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Well the problem with overfilling besides oil aeration mentioned above is that the next time the engine is run, the windage in the crankcase and pressure generated by the oil pump, etc. place a great strain on the seal on the rear main bearing. Eventually, the rear main bearing seal ruptures, and the engine becomes a 'leaker'. If you've got a manual gearbox, this means this oil goes right onto the flywheel and the face of the clutch disc. If this still goes unnoticed, the front seal is the next to go, and the engine then becomes a 'gusher'. As well as smothering the clutch with oil from the rear, the oil now coming from the front leak will be blown all over the engine bay as it hits the front pulley - often propelling it out as far as the brake discs. At the same time as this is unfolding outside the engine, things aren't working out any better on the inside. Overfilling will mean the crank dips into the oil and churns it into a froth. The mixture of aerated oil will be forced into the bearings and in case you didn't know, air is not a lubricant. Typically this means that bearing damage will follow quite rapidly. As if that all wasn't bad enough, the excess oil gets thrown up into the piston bores where the piston rings have a hard time coping with the excess oil and pressure. It gets into the combustion chamber and some of it will get out into the exhaust system unburned resulting in a nice patina of oil all over the platinum surfaces of your catalytic converter destroying it.
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