Renting a car in Iceland is pretty much a necessity. There are two main ways to get around Iceland to take in all the beautiful sights of the country and that is either to book a tour and have someone else drive you around or rent your own set of wheels. Renting a car in Iceland doesn’t have to be complicated, but it can sure feel that way when you get started. I’m going to break down everything you need to know to successfully rent your own car in Iceland.
Where to Find a Rental Car
One great thing about renting a car in Iceland is that there is no shortage of rental companies. In addition to big name rental companies that you are familiar with in the United States like Alamo, Avis, Budget, etc. there are many local companies to choose from.
If you have built up loyalty with a certain car rental company it might be the best choice to go with them as status with one of these companies has its perks and you can take advantage of that. If you aren’t loyal to a certain company you start to expand your search. I personally decided to rent from a local company.
I recommend that you start your car rental search in two places, Kayak.com and Guidetoiceland.is. These two websites are fantastic for familiarizing yourself with not just the car rental companies that are operating in Iceland but also the general prices for a rental vehicle. Once you’ve started your research here, head over to the actual car rental company’s website. Many times you will find a slightly better price booking direct and you don’t have to worry about dealing with a third party.
Car Rental Types
There are a variety of types of vehicles you can rent while you are in Iceland. There are everything from sedans to SUVs to camper vans to RVs. Finding the vehicle that works best for your needs is up to you, but let’s go over the options.
These are going to be the cheapest option available and are best for diving on regular roads in clear weather. If you are wanting to explore the highlands of Iceland or drive on F-roads (mountain roads that are unpaved) you will want to steer clear of this option. Similarly, if you are planning on visiting in the winter when road conditions are less than ideal you will want to go with a more robust vehicle. 2wd vehicles are not allowed on F-roads.
One of the most popular vehicle options for renting in Iceland. 4×4 rental vehicles are great for Iceland. They can handle multiple types of weather and road conditions. They also have additional space which is fantastic because more than likely you will be spending quite a bit of time in your vehicle driving from attraction to attraction in Iceland. If you are planning on driving on F-roads, be sure to check with your rental company that your SUV is allowed to be on them.
Camper Vans and RVs
Another popular rental vehicle in Iceland is a camper van. There is nothing quite like trying out van life in Iceland. While camper vans are more expensive they make up for their cost as doubling as your accommodation in Iceland. However, there are some things to take into consideration. Camper vans are great in the summer when the weather is mild and campsites are open. As winter rolls in, renting a camper van may not be your best option. Campsites start to close for the season starting in September so the opportunity to actually camp in your van becomes limited. Camper vans are also not great for high winds and can flip over easily in bad weather. I saw this first hand when I was in Iceland in September.
I don’t recommend skipping insurance when renting a car in Iceland. I know, renting a car is already expensive, but there are so many ways to damage a vehicle when you are in Iceland and you do not want to have your vacation ruined because of a busted up rental car. Getting insurance will ultimately be cheaper than having to deal with any damage and it will give you peace of mind as you navigate the wild roads of Iceland.
Each car rental company will have its own costs and coverage. When you are comparing prices you will want to make sure you are taking these expenses into consideration in addition to the base rental price of the car. There may be a company that has a very cheap base rental price but once you add on the insurance they suddenly become the most expensive option.
You will also want to consider the cost of the deductible. Many insurance options require a deductible if the car is returned with any damage. How much is it and is it an expense you are comfortable paying?
Remember to read the fine print. Not even the most premium insurance coverage will get you off the hook in every situation. Things like driving under the influence (which you shouldn’t be doing anyway), high water crossing, and hitting animals aren’t typically covered. Even paying the big bucks for full coverage doesn’t necessarily mean you aren’t liable for all damage.
If you decide to use the insurance provided by your credit card company or buy insurance through a third party you will just want to double check with the car rental company that you are in fact covered and what the process would be for any damage. In Iceland, if you damage a rental car you would have to pay for the rental car out of pocket and then be reimbursed through your insurance. Something to think about.
To rent a car in Iceland you will need a driver’s license. It does not need to be an International license or an Icelandic license, it only needs to be in Roman English letters. If it is not, your next step is to present an International driver’s license. You will also need to present the actual, physical license. Generally the rule is that you must have had your license for 12 months but this can vary depending on the car rental company.
You will need a credit card for the security deposit. You can still use a debit card to pay for the rental but most companies will require a credit card for the deposit. I highly recommend using a credit card in general when you travel, not only do many travel credit card companies waive foreign transaction fees but they also have additional rental car insurance. You can read more about how I use credit cards to travel and if you are interested in finding out how to travel more for less, check out my course Travel Hacks for Beginners.
There are also age requirements for renting a car in Iceland. This can vary between 20 to 23 for the primary driver and 19 years old for the secondary driver. Once again, check with the car rental company you choose to find out their specific restrictions.
Summer vs. Winter Driving
If you visit Iceland in the summer and rent a car you can expect clear roads. There will also be less road closures and getting around the country will be much easier. You still cannot access F-roads if you are not in a vehicle that is rated to drive on them. If you visit closer to spring you will have to be aware of water on the roads from melting snow and ice.
In the winter, you can expect snow and road closures. Luckily, rental cars in Iceland are equipped with winter tires that will help you with rough conditions. If you are not accustomed to driving in winter conditions, this is not the place or the time to learn. You should probably sit this one out and instead hire a guide or a driver that has experience in winter conditions.
Another thing to consider is the amount of daylight hours. While in the summer in Iceland you can experience the midnight sun and be able to see the road clearly, in the winter it is dark. Roads have reflectors to help keep you on them at night, but there aren’t highway lights like how there are on interstate roads in the United States. Driving in the dark can be scary as many roads don’t have guardrails.
If you choose to visit in the spring or fall you can expect to see a variety of weather conditions and you will need to be prepared for sun, rain, snow and everything in between.
How to Save Money On a Rental Car
It is no secret that Iceland is an expensive country to visit and this expense unfortunately extends to rental cars. There are a couple of things you can do to save money on a rental car when you visit Iceland.
First, you should book in advance. You will get a better price when you reserve your car ahead of time. Not only is the price of a rental car typically more expensive for a walk up but there is a chance there won’t be any cars available.
Visiting during low season is another way to not just save money on your car rental but also your trip in general. As with anything else, car rentals in Iceland are more expensive when you visit during more popular times like the summer.
Knowing where you are going in advance will also help you save money. If you aren’t planning on going far from Reykjavik, then you probably don’t need to go all out on getting a 4×4. If your plans are keeping you in the city then a less expensive sedan will be perfect for you.
Renting a car in Iceland for a longer period of time will drop the daily rate which can help you save money in the long run.
And finally, most cars in Iceland are manual transmission. Deciding to rent a car with an automatic transmission costs extra so if you know how to drive stick, that will save you some on your rental car.
My Rental Car Experience
I rented an SUV in Iceland for 7 days in September 2021 and paid $925. The base cost for the 2017 Dacia Duster, a small 4×4 SUV with manual transmission, was $654 and the rest of the total was for the optional Platinum Insurance Package.
The SUV was in good condition but did have over 100,000 miles on it, which isn’t surprising given how much driving tourists do when in Iceland. The rental did come with unlimited mileage and trust me, I put my fair share on the Duster as well.
The insurance package that I chose basically covered everything and did not have a deductible. The next cheapest insurance package had the same coverage but a deductible of almost $700. For me, it was worth it to just pay the additional cost and not have to worry about a deductible in case any damage occurred.
The company that I decided to rent from was Lava Car Rental. It was easy to rent right through their website. Their customer support was responsive and there was no additional fee to pick me up from the airport and bring me to the car rental office (which was only a few minutes drive from the airport). I luckily did not have any issues with damage so I can’t speak to how that would have been handled but after my experience with them I do recommend Lava Car Rental.
Things I Wish I Knew Before Getting a Rental Car
Right Side of the Road
Thank goodness that in Iceland they drive on the right side of the road!
Premium Insurance Doesn’t Cover Everything
Even the most expensive insurance doesn’t cover everything you might encounter in Iceland. This includes something called, “wind blown doors.” That’s right, the wind can get so powerful that it can snap the doors right off cars. Be sure to hold onto the door as you are getting in and out of the car and try to park facing into the wind. Read that fine print.
Many car rental companies will provide renters with a gas discount card. This is fantastic because gas in Iceland is not cheap and any way to save a little bit of money is great. Check with your rental company to see if you will get a gas discount card.
Roads in Iceland Are No Joke
While the Ring Road and roads around the Golden Circle are paved and well maintained, a lot of roads are not. There are a lot of gravel roads, not only are these trickier to drive on but they can kick up rocks that can damage your rental car.
Tourists Don’t Know How to Drive
I’m including myself in this. Driving conditions in Iceland can be dangerous and many tourists, for some reason, don’t take warnings seriously. One of the days I was in Iceland the entire country was under a high wind advisory. There were road closures and alerts telling people to stay put. Many people, myself included, didn’t necessarily listen. Luckily, I was fine with my 8 mile trip down the road to see a waterfall, but the next day I now only heard stories but also saw vehicles flipped over from the wind. If you don’t know how to drive in snow in the US, you are not magically going to know how to in Iceland.
Watch Out for Sheep
Animals can find their way onto the road. Be careful and keep an eye out for stray livestock. The advice given from Lava Car Rental was, if there is no opportunity to stop, hit the animal head on because swerving to avoid it can be more dangerous for you.
For one, it’s just not safe. There are speed cameras which can issue you a ticket. And also, you will miss so much of the beauty around you which is one of the best parts of driving in Iceland.
Review the Iceland Road Laws
Some of the laws that surprised me were things like, headlights need to be on at all times, no turning right on red, and only talking on the phone using hands free devices. You can also expect a lot of roundabouts.
Keep That Gas Tank Filled
As you explore further out into Iceland, the gas stations become few and far between. Make sure you are keeping an eye on not just your gas tank level but where the next gas station is. When in doubt, keep it filled up.
Driving in Iceland is a lot of fun and a great way to see the country on your own schedule. You’ll get to discover so much and have the flexibility to do what you want. This guide will give you the confidence to choose a rental car that is perfect for your trip to Iceland.