Spain/Portugal/Gibraltar-arrive/departure from Madrid itinerary

Be sure and obtain an international drivers license from AAA. $25 well spent. Plus required by Spanish law. Don't leave valuables in the car. When going from point A to B make sure your luggage is covered. Make sure you obtain a GPS system plus a map. Park smartly. Drive smart. We found it easier to NOT try and park as close to old town as possible. Easier to park a little outside the tourist zone and walk then fight the narrow street stress. If possible get a hatchback due to there usually being a cover you can use to go over the luggage. Take photos of the car before you drive off the lot and after you return the car. After picking up the car, drive around the local neighborhood to test functionality of all aspects (wipers, headlights, brake lights, turn indicators (stuff police like to pull you over for not working)plus the radio, etc) of the car. Investing 30 minutes to test drive the car can save a lot of stress later. Do check the tread depth on the tires. If you don't like the car then change it! The car is not going to get any better with time. When you stop and park DO NOT get out and open the trunk to store valuables. Instant tipoff to there being valuables in the trunk!
Learn the type of fuel the vehicle consumes and then learn the lingo for stopping for petro. Toilet? Get a key from the attendant.

Have done a a 21 day driving trip with wife and found there are better ways to spend time. Food for thought: Arrive Madrid do not pu car until you are ready to leave for Barcelona. Arrive Madrid and take AVE train to Barcelona. Neither city requires a car and both offer excellent metros. AVE is a wonderful experience. Going down the coast of Spain... p/u car in Barcelona and enjoy the drive. I question if you need a car in Tangier (never been). Consider leaving the car in Spain at not having to hassle with the vehicle (ask if a hotel will allow you to pay a fee to allow the car to remain parked while you are in Tangier). Gibraltar: zero need for a car (a real hassle) consider same advice as for Tangier. Note: last Oct we spent two weeks in Spain and mixed the use of no car then trains and then renting a car with great success. We would have been greatly burdened to try and have a car for the entire time. Parking can be a hassle! You are really going to need to pay a great deal of attention to always making sure your luggage is covered while leaving the car. However, we enjoyed traveling by car and found it to be a safe flexible method to travel. We just chose not to make it the only mode of transport for the trip.
Safe Travels!

I'd also question some of your plans regarding the car. yes, there are parts of Spain & Portugal that work better by car - but I'm not sure if you're going to any of those. For the places you specifically mention - Madrid, Barcelona - a car is nothing but an expensive headache. Trains (and cheap flights) work better for much of Spain. I'm not sure that the drive along the coast from Barcelona to....all the way to Gibraltar? is worth the time, cost and hassles. It sounds like what you really want to do is visit Madrid, Barcelona, Gibraltar, Morocco and Portugal. I'd ask why you are skipping Andalusia - it has some (most?) of the best stuff in Spain. Maybe you've already been there? If not, I'd reconsider your plan and how you're allocating your time. Regarding Gibraltar and Tangier... I do think Gibraltar is worth seeing, and is one of the few places on your itinerary that it helps to have a car. But if you goal is to actually see Morocco for a couple days, consider skipping Tangier (think: "the Tijuana of Morocco") and instead fly to Marrakech or Fes and see the real Morocco (you may be shocked to see how cheap the flights are). Where you might actually need a car is Portugal, but you didn't indicate where in Portugal you wanted to go. You might consider flying open jaws, in to Barcelona and out of Madrid or Lisbon. Think long and hard about spending all those days paying for a rental car which will be worse than useless and expensive to park in any big city.

Before renting a car, read the conditions carefully. You can do that on-line in advance. I rented from Eurocar and they specifically state that the car may not be taken to any island (so that precludes Granada). I wasn't planning to visit Morocco, so I don't remember if that's permitted. What David has advised about Morocco is pretty much what I learned before my trip to Spain, which is why I nixed it. I thought about flying there - and skipping Tangier - but in the end I didn't want to take that much time out of my 22 days (Andalusia and Madrid). I also thought about adding Portugal to my trip, but when I looked into it in detail, it seemed like there would be a lot of boring (non-scenice) driving time.

Granada is not on an island.

Hello fellow travelers, Thank you for the insightful and helpful tips. Based on your recommendations, I'll be changing my rental dates and itinerary - ex., leaving car outside Gibraltar border and taking bus into town, leave car at Tarifa and taking ferry across to Tangier (still debating this trip). Cheers, Karen

Of course it isn't. I meant Gibraltar! Yikes, senior moment.