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Initial tension or compression applied to a spring or differential clutch pack before any external force acts on it. Spring preload affects ride height without changing spring rate. Differential preload sets the minimum torque needed to activate differential action.
Guiggiani's The Science of Vehicle Dynamics explains differential preload: "All clutch-pack differentials exhibit a clutch torque preload, also called break-away torque. That is, the clutches have some spring preload. Therefore, to activate the differential action, even when no torque is applied to the differential housing, there has to be a difference between the left and right driving torques equal to the preload." For coilover springs, preload compresses the spring on the shock body, raising the ride height at that corner without changing the spring rate — it just changes the point at which the spring begins to act. More preload = higher ride height at that corner, which is the primary mechanism for adjusting corner weights on cars with coilover suspension. Increasing differential preload makes the diff behave more like a locked axle, improving traction but reducing turn-in agility.