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2003 Audi TT Overheating

My TT has overheated slightly for some time but has gotten progressively worse over the last few months. Over the last two years, I’ve had the cooling fans, water pump, and temperature sensor replaced but it continues to overheat. Initially I thought it was an electrical problem and that it was not really overheating, but I noticed that the temperature goes down when I turn on the heat. What could be causing the problem?

Bad thermostat.

Is the coolant system pressure when hot good? Are you checking coolant level in the radiator, when cool of course rather than the coolant reserve?

You need to see if the cooling system is holding pressure while it is running. If it is not, you can develop steam pockets in the cooling system, and the engine will overheat. It could be something as simple as a bad radiator cap, or a crack in the fluid expansion tank.