I'm going to Iceland by myself next month (June) for 9 days. Everyone's been saying you need a car and I was wondering how true that is. Could I take buses to different sights (e.g. a waterfall)? Or do they only take me from town to town? And if I were to rent a car, what are the road conditions like? I'm just worried that if something were to happen to my car, I'd be stranded in the middle of nowhere. Thanks!
Samuel, if you plan on going beyond Reykjavik then yes, you'll need a car. There is a bus network that travels the "Ring Road" around the country, but schedules aren't too convenient. There are buses from Reykjavik's BSÍstation to major tourist spots such as Blue Lagoon, Þingvellir, Selfoss and Vík í Mýrdal but again, schedules aren't always convenient and it's always better to have your own car if you can afford it to maximise sightseeing time and minimise time spent waiting on transport. And if you really want to get off the beaten path, e.g. Snæfellsnes, Bjarnarhöfn (where you can see hakarl being made), Isafjordurand the northwest peninsula, Akureyri and the eastern glacier fields, you'll need your own car.
The roads in Iceland are very well maintained, which is especially impressive given the harsh climate. Conditions are excellent, but outside Reykjavik and the larger towns there is very little traffic, and livestock frequently cross the roads so it's advisable not to drive in rural areas after dark. Make sure your mobile phone will work in Iceland (buy a local SIM card if you have to) and make sure you know the emergency road assistance numbers. Mobile phone coverage is good, even in desolate rural areas. Fuel prices and rental rates are higher than in the USA but lower than in continental Europe.
N.B.: avoid renting your car at Keflavík International Airport. You'll get much better rates renting in central Reykjavik. Take the Flybus from the airport terminal to the BSI bus station (takes about 40-45 min). There's a rental car lot (Hertz, Budget and a few local companies) right next to the BSI bus station.
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I drove in Iceland for 10 days last November. For me it is certainly the way to go. For my photography, the only way to go. You can take a bus tour to the most common waterfalls on a strict route and time table, but why? Roads are good, people are friendly and you will likely never be alone. Bring your own GPS eith Iceland map downloaded or rent one from car company. What good would additional riders be anyway?? Unless they speak Icelandic or are a mechanic who brought there tools how will they help? Go for it, and don't worry. Also go to the Glacual Lagoon and stay in that area.