Symptoms of a bad transfer case manifest themselves differently depending on the extent of damage within this important drive-line component. According to AAMCO, the most obvious sign of transfer case failure is the complete loss of four-wheel or all-wheel drive. Another sign of extensive damage to the transfer case is the inability to switch back to two-wheel drive from four- or all-wheel driving modes.
Some signs indicate that a transfer case is about to fail. These warning signs include grinding noises coming from the transfer case area, leaking, dark or low lubricant fluids and rough shifting between drive modes. Ignoring these warnings can result in more dire problems. Direct Tire and Auto Service explains that any of these warning signs are a cue to have a transfer case replenished with new, clean fluid and inspected for damage to the transfer case housing and gears.
Escondido Transmission points out that some symptoms of a bad transfer case are easily remedied by properly shifting between drive modes, and only using four- and all-wheel drive modes under manufacturer specified conditions. Another remedy includes a fluid drain and refill to the proper levels. Serious, internal damage to the transfer case may require complete dismantling and rebuilding of the failed component.