For hard-core 'wheeling, slower speeds mean greater control and less strain on your drivetrain. However, hard-core 'wheeling also means big tires, which can drain your horsepower and drop your torque curve, leaving your engine sputtering the slower you go.
Swapping in lower (numerically higher) gears into the axles will certainly help you regain some of that lost power and low-speed control, but it may not get you far enough. Also, lower axle gears mean you turn higher rpm on the highway, which can leave your engine spinning a little too fast.
One great answer to this dilemma is changing out the internal gears in your transfer case. This can let you retain good road manners in 1:1 High range and still leave you with the low trail gearing you need -- the best of both worlds.
The stock Dana 20 transfer case found in a lot of Jeeps, Scouts, and Broncos is a sturdy and reliable unit. However, its Low-range gear ratio is only 2.03:1. Tera Manufacturing sells a replacement gearset that can convert the stock Low-range ratio to a much more trail-friendly 3.15:1, a gear reduction improvement of 55 percent.
The TeraLow gearset is a complete upgrade kit that includes five replacement gears, thrust washers, an intermediate shaft, needle bearings, and all the necessary seals and gaskets required to complete the installation. The kit is made in two versions for the Dana 20. The Low20 kit uses a six-spline input gear designed for use with factory manual transmissions. The Low20-Auto kit uses a 15-spline input gear for use with the factory automatic transmission.
We ventured to Off Road Unlimited in Mesa, Arizona, to watch the TeraLow kit being installed in a '76 Jeep CJ-7 equipped with a T-18 manual transmission. Robert Brownlee, resident gear guru, showed us the steps involved in tearing down and rebuilding the Dana 20 transfer case.
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 The Tera kit includes all...  The Tera kit includes all of the gears, gaskets, washers, and seals to do the complete job. |
 Robert started the bench work...  Robert started the bench work by removing the bottom oil pan. Disassembling the transfer case was very straightforward. |
 The first piece to be removed...  The first piece to be removed was the rear bearing cap assembly. |
 With the front output shaft...  With the front output shaft and yoke assembly removed, the front seal was removed, along the cover plate shown here. Be careful with the cover shims because they will be used to reset the front shaft preload during reassembly. |
 Next, the intermediate shaft...  Next, the intermediate shaft and gear could be removed from the case. New thrust washers, needle bearings, and seals were installed. |
 With all the gears removed...  With all the gears removed from the case, the shift forks were removed from the shift rails by removing the set screws in the forks. |
 To remove the shift rails,...  To remove the shift rails, they both had to be placed in the neutral position. Be sure not to lose the poppet balls and springs used behind the shift rods. |
 With the case fully gutted...  With the case fully gutted and stripped of any old gasket material, it was ground for gear clearance per the TeraLow instructions. |
 To begin reassembly, the front...  To begin reassembly, the front housing was bolted onto the transfer case housing, and the new shift rail and yoke seals were installed. |
 The front output rail was...  The front output rail was slid into the front housing, and the front output shaft shift fork was bolted in place using the set screw. Installing the poppet ball and spring was a little tricky, but using a small punch to depress the spring helped. We installed the rear rail in a similar manner. |
 Next, the new rear output...  Next, the new rear output sliding gear was placed on the shift fork with its slot facing the rear of the case. |
 This is the paper gasket for...  This is the paper gasket for the rear bearing cap assembly. Robert mentioned that aftermarket gaskets are typically made to fit the Dana 18, so they may require some inside-diameter trimming to fit properly. Ours did. |
 The rear bearing cap assembly...  The rear bearing cap assembly was tapped into place and bolted down. Robert added Permatex sealer to the gasket for an oil-tight seal. |
 The large front output gear...  The large front output gear was placed in the case. In the background you can see how the rear sliding gear mates to the rear output gear in the cap assembly. |
 Thrust washers were used on...  Thrust washers were used on each end of the intermediate gear. They were installed with their tangs aligned with the grooves in the case. Heavy grease helps hold them in place for assembly. |
 The kit includes all-new needle...  The kit includes all-new needle bearings and three spacers for the intermediate gears. The needle bearings fit in two rows of 24 needles each. Grease was used to hold the bearings in place while the gear was installed. |
 With the intermediate gear...  With the intermediate gear held in place in the case, the new intermediate shaft was tapped into the bores in the case using a mallet. |
 The intermediate shaft lock...  The intermediate shaft lock plate was held in place with a lock washer and bolt, and it served to secure the intermediate shaft. |
 The front output shaft was...  The front output shaft was slid through the front output shaft gears, the thrust washer, and the bearing. The bearing should be replaced if it shows signs of wear. |
 The shaft was tapped into...  The shaft was tapped into place so that it was fully seated in the case. Then the rear bearing race was tapped into the housing. |
 Next, the original rear bearing...  Next, the original rear bearing shims and cover plate were bolted on. Endplay on the front output shaft was adjusted by changing these shims and should be between 0.001- and 0.003-inch. |
 Robert preferred to use only...  Robert preferred to use only Permatex Ultra Black to seal the bottom oil pan to the transfer case housing. |
 Once the silicone set up,...  Once the silicone set up, the bottom cover was bolted in place, and the transfer case mods were complete. |
 The last of the five gears...  The last of the five gears was the output gear for the transmission. It was installed on the splined output shaft of the transmission, a T-18 in our case, and secured with a nylon locking nut. |
 With all the kit parts installed,...  With all the kit parts installed, the transfer case was reunited with the transmission. Robert added Permatex Aviation Form-a-Gasket to the paper gasket for sealing the mating surfaces. |
 Here, the transfer case and...  Here, the transfer case and transmission were bolted together. Our T-18 had just been rebuilt, so both had been removed from the Jeep. |
 The shift linkage was then...  The shift linkage was then reinstalled on the transfer case. When you install this in the vehicle, it's easier if the shift lever is left unbolted until the transmission is mated to the engine. |