If you want to really see Iceland and not be confined to a tour bus schedule or the views from taxi cabs to and from the airport, you MUST rent a car in Iceland. Let me repeat myself: You must rent a car in Iceland! Iceland is half the size of the Great Britain or about the size of Kentucky and demands to be seen from a all-weather vehicle (preferably a 4×4) or if your budget only allows a rusted 1999 Toyota Yaris powered by a couple hamsters under the hood. The best rental deals can and always are found on-line and the more off-season you go (anytime before mid- June and after Aug) the cheaper the rates, sometimes 50% of what you would pay in high season. Make sure you compare different car hire sites because sometimes a deal looks too good and you’ll soon know why- no unlimited mileage or in my case a 1999 Toyota Yaris hamster car.
Iceland is extremely easy to navigate, based on the fact country has something in the neighborhood of 10 roads ( I may exaggerate a little here). The best roads remain on the exterior of the country, namely Highway 1 which circumnavigates the entire country .This is a nicely paved 2 lane road without a pothole in sight. Once you leave this road, the quality is still good but often you will find yourself on gravel or packed dirt roads. Still better by comparison to some of the paved roads in 3rd world countries-Vietnam- I am talking about you!.
The roads are also surprisingly free of traffic. So traditional motorways with exits don’t exist here, you simply pull off the road to stop or take intersecting thruways. Traffic does build up on Summer holidays as many locals hop in the family car and head out of the city (Reykjavik) and head for their summer cabins or national parks to go camping. June 18th is Iceland’s Independence and a busy day to be on the roads, like a line of ants, the vehicles funnel out of Reykjavik. The national speed limit on highway 1 is 90KM and drops to 50km in most cities.
BEWARE: Iceland is littered with speed traffic cameras that will take a snap shot of your license plate and mail you a ticket for speeding. If renting a car, your rental car company will alert you if you have received one.
Iceland’s interior is protected by ice and snow for about 9 months out of the year and demands a 4×4 vehicle if you expect to head inland. These roads tend to open up towards mid June and remain open throughout August.
To Save Money on your rental: Try SAD Cars. They come in 30-40% less than other rental agencies. Why? They use an older fleet of vehicles which while road worthy, have their occasional quirks but should get you wherever you need to go in Iceland.