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Sounds like a problem with the transfer case, but doesn'tnecessarily mean the whole thing is bad. Sounds like just the gears used in 4H so you may be able to repair and place certain parts within the transfer case. Depending on how mechanical you are, it may be cheaper just to replace the whole thing with a different, used TC.

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14y ago
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Q: When your 99 Tahoe push button engages 4H It makes a grind noise but still has power no noise in 2H or 4L is this a bad transfer case or is there a simple fix?
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