There are many rental locations all over the island. They have formed an association and all have the same prices, saying this should prevent the problems with the scams that many people complained about before. The advertised price is now 250 baht/day, can be bargained to 200 baht/day if renting for more days, but basically impossible to get anything cheaper. Do not rent from the rental shop across from Phangan Cottage (tel 084-8510541) which charges only 200 baht for normal bike but takes passport and will scam for damages.
Some rental shops overcharge for every scratch or dent. They don't fix, but rather replace the whole part - so note damages to the bike on the rental contract. Your passport will be held until you pay the extortionate repair cost. You can negotiate the costs down from exorbitant to high, but keep your cool, don't yell and stay polite. This practice is very common all over the region. It's not unheard-of that you are asked to pay for damage you haven't done. In most cases, it's the combination of very bad & dangerous roads and inexperienced or intoxicated driving that causes accidents. Some good advice is to take pictures of your bike as you rent it, but if the guy has your passport, this won't do any good. If you don't know what you're doing, stay on the safe side and stick with songthaews.
Avoid riding at sundown, when the bugs are out en masse, and result in brief periods of riding blind, while you desperately try to clear your corneas. Try not to go home with a "Thai tattoo", this can either result from your tender body sliding along a bitumen road at high speed with few clothes on, or from the inside of your leg touching a hot exhaust pipe. Also keep in mind that many, if not most, travel insurance policies will not cover motorcycle accidents, especially if you do not have a Thai drivers license.
Care is needed if attempting to go over the notorious Haad Rin hills, the roads on the east side of the island, and north of Haad Yao. Especially the "Hill of Tears" (first steep ascent from Thong Sala towards Haad Rin) needs caution. Use low gear only and have your passenger walk. This is still quite good concrete road where you need only use brakes compared to mud roads on the northeast part of the island to Bottle Beach, which are the worst on the island with many potholes.
Drunk driving in the West is illegal (not on Ko Pha Ngan, where police don't check). On Ko Pha Ngan it's suicidal. Better to sit in the back of a taxi than having a smash-up at night and ending up dead or in the hospital.
Wear a helmet. Police will fine you 200 baht for non-compliance and set up roadblocks occasionally (before noon in Thong Sala, for example). When driving, stay within your limits. The slower you drive, the less it's gonna hurt.
It is also possible to rent small Suzuki 4WDs, however, you will find that you can circle the island in a day.
Petrol is quite overpriced at many places. One of the places selling it for reasonable price is the 1 petrol station in Thong Sala, round the corner from Tesco on the road to Chalok Lam.
Songthaews criss-cross the island asking from 100 baht a ride, if you share the taxi with other people. You can and should bargain for a lower price, especially if your destination isn't that far. The taxi driver cartel tries to fix prices at 200 baht a ride. Do not accept the price at the pier and walk rather 300 m to the roundabout in Thong Sala where there is a taxi station with normal prices. From Thong Sala to Baan Tai/Khai or Chalok Lam should be priced around 100 baht/person, Haad Rin 150 baht/person, Haad Yao/Salad 150 baht/person, Thong Nai Pan or Had Sadet 250 baht.
All taxi service on Ko Pha Ngan is provided by songthaew (pick-up truck). Should you choose to go with a freelancer on a motorbike or in a pickup, make arrangements quickly, quietly and pay surreptitiously.
Usually is the best option to save money and be flexible and avoid using songthaews at all is to rent a motorbike after arriving in Thong Sala as you will be probably leaving from this pier. You can later return the motorbike here and it can save you a lot of money. If there are two of you and you pay 150 baht/person for one taxi ride, your total expenses to/from beach will be 600 baht. For that you can have a semi-auto motorbike rental for 6–7 days or a fully automatic for 4–5 days and you are free to ride anywhere between arrival and departure and it's also the best way when looking for accommodation instead of taking taxi and walking around with a lot of baggage.
Cruise the bays with your snorkelling gear until someplace takes your fancy. The round-the-island, all-day boat trip is a great way to see some of the best beaches in the island.