Planning a trip to the magnificent land of Fire and Ice? Great choice! The best way to get around is by driving. Here is my complete step by step guide on how to rent a car in Iceland - Where, What, Which company, Insurance, pick-up, tips.... Get ready for an amazing road trip!
Navigate back to the complete Iceland Travel Guide
This article contains affiliate Links (info on the 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 whole guide with the step by step to renting a car in Iceland, here is a short summary and my overall 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 but a simple 4WD allows you to enter any road that looks inspiring without worry 🙂
- Compare the vehicle and price offers from local companies on this website
- or Compare offers form well-known international rental companies on this website
STEP 1 - When to look at car rental in Iceland
Iceland is a very popular destination, especially in Summer.
So if you want the choice of your vehicle type and good price, it is better to rent your car as early as possible
And depending on your travel plans, choose a flexible or a non-reimbursable option.
STEP 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 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
STEP 3 - Decide what - Iceland car rental 4x4 or not ?
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, 4WD is mandatory and you need to know you to cross rivers
- 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
- Do you plan on taking long gravel roads - 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 --> if yes, take a 4WD
- Otherwise to reach most attractions around Iceland, renting a standard car is largely sufficient
NOTE - A 4WD does not mean a huge vehicle. See below my little 4WD car - not sufficient for river crossing but great for bumpy tracks 🙂
Have a look at the many SUV options.
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.
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 car. So make sure you pay attention to that detail when choosing a vehicle especially if you are uncomfortable driving shift.
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.
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 whole 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.
STEP 4 - Decide who - best car rental Iceland (companies)
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
- Your favorite brand - most international brands are available in Iceland. However every time I did research, I felt that their international policies and set up were not the best for Iceland. Maybe just a detail... - See here to compare prices on International rental brands
- Or a local brand - there are many local car rental agencies in Iceland. It is not easy to compare. But on this website, 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.
Iceland car rental review
I am a big fan of Route 1 car rental. They are really focussed on customer service and really willing to help.
Even when talking with the representative dropping off the car at my accommodation, he really wanted to give me a lot of details to ensure I was safe.
How to find cheap car rental in Iceland
If keeping the cost down is your main concern in regards to renting your car in Iceland, consider:
- Booking very early
- Local Companies with older cars
- Calculate cost with Camper van compared to normal car and accommodation
- 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...
STEP 5 - Decide on Insurance Level
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.
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.
STEP 6 - 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.
Learn about driving in Iceland
Let's start with a short video about driving in Iceland on various types of roads. If you are planning a Winter trip, head to my Iceland in Winter article.
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
Plan your Iceland road trip itinerary
Have a look at my 2 ebooks to help you plan your Iceland road trip. With maps designed especially to facilitate the planning, as well as large photos, practical info for each recommended location and GPS coordinates of the carparks:
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 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.
STEP 7 - Things to check when picking up the car
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.
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
- 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
STEP 8 - 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
FUEL - Fill up on fuel when you can - some area are sparse in terms of petrol station, so plan ahead
DANGERS - And pay attention to:
- 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
STEP 9 - 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.
I wish safe and worry-free travels in Iceland!
Want to see more of ICELAND?
Have a great Iceland road Trip!
YOU MIGHT ALSO LIKE: