Planning to explore Portugal by car? You’ve made an excellent choice. This beautiful country offers stunning coastal drives, charming villages, and picturesque countryside, best discovered at your own pace.

Before you book your rental, however, there are several important factors to consider. In this comprehensive guide, I’ll share everything you need to know about renting and driving a car in Portugal, from costs and required documents to potential scams and everything in between.

Driving on the right side

Let’s start with a fundamental consideration that you can skip unless you come from the UK, Australia, Singapore and a few other countries.

In Portugal, they drive on the right side of the road. If you’re accustomed to left-side driving, I recommend taking it easy for the first couple of days. Follow the flow of traffic rather than trying to lead it, and consider renting an automatic vehicle to make things easier.

And, when entering roundabouts—which are plentiful in Portugal—remember to turn right.

License Requirements

Is your regular driver’s license enough for driving in Portugal? It depends on your country of origin:

• European and UK drivers: Your national driving license is all you need.
• Non-Latin alphabet licenses: If your license uses Chinese, Japanese, Arabic, or other non-Latin scripts, you’ll need an International Driving Permit (IDP). This document translates your license information into multiple languages, including English. Important: You must carry both your original license and the IDP when driving around Portugal.
• Other countries with Latin-alphabet licenses (USA, Australia, etc.): The situation is somewhat ambiguous. While rental companies will typically rent you a car with just your national license, you might encounter problems if stopped by police or, more critically, with insurance coverage in case of an accident. When I asked various operators, they consistently recommended obtaining an IDP, regardless—a clear indication that the situation remains unclear.

My Tip: Unless you are from the EU/UK, I strongly recommend getting an IDP before your trip. It costs only $15-20 USD, and you can easily do it in your home country.

Choosing Your Airport and Rental Location

Portugal has three main international airports: Porto in the north, Lisbon in the center, and Faro in the southern Algarve region. Porto and Faro are similar in size, while Lisbon is nearly three times larger.

This size difference typically translates to more flight options and better car rental selection, besides better pricing, in Lisbon.

My Tip: If budget is a primary concern, consider flying into Lisbon even if you plan to explore southern Portugal. Both flights and rental cars are often less expensive in Lisbon compared to Faro. Always compare options on booking websites before making your final decision.

Selecting the Right Vehicle

Portugal doesn’t have extreme terrain that would need specialised vehicles. The country doesn’t have extreme mountain peaks or desert conditions, so your choice really comes down to personal preference and budget.

For budget travellers, economy cars typically cost between €15-30 per day, though prices can drop to as low as €8-15 during off-season periods.

For example, when I checked in May for a 1-week rental in Lisbon for my holiday in September, I found these prices:

• Small cars starting at €50/week
• Medium cars starting at €70/week
• Large cars starting at €100/week
• Premium cars at €250/week and more

These prices will surely be inflated closer to the departure date.

My Tip: Book your car as much in advance as you can for lower prices and better selection. Cancellation is usually free of charge up to 24/48 hours before pickup.

Just to have an idea, if you’re traveling with three people, a mini car should give you enough space for one large suitcase, with additional bags fitting in the car during travel. For more space, consider upgrading to a larger economy car or even a compact SUV.

Global vs. Local Rental Companies

When renting in Portugal, you can choose between global brands (like Europcar, Hertz, Avis, etc) or local operators. Here’s how they compare:

Global rental companies typically offer:

• Newer vehicles
• Staff with fluent English
• On-site airport locations (no shuttle required)
• Higher prices

Going with Local operators generally provide:

• Older (but well-maintained) vehicles
• Staff with potentially limited English skills (Google Translate can help)
• Off-site locations requiring shuttle transport (usually 5-10 minutes from the airport)
• Lower prices

Another benefit of going with a local operator is that you will support the local economy, which is always important.

If you choose an off-site company, you may need to call them upon arrival to arrange pickup. Fortunately, all major Portuguese airports offer free Wi-Fi, making it easy to communicate via WhatsApp or other messaging apps.

For the past five years, I’ve used a comparison website called DiscoverCars that rates rental companies on a scale from five to ten stars based on customer feedback. It’s basically a sort of Airbnb of cars.

I filter for companies rated between eight and ten stars to have only the most trusted providers, then select the cheapest options. So far, this approach has never failed me. I personally prefer to pay a few Euros more and avoid the poorly rated rentals, which typically try to scam (more on this later).

My Tip: When reviewing rental conditions, verify that everything you need is included for your road trip in Portugal, and if you plan to drive into neighbouring Spain, confirm that your rental agreement permits cross-border travel.

Book as far in advance as possible to secure better rates and a wider vehicle selection. Most companies offer free cancellation up to 48 hours before pickup, providing flexibility if your plans change.

Insurance Options

Here’s what you need to know about your insurance coverage when renting a car in Portugal. I start from the bottom of the pyramid (mandatory insurance) to work up to the peak (nice to have)

Third-Party Liability Insurance (TPL): This mandatory coverage is always included in your rental. It covers damages you might cause to other people’s property or vehicles but doesn’t cover damage to your rental car.

Collision Damage Waiver (CDW): While not mandatory, this is typically included in rental packages. It covers damage to your rental vehicle but usually comes with a deductible (excess) ranging from €500 to €3,000.

Many providers also include Theft Protection (again, with a deductible) and Roadside Assistance, which can be invaluable in case of problems during your trip.

To reduce the financial exposure, you can also consider a couple of options:

• Super Collision Damage Waiver (SCDW): A sort of CDW on steroids that reduces your excess/deductible to €100-300, but it does not zero it.
• Full Insurance: Eliminates your excess entirely. There is no extra cost even if you cause the accident or if you return the car with additional bumps or scratches.

I personally opt for full insurance coverage, which typically costs only €8-10 per day through the comparison website DiscoverCars. This provides complete peace of mind—if the car gets scratched or bumped, you won’t face additional charges of €300-600 when returning the vehicle.

My Tip: Watch out for upselling techniques on insurance. When you pick up the car, unfortunately, most of the rental companies have this bad habit of upselling full insurance for up to €30-€50/day. Be aware and prepared to save some money.

Car vs. Public Transportation

Do you actually need a rental car in Portugal? It depends entirely on your travel plans:

If you’re primarily visiting major cities like, for example, Lisbon, Porto, Coimbra, and Évora, Portugal’s public transportation system works exceptionally well. It’s quick, reasonably priced, and eliminates parking concerns in busy city areas.

However, a car becomes essential if you want to:

• Explore wineries around the Porto region
• Discover the stunning southern coast of the Algarve
• Visit smaller villages and towns
• Enjoy flexibility with your schedule
• Stop for beautiful sunsets without worrying about catching the last bus
• Travel with children or big bags

For solo travelers, public transportation is typically more economical. For couples, families, or groups of two or more, a rental car is usually more cost-effective, besides providing greater convenience.

Moreover, with a car, you can simply load your luggage and go, rather than navigating public transportation with heavy bags, potentially under the hot sun.

Portuguese Roads and Tolls

Portugal has three main types of roads.

Highways (Autoestradas): These connect major centers along Portugal’s west coast. You will also find a few highways to the interior of the country, like the A23, A24 or A25.

Most highways require toll payments. You can pay by cash or credit card except where the tolls are fully automated (Algarve is famous for that).

If you’re renting for more than a week, consider renting a transponder (Via Verde) from your rental company. These typically cost €1.50-2 per day, with a cap of €15-20 for your entire rental period. The transponder allows you to pass through automated toll points, with charges billed through your rental company.

Alternatively, you can purchase a Toll Card linked to your rental car’s license plate. The drawback is that you must pre-load this card before using toll roads, and any unused balance is forfeited when you leave Portugal.

Important: Don’t take the highway if you haven’t organised your Via Verde or Toll Card. You will be fined, and the rental company will also add an Admin Fee which can be much bigger than the cost of the toll.

Secondary Roads: These can be incredibly charming and scenic, though sometimes winding. They offer the opportunity to discover hidden gems, picturesque villages, and stunning landscapes that you might miss on the highways.

Speed limits in Portugal are strictly enforced:

• Highways: 120 km/h
• Secondary roads: 90-100 km/h
• Urban areas: 30-50 km/h

Traffic

Portuguese drivers are generally calm and relaxed. Occasionally, you might encounter drivers overtaking on narrow roads outside small villages—simply stay calm and let them pass.

Traffic can become hectic during rush hours, particularly around Lisbon and Porto. Try to avoid driving in these areas between 7:30-9:30 AM and 5:00-7:00 PM.

If you need to travel in these areas in the morning, either do it before 7:30AM or just take a leisurely breakfast with a traditional Portuguese pastry before starting your journey after 9:30 AM.

Parking in Portugal

Portugal uses a color-coded parking system:

• White lines: Usually indicate free parking (there could be a time limit)
• Blue lines: Paid parking, requiring payment at meters or via parking apps
• Yellow/orange lines: Reserved for loading/unloading or drivers with reduced mobility

Never park in yellow/orange zones—fines are substantial, and your vehicle may be towed away. Stick to white or blue-lined areas for safe parking.

Fuel Stations

Portugal has plenty of fuel stations, particularly in populated areas. Fuel prices are comparable to the rest of Europe—slightly lower than average but significantly higher than in countries like the United States or Australia.

At fuel stations, you’ll have two main options: gasoline (petrol/gas) or diesel, depending on your rental vehicle.

Diesel is typically less expensive, which might make diesel cars advantageous for very long trips or extended rentals. However, petrol cars usually have lower rental rates, offsetting the fuel savings for shorter trips.

My Tip: Use Google Maps to search for the closest and cheapest petrol station around. Just look up “Petrol stations” or “Gas stations”

Traveling with Children

If you’re traveling with kids under 12 years old or shorter than 135 cm, Portuguese law requires appropriate child seats or boosters. Be aware that children under 3 years need a special child seat.

Rental companies offer child seats and boosters for approximately €5-10 per day. Just don’t expect the latest or newest model.

For longer rentals of two or more weeks, consider bringing your own child seat or purchasing one at a shopping center near the airport. The cost savings can be substantial for extended stays.

Potential Scams to Watch For

Like in most countries, also when renting in Portugal you should watch out for these two annoying scams.

Fuel Policy Scams

Most companies use a “full-to-full” policy, where you receive the car with a full tank and return it the same way. This is ideal and transparent. Just remember to top it up at a petrol station before dropping it off.

However, some companies employ “empty-to-empty” or “full-to-empty” policies. Since it’s practically impossible to return a car with an empty tank, you’ll inevitably lose money with any petrol left in the tank.

Additionally, “full-to-empty” policies typically charge inflated petrol rates for that initial tank of fuel, which you cannot avoid.

Damage Claims

Some less reputable companies may claim pre-existing damage occurred during your rental period. Always thoroughly document your vehicle’s condition before driving away:

• Take detailed photos and videos of both exterior and interior
• Pay special attention to existing scratches, dents, and interior damage, even below the car
• Save these images until your rental concludes without incident

Obviously, having full insurance coverage helps to avoid any issue, though be aware that some policies don’t cover interior damage. When picking up your vehicle, check for interior issues like cigarette burns or saltwater stains and document any problems immediately.