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The dramatic and breathtaking landscapes of the Land of Fire and Ice are best explored via a road trip.
This way, you remain the captain of your own adventure and the boss of your own time. But before you head out, you’ll need to know all the important ins and outs of how to rent a car in Iceland.
Whether it will be your first time renting a car or just the first time renting one in Iceland, this guide should give you a good idea of what to look out for and how the process works.
So, if you’re interested in learning more about which rental car to choose, what insurance coverage makes the most sense, how to save money, and plan the perfect itinerary – read on!
Why Renting a Car in Iceland Is Worth It
There are many reasons why renting a car in Iceland is the best way to explore the island, such as:
- It provides the ultimate freedom to do what you want when you want to. There’s no strict tour schedule or having to accommodate 10 other tourists.
- It gives you the chance to explore some of our “roads less traveled” and hidden gems. Most guided tours only have our most famous attractions and activities on their books. So, unless you pay for a customized private tour, there are certain things you’ll be missing out on.
- While renting a car in Iceland is a must for any avid traveler, you can get the most bang for your buck if you rent a camper in Iceland. This will take care of both your transport and accommodation needs and allow you to go camping in style and comfort in our many super affordable (and beautiful!) campsites around the country.
If you’re all about quality and reliability, Cars Iceland has you covered with the perfect rental vehicle for your adventure.
Want even more freedom? Turn your ride into your home on wheels!
Our sister brand, Camper Rental Iceland, offers a great selection of camper vans, so you can wake up to Iceland’s stunning landscapes every morning.
When & How to Book Your Rental Car
The below info will help you understand when and how to book your rental car in Iceland:
Ensure You Book Early
It’s always a good idea to book your rental vehicle well in advance. This usually results in better prices, and you’ll have a better chance of the vehicle you want being available. This is especially important during our busy summer peak season (June to August).
A good rule of thumb is to book your rental along with your flight tickets. To check availability and to book is simple and can all be done online. Just check which cars are available to rent with Cars Iceland for your specific dates and then just book online or pop the rental agent an email or give them a call.
Choose the Best Season for Your Budget
We have a few peak seasons here in Iceland when you’ll definitely have to fork out more for most things on the island. This includes our summer season (as already mentioned) and our festive period till after New Year. So, if you’re on a tight budget, you might want to avoid these periods. Generally, you’ll pay much less during our “down” seasons.
But since road-tripping around the island during our winter season is not always ideal, we recommend you pick one of the shoulder months (September, October, November, March, April, or May). To give you an idea of the type of savings we’re talking about, a 2WD economy car can cost you between $500 and $550 for a weekend rental during peak season, while it can only cost between $250 and $300 for the same rental during our “down” season.
Requirements & Documentation for Renting a Car in Iceland
We often get asked questions regarding which licenses are required/accepted, payment methods are accepted, and what the legal driving and rental hire age in Iceland is. Find the answers below:
Accepted Driver’s License for Renting a Car in Iceland
You don’t need an International Driving Permit to rent or drive a car in Iceland. As long as you have a valid driver’s license (in a language that’s understood here in Iceland), you’ll be able to hit the road.
Age Restrictions & Acceptable Payment Methods
You must be at least 20 years old to rent a 2WD vehicle at a rental agency here in Iceland, including Cars Iceland. And at least 23 if you want to opt for a 4WD or one of their other larger vehicles. It’s also recommended to reach out to the rental agent beforehand to ensure you meet all agency-specific criteria before finalizing your booking.
Choosing the Right Vehicle: 2WD, 4WD, or a Camper?
Which car will work best for your trip will depend on various factors. Here’s what to consider:
2WD Cars
2WD cars are usually compact vehicles, perfect for zipping around the cities or towns and in and out of parking spots. These cars are best for shorter trips on paved and well-maintained roads, such as the Golden Circle and the Ring Road. And while these cars can be used during our colder months as long as they have the necessary winter gear and accessories, they’re best used during our warmer months.
4WD Vehicles
4WD cars are larger and more durable vehicles, perfect to take on our rougher, unpaved roads, as well as exploring our more remote regions like the Highlands and the Westfjords. In these regions, you’ll also find our adventurous F-roads, which legally require you to drive a 4WD.
Campervans
Campervans are perfect if you’re looking for the convenience and cost-effectiveness of having both your transport and accommodation sorted. It will also allow you to go “camping” much earlier and later than the weather usually permits traditional tent campers to do, and these campsites will often have some of our most famous and breathtaking sightings practically on your doorstep!
Understanding Rental Car Insurance & Coverage in Iceland
With our fickle (and often extreme) weather and contrasting terrain that only the Land of Fire and Ice can dish up, having the correct and sufficient rental car insurance in Iceland is absolutely essential.
We recommend chatting with your rental agent regarding your planned route and trip itinerary, as well as which season you’re planning on visiting the island, so they can also weigh in on what you may need that’s specific to your trip. But the following are already what you should be considering:
- Collision Damage Waiver (CDW) – This will ensure that you are not held liable for the full cost of the damage to the rental caused by an accident. You’ll only be responsible for paying the excess.
- Super Collision Damage Waiver (SCDW) – This will further reduce the excess amount you’ll be held responsible for.
- Gravel Protection (GP) – This will cover you for any damage caused by gravel, rocks, or pebbles and is a non-negotiable if you’ll be traveling on our unpaved roads.
- Sand and Ash Protection (SAAP) – This will cover you for any damage caused by volcanic ash or sand and is a non-negotiable if you’ll be traveling along our coastline, where the wind is known to batter the cars with sand from the beach.
At Cars Iceland, they’ve got you covered—literally! Every rental comes with essential protection, and you can add extra coverage if needed. Given Iceland’s rugged volcanic landscape, sand, ash, and gravel protection can be real lifesavers.
Picking Up Your Rental Car: Reykjavik vs. Keflavik
If you’ve decided to rent a car in Iceland, you’ll have a couple of options when it comes to picking up the vehicle:
Keflavik International Airport
You can pick up your rental at the rental agency lot at Keflavik Airport directly immediately upon arrival here on the island. The rental lots are a short drive away, so you’ll need to catch one of the rental car shuttles outside the entrance to take you there.
Reykjavik
Another alternative is to simply get your rental at the Cars Iceland lot in Reykjavik. That means you’ll need to catch a transfer shuttle, bus, or taxi from Keflavik Airport, where you can regroup and rest at your accommodation in the capital city, then pick up your rental and hit the road.
***As a side note, it’s always good practice to properly inspect the vehicle before driving it off the lot. Many even go as far as to take “before” pictures. This is to avoid being held responsible for any damages you did not cause.
Driving in Iceland: Road Conditions, Weather & Safety Tips
If this will be your first self-drive trip to Iceland, the following information and advice will come in handy:
Seasonal Considerations
As we already began touching on, driving in Iceland can be entirely different experiences, depending on when you visit the island. You’ll need to consider the following when planning your trip:
Extra Traffic
Our peak seasons bring your typical peak season crowds, which means additional traffic here on the island. You’ll need to contend for parking, the roads will be busier, etc. This is not just important to know so you can emotionally prepare yourself, but also to take this into account when planning out your trip itinerary. Allocate sufficient time for driving as well as at attractions and activities.
Weather & Road Conditions
Needless to say, there are big differences between the colder and warmer months here on the island. For example, our summer months offer some of the best weather conditions, have plenty of daylight hours for a jam-packed trip itinerary, and road conditions are practically pristine. The worst you may come across is Icelandic Horses or sheep crossing the road. Winter weather can be pretty extreme, making driving challenging.
You’ll need to drive with snow and ice on the road and may encounter blizzards or our legendary winds of 35+ kilometers an hour. You’ll also have very few daylight hours to plan your itinerary with. Driving in Iceland during the winter will also mean additional winter gear and accessories, a 4×4 being your go-to, and planning your itinerary around our roads that are closed throughout this period every year (this includes Iceland’s F-roads).
A Few Helpful Tips for Driving in Iceland
The following tips will ensure you have a safe and memorable drive around the island:
- Save any/all emergency numbers on your phone. Your rental agency should have a 24/7 support number, and Iceland’s emergency number, 112, is also there for any emergencies, whether you need roadside assistance, the police, or the fire brigade.
- Iceland’s weather is notoriously fickle. That’s why we highly recommend you keep a close eye on the weather and the road conditions. You can do so on the Vedur website and the Umferdin website. Safetravel.is will even send notifications or alerts to your phone!
- Icelanders are sticklers for the rules, especially our traffic rules, so always keep an eye out for any road signs along the way and strictly adhere to Iceland’s speed limits (which may differ from what you’re used to back home). Speeding fines can easily exceed $1000 here when caught! Although there are always exceptions to the rule, speed limits tend to be 50 km/h in urban/residential areas, 80 km/h on unpaved roads, and 90 km/h on paved roads outside of town (roads considered “highways” connecting cities and towns to one another).
- Always use a GPS when driving in Iceland (or any other unfamiliar country, for that matter) to ensure you stay on the right track. But also keep a few offline, downloaded, and hard copy maps nearby for those times technology and signals let you down.
- Most of our paid parking and tolls can be easily paid via apps such as EasyPark, Parka, and Veggjald.is.
- It is illegal to stop or park next to the road here in Iceland. So, no quick snapshots or mini breaks along the way. Wait till you’ve reached a designated parking spot.
- Iceland is also not the place to create your own 4×4 routes. This is to keep you, as well as our sensitive ecosystem, safe.
- Always keep your headlights on, irrespective of whether it’s night or day. This is not only to ensure you have proper visibility but also to ensure others see you.
- Be super careful with our legendary winds, and hold on tight to car doors whenever you open or close them. When wind speeds reach extremes, we’ve had car doors blow straight off their hinges!
Planning Your Route & Saving Money
The following information will help you plan your trip and make your budget stretch further:
Road Trip One of Our Popular Routes
We have quite a few popular road trip routes here in Iceland that you can consider:
- Golden Circle – Excellent for those with limited time on the island. It’s possible to drive the Golden Circle with a 2WD from Cars Iceland as long as the winter weather permits.
- Ring Road – This route wraps in a circle all around the island and is a great way to get a taste of every Icelandic region. Best if you have 1 to 2 weeks available for your trip. Also possible to drive with a 2WD or a camper from Camper Rental Iceland as long as the winter weather permits – especially in specific sections in the Eastfjords and the north.
- South Coast Way – This is also a great option if you’re looking for a shorter road trip. This coastal adventure offers everything water and then some – from black sand beaches and glacier lagoons to breathtaking waterfalls. While this route can also be driven with a 2WD as long as the winter weather permits, we’d recommend using a 4×4, especially when taking the coastal winds and the sand into account.
- Westfjords Way – This route explores the more remote region of the Westfjords and is best if you have at least a week to drive around. Since our remote regions have many unpaved roads, and you’ll also find some of our infamous F-roads in the Westfjords, you should only take this route on in a 4×4.
- Diamond Circle – This route explores the northern parts of the island. While certain sections can be driven with a 2DW while the weather permits, we’d also recommend using a 4×4 instead, even if it is just to have the peace of mind that you can tackle those unpaved roads if you’d like.
A Few Money Saving Tips
If you’re going to be traveling on a tight budget, the following can really help you out:
Split the Costs
It’s always easier to travel in a group, so the costs can be split between individuals, couples or families. So, what do you do if you’re solo traveling or as a couple?
Many backpackers have noticeboards where you can advertise lift opportunities, and also, don’t be surprised if you find hitchhikers along the road here (well, at least during our warmer months). As the safest country in the world (officially), you can really offer people a ride to help split the costs.
Don’t Rent the Monster Truck
Smaller cars will cost you less in rental costs and are more fuel-efficient.
Plan Your Trip During the Down Season
As we already mentioned, once peak season is in the rearview mirror, so are our peak season prices.
Plan Where You’ll Fuel Up
Not all gas stations in Iceland offer gas at the same prices, and the more remote you go, the fewer gas stations you’ll come across (meaning they can charge you whatever they’d like, really). That’s why you need to do some research on gas prices in Iceland and plan out where you can fuel up more affordably.
Make Use of Our Camping Card
The Camping Card is a great way to save money. You’ll be able to use this whether you’re planning on tent camping or campervan camping. The Camping Card costs €179 and gives a family of 2 adults and up to 4 children access to numerous campgrounds across the country for up to 28 days.
When you take into account that campsites usually charge between $10 to $20 per person per night, the Camping Card amounts to staggering savings. You’ll also get discounts on gas with the Camping Card, meaning you’ll be saving on transport as well as accommodation.
Ask Your Rental Agent About Discounts
Cars Iceland and Camper Rental Iceland often partner with local businesses to bring their clients all sorts of discounts, from attractions and activities to accommodation and food. Just ask your rental agent about any discounts they may offer.
Make Your Own Food
One of the most expensive things you can do here in Iceland is dine out. There certainly are a few unique experiences that are considered musts here on the island, such as eating fermented shark and drinking Brennivin or eating our famous hot dogs “with everything on it” at the Bæjarins Beztu Pylsur stand. But the best way to save a lot of money is by simply buying groceries and cooking your own food.
Long Term Stays Often Beat Short Term
Many accommodation options offer discounted rates for longer stays. So, just inquire with the property owner, landlord, or managing agent whenever possible.
Returning Your Rental Car
When it’s time to return your rental car to Cars Iceland, you’ll essentially just reverse the same process of getting one in the first place. Just keep the following in mind:
- Remember to refuel. You need to return a rental car with a full gas tank (unless specifically requested otherwise by the rental agency).
- Don’t be late. There are specific check-in times, and if you’re late, you might be charged an extra day’s rent.
- Ensure that you check the vehicle along with the staff. This will keep you safe from being held responsible for damage you didn’t cause.
- If you’re catching a flight after returning the vehicle, leave sufficient time for final checks, payments, and paperwork so you’re not rushed to catch your plane.
Additional Resources & Next Steps
By now, renting a car in Iceland should feel like a breeze! But if you still have questions, don’t worry, the friendly customer support team at Cars Iceland is always happy and willing to help.
Ready to hit the road? Check out the wide range of rentals at Cars Iceland or, if you’re looking for a home on wheels, explore the camper options at Camper Rental Iceland. We’re sure they can’t wait to help you start your road trip adventure in the Land of Fire and Ice!
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