The absolute best way to get around Iceland is by driving. But renting a car can feel overwhelming.
Below is my complete step-by-step guide on how to rent a car in Iceland with my top car rental tips based on my experiences:
- Where and when to rent,
- What type or car, 4WD or not,
- How to choose the rental company,
- Need for Insurance,
- pick-up and return tips...
Get ready for an amazing road trip!
This article contains affiliate links (Disclosure page). If you purchase using my link, I get a commission at no extra cost to you.
How to rent a car in Iceland - Overview
If you don't want to read the entire article with the step-by-step to renting a car in Iceland, here is a short summary and my top recommendations:
- TIMING - Iceland is a popular destination - for choice and good price, book as early as possible
- 2WD / 4WD -
If you plan on driving on F-roads, a 4WD is mandatory.
Otherwise 2WD is sufficient. However, a simple 4WD or SUV allows you to enter any gravel road that looks inspiring without worrying.
- INSURANCE - get insurance, with all the gravel and
- Local experts - Iceland has a lot of specificities and offerings by local companies are adapted - compare cars and prices of quality local brands on GuidetoIceland.com
- If you prefer International Brands - compare offers on Discovercars.com - one of the best customer-rated comparison sites!
Is driving in Iceland worth it?
Before I share all my tips, you may first be wondering if it is hard and if it is worth it?
Driving i the absolute best way to explore Iceland. It gives you so much freedom to admire the incredible nature all around you.
Is it hard to drive in Iceland?
Driving is actually relatively easy.
Apart from Reykjavik and Akureyri, the towns are very small with one main street.
Out of the capital city, you are driving mostly on well paved roads only surrounded by nature.
The most difficult part is to keep your eyes on the road and looking in every directions!
TIP 1 - When to look at car rentals in Iceland
Iceland is a very popular destination, especially in Summer.
And tourism as grown fast. There are a lot of car rental companies, but it is still an island. Therefore supply is limited.
So, if you want the choice of your vehicle types and good prices, it is better to rent your car as early as possible.
You won't find last minute deals in Summer in Iceland. As soon as your date are decided, book the car!
Tip 2 - Decide where - car rental Iceland airport or cities?
There are 3 main locations where you can rent your car. They do not offer the same variety of companies and cars, but you should choose depending of your type of travels to make your Iceland car rental experience the most efficient.
Most car rental companies in Iceland are based in the capital city Reykjavik or at the Keflavik international Airport.
Car rental at Iceland Airport - Keflavik
- BEST FOR - those who want to start their road trip right away and head into the beautiful Icelandic nature, the best option is to rent your car at the Keflavik airport
- PROS - Large choice of companies, no need to drive in town, you can head straight for the ring road
- CONS - Big Machine, one after the other, impersonal
- NOTE - be careful - the International airport is at Keflavik, while the regional airport is at Reykjavik (40min drive away)
- Note - some companies are right in the airport, while others require you to take a free shuttle to get to the rental car areas
Car rental Reykjavik
- BEST FOR - people combining quiet days in the capital cities or organized tours with driving days. You can stay in Reykjavik without a car and rent it only when needed
- PROS - Large selection of companies, No car to park and pay for for the days you don't need it
- CONS - need to drive and park in the city
- NOTE - some local companies even offer a drop off where you are stying - When I used Route 1 car rental, they came at 8am at my accommodation to give me the car and do all the pick up activities, as well as give me advice. That was great!
Car rental Akureyri
- BEST FOR - People who don't like driving and are taking an internal flight to Akureyri and start driving from there to explore North Iceland
- PROS - No long day on the road, on clear days you get nice views from the plane
- CONS - not many companies are renting cars from Akureyri, choice is limited
TIPS 3 to 8 - Choose which type of car to rent in Iceland - 4WD?
Tip 3 - 2WD or 4WD - Summer discussion
This is the biggest question everyone has.
Let's go by logic:
- Do you plan on driving on F-roads (Mid- June to September only) ?
If yes, a big 4WD truck is mandatory and you need to know how to cross rivers.
If no, go to next question
- Do you like taking a road that looks promising off your itinerary?
If yes, take a 4WD so that you have peace of mind that you can go anywhere - but you don't need a big truck
If no, go to next question
- Do you plan on taking long gravel roads which are not F-roads? e.g. Berserkjahraun
If yes, know that most car rental companies do not allow normal cars on gravel roads - you can take a short one to reach the parking of an attractions, but not go on a gravel road adventure - so take a 4WD but you don't need a big truck
If no, go to next point.
- Otherwise to reach most attractions around Iceland, renting a standard car is largely sufficient
Tip 4 - Are F-roads worth it in Iceland?
Based on the decision tree above, your next question might be if F-roads are worth it.
If it is your very first trip to Iceland, I would say that:
- there is already a lot to see outside of the F-road
- the beauty is incredible but so might be the stress for you.
It might be best to keep it for a second trip, unless you are already a very frequent off-road driver.
Tip 5 - 2WD or 4WD - Winter discussion
In Winter I would totally go for a 4WD for peace of mind.
The weather can change abruptly with ice and snowfalls, 4WD gives you more comfort in driving in difficult conditions.
Learn more on my article about Driving in Iceland in Winter.
Tip 6 - Transmission choice
I have driven both manual and automatic in Iceland. I like both options for different reasons.
Note that some companies have a lot more manual transmission cars.
So make sure you pay attention to that detail when choosing a vehicle especially if you are uncomfortable driving shift.
Tip 7 - Gas or diesel?
Gas is called petrol in Iceland.
All gas stations have petrol and diesel.
It is up to your personal preference. Prices do not differ that much.
Tip 8 - Consider vehicles with sleeping options
You can also choose to rent a vehicle that allows you to sleep in it. This way you save money on accommodations on your Iceland Road trip.
However, know that overnight in cars, trailers or campervans is illegal outside of a designated campsite.
You can opt for:
- Mini campers or camper vans where you sleep inside the vehicle
- 4WD with roof tent options for the adventurous - to be able to go anywhere
- Complete Motorhome - more comforts but limits a little where you can go
Note: Self-drive packages
If you don't want to plan the entire trip by yourself, you can also book a complete self-drive package that includes the rental car, the itinerary and the accommodations. Check out my article on the Self-drive options.
Tips 9 & 10 - Decide who - best car rental companies - reviews
Tip 9 - Things to consider when choosing an Iceland car rental company
Price is of course an important criteria when choosing a car rental company, but there are a few more things your should consider:
- Unlimited or sufficient milage - the price can be attractive but if it has only a few hundred kilometers included, you final invoice might be a big surprise. So make sure there is sufficient milage included or even better, unlimited milage
- Age of the fleet - Normally, rental companies tend to keep modern fleet of vehicles and change their stock frequently. However to keep the prices as low as possible, some of the companies offer older vehicles. Make sure you understand what it entails.
- Customer service - Is there a number to call 24/4?
- Servicing - Make sure they are big enough to carry out servicing anywhere in Iceland and that they can replace your car for you to keep going on your road trip (especially if choosing an older fleet)
- Reviews - of course, best to check out their reviews online, but with a grain of salt as many websites are open to anyone so fake reviews are a classic
- Don't pay attention to the classic bad reviews - when people did not take any insurance, had an accident and oh surprise, they had to pay for it... well that's normal
- Pickup - this might not be important for everyone, but some companies do offer to drop the car at your accommodation which can be practical
- My favorite comparison site (one of the best rated internationally) - See here to compare prices on International rental brands: Discovercars.com -
- Or consider a local brand - there are many local car rental agencies in Iceland. It is not easy to compare. But on this website GuidetoIceland.com, they have gathered almost all of them and you can compare the vehicles and prices for the dates you are interested in - Check out prices with local car rental companies in Iceland.
- Both websites collect many customer reviews / ratings
Tip 10 - How to find cheap car rental in Iceland - How to save money
If keeping the cost down is your main concern in regards to renting your car in Iceland, you should consider:
- Booking very early
- Booking with local Companies with older cars (but know that service may not be as good in case of issue)
- Calculate cost with Camper van compared to normal car and accommodation
- Book with limited milage
However do read the fine print. And get your expectations at the right level.
All can go right but you might not get the same level of service, you might have issues with your cars...
2 companies with excellent reviews and ratings:
Tips 11 & 12 - Decide on Insurance Level - tips
Tip 11 - First of all: DON'T SKIP INSURANCE!!!!
I know that car rental may seem expensive, and the extra insurance will feel like a lot when you have not had to use it.
But the day you need it, well you will he happy.
It depends on how much money you have in case of an accident and if you are ready to take the risk.
Tip 12 - Understand the types of car rental insurances in Iceland
You can pick the insurances you want à la carte or pick a discounted bundle the rental company might offer.
Plus in Iceland, there are specific insurance to consider.
Here is an explanation of the various options that may be offered to you:
- Collision Damages Waiver (CDW) and Super Collision Damages Waiver (SCDW): typical rental car insurance everywhere, to lower what you will have to pay in case of collision. Some companies will cover the whole cost while other will still leave a deductible to pay.
- Gravel Protection (GP): typical rental car insurance to protect from gravel damage to the windshield, headlights, and car body. I normally don't take that one and I am ready to take the risk but considering the many gravel roads in Iceland, I think this is a great one to have.
- Theft Protection (TP): Protects from theft damage to your rental - Iceland is considered a very safe country but, like everywhere, you still have thieves, locals and tourists. This one, I have no opinion on.
- Sand and Ash Protection (SAAP): This protects from damage causes by sand and ash to the paint of your rental. It happens mostly February to April, when the snow melts and during eruptions or sandstorms when it is windy. Iceland has active volcanoes, so you never know. There was an eruption that started when I was there...
Your insurances back home (credit card, home insurance... ) might cover some of those.
But make sure to read to fine print, they often exclude some countries such as Iceland.
Tips 13 to 15 - Get ready to drive in Iceland
Now that you have selected your rental company and your car, it is time to get ready for your Iceland road trip.
Tip 13 - Learn about driving in Iceland
Let's start with a short video about driving in Iceland on various types of roads (Spring, Summer and Autumn)
If you are planning a Winter trip, head to my Iceland in Winter article.
Iceland Driving Rules
The main driving rules to know are:
- Alcohol limit = 0
- Lights shall be turned at all times
- You must use of hands-free kits for mobile phone while driving
- Speed limits is 50 km/h in urban areas. Outside towns, it is 90 on paved roads and 80 on gravel roads (although I rarely was driving at 80 on those…)
- Seatbelts are mandatory for all
You can learn more and get ready with my article about driving in Iceland
Tip 14 - Plan your Iceland road trip itinerary
There is so much to see in Iceland, that you should have a good idea of where you want to stop so as not to run out of time every day.
Have a look at my 2 travel guide ebooks to help you easily plan your Iceland road trip:
Where to stay in Iceland?
- Reykjavik - capital city - see best rated accommodations
- Selfoss - between Golden Circle and South Coast - see best rated accommodations
- Vik - near waterfalls and glaciers - see best rated accommodations
- Höfn - gateway to the East fjords - see best rated accommodations
- Egilsstadir - between fjords and North Iceland - see best rated accommodations
- Reykjahlid - for the wonders of Lake Myvatn - see best rated accommodations
- Akureyri - capital of the North - see best rated accommodations
- Grundarfjordur - to explore the Snaefellsnes Peninsula - see best rated accommodations
Tip 15 - Things to take in the car
Here are my 3 recommendations of things to have in the car with you on your Iceland Road Trip:
Your GPS. It is great to just go explore and discover incredible Scenery. But if you are limited in time, better to have recorded the GPS coordinates of all the locations you want to visit. So much time saving.
You can find the GPS coordinates in my eBook.
And with this GPS, you can easily enter them via your computer.
Keep all you equipment charged, especially your phone in case of issue. This has 2 USB plugs so it's even better!
Thermal blankets are something I never travel without.
You never know what can happen on the road. They do not take a lot of space and if you get stuck in your car they will keep you warm.
You can also check out my Iceland Packing Guide.
Tips 16 & 17 - Things to check when picking up the car
Tip 16 - Check your vehicle at pick-up
For a worry-free exchange with the rental car company, I recommend you do a thorough check of the car before leaving the carpark.
Sometimes it is done with an agent. Sometimes they just give you a form with the state of the car before renting.
Make sure all dents and scratches are noted, if not, make sure they add it. Plus for peace of mind, you can take pictures before leaving (like in every country).
Things to look for:
- Check all the exterior of the car for dent and scratches
- Don't forget to check the roof!!!! It is often forgotten, but they might check it when you return
- Don't forget under the bumper
- Check the interior for any damage
- Check the state of the tires
- Check the state of the fender (mud wing above the wheels)
- Make sure the spare tire is in place and in good condition
- Check that gas level and milage match the record
Tip 17 - Expect a hold charge
Make sure you credit card limit is high enough to accommodate the sum that the company is going to block during your rental.
Tips 18 to 20 - Be safe when driving in Iceland
Tip 18 - Follow the rules
RULES - Follow the rules of you rental agreement - don't go on roads you are not allowed to with your type of vehicle
EMERGENCY - Remember the emergency number : 112
ROAD CONDITIONS - always check out the latest status of the roads - Visit this website and click on the different sections of the small map to see the colors of all the roads
Tip 19 - Fill up the tank at every main town
Fill up on fuel when you can - some area are sparse in terms of petrol station, so plan ahead.
Tip 20 - Be aware of the DANGERS
Iceland driving is not especially dangerous but pay attention to the following:
- Wind warnings (boards) - If it is red, don't go on the road
- Sheep - They can appear in the middle of nowhere
- Morons - People stopping in the middle of the road to take pictures
- The road - it is easy to get distracted by the amazing scenery
TIP 21 - Drop off the car
For peace of mind, try dropping off the car during opening hours so that the car checks can all be made and validated.
If not possible, take pictures of the car before leaving it.
It is true that you can read horror stories on the Internet about renting cars in Iceland.
However keep in mind that the thousands and thousands of people who have no problem don't write that all went well with their rentals...
So don't be stressed. If you have taken a reputable company, are respecting the rules and took the gravel protection insurance, it should go very smoothly.
Want to see more of the best Iceland has to offer?
- Tips to plan your Iceland road trip - read article
- Itinerary suggestions - read article
- 45 Most beautiful landscapes in Iceland in pictures - read article
- The best stops on the Ring Road - read article
- The best locations off the beaten path around Iceland - read article
- 21 Most beautiful waterfalls in Iceland - read article
- Top 5 places to see around Myvatn - read article
- 5 best Lava Fields in Iceland - read article
- The 10 best lava caves in Iceland - read article
- The 5 most beautiful black sand beaches in Iceland - read article
- The Golden Circle - read article
- The Snaefellsnes peninsula - read article
Planning a trip to Iceland?
Check out my travel guide to help you plan:
Plan your dream road trip in Iceland
And keep track of your own trip!
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