A transfer case is an important part of the drivetrain for any 4WD or AWD vehicle.

This mechanism is responsible for transferring power from the transmission to the drive shafts and then to the front and rear axles of your vehicle.

The transfer case shifts power between axles depending on road conditions.

Replacing a transfer case is an expensive repair that usually costs anywhere from $2,300 to $2,900. Most people end up paying around $2,500 to replace a transfer case, but the total price may be slightly more or less depending on the vehicle. 

Replacing a Transfer Case

Some vehicles are notorious for having transfer case assemblies fail before the vehicle even hits the 50k mile mark. However, this is usually not the case for people who keep up with their vehicle’s maintenance and don’t drive it in an abusive manner. 

Most people notice a problem when their vehicle doesn’t shift correctly between drive modes, they hear unusual sounds, or when various dash indicators and warning lights communicate a problem.

If the source of the problem can be located and repaired, you may not have to deal with the hassle and expense of replacing the transfer case altogether. 

However, if the transfer case fails completely or suffers mechanical damage, replacing it may be the only option. Replacing a transfer case usually costs between $2,500 – $2,750.

Some vehicles may be less expensive and cost closer to $2,300, while other jobs may be more complex and cost closer to $2,900.

Cost to Replace a Transfer Case

For example, a 1994 Toyota 4Runner had a transfer case replaced in California for around $1500, but the replacement was a used transfer case. However, some drivers have reported costs outside this average range, but they are mainly dependent on the vehicle type, the specific parts cost, and the shop.

Another driver reported a $3,000 price tag for a replacement transfer case for a 2005 BMW X3.

So, the cost can vary significantly based on the details of your specific situation.

Diagnosing a Transfer Case Issue

If you suspect a problem with your transfer case, you should get it to a qualified service station as soon as possible. Driving your vehicle if the transfer case is damaged may cause irreparable damage, causing you to have to get the entire assembly replaced.

Even worse, you could even potentially damage your transmission, driveshafts, axles, and other components within your drivetrain. 

Once you notice one or more of these symptoms, it would be best to bring your car to a qualified garage right away. Once there, your vehicle will be scanned for fault codes to indicate what the problem is.

Sometimes, the mechanic will need to drive the vehicle to diagnose the problem. 

On average, a simple diagnostic test for your vehicle will cost anywhere from $85 to $120.

However, Popular Mechanic reports that diagnostics can cost up to $400. 

It’s a good idea to check with your mechanic first so you’ll know what to expect. Many auto shops don’t charge for a diagnostic if you let them do the repair work. 

After the initial diagnostics, if the transfer case is suspected, it will be removed, disassembled, and inspected for signs of physical or mechanical damage.

The service technician will determine if it’s possible to repair the assembly or if it must be replaced altogether. 

Labor Costs for Replacing a Transfer Case

The labor costs for replacing a transfer case can be quite high because of the time involved. The average labor costs range between $435 and $650. To understand the labor costs, it helps to understand what all is involved with doing the repair. 

First, the oil must be drained from the transfer case so that the driveshafts can be removed. Then, the transfer case must be disconnected from the transmission and disconnected from all electronic components.

The transfer case will then be supported on a transmission jack so that the mounting bolts can be removed. 

Once the transfer case has been removed, it will be disassembled, cleaned, and inspected.

If any damage or leaks are discovered, it may be possible to repair the part. If not, a new one will have to be installed. 

In addition to the new transfer case, the various seals and gaskets should be replaced and the drive shaft should be cleaned before reassembling the parts and refilling the transfer case with fluid. 

Parts Cost for Replacing a Transfer Case

The main expense of replacing a transfer case is the new transfer case itself. The estimated cost for parts is usually between $1,700 – $2,400, depending on the make and model of the vehicle.

Some people decide to save some money by going with a used transfer case. This can save thousands of dollars, but it’s always risky to purchase used parts.

It’s a good idea to only do this when there’s still some kind of warranty or guarantee on the work. 

Some owners have been able to purchase replacement transfer cases for as little as a couple of hundred dollars from a junkyard which can be a good option, especially if you don’t have the money to pay for a $2,500 repair. 

Preventing Transfer Case Problems

The best way to avoid having to replace your transfer case is to keep up with your vehicle’s scheduled maintenance, and also have your transfer case fluid changed every 30,000 miles (or according to your vehicle’s maintenance schedule). 

During this procedure, ensure that the mechanic inspects your seals for wear and damage so that they can be replaced.

One of the early preventable problems is leaks from your transfer case assembly, which can be avoided with maintenance and inspections. 

To replace your transfer case fluid, most garages charge between $75 – $160, depending on your vehicle and geographic location. 

If your mechanic notices that the transfer case fluid is dirty or if you find that your car won’t change gears properly, it may indicate that you need to replace the transfer case fluid.

The fluid is extremely important to the functionality of your vehicle. It keeps the internal components lubricated so that the transfer case works properly. 

If your transfer case leaks or if the fluid inside becomes contaminated, it can cause serious damage to the transfer case.  

Average Price for Transfer Case Fluid Replacement

Other Related Transfer Case Problems

It’s possible that you don’t need to replace the transfer case if you’re able to diagnose a related (repairable) problem. There are several very common issues that you should have your vehicle checked for before committing to a costly replacement. 

Transfer Case Fluid Leaks

A fluid leak is one of the most common issues that could be thwarting your transfer case. If transmission fluid is leaking into the transfer case, it can cause problems.

This type of leak could be due to a faulty seal. However, the good news is that replacing a seal is much less expensive than replacing the transfer case. 

To replace the input seal for your transfer case, you should expect to pay between $150 and $500, depending on how much labor is involved. If you do the work yourself, the part only costs $20-$50.

Holes Inside the Transfer Case

Another common problem with this vehicle component is pin-sized holes in the transfer case. Usually, these will be on top of the case, but you may have to inspect the parts very carefully to locate any of the tiny holds.

Should you find that this is the problem, you’ll need to replace half the case to avoid having to replace the whole thing.

Replacing half the transfer case costs between $450 and $675, depending on how labor-intensive the job is. The parts are usually anywhere from $115 – $150. 

Damaged Encoder Motor Ring

A damaged encoder motor could cause the transfer case to fail. Sometimes the actual problem is just the ring inside the motor.

If this is the case, it’s far less expensive just to do the simple repair and replace the ring rather than the whole encoder motor or the whole transfer case. 

The replacement part for this repair averages between $30 and $60. So, it’s a far less expensive repair than replacing the entire transfer case.

If you have the work done professionally, the labor cost may be anywhere from $425 to as much as $800.

Where to Buy a Transfer Case

If you decide to buy the parts yourself, a good place to start is by looking for a used transfer case online or at a junkyard or salvage yard.

The reason for this is that transfer cases are not sold in “new” condition, even if you purchase one from an auto parts store. 

All retailers sell refurbished or remanufactured transfer cases. Even if you have the work done at the dealership, you will not be buying a “brand new” transfer case.

However, the good thing about this remanufacturing process is that older components will be replaced and updated or upgraded. Sometimes this involves using better quality parts and materials or adjusting specs for better performance. 

The price for these remanufactured transfer cases varies depending on the make and model of the vehicle, but they usually cost anywhere from $1,000 to over $2,400. 

Since you’ll be getting a remanufactured transfer case no matter what, it’s not a bad idea to check around for a better deal on a used piece of equipment. 

When you’re ready to price the equipment or purchase the replacement transfer case, make sure you have the following information ready to help make your search easier: 

• Basic vehicle information (make, model, trim, year, mileage)
• Vehicle Identification Number (VIN)
• Engine specifications (Cylinders, liters, displacement capacity)
• Body style details (sedan, 2-door coupe, convertible, truck, etc.)
• Drivetrain information

Wherever you decide to purchase your new transfer case, make sure it’s a reputable establishment.

If you make the purchase online, the part should always come with a warranty that covers any defective equipment for at least 90 days.

If you make the purchase from a local junk or salvage yard, you can inspect the transfer case for any defects or damage. It’s not a bad idea to have someone who’s familiar with the part to take a look at it. 

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The Bottom Line

Replacing a transfer case isn’t something that everyone will have to do with their vehicle like oil changes and replacing windshield wiper blades.

However, if you have a four-wheel drive or all-wheel drive vehicle, you may need to have the transfer case (or its components) repaired or replaced at some point during the life of the vehicle. 

The best thing to do is keep up with preventative maintenance and have the fluid changed every 30k miles. At that time, you can have your mechanic inspect the transfer case and look for any signs of damage.

If potential problems are recognized early, they can be addressed before irreparable damage occurs. 

If you do end up having to replace the whole transfer case, it won’t be a cheap repair. You should expect to spend around $2,500 for the parts and labor, but it’s always a good idea to check around and get several quotes.

Labor charges are often negotiable, so it doesn’t hurt to ask if the shop offers any discounts or whether they’ll match their competitors’ prices.