A rear differential leak occurs when one or more of the gaskets found inside of the differential wears out. A differential leak is most commonly caused by a damaged pinion seal.
Pinion seals are found inside the pinion gear assembly. Their replacement procedure is often expensive as it requires the differential to be completely disassembled.
After disassembling the differential, the pinion seal can be replaced promptly. However, before reassembly, the crush sleeve that separates the bearings of the driveshaft should be replaced. The repair is complete after the ring and pinion gears are aligned and reassembled correctly.
Causes of a pinion seal leak can include, but are not limited to, degraded gaskets and bad seals.