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Everything You Need to Know About Renting a Car in Iceland

You all know that I think the best way to experience Iceland is by renting a car and driving around the country yourself, but there’s so much to consider when choosing a rental vehicle and a rental company and insurances, and all of the things. So, today, we’re talking about everything that you would need to consider for renting a car in Iceland.

 

This post is Part 1 of the ultimate road trip planning series:

Here are the main points you want to consider before purchasing a rental car for your Iceland road trip.

Why rent a vehicle

First of all, I want to talk about why you would even rent a car in Iceland in the first place. The obvious reason and most important to me is freedom and flexibility. Renting a car allows you to drive around Iceland and enjoy all of the gorgeous landscapes that the country has to offer. Not only that, you’re on your own time schedule, so you can literally control every minute of every day, where you go, how long you stay, things that you can’t do when you join an organized tour. Next and also very importantly is that the public transportation system in Iceland is just basically non-existent. Compared to other countries especially in Europe, there are no trains. The bus system is very, very limited. It’s just not a great way to get around, so public transportation is not going to be useful for you in Iceland.

4wd vs. 2wd

This is by far the most common question I get asked, and definitely something worth considering.

The answer primarily depends on a) where you are planning to go and b) the season you are traveling in.

  • If you are driving the Golden Circle, the ring road, or cruising around during summer, then no.
  • If you’re visiting in the winter and/or you’re not used to driving on icy roads, then yes. Roads in Iceland are not very well maintained, especially outside of Reykjavik. Not only that, but the wind in Iceland can be so strong, you might feel like it could blow you right off the road! The weight of the bigger vehicle will give you peace of mind when traveling.
  • If you are planning to drive on any F-roads (off the main roads, usually in the interior of Iceland), then yes you will for sure need a 4wd. All of the rental cars have a sticker on the dashboard that warns you against driving off-road. Not only can it be dangerous to you if you violate this rule, but it can also get you a hefty fine if the rental company finds any damage.

GPS vs. WiFi

The next consideration might be if you need some extras like a Wi-Fi or GPS rental. These are add-ons that a lot of rental car companies will offer to you. I would say that these services usually cost $10 per day per service. Every rental car is different, but in general, that’s kind of what I’ve heard for a price. I do believe that a Wi-Fi device is a lot better option than a GPS. I can’t speak from personal experience because I’ve never used GPS in Iceland, but I have heard from some other travelers that the GPS didn’t work as well as they thought or maybe didn’t have all of the places listed, and so, it was difficult and maybe kind of a waste of money.

Make your own decision, of course, but in my opinion, a Wi-Fi rental will get you so much further because you can use Wi-Fi to navigate in Iceland. You can link up maps from your phone or your iPad to navigate you. I think that’s a lot better deal. Not to mention that if you rent a Wi-Fi device of some sort, then you can usually link that up with multiple users in your vehicle, so I think that this is not only more economical. This makes more sense for your trip.

BONUS! You can use the Google Map in my Ring Road eBook when you rent a Wi-Fi, which is literally the best navigation you would ever need!

Insurance

Insurance for a rental car in Iceland is an absolute must.

This is a crazy topic because there are a lot of options for insurance in Iceland because there’s a lot of elements in Iceland. The first thing that you need to know is that all vehicles are required to be insured. For example, in other countries around the world, you can sometimes deny insurance coverage. That’s not the case in Iceland. All vehicles have to have insurance. With that being said, most companies include the basic, basic option, which is called CDW or Collision Damage Waiver. From there, you will most likely have the opportunity to add other insurances on there for a lower deductible or things like that.

Before I get too far into this topic because it is a really long one, I am making an entire video about rental car insurance options and which one would work best for you in a future video, so make sure to check back for that one for a complete description.

Fuel

It’s important to remember that Iceland is a small island in the middle of the Atlantic…things are expensive up here! Don’t forget to budget for gas, especially if you will be driving a lot (~$60 USD/day).

  • You can expect fuel to be around $6-70 per gallon / $2-3 per liter.
  • If you rent a diesel vehicle, it’s cheaper per liter and gives you better fuel economy
  • Fill up literally wherever you can. Gas stations in Iceland are few and far between, and sometimes it’s just one pump on the side of the road!
READ MORE:   5 Iceland Travel Planning FAQ's

Mileage

Make sure your rental includes unlimited miles. You never know where you’ll going to want to go!

Types of Transportation

Obviously, the two most common ways to travel are by car and SUV. But one thing I love is that Iceland offers unique ways to travel around this country so that you get the most out of your vacation.

  • Car – adequate for the main roads (Golden Circle, Ring Road, Reykjavik)
  • SUV – required for F-roads, recommended for winter driving
  • Camper Van – Does having your vehicle and accommodation rolled into one sound good to you? Do you want to be able to cook your own meals rather than spend money at expensive restaurants? Then Camper Vans are for you! Not only is this option your wheels and your bed, but it is also equipped for cooking as well!
    • The BEST and first original campervan company in Iceland that I have used and highly recommend: Happy Campers
  • Big Rig – These vehicles are serious heavy duty 4×4’s that have been modified to handle anything that the Icelandic wilderness throws at you. You will be able to get you into the interior places of Iceland like Landmannalaugar and Thorsmork.  If you want to drive through streams and take the F-roads head on, these bookings are for you.

Choosing a Company

Your choice of a rental company depends entire only on the above preferences and your needs as a driver. There are big name rentals and smaller companies, and each will have something good to offer. Consider your individual needs for your trip.

No matter who you choose, I would recommend getting pick-up at Keflavik airport. If you are thinking about getting transported into Reykjavik, a bus or taxi will cost you $20-$50 each way.

If the car company is not on-site at the airport, make sure free pick up is included!

Want a discount on your rental car?! Get 5% off your ENTIRE rental purchase by using code: #LWV at checkout!

What else do you need to know?

  • The peak rental season in Iceland is May-September. Outside of those months, rentals become cheaper. This can allow you significant savings!
  • In Iceland, we drive on the right side of the road, so my American travelers will have no problem with this.
  • Also really important is that an international driver’s license is not required to drive or rent a vehicle in Iceland.
  • When you pick up your rental car is to take lots and lots of photos in and around the car. Usually, the company will go outside with you and look through the vehicle and mark down all of the damages, but just to totally make sure that you’re fine when you return the car, they will be checking again for damages, so anything that you think is suspicious and you want to document, I recommend taking pictures so that you have that to refer to later.
  • Always, always, always check the road conditions, especially if you are traveling in winter. I cannot stress this enough. The weather in Iceland is very unpredictable and road conditions can change rapidly. Be prepared, and don’t take any chances.
    There is a great app called 112 Iceland that can be used in an emergency to notify a response center.
    In an emergency, call 112

Remember that Iceland is incredibly beautiful, but safety comes first. Invest in a rental vehicle that is right for your itinerary, and most importantly keeps you safe!


Happy planning,

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Road Tripping in Iceland?

Make sure you can read the Icelandic road signs with my complete guide!

  • Driving in a new country can be scary and you want to be able to read the signs! Don't worry, I got you covered with this detailed guide. Drive in peace, my friends!
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  • Don
    March 27, 2017 at 12:26 am

    What a cool site! You are definitely a major resource for travelers to Iceland!

    My wife and I are trying to make plans for a 5-day visit to Iceland this August. We fly overnight from the US and arrive at 9:10 AM Saturday morning. Would it be rational to do:

    Day 1 – pick up a rental car at the airport and visit your suggested Reykjanes peninsula sights and continue on driving to Vik for the first night.

    Day 2 – Take a day trip from Vik to Jokulsarlon. Would it be too ambitious to try and drive all the way to Reykjavik after visiting Jokulsarlon or would it make more sense to just go back to Vik for a second night?

    Days 3-5 – Do day trips from Reykjavik for the remainder of our stay (golden circle and others from your top 10 list).

    • Jeannie
      March 29, 2017 at 6:06 pm

      Thanks Don! I usually suggest a 2 day trip down to Jokulsarlon and back – too much to see to rush it!

  • Janete
    March 23, 2017 at 10:27 pm

    So glad to have found your site! We will be travelling to Iceland April 8-17 and are going to attempt the Ring Road in 7 days (thanks to your honeymoon post!). A couple questions. Is it still “winter” at that time and should we pack for “winter”? And do you recommend we rent a 4wd if it’s still winter in April?

    • Jeannie
      March 29, 2017 at 6:00 pm

      Great questions Janette! The thing is, early April could easily be either season. I would be on the safe side and pack with my winter packing list – but you can omit the bulky winter boots. It will still be cold, but not as snowy. You would probably be fine with a 2wd around Ring road at this time. Have a great trip!

  • Jeny
    February 24, 2017 at 8:00 am

    Hey, Jeannie how about winter wheather in Iceland ? Me and my husbind plan to go there. Do you have some tips?
    And thanks for other tips!

  • Angie Spiegel
    February 6, 2017 at 5:17 am

    Thanks for the info. We were in Iceland last year in July for only two days. We did rent a car but I have not read about payment for fueling.

    • Jeannie
      February 6, 2017 at 12:03 pm

      Happy to help, Angie!

  • Jakob
    January 24, 2017 at 7:19 am

    Hello you talk that it’s way more expensive to rent a car in may-september. Does it mean that in other months are cheaper because it’s more dangerous to travel with car in other months? Or I wrong understand you?

    • Jeannie
      February 6, 2017 at 11:39 am

      Hi Jakob! It’s cheaper for car rental and hotel in the “off-season” because the demand for these things isn’t as high.

  • caitlin
    November 10, 2016 at 4:28 pm

    Hi! I plan on driving the ring road May 10-20 of this year. I don’t foresee wanting to take the F roads, do you recommend a 2WD with diesel or regular fuel? Will I really save that much (planning on spending ~600 on fuel anyways)? Also do you have a preferred car rental service?

    • Jeannie
      November 15, 2016 at 10:19 am

      Hi Caitlin!
      During May you will have no trouble with a 2wd if you aren’t going on F-Roads. I have used Sixt rentals in the past and had a great experience with them! Happy planning 🙂

  • Emily
    October 13, 2016 at 6:05 am

    Hi! I was just wondering if it’s true that Iceland mostly has stick shift cars? Is it a big difference in cost when getting an automatic for 4 wheel drive?

  • Candi
    September 8, 2016 at 4:25 am

    Hi Jeannie,

    I’m going to travel Iceland in early Oct, 3 weeks away! We plan to drive along the Ring Road to Selfoss, Vik and see the glaciers; hit the Golden Circle, and tour the Snaefellsness Peninsula. Do you think a 2WD is good enough for our routes? We are from Canadian, so kind of okay with driving in winter.

    Thanks for your suggestion.

    • Jeannie
      September 8, 2016 at 1:52 pm

      Hi Candi! Yes a 2wd is absolutely sufficient for those routes! Early October won’t have much snow anyway. Happy travels, and let me know if you need any more help planning!

    • Alexis
      January 27, 2017 at 3:51 am

      Hey Candi — I hope you see this. How was your trip? We’re headed to Iceland in May with our baby who will be 8 months old. We’re planning to do the same trip. How was it? Any tips? Where did you stay along the way (as in towns…or any hotels or guesthouses that you loved)? We won’t be doing any tours or long hikes bc of the baby so we’ll mostly just be driving. 🙂

  • Jennifer Kupstas
    August 23, 2016 at 5:37 pm

    Hi Jeannie,
    Did you use travel guard insurance for your car versus paying for the extra insurance through the rental company. The extra insurance through the rental companies are SUPER expensive and still seem to have high deductibles in some cases.

    • Jeannie
      August 29, 2016 at 10:10 am

      The insurance thing depends on where you are coming from. As a US citizen we were able to use our insurance company in the states. I would check with your rental company and then compare prices with Travel Guard. Good luck!

  • Brandon
    July 15, 2016 at 11:23 pm

    Which map did you get?

    • Jeannie
      July 17, 2016 at 2:49 pm

      Hey Brandon, I just updated the post with the map that I recommend from Amazon! http://amzn.to/29SxHA4
      Hope that helps 🙂

  • Seth
    May 10, 2016 at 1:56 am

    Thanks for the valuable information! I’ve been reading that car/campervan rental companies requires driver license to be held for at least 12 months. Are there any exception to this rule?

    • Jeannie
      May 11, 2016 at 8:31 am

      Glad it was helpful, Seth! I’m not sure about that rule, you could to contact the company directly to check. Hope you have a great time in Iceland!

  • Tobias Armstrong
    March 28, 2016 at 8:59 pm

    Thanks for sharing the peak rental season. I’ve always wanted to go to Iceland, and I really want to have my own car when I’m there. Knowing what I’m going to get myself into, and being able to plan a little bit in advance to avoid most of the crowds seems like it would be the smartest track. Thanks for sharing!

    • Jeannie
      April 5, 2016 at 11:27 am

      Absolutely Tobias! Good call on having your own car, it’s definitely the best way to see a lot of beautiful things in Iceland. Happy to help 🙂

    • Michelle
      December 3, 2016 at 9:21 pm

      HI Jeannie- Thank you so much for sharing this valuable information. I am actually travellng to Iceland this week. I was wondering what you thought about renting a a camper van in December. Is it too riskygiven teh weather and road conditions? what are the options for road side assistance if you get stuck somewhere? Is it too cold at this time to sleep in a camper? Who do you recommend for SUV / camper rentals? Thank you so much!!

      • Jeannie
        December 13, 2016 at 9:08 am

        I’m not sure about the camper rentals at this time of year. As far as assistance, your rental company should be able to help you if needed. And you can always call the emergency number which is 112. Have a great time!