We flew into Larnaca last year and stayed in Girne. We arranged with the hotel for a taxi transfer and this cost £20 sterking each way. We found the taxi waiting for us on arrival and crossed the border with no problems as the Turkish border officials check your passports. This cut out journey down by about three hours compared with flying to Ercan. As a word of warining though, leaving wasn't quite so easy as passports etc are checked by the Greeks on the way back to Larnaca. We saw many British being stopped and having cigarettes etc confiscated even though they were within their allowance.

Car hire is not really an option as most hire companies do not allow their cars to cross the border, and as such, will not be insured.
You can buy insurance at the crossings but as far as I'm aware it's only valid for up to 3 days.
You would not have breakdown cover.

Mark

No problem as stated. If booking villa etc car hire companies will pick you up for approx £75 return and have car at villa. They deal with turkish customs. On return greek side will possibly go through luggage looking for cigs etc. It is possible to hire a car at larnaca, demis car rental or http://www.cyprus-car.com allow you to take take over but you have to buy insurance at turkish customs before doing passport bit. You can pay for different lengths of time but if you have an accident in North you have to get car back over. Rental company will confirm everything. One word of warning - if you hire a car make sure all paperwork matchs reg etc and that turkish insurance write down correct details.