I think it is best to book it on internet or even book it when you book the flights.

Most car hire companies are very similar. 

Just use agregator sites and choose the best deal.

Here are 3 good ones. 

Do you Spain

Get rent a car

Discover Cars

There are pick up points at Malaga and Granada airports  and all companies have a pickup and drop off point in Granada itself.


By the way this page tells you where to park in Granada.
https://granadaforo.granadainfo.com/getting-around-in-granada/where-can-i-park-in-granada/

This site will tell you the distances between Spanish cities.
https://crazycalculations.com/distances

There is a lot of misunderstanding about car hire insurance in Spain. The biggest source of complants about car hire is when people think that they have been scammed.

Here is more info 

https://infoaboutspain.com/article/car_car_insurance_scam