2004 Wrangler TJ, 42RLE auto trans. F/R lockers, 5.38 gears, Warn Winch, Currie 4" Suspension
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Some 97/early 98 4.0L engines had bad valve springs installed from a bad batch. If this problem persists, that is likely your engine's real problem. The dealer has a TSB for it which basically just replaces the valve springs.