Car Rental in Iceland – Ultimate Guide

Driving towards mountains at sunset in Iceland

Driving around Iceland is one of the best ways to discover the hidden gems of the country and explore at your own pace. If you’re contemplating a road trip in the Land of Fire and Ice, you’ll want to rent a car.

To help you prepare for your self-drive adventure, we’ve gathered all the info you’ll need for your Iceland car rental. Read on to figure out the right car for you, tips to take on Icelandic roads, and what to look out for when booking.

Why choose car rental for your Iceland trip?

Are you looking to take on the open roads? To see the striking sights of Iceland at your own pace? Do you wish to be in charge of your own adventure to explore the otherworldly scenery? Iceland’s Ring Road lends itself perfectly to a memorable road trip.

Imagine being at the wheel of a car driving through the Icelandic landscape, black sand beaches and the roaring Atlantic Ocean on one side, volcanoes and glaciers on the other. Your favorite song is playing as you take on the thrilling bends and mountain passes of Iceland.

This is what awaits you on a road trip in the Land of Fire and Ice. Renting a car will allow you to do all of these things and more. Journey independently and discover all the sights on your bucket list, stopping at all the jaw-dropping attractions along your route. 

Picking up your rental car is also a flexible way to travel as soon as you arrive in Iceland. You could drive yourself to the Blue Lagoon to start on a high note!

Road through the mountains and fjords in Snaefellsnes peninsula Iceland

Picking the right car for you

There are many things to take into consideration when picking the right car for your tour. The first thing to think about is when you’re visiting Iceland and what you want to explore.

2WD or smaller cars are perfect if you’re looking for day getaways or budget trips. It’s also a great option for tours around the Ring Road. If you’re keeping to the main roads and visiting in summer, this is your best pick.  

If you’d rather something more comfortable, why not opt for a 4-wheel drive or an SUV?

This is also the car you’ll want to go to more remote areas, like discovering the Westfjords or the highlands. Some of the roads in these regions, usually called F-roads, are unpaved or made of gravel, so you’ll need a sturdy drive.

4×4 vehicles are also the best if you’re visiting in winter. This is because of the weather and road conditions at this time of year.

To secure your preferred car, make sure to book in advance. Especially if you’re visiting in summer, which is the popular travel season.

Transmission types

When picking the right car for you, make sure to take into consideration the transmission type of your rental vehicle. Many vehicles are manual, but you’ll find plenty of automatic options. Make sure to choose the transmission that you are comfortable driving.

Winter travel

Don’t let the winter conditions of Iceland deter you. A winter road trip in the Land of Fire and Ice is exceptional. You’ll see the contrast between the fluffy snow and the stark lava fields. You could admire the magical landscape, tour ice caves, and even hunt for the northern lights.

But be prepared! Winter travel can be a bit more challenging than in summer. As we’ve already mentioned, hire a 4×4 to enjoy a winter self-drive tour. And make sure you’re a confident winter driver.

Your rental car should come equipped with winter tires. Every morning you should check the weather and road conditions at before setting off. Throughout your time in Iceland, take your time and enjoy the journey.

Wintry landscapes near Lake Myvatn, Iceland

How to rent a car in Iceland

Renting a car in Iceland is easy enough. You’ll need to find a car rental provider where you want to pick it up. This could be either at Keflavik Airport or in Reykjavík, the capital city.

Then you’ll need a valid international credit card to be able to make the deposit. This is usually held for the duration of your trip in case anything happens with your rental vehicle.

Finally, the other thing you’ll need is a valid driver’s license. It usually needs to have been held for at least 1 year. There’s no need for an international driver’s license, but it may depend on where you’re from. For example, if your national driver’s license is not in Roman script.

Then you’re good to go to rent a vehicle online for your Iceland road trip.

How old do you have to be to rent a car in Iceland?

In Iceland, the minimum age to rent a car is 20 and all drivers should have held their license for at least a year.

To rent smaller cars, drivers under 20 years old will be subject to a young driver fee. This also applies to drivers under 23 years old who may want to hire a premium vehicle, such as large SUVs and mini-buses. Check with your travel consultant.

Ariel view of a causeway in Iceland

How much does it cost to rent a car in Iceland?

The cost of renting a car in Iceland depends on a few factors, so we can’t give you an exact number. Usually, it will depend on:

  • Who you book with
  • The type of car you want
  • When you’re visiting Iceland
  • Any additional insurance and protection you might want to add

When you book with Iceland Tours you get added benefits, such as a second driver at no extra cost, in-car Wi-Fi, and more.

To find out how much renting a car will be for your trip, pick your favorite itinerary and input the details. You’ll be able to choose the kind of car you want according to your budget or preferences.

What about insurance?

When you rent a car as part of a package with Iceland Tours, you’ll get added benefits, including CDW, or Collision Damage Waiver. This means the rental company won’t charge you over a predetermined limit if you drop off the rental car with damage.

You could also get extra insurance from the rental agent, such as protection for ash, ice, gravel, and river crossings. Be sure to read your contract carefully and chat with your car rental agent to get what’s best for your adventure.

We also encourage you to always purchase personal travel insurance before your time abroad.

10 tips for driving around Iceland

Now you’re all booked and you’re traveling to Iceland. We’ve compiled the top advice to keep in mind from locals and fellow visitors.

1. Look out for animals

The main animal you should be careful about when driving around Iceland is sheep. They roam freely around the country and like to hang by the road.

You may also pass wild roaming reindeer and beautiful Icelandic horses. Make sure to slow down and pass animals carefully if they are too near the road.


2. Watch your speed

Speeding fines are steep in Iceland so make sure to keep an eye on how fast you’re going.

The speed limits usually go as follows: 50 km/h (30 mph) in urban areas, 80 km/h (50mph) on gravel roads, and 90 km/h (55 mph) on paved highways, like the Ring Road. Yes, limits are generally quite low due to unpredictable road conditions, but it’s best to take your time to enjoy the journey!

3. Be mindful of bridges and tunnels

In rural areas, you’ll find several narrow passes and blind summits, especially in the East Fjords. There are also single-lane bridges that you should approach carefully. Generally, the rule is that whoever is closest has right of way.

Road tunnels can sometimes surprise first-time visitors to Iceland and can go on for nearly 6 kilometers (3.8 miles). They are a good way to avoid difficult driving conditions, especially through the mountains in winter. Those to keep in mind are the Hvalfjörður Tunnel, the Almannaskarð Tunnel, and the Fáskrúðsfjarðargöng Tunnel.

4. Learn about the different types of roads

Driving in Iceland will be an experience like no other because you’ll come across different types of roads. In the city and along the Golden Circle, you can expect paved roads, no problem.

But when you venture outside the city, you may find yourself driving over different terrain. Even along the famous Route 1, or Ring Road, some stretches have a gravel surface, most especially in East Iceland.

You should also take care when it comes to F-roads in Iceland. These head into the highlands and are only open seasonally. If you want to drive these gravel roads, visit between the end of June and August. And it’s important to note that it’s only legal to drive F-roads with a 4-wheel drive or jeep.

Car driving into the sunset in East Iceland

5. Fuel up when you can

If you’re going to be touring the island and driving through some more remote regions, make sure to fuel up when you can. Stop at gas stations when you come upon them and top up your petrol.

Gas stations usually have other amenities like a car wash and food stall. This means you can also top up on snacks!

6. Park in safe spots

We know it’s tempting to stop spontaneously to take a spectacular photo. But do not stop in the middle of the road or park on the grass by the road or along single-lane bridges, tunnels, or roads. This is unsafe.

Make sure to park where it is safe to do so. If in doubt, always look for a marked bay or parking lot.

7. Keep an eye on the weather

The weather in Iceland can be very changeable. During your trip, keep an eye on the weather each morning before setting off. This is especially important in winter. You’ll be able to see if you should take more time or change your route if there have been road closures and such.

8. Use both your GPS and map

A GPS (or online maps, like Google) is a great tool, but it’s wise not to rely solely on it when you’re traveling, especially in more remote areas of the country.

Thankfully Iceland Tours will provide you with a personalized map so you always know where you are!

9. Be careful where you camp in Iceland

Going on a road trip and camping along the way is a great way to immerse yourself in Iceland’s stunning nature and to save money on accommodation. But Icelandic flora is fragile and it’s best you stick to designated spaces.

This is especially true if you’re in a camper van or a tent trailer. You will have to use campgrounds.

Camping in Iceland river and mountains view from the open tent

10. Brush up on the local laws

First thing first, it’s good to note that Icelandic motorists drive on the right side of the road. It’s the same as North America and much of continental Europe.

Four big laws to also keep in mind are:

  • Your headlights must be switched on at all times, summer and winter alike
  • Off-road driving is illegal
  • All passengers must wear their seatbelts
  • Driving under the influence is illegal and will result in hefty fines

Best way to rent a car in Iceland

Planning a trip can sometimes be a bit overwhelming, but book via a local company for competitive deals and personal service. Iceland Tours has more than 20 years of experience as a tour operator and has developed trusted relationships with top suppliers.

We only work with the best and most reliable car rental agencies in Iceland. This means you can be sure that the vehicle you hire through our services will be in excellent condition and road trip worthy.

When you book a self-drive tour with Iceland Tours you’ll get added benefits:

  • CDW insurance
  • Unlimited mileage
  • In-car Wi-Fi
  • 2 drivers included

What's more, this is on top of a personalized itinerary created by a local expert and access to our 24-hour emergency helpline. We’ll also arrange your entire Iceland vacation before you arrive so all you have to do is enjoy yourself.

When you’re ready to visit Iceland, browse our self-drive packages to pick your dream road trip.

ITo Author Bio Camila Transparent BG.png

About the author

Camila first travelled to Iceland in 2018 and it didn’t take long for her to fall in love with its culture, food and scenery. Throughout her life, she’s had the pleasure to live in different cultures and languages and absorb as much as possible from all her travels. You’re most likely to find her reading a good book in a local café or writing about the best spots to visit for top travel agencies.

View more posts by Camila

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