We highly recommend renting a camper van for your ring road trip. Camping will allow you to access so many more places & make sure you get a camper with 4x4 capabilities.
We used Happy Campers for our van rental, and loved it! Some of the vans are automatic, and some are manual, so make sure you book the one you want.
Our van came with a full pull-out bed set up that could be used as a couch or a bed. It came with a sink & soap pump, and a stove with dishes & utensils, and anything we needed to cook.
You can also add add-ons. We got a wifi unit with a GPS which was a game-changer. They also offer extra blankets, sleeping bags, Bluetooth speakers, and a ton of other stuff.
The GPS unit we got came with a full GPS map of all the campsites in Iceland which made it easy to figure out where to camp.
Also, make sure you get insurance. We know sometimes travel credit cards cover this, but specifically for Iceland, there are certain insurances necessary for certain things. We recommend getting the gravel & tire insurance if you only had to pick one because the conditions of the roads can be extreme with the weather. It's better to be safe than sorry. I think it was around $170. It's probably worth it if you're doing a lot of off-roading.
Lastly, you can use the code PASSPORT for 5% off your rental!