The algarve is a great place to drive there are good roads and few cars, so traffic jams are very rare.
A good point to remember when hiring a car is that you will need additional insurance cover if you are going across to Spain.
Below are some links to local and international car hire companies.
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Rhino Car Hire compares prices across all local and leading car rental suppliers in Portugal to find you the cheapest price and deal. A family run business, they won the award of Best Car Hire Website in 2010
This site has a booking engine which queries major Algarve car rental suppliers