If it's the weekend, there won't be any congestion charge (toll), just the usual outrageous parking cost, although you could well be able to find free street parking on Saturday night and Sunday if you wandered around a bit. So you could drop it near South Ken, although I agree it is a bit of a drive around the outer ring road. Exactly where depends on who you are renting from.

Watford should work fine too, just make sure you get there before the rental agency you need closes. It definitely isn't too close to London.