We drove as far south as Illizi without a guide, in our own 4x4 in 2009. The chief police came out to greet us and said we were the first to do so since the kidnappings of 2003.
But further south was impossible. "Ici le Grand Sud!"
I doubt anyone has come that far without a guide after that, since the security situation has mostly deteriorated.
Algeria is not like Western Sahara, the landscape is very different, and much more exciting. In algeria you have huge sand deserts and wild mountain ranges. And there is no territorial conflict, and no mines, just a nagging feeling of insecurity after numerous kidnappings and other incidents. The gendarmes will want to know exactly where you go and your itinerary, with an official guide, before giving you the paper.
Try it and see how far you can get on your own. Worst case you will be obliged to take a guide along all the way from the border. Renting in Algeria? not sure you will find 4x4, and they may not be happy with a regular vehicle being used offroad.
In the dunes off the tarmac you will have a guide, and it will be money well spent.
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