Transfer Case Replacement Cost: How to Save Money

Author: Daniel Rey

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Most light trucks come in two varieties: two-wheel drive and four-wheel drive. Both varieties direct engine power to the rear wheels, but four-wheel drive models use a transfer case that can take some of that engine power and direct it to the front wheels as well. Usually, four-wheel drive is only used when necessary, when extra traction is needed on all four wheels.

The transfer case is bolted to the end of the transmission and has two driveshafts: one goes back to the rear differential, and the other runs forward to the front differential. 

Replacing the transfer case can be relatively simple. The driveshafts need to be taken off, and the transfer case needs to be unbolted from the transmission. Sometimes there are shields or cross-members that also need to be removed, and there are usually a few electrical connectors and hoses to undo. 

How Transfer Cases Fail

Transfer cases are usually pretty robust and reliable, but like anything mechanical, they can fail. The majority of four-wheel-drive problems begin with noise. There is usually a chain drive connecting the main shaft to a secondary shaft, which takes some power from the rear wheel drive and sends it to the front. The chain between the two can stretch with age and wear and develop slop and noise, such as a clunk when going from park to drive, or drive to reverse. U-joints can also cause this, so those should be ruled out first. Sometimes the drive chain becomes loose enough to rattle against the inner housing periodically.

Most transfer cases have a clutch pack that makes up for any difference in speed between the front and back wheels. These clutches can wear out and cause the transfer case to slip. This would release clutch material into the fluid, which would give it a thick black appearance. There are also several bearings that can wear out and cause noise issues, gear misalignments, and more wear. All of that would release a lot of metal into the fluid, giving it a silvery or glittery appearance.

The expected lifespan of a transfer case should be at least 100,000 miles, but a lot of different factors are involved. If four wheel drive is used frequently, that shortens the lifespan. If fluid service is neglected, that shortens the lifespan. If a vehicle is used heavily for towing, hauling, or city driving, especially if it is in four wheel drive, that also shortens the lifespan. And then, as with most things on any vehicle, if it is driven, used lightly, and maintained on a good schedule, a transfer case can last much longer. Most four-wheel-drive trucks aren’t purchased to be used lightly, though.

Encoder Motor Problems

Any four wheel drive vehicle that doesn’t have a floor shifter is likely to use an actuator or encoder motor to shift the transfer case in and out of the different gear options. It is essentially a motor that moves the shift fork in the transfer case between indexed positions, coupling or uncoupling internal drive gears. 

The encoder can fail due to wear in the gearing that catches or interferes with the shift fork operation. It can fail if the motor itself begins to go out, or if the indexing system built into the assembly fails. In all of the above cases, the most common symptom is a failure to shift. Along with this failure there should be a trouble code set in the module that does the shifting, and diagnosis follows the code. If necessary, the encoder motor can be replaced without replacing the transfer case. A new transfer case will usually come with a new encoder motor. 

Transfer Case Replacement Options

Like most large mechanical assemblies, it’s usually possible to rebuild a transfer case if it develops problems. On the positive side, it’s a relatively easy assembly to remove, and is comparatively simple to disassemble. In most cases, it’s not usually possible to get a good idea of the cost until it’s all in pieces and the internal parts are inspected. 

Normal procedure would be to take off the transfer case and look at it, then figure out how much it would cost to fix or replace it. The main advantage of a replacement is that you typically get a more comprehensive warranty. There’s not always a good aftermarket supply for whole assemblies, but problems are infrequent enough in that case that a used replacement is usually a safe option and usually comes with a warranty.

If a good rebuilder is not available or if the internal wear is excessive, then the question becomes – what is the best way to get ahold of a replacement transfer case? Most of the time that problem is managed by the shop doing the work. Calling around locally is always the first option, as any fitment issues or problems that would be under warranty are always easiest if handled locally. If there are no local sources, then a wider hunt online is usually easy enough. And looking online is also a way to price-check local suppliers; it’s normal to have to weigh the advantages of a local source versus possibly a lot of cost savings buying online.

The transfer case is critical part of the powertrain, and if there is a powertrain warranty covering the vehicle, then problems with the transfer case should be covered.

Cost of Transfer Case Replacement

For some rough estimates of replacement costs, assuming a shop rate of $150 an hour:

  • For a 2004 Ram 1500 with a 4.7 liter engine, the labor time to replace the transfer case is 1.8 hours. An OE transfer case costs about $3100, and a remanufactured Zumbrota unit costs about $2100. That would make the job about $3400 using factory parts or $2400 using aftermarket parts. 
  • For a 2016 Chevrolet Silverado with the 6.6 liter engine, the labor time to replace the transfer case is 3.5 hours. An OE transfer case costs about $2000, and a remanufactured Zumbrota unit costs about $1900. This would make the job about $2600 using factory parts or about $2500 using aftermarket parts.
  • For a 2013 Toyota 4Runner with a 4.0 liter engine, the labor time to replace the transfer case is 7.2 hours. An OE transfer case costs approximately $3200, while a used replacement with warranty costs approximately $2,000 That would make the job about $4300 using factory parts or about $3100 with a used transfer case installed.

Transfer Case Service Cost

The two best ways to avoid transfer case problems are, first, to avoid using four wheel drive on dry terrain or when it’s not necessary. The second way is to service the transfer case fluid according to the vehicle’s recommended maintenance schedule.

  • For a 2015 Chevrolet Silverado, the transfer case fluid is replaced every 45,000 miles, and the cost is about $80 to $150, depending on whether it’s done at a chain or a dealership.
  • For a 2008 Toyota Tundra with 4WD, the transfer case fluid is replaced every 30,000 miles, and the cost is about $100 to $150. 
  • For a 2012 Ram 2500 with 4WD, the transfer case fluid service is recommended at 120,000 miles. Though in practice it is usually done when the transmission fluid service, which is every 60,000 miles if it sees severe use (which realistically is “normal use”, for the vehicle). The cost is about $90 to $150.

What Else Can Seem Like a Bad Transfer Case?

A bad actuator is probably the most common problem, which can usually be replaced separately. It’s not always easy to tell whether a shifting problem is due to the actuator or the transfer case, and following the diagnostic steps for any given code is the best approach. 

In many cases, there is also an actuator in the front differential that has to be operated to engage four-wheel drive. On some vehicles, it’s very common for this to fail or for the switch or relays that operate it. Usually this can be determined fairly easily with the vehicle on a lift.

The means of engaging four-wheel drive should also be ruled out. For a system operated by a switch, there will be a fuse and wiring and so forth that could be a problem. For a system with a lever operating a cable or rod assembly, there is usually some adjustment, and things can slip, break, or become disconnected. 

Frequently Asked Questions

Can you drive with a bad transfer case?

A transfer case usually has a continuous shaft between the transmission and the rear driveshaft, so if the four wheel drive function fails, it will usually still be possible to use the vehicle as a normal rear wheel drive. There are exceptions, of course, and in some cases removing the front driveshaft is done to bypass some some problems. It is also sometimes possible to lock a transfer case into 4WD low and then operate the vehicle without a rear driveshaft if the front driveshaft and differential are okay. That is more of a very temporary emergency measure and wouldn’t be advisable at any sustained speed. 

Can you drive without a transfer case?

No, you can’t. On a 4WD vehicle it is necessary to have either a driveshaft running from the transfer case to the rear differential, or to have a driveshaft running from the transfer case to the front differential. Both front and rear driveshafts attach at the transfer case, so without a transfer case there is literally nothing to attach the driveshafts to.

How can I avoid transfer case problems?

Maintenance is the main way; the transfer case has fluid lubricating the internal parts, which needs to be changed on a schedule, usually every 30,000 miles. The other way to avoid problems is to only use four wheel drive when appropriate, in wet or slippery conditions. And then it’s also important to have the sizes of the tires matched, or extra strain and wear occur in the transfer case.

What’s the difference between four wheel drive and all-wheel drive?

A four wheel drive vehicle primarily drives the rear wheels, while an all-wheel drive vehicle primarily drives the front wheels. 
Or, in another way of explaining the difference, a four wheel drive vehicle starts out as a rear wheel drive vehicle, and then a transfer case and a front differential are added, allowing the front wheels to be driven as well. 
An all-wheel drive vehicle starts out as a front wheel drive vehicle, then a power transfer unit (it can be called different things by different manufacturers) and a rear differential are added, allowing some of the engine power to be taken off to drive the rear wheels. 

How can you identify what transfer case you have?

There are often different options available for any given model, which can be made by different manufacturers and have different model numbers. One easy way to know which option a vehicle has is to call a dealership and have the parts department run the VIN, with which they could look at the sales option it came with. Another way it to get under the vehicle and look at the differential. There will be a drain plug on the bottom of the transfer case housing, and a plaque with the manufacturer, model and serial number there just above it. Sometimes that information is cast into the housing above the drain plug instead. In a worst case if that is missing or not legible, it’s usually also possible to take a good look at the shape of the transfer case and compare that to a parts catalog which gives illustrations of the different options available for that vehicle.

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