NP261 Transfer Case Problems & Solutions

A 4X4 or an all-wheel-drive vehicle uses a transfer case to deliver power to more than one drive axle. A transfer case converts power from the transmission and sends it to drive shafts. Those drive shafts power the front and rear axles. Modern transfer cases use gears and drive chains to handle the power delivery. And they can synchronize the power to balance the output to the drive shafts.

GM used its NP61 transfer case in popular Chevrolet and GMC pickups starting in 1999. New Venture Gear in Syracuse, New York, manufactured the transfer case. If you are driving a Chevrolet Silverado or a GMC Sierra 4X4 pickup built-in 1999 through 2008, odds are it has the NP261 transfer case

Heavy-duty versions that are designated the NP261-HD powered the manually shifted Silverado and Sierra 2500HD and 3500HD models from 2001 through 2008. All versions of the NP261 use chains to transfer power to the driveshafts. Each has a left-side dropout and a 2.72 to 1 gear ratio.

Common Problems with the NP261 Transfer Case

The NP261 and NP261-HD transfer cases are well-designed, durable, and reliable. But they could develop common problems due to normal wear and tear.

Fortunately, there are some simple precautions that can help to prevent most of them from occurring. Here is a closer look at the most common problems with the NP261 transfer case.

Premature Case Failure

The oil pump housing might wear a hole through the transfer case in which it is housed. And a hole in the case will cause a loss of fluid and possibly wreck the case. Solutions include installing a protector plate or purchasing and installing a redesigned section that provides more room for the oil pump housing.

Input and Output Bearing Wobble

The input and output bearings could develop a wobble over time that damages the transfer case. The case is made out of magnesium, which does not hold up well to the heat created by the bearing wobble.

That heat can damage the range hub and range fork. Your options then are to rebuild the transfer case with new parts or purchase and install a rebuilt transfer case.

Excessive Torque Load on Chains and Sprockets

Many people make the mistake of running with the 4X4 or AWD drivetrain working at all times. When you drive on paved roadways in good condition, you should not use the 4X4 or AWD systems.

Doing so causes extreme wear and tear on the transfer case and premature wearing. The 4X4 or AWD drivetrain works best in muddy and slippery road conditions and while off-roading.

Mismatched Tire Diameters

You might run tires that wear unevenly or are not the same size. The greater the size difference, the greater the difference in the wheel speed. It causes a greater difference in axle and driveshaft RPMs.

That could cause damage to the internal parts and cause your transfer case to fail. It always pays to run matched tires on your wheels when you have a 4×4 OR an AWD drivetrain.

A Rebuilt Transfer Case Is Affordable and Effective

If you suspect your NP261 transfer case is wearing out, affordable solutions are available. The best is to buy a rebuilt transfer case that is warrantied and will last a very long time when installed and used properly. Knowing the common problems with the NP261 transfer case and taking steps to prevent them will help you to get the best service from a rebuilt model.  

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