Helen, I always like to save a few Euros, especially with 2 cars and we may only be subject to tolls when we do the probably only one day trip East of Lagos. We might easily avoid the tolls by taking N125 and visiting the towns along the way to Albufiero. The transponder would be useful if we stay longer and had to commute quickly from one end to other end of Algarve many times. Plus, I have more than 4 months before our trip, so what else am I going to do but research and plan the little details.
Where I live, we do not have to deal with tolls, so I am always interested on how things work in the country I will be visiting. Jaimeel, thanks for the link. It does say this is for foreign registered cars, so may not work for the Portuguese rental car. And since we are only renting for 4 days, if I register the rental plate, I could end up paying the tolls for the subsequent renter. A poster on tripadvisor said that we can rent the transponder for €20 and if we avoid all the tolls, we should get a full refund. But if we hit even one toll, the balance of the unused €20 is non-refundable. Good to know. Thanks all.