Driving in Portugal and Spain

Driving in Portugal is not difficult, the tolls roads are very easy, although some of the smaller roads can be narrow, and occasionally almost scary. I personally don't feel it is worth driving into the cities ( Lisbon, Porto). Although we had no trouble navigating Lisbon when we needed to get through it.

I know some automatic transmissions are available, but you will pay a large premium for them. As well, I have heard ( but can't speak personally to it) that it can be costly to pick up in Portugal and then drop in Spain.

Driving in Portugal is pretty easy, as long as you stay out of the bigger cities - Lisbon and Porto. I always recommend people pick up their car someplace other than those big cities. The toll roads are good but expensive.
You can likely get an automatic if you reserve far enough ahead of time, but you will pay dearly. If either of you can manage a standard you will save a lot. Or, the other option is a Smart car, but then you have a very small car with room for very little luggage.
And, to add insult to injury, picking up a car in Portugal and turning it back in in Spain will be very expensive. They add on a several hundred euro surcharge.
I would recommend you drive through as much of Portugal as you wish, then fly to Barcelona. Flights from here to Barcelona are usually very inexpensive.

Driving in Portugal isn’t too bad, but the locals can’t park cars and they like overtaking on blind bends! Many cars have dents, so take extra caution. The roads aren’t as congested as many parts of Europe.

While possible, is not a good plan to rent in Portugal and return the car in Spain, the penalties will be steep. Few hundred Euro I would guess.

Portugal does use a transponder type system for tolls so the use of that in your car the rental company will charge you a fee each day for ; plus the actual tolls. These are not factored into any quotes for the rental you may have.

Driving should be easy. If you avoid driving in Lisbon and Porto that is.
Like most of Europe the gas (or diesel) costs much more than in the US but the cars all get much better fuel economy so operational costs are not drastically different.

If you can drive a standard/manual it is best. If the car does not state, it will be manual. If you must have an automatic you will pay more and have to reserve in advance as there are not many to go around. In fact if I had to have an automatic I would personally try and stick with an airport rental with a starting time of the morning or afternoon just to make my chances greater than automatics would be around even with an advance reservation.