Visiting Panama is an amazing experience. Renting a car in Panama can be totally confusing and frustrating.

The first time my partner and I rented one, our daily rate skyrocketed by more than 30% at the rental counter. Instead of the $7/day we were quoted, we ended up paying more than $30/day!

It took us several trips to figure it all out.

Although I still don’t have a solid recommendation for the best car rental company in Panama, I do have 12 solid tips to make your experience renting a car in Panama as frustration-free as possible.

👉 Tip #1: Don’t get excited about the online quoted price

This is the issue that gets people the most. Most Panama car rental companies do not include the country’s mandatory liability insurance in their quoted daily rate.

So, when you see $2-$8/day online, don’t bother to get excited. You’ll actually pay more like $25-$40/day for a typical car—and you can’t get out of it.

You can get out of part of it.

Most likely your credit card company provides complimentary collision coverage IF you pay for the car with the card. (See Tip #4 for more info.)

The mandatory insurance required by Panamanian law is liability insurance and the car rental companies can’t accept any out-of-country coverages. (See Tip #3 for more info.)

👉 Tip #2: If you plan on possibly extending your rental, get the price in writing for the additional days at the counter.

If you try to extend your rental later in your trip, the car rental agency may try to charge a higher daily rate than what you paid for the initial rental period unless you return to where you rented it and start a new contract.

👉 Tip #3: Rent an all wheel drive vehicle

If you’re just visiting Panama City and other cities/major towns, like David or Boquete, you can skip this tip. You’ll be fine with a regular car.

However, if you’ll be doing any exploring, or coming down to Playa Venao, we highly recommend renting an all- or four-wheel drive vehicle.

The most common one we’ve gotten with the mainstream rental companies is an all-wheel drive Subaru and it has served us well each time.

Why the all- or four-wheel drive?

Because it’s common to come across many dirt roads with varying levels of potholes outside of the larger towns. You can also count on most driveways being dirt, some quite daunting…especially in the rain.

For an all-wheel or four-wheel drive vehicle, you can expect to pay in the neighborhood of $40-$50/day. We have always been thankful we made this investment!

If you will be sticking to the cities and major towns, you still want to make sure your rental car is not low to the ground. Between potholes and high curbs, you’re at risk for damage if it is!

👉 Tip #4: Don’t buy any insurance online

None of the insurance you can buy online will be valid in Panama—the law requires that everyone renting a car in Panama purchase the liability insurance from a Panamanian company, so you need to buy the required insurance when you pick up the car in Panama.

👉 Tip #5: Bring a letter from your credit card company confirming your collision coverage

If you want to save some money, at least a week before you leave for Panama, contact your credit card company and request a letter confirming that they will be providing you with collision coverage. You will want to get this letter in both English and Spanish. The amount you save will depend upon the rental company you use, but can cost between $5 and $10 per day.

NOTE: See Tip #6 for more info before making this decision.

Make sure you fully understand the type and amount of coverage your credit card company provides. (For example, some don’t cover pickup trucks.) It may or may not be worth the savings to waive the Panamanian insurance, so please don’t waive anything until you fully understand the repercussions.

Then, don’t forget to use that card to pay for the rental car!

👉 Tip #6: Be prepared to put down a deposit

When you decline the optional collision coverage, Panama car rental companies will require you to pay a sizable deposit on your credit card—like several thousand dollars. Actual deposits range from $1,500 to a whopping $10,000.

You may even be required to put down a deposit—about $300 to $500—even if you do not decline collision coverage.

Note that whatever the deposit, it will be credited in its entirety if there is no physical damage to the car. (See Tip #8 for more info.)

If they do find damage, they will deduct it from this deposit. Make sure to get copies of all paperwork, which you will submit to your credit card company for reimbursement once you are back home.

👉 Tip #7: Ask for a car with enough Panapass funds

Panapass is used to pay for the toll roads around Panama City. It’s usually mounted somewhere on the windshield and will be automatically debited and lift the toll gate as soon as you approach it. (Look for your balance on the digital screen at the gate!)

About half of the cars we’ve received have been short on Panapass funds—without enough balance to get us out of the city. If you’re not familiar with the area and/or don’t speak Spanish, it’s a hassle to get it refilled.

If you can, try to get one with at least $6 on it, preferably $8-$10.

If you do get stuck with one that has $2 or less on it, you’ll want to find a Super 99 grocery store where you can get your card refilled by a checkout clerk. You will give them your Panapass number, which you should find on the key tag, and buy enough to get you to $8-$10.

👉 Tip #8: Check the gas tank

Two times we’ve been given a car on empty. Finding a gas station near the airport is not as easy as you’d expect. If you want to avoid a moderate headache, request a different car.

👉 Tip #9: Do a detailed damage inspection of the car and take a video

Be ruthless in your damage inspection and take a video of the entire process, making sure to film any actual damages. This is an excellent “insurance policy” against unscrupulous rental return agents!

Make sure you check the tires! It absolutely CAN happen that they give you a car with tires that are past their prime.

👉 Tip #10: If your car is filthy, wash it or expect a cleaning fee

Driving around Playa Venao will have your car covered in dust and the interior having seen better days. If you don’t want to get nailed with an extra cleaning charge (sometimes as much as $75!), try to find a cheap car wash the day before you return it.

👉 Tip #11: Don’t forget the gas tank!

And, of course, after renting a car in Panama, don’t forget to return it with at least the amount of gas it had when you received it.

Unlike many U.S. airports, there are not a ton of gas stations in the immediate vicinity of the airport, so this takes a little planning in Panama!

👉 Tip #12: Do not let them take the car until your final inspection and return paperwork are done.

I’ve heard stories of some handing over a car that was totally fine, the car being driven away, and returned with a flat tire. Guess who paid for that?

Do not let anyone take your car until they complete the inspection and all of your final paperwork has been completed.

One Final Tip: Use Waze

Once you’re on the road, you will definitely want to use Waze as your navigator. Panamá’s highways are infested with speed traps and Waze will give you forewarning, saving you from major headaches.

Panama Car Rental Companies

I’m determined to find a Panama car rental company that offers consistently good service and stick with them. As soon as I do, I’ll be updating this post. Other than Sixt, which I’ve used and been reasonably happy with, the following companies are ones I will be trying in the future:

For other tips on visiting Panama, visit our FAQ page!