Don't listen to any scare stories about hiring a car in Iceland. The roads are extremely well-maintained and even in the depths of winter the golden circle route is an easy drive. We went in January and hired a car for £60 from National - a coach trip of the same route would have cost £80 per person.
Another reader recommended hiring a car to see the main sights and I couldn't agree more. However, we did find that even in summer the quality of the road surfaces was very variable. The Icelanders tend to resurface their roads by throwing down a load of hardcore and then working the whole width of the road, which means you have to drive over the top! Our Toyota Corolla sustained quite severe damage from landing on its nose while following a bulldozer... So get a 4x4, even if you would normally never be seen dead near one, it gives you more options and peace of mind.
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