Renting a car in the Algarve can be a great addition to your holiday. A rental car gives you the freedom to explore the region's many charming villages and secluded beaches. It is the ideal way to escape the crowded beaches and overly touristy areas, as well as avoiding the hassle of public transport.

A car becomes invaluable if you are based within a hotel remote from a major town or if you are travelling as a family. However, it's not always the best choice for every traveller. Renting a car comes with its own challenges, such as navigating and driving on unfamiliar roads, or finding a parking space in busy areas.

This guide will help you determine if renting a car is the right choice for your Algarve holiday. It will explore the advantages and disadvantages, compare alternatives such as public transport, and offer practical advice if you opt to drive. At the end of the guide, you will find a list of the best places to visit in the Algarve by car (or jump to the section here).

If you're not sure whether to hire a car for your trip to the Algarve, here's a quick guide to help you decide:

Benefits of hiring a car in the Algarve:
• Convenience and flexibility - explore at your own pace and visit places off the beaten track
• Rural exploration - Easy access to small villages and remote locations
• Ideal for staying in rural hotels or holiday homes
• Family friendly - makes travelling with children easier and allows for spontaneous stops

Disadvantages
• Extra costs - Both expected (fuel, tolls) and potential hidden charges such as additional insurance, second driver fee, toll transponder cost.
• Challenging city driving - Due confusing road layouts, and erratic drivers.
• Parking headaches - Finding parking in popular tourist areas is often difficult and time consuming
• Potential hassles - Dealing with accidents or breakdowns in a foreign country can be complicated
• Young drivers - If you're under 25, you will face significant extra fees for car hire

Public transport in Carvoeiro is very poor, so you will probably need a car.

If you decide to hire a car for your holiday in the Algarve, it's generally better to opt for a conventional petrol or diesel car rather than an electric one. Although electric cars are becoming more common, they can be a challenge for visitors who are unfamiliar with the local charging infrastructure or who plan to drive long distances. With an electric car, you risk wasting valuable holiday time searching for charging points or worrying about range.

Due to lack of demand, many car rental companies now have a surplus of electric cars. This means you may be encouraged to take an electric car (either as a discount or as an upgrade), but it's usually wiser to politely decline unless you're very familiar with the potential complications.

When renting a car in the Algarve there are several factors to consider that can affect your experience and your budget:

Adding a second driver can be useful, especially for longer trips, but will increase the cost of the rental. Consider whether the added convenience outweighs the extra cost.

If you're planning to drive to Spain, you must inform the rental company in advance. Standard Portuguese rental contracts don't cover cross-border travel and additional insurance is required, which will increase your costs.

Age restrictions apply to car hire. While the minimum age is usually 21, drivers under 25 often face surcharges or may be restricted to certain vehicle categories. Check with your car rental company for their specific policies.

Collecting your car at the airport is often the most convenient option. It allows you to start your journey immediately upon arrival and avoids the need for transfers to off-site locations. However, compare prices with off-airport car hire companies as they can sometimes offer better rates.

A car is needed to visit Cabo de São Vincente, right at the western tip of the Algarve.

While most rentals go smoothly, it's wise to be aware of common problems that may arise. The majority of problems typically revolve around two areas: Collision Damage Waiver (CDW) insurance and vehicle damage.

Collision Damage Waiver (CDW)

A Collision Damage Waiver (CDW) is an 'optional extra' offered by car rental companies to limit your financial responsibility for damage to the vehicle. It's designed to cover the high excess (often around €800) that comes as standard with most car hire contracts.

This CDW is usually charged when you collect the car, rather than when you book. The cost varies from company to company, but averages around €20 per day, sometimes more than the basic rental price.

Although CDW is optional, be prepared for a thorough inspection of the car on return if you decline it. Rental companies tend to scrutinise vehicles more closely if they're not covered by their own insurance.

It's important to note that if you don't have a credit card to cover the full excess, you may be required to purchase CDW. Debit cards are generally not accepted for this purpose, as credit cards allow the company to pre-authorise payment of the excess.

It's possible to purchase CDW insurance from third party providers in your home country, often at a significantly lower cost than the rental company. However, there are a number of considerations that need to be taken into account.

If you opt for third-party CDW insurance, you'll still have to pay the full excess to the rental company in the event of a claim. This fee (often around €800) will be charged to your credit card immediately. You'll then have to claim this back from your insurance company when you return home.

While this can save you money, be aware that the claims process can be lengthy and potentially frustrating. Insurance companies may look for reasons to deny the claim, and you'll need to provide detailed documentation of the damage and costs incurred.

Vehicle damage
One of the most common problems with car rental is being charged for damage that is already present or minor. Rental companies may try to charge you for this:
• Pre-existing scratches or dents that you didn't notice or document when you picked up the car.
• Minor wear and tear, such as small scratches or paint chips, which they may classify as damage rather than normal wear and tear.

To protect yourself, take these important steps before you drive off: inspect the car thoroughly, photograph any existing damage (no matter how minor) and ensure that any imperfections are clearly marked on the rental paperwork.

Don't be rushed through the collection process, even if the staff seem friendly and efficient. Take your time and carefully document the condition of the car. Remember that the same staff who are pleasant at the time of collection may inspect the car closely for damage on return.

We refrain from recommending specific car hire companies as standards can vary from year to year and individual experiences are often very different. We are aware of a number of companies with particularly bad reputations, but for legal reasons we can't name them directly.

Instead, we advise you to thoroughly research your options before booking. Look for recent, detailed reviews from other travellers and be wary of clicking on advertisements that may not reflect the true quality of the service.

Don't overlook smaller, local car hire companies - they can sometimes offer better service and value for money (such as Travelrent and Drive 4 Fun), while Zest is the best place to search and book car hire in Portugal.
A very good forum post on Tripadvisor that says everything we can't say can be found here: www.tripadvisor.co.uk/ShowTopic

It's important to note that well-known car hire brands in Portugal often operate as franchises. While you may have had an excellent experience with a particular company in your home country, this does not guarantee the same level of service in Portugal.

These franchises are essentially separate companies, sharing only a name and some standardised practices with the parent company.

Don't assume that brand familiarity equates to consistent service across countries. Always check recent reviews specific to the Portuguese branch of any rental company you're considering, regardless of your previous experience with the brand.

With the freedom of a rental car, you can explore the diverse beauty of the Algarve at your own pace. Here are our top 10 recommendations for places to visit:

Tavira - Located in the far east of the Algarve, Tavira embodies what visitors imagine when they think of the region. This picturesque town, which straddles the River Gilão, has a strong Moorish influence that is evident in its architecture and rich history. You'll find a wealth of historic buildings throughout the town, including the iconic Roman Bridge and the atmospheric castle ruins. To the south of the city lie the beautiful beaches of Ilha de Tavira, accessible by a short ferry ride. Tavira may be a long drive from your accommodation in the central or western Algarve, but its authentic charm and relaxed atmosphere make it well worth the journey.

Sagres - This remote, windswept fishing village has become a favourite with surfers attracted by the region's phenomenal waves. In contrast to the polished resorts of the central Algarve, Sagres has a rugged, end of the world feel. Combining ramshackle charm with understated trendiness, the town offers a unique atmosphere that you won't find anywhere else in the region. There are few real sights in Sagres, apart from the Fortaleza de Sagres and watching brave surfers take on the massive swells. The real attraction of the town is the rugged natural beauty of the cliffs and coastline.

Monchique and the Algarve hills - With a rental car, you can venture into the Serra de Monchique, a lush escape from the coastal plains. Wind your way up to Fóia, the Algarve's highest point at 902 metres, where you'll be rewarded with panoramic views stretching out to the Atlantic. On the way, stop in the pretty village of Monchique for its famous handicrafts and relaxed pace of life.

Cabo de São Vicente - Situated at the south-western tip of mainland Europe, Cabo de São Vicente is a place where colossal cliffs face raging seas and relentless winds. This dramatic headland, often visited in combination with nearby Sagres, offers stunning Atlantic views that seem to stretch to infinity. Watch the sunset from the iconic lighthouse, which has guided sailors since the 16th century.

Praia da Marinha - Often regarded as one of the most beautiful beaches in the world, Praia da Marinha captivates visitors with its golden sands and turquoise waters. The beach is framed by highly weathered limestone cliffs, creating a stunning backdrop. At the western end, you'll find a distinctive double arch rock formation. For the adventurous, the cliffs above the beach mark the start of the scenic Seven Hanging Valleys Trail, which offers breathtaking coastal views as it winds along the rugged coastline.

Ferragudo - This charming fishing village sits where the Arade River meets the Atlantic Ocean. Ferragudo's whitewashed houses cascade down the hillside to a small harbour, creating a picturesque scene that feels worlds away from the busy resorts nearby. Wander the narrow cobbled streets, relax in the main square or enjoy fresh seafood at one of the waterfront restaurants. The village's beaches, including Praia da Angrinha, offer a quieter alternative to the more crowded stretches of sand along the coast.

Silves - Once the Moorish capital of the Algarve, Silves is dominated by its imposing red sandstone castle. This heavily fortified town, perched on a hill overlooking the River Arade, offers a fascinating glimpse into the region's rich history. Wander the narrow streets of the old town, visit the Gothic cathedral and climb the castle walls for panoramic views.

Estoi - This charming village, situated in the hills north of Faro, offers a blend of ancient history and Rococo extravagance. The Roman ruins of Milreu, dating back to the 1st century, contain well-preserved mosaics and the remains of a luxurious villa. Nearby, the opulent Pousada Palácio Estói, a restored 18th century palace, is now a luxury hotel.

Praia do Barril and the Cemetery of Anchors: A beautiful sandy beach in the eastern Algarve which is known for the Cemitério das Âncoras (Cemetery of Anchors). This rusting memorial to a former tuna fishing community consists of over 240 anchors placed in the sand dunes behind the beach. The beach is reached by a mini-train that runs on the old fishermen's tracks and takes visitors across the lagoon - a ride that delights young and old alike.

Cacela Velha - Perched on a cliff overlooking the Ria Formosa lagoon, this tiny whitewashed village feels like a step back in time. The unassuming church and crumbling fort frame breathtaking views across the lagoon to a secluded beach and the Atlantic beyond. The beach, which is only by boat or by walking across the lagoon at low tide, the beach offers a sense of discovery and isolation rare in the modern Algarve.

Castro Marim - This small town near the Spanish border offers a unique blend of history and nature. The imposing castle that dominates the skyline offers panoramic views of the surrounding salt flats and the Guadiana River. Inside the fortress walls is a medieval torture museum that, while not for the faint of heart, offers a fascinating insight into the darker side of history. Equally compelling are the city's salt flats, where you can learn about the production of Flor de Sal, a prized culinary ingredient.

Mértola - This enchanting village, perched atop a hill overlooking the Guadiana River, is a gem of the Alentejo region. Although it's a considerable drive from the Algarve, Mértola's secluded location has helped it retain its authentic charm, offering visitors a glimpse of a Portugal that feels unchanged by time. The town is surrounded by the rugged landscapes of the Parque Natural do Vale do Guadiana. Its well-preserved Moorish architecture, including a former mosque converted into a church, reflects its fascinating past.

The interactive map below displays the location of these towns and attractions. (Note: zoom in or out to see them all)

Legend: 1) Tavira 2) Sagres 3) Monchique 4) Fóia hill 5) Cabo de São Vicente 6) Praia da Marinha 7) Ferragudo 8) Silves 9) Estoi 10) Praia do Barril 11) Cacela Velha 12) Castro Marim 13) Mértola

Portugal tolls
Portugal's motorways use an electronic toll system called Via Verde. If you're renting a car, ask for a Via Verde transponder so you can easily pay tolls during your journey. This small device, usually attached to the windscreen, automatically registers tolls as you pass through toll booths.

Many Portuguese motorways have only automatic toll collection, so a transponder is essential for hassle-free travel. Without one, you'll have to register your vehicle and pay the toll at certain service stations or post offices, which can be time-consuming. For more information on the Via Verde system, visit: visitors.viaverde.pt

If you are planning on driving a foreign registered car, please see this website:
www.portugaltolls.com/

To estimate the cost of tolls in Portugal, use the website:
https://portagens.infraestruturasdeportugal.pt/

Portugal is rapidly expanding its network of speed cameras, both in urban areas and on major roads. While signs indicate the zones where cameras are operating, the actual devices are often inconspicuous, either discreetly positioned or painted in neutral colours to blend in with their surroundings.

Alternatives to Car Rental in Portugal
Before committing to a rental car, consider these convenient alternatives for getting around the Algarve:

Public Transport
Public transport in the Algarve varies from good to non-existent and is much worse than in the Lisbon and Oporto regions. There is only one train line, which connects many of the major towns, but somehow bypasses much of the main tourist area of the central Algarve.

The national railway company is Comboios de Portugal and their website is www.cp.pt.

The regional bus company is Vamus and their website is www.vamusalgarve.pt

Ride-hailing apps
Uber and Bolt offer a convenient middle ground between public transport and car hire in the Algarve. These apps offer the flexibility of personal transport without the hassle of driving and parking. Fares are often surprisingly affordable - for example, expect to pay around €25 for a trip from Albufeira to Zoomarine and around €40 from Faro Airport to Praia da Rocha.

These services are particularly useful for getting around in the low season. However, be aware that during high season in the Algarve, it can be difficult to find a driver, especially for airport transfers, due to high demand.

Considerations: Before you travel, download the app and familiarise yourself with how it works. As fares are charged in euros, make sure the payment method you use doesn't incur foreign exchange charges if your home currency is different.