Portugal travel: 2 small rental cars, one 7 passenger car, or train??

Yes, rent a car on your way out of Lisbon. I wouldn't want a car in Porto. What if you visit Coimbra on the way north and then when you go back south from Santiago de Compastela return the car and visit Porto and train back to Lisbon. If I recall correctly, it is a 3-4 hour train ride.

In terms of what to rent, I think you need to price out various options. Autoeurope might be a good place to start.

Suggest that you use ZestCarRental.com to compare shop.

For 7 people, you will need a 9 pax van and even then it may be difficult to fit all the luggage. When we were looking for a van for our trip last September, we found only one affordable 9 pax van to fit our group of six and our luggage. However, it was rented out very quickly and the remaining available vans were about three times the cost and we found that it was cheaper to rent two regular cars instead. The downside is that you will be paying double the tolls, more for gas and parking.

I don't think you need to worry about the size of the roads. The toll roads are multi-lane freeways, as good and less busy than in most of North America. Even the non-toll roads can accommodate large commercial vehicles, but can be slower with lots of roundabouts.

Driving and parking in Porto may be challenging, depending on your driving competence and confidence. You should research available parking at or near your accommodations.

You can consider not renting your car until you leave Porto. However, then you will incur the cost of trains or buses on that part of your trip from Lisbon to Porto, not having the convenience of cars on your way North and the drop off fees for picking up the cars at one location and dropping off at another location.

You should also email Zest and find out their policy about taking cars outside of Portugal and into Spain. Some rental companies will apply a surcharge. Good luck.

In Nazaré, and Coimbra we reserved hotels with free parking. In Porto the hotel (NH Porto Jardim) had its own garage and parking was 15€ per night. It was easy to get to and in a good location for seeing all the sights. There are a number of free lots in Fátima by the welcome center. The Sanctuary of Our Lady of Fátima is about a five minutes walk from the parking lots.

The last time we had a vehicle in Santiago de Compostela we stayed at the Parador and it has an on-site pay garage. There are a couple free parking lots in Santiago. Each is a little over a mile from the cathedral. Likewise, there are a number of free lots (aparcamento/estacionamento gratuíto) in Pontevedra.

Very helpful information, thank you all! I am going to go with two small cars, as it will also give us more flexibility to do things with only part of our group. The rates I have been quoted for a van are almost 4x as much as a car. I am less nervous about driving too, I think I was reading too many "crazy roads and drivers" blogs. Then remembered I drove in both Costa Rica and Greece, both of which are most definitely worse. :) I will also look into the crossing of the border, and maybe save that for later. We can certainly fill 2 weeks of time in just Portugal.

Just drive across the border. There are no checks. If you get onto a toll road in Spain you can pay with cash or a card.

Ensure you let the rental company know you’ll also be driving in Spain. The major rental companies will not charge extra for doing so.