My own travel style has evolved over the years. In the past I generally bought one big, fat, wonderful railpass for my entire trip. These days I cobble together a few cheap flights within Europe, some rail trips and a modest car rental (which I find is becoming a better value than rail).
Renting a car in Europe is generally more expensive and more complicated than in the United States, but worth it for the freedom to explore Europe at your own speed.
First decide, though, if you'll need a car. If you're just going from big city to big city, take trains instead; Europe has an excellent public transportation system. But if you want to explore the countryside, consider renting a car, even for just part of your trip.
For the best price, book in advance from home. Most of the major U.S. rental agencies (including Alamo/National, Avis, Budget, Dollar, Hertz and Thrifty) have offices throughout Europe. You could start your search on a travel-booking site such as Expedia, Travelocity or Kayak, then visit the companies' own Web sites to compare and book.
It can be cheaper to arrange your rental with a consolidator, such as Auto Europe or Europe by Car, though working with a middleman instead of directly with the vendor can make it challenging for you to get help if you run into a problem.
European cars are most economical when rented by the week with unlimited mileage. Daily rates are generally quite high; typically, the longer you rent, the less it'll cost per day.
Plan your route thoughtfully with these tips in mind: Picking up a car at an airport sometimes costs more than picking it up downtown. Avoid picking up or dropping off your car in a small town on a Sunday or anywhere on a holiday, when offices are likely to be closed. If your route involves a ferry crossing, such as between Ireland and Great Britain, you'll pay dearly to take your car; it's cheaper to arrange a separate rental per country and walk on the ferry.
To avoid backtracking, pick up the car in one city and drop it off in another. (Bigger car-rental companies are more likely to have more branches, increasing your options.) There's generally no extra charge to pick up and drop off at different locations within the same country, but be warned that international drop-off fees typically add $100 to $300.
Talking about fees, you could write a book about all the extras (someone probably has). Tax is generally 18 percent to 25 percent on top of the base price. The CDW (Collision Damage Waiver) insurance supplement runs about $15 to $35 a day (Click here for details on CDW). And theft protection, mandatory in Italy, costs about $20 per day.
Automatics can tack on an extra $100 to $200 per week. Most rental cars in Europe have manual transmissions. If you need an automatic, reserve it well in advance.
How much to budget for a typical rental? Allow about $750 per week for a car with manual transmission, unlimited mileage, CDW insurance, gas, freeway tolls (common in Italy, France, Spain, Portugal, and Greece), and parking (about $25 to $40 per day in big cities).
For a trip lasting several weeks or more, look into leasing (technically, buying the car and selling it back). Prices include all taxes, as well as theft and collision insurance (comparable to CDW), and you get to use a new car. Europe by Car and Renault Eurodrive, along with many other companies, offer leasing. Drivers who are young (under 21) or old (over 70) can more easily lease than rent cars, depending on the country and car-rental company.
For a short trip, consider rail-and-drive passes. Along with a railpass, you get vouchers for a few Hertz or Avis car-rental days.
If you don't decide until you get to Europe that you want to rent a car, just go to a local car-rental office or travel agency. You can rent a car for even just a day.
Be sure to bring your driver's license; it's all you need to drive in most European countries. Some countries such as Spain, Austria, Italy and Greece also require you to carry an International Driving Permit (sold at your local AAA office). However, I've driven throughout Europe, and have never been asked to show it.
Learn the rules of the European road. Check the U.S. State Department Web site, select "International Travel," specify your destination country and click "Traffic Safety and Road Conditions."
Once you're behind the wheel, you may curse the traffic jams, narrow roads, and macho habits, but driving in Europe carbonates your experience. Driving at home is mundane; driving in Europe is memorable.