there is something seriously wrong with your transfer case.

Something smells like its burning

As you reach critical levels of transfer case fluid, the moving parts in the transfer case will essentially grind together without any form of lubrication. This releases an unpleasant smell of burnt metal and it quickly leads to a complete failure of the transfer case. There is nothing but trouble for you, we are sorry. While this is not one of the more common signs of a bad transfer case it does happen and you should not ignore any burning smells.

How much do common transfer case repairs cost

We want to start off by revealing just how much it costs to have your transfer case replaced; according to various sources, including repair pal, the average cost of a transfer case replacement with labor included is 2500$, for some modern vehicles the cost can be anywhere from 3000-5000$. Compared to how much it costs to replace the transfer case fluid, it seriously makes no sense why you would not want to spend 100-130$ for a fluid replacement every 30,000 miles. Another component that commonly fails on a transfer case is the encoder motor ring, the part cost for a replacement ring is 30-70$ but the cost of labor can be anywhere from 300-700$.

To summarize, the cheapest practice you can do is make sure you follow the maintenance plan of your car manufacturer. Replacing the transfer case fluid regularly will prevent complete failures and big repair bills. Let this be a lesson on why you should never ignore signs of a bad transfer case.

Frequently asked questions

Should You Drive With A Bad Transfer Case?

No, you definitely should not drive with a bad transfer case. In most cases, you won’t be able to drive with a bad transfer case. If you assume something is wrong with your transfer case, visit a mechanic as soon as possible to prevent further damage.

Can You Fix A Bad Transfer Case At Home?

You can, but only if you have the appropriate knowledge and tools. Transfer cases need to be installed without any faults. There have been cases where DIY mechanics ruined new, 2000$ transfer cases because of improper installation.

Is a Transfer Case Part Of Transmission?

No, a transfer case is a part of the vehicle’s drive train. However, it does receive the power from the transmission and allocates it to the front and back axle.

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