- what you want to see
- when you want to go
it depends on mainly 2 things
we went there in June so if you mainly go on the ring road and not planning to go out of it, then there is no need for a 4x4. If you want to do any special trips it might be that without a 4x4 you won't be able to go. For example our road to Latrabjarg if it rains you can't pass by a 2WD or at least this is what the owner of our hostel told us.
so, it is basically up to you, you can enjoy Iceland for sure with a 2WD but if you want to go off-road...might be safer for you to get a 4WD.