What to Know About Renting a Car in Iceland

👉 Jump to: Best Iceland Car Rental Sites | Do You Need a Rental Car? | Requirements | Cost | Tips | FAQs

Iceland is one of the most uniquely beautiful countries in the world. Lucky for tourists like you and me, it’s also one of the most drivable countries in Europe. Wide-open roads, reasonable traffic rules, and straightforward laws make renting a car the obvious choice in Iceland. The only thing you have to worry about is other tourists! And sheep…

I recently drove the Golden Circle and was able to rent a car on a whim. Here’s everything you need to know if you plan to explore Iceland on four wheels.

Best Car Rental Sites in Iceland

Not sure where to start looking for a rental car in Iceland? These three comparison websites are our most trusted recommendations:

Best Car Rental Sites in Paris

Do You Need a Rental Car in Iceland?

Iceland is one of the greatest places on Earth to take a road trip. The landscapes are gorgeous, ever-changing, and unique. Driving around, pulling over when I liked, and taking unexpected excursions was the best part of my trip. You need to rent a car to maximize your experiences here, in my opinion. 

There are plenty of tours that provide transportation around Iceland. However, most of these tours are extremely pricey and will pack you into a small van or a slow bus with a ton of other tourists.

As a person who doesn’t like to follow the crowd, I think renting a car is a must in Iceland. This way, you have the freedom to explore on your own terms.

Rental Car Requirements for Iceland

🚘 Driving Age – The driving age in Iceland is 17. However, most rental car agencies require that you be at least 20 years old to rent. Additional fees may apply for drivers under 25.

🧾 License Requirements – You are required to hold a valid driver’s license from your country of residence to rent a car in Iceland.

💳 Payment – A credit card in the driver’s name is required to finalize your car rental in Iceland. Cash alone won’t fly here.

🚗 Collision Insurance – Collision protection is the number-one insurance recommended by car rental agencies in Iceland, but it’s not required. This typically covers accidents, theft, and vandalism. You should read the fine print to ensure you know what you’re purchasing. Collision insurance ranges from $20-$50 extra per day.

🔧 Additional Insurance – Consider comparing travel insurance deals on VisitorsCoverage.com, especially if you intend to stay in Iceland for a long period of time. It’s a rugged country and it’s always better to be safe than sorry.

How Much Do Rental Cars Cost in Iceland?

Rental cars in Iceland range from $25 to $500 a day. Of course, the price varies according to what you want. My boyfriend and I rented the most bare-bones, bottom-of-the-barrel car to save money. And we fared just fine with what we got (a Toyota Aygo X).

If we had planned to go off-roading or explore more rugged areas, we would’ve needed a much more expensive four-wheel drive vehicle like a Jeep. Consider what you want to accomplish in your Icelandic explorations before confirming your rental. You can always upgrade at the rental site if you need something more durable (if available).

🚗 Compare rental car prices for your dates by searching these sites: 

• Discover Cars
• Booking.com
• Kayak.com

10 Tips & Things to Know Before Renting in Iceland

Take Before and After Photos

Let’s start with an obvious tip. Take ample photos of every angle of the outside and inside of your rental car as soon as you get it, as well as when you return it. This will protect you from any false damage allegations.

Know the Rules of the Road

Iceland doesn’t have any outlandish driving rules in my book. But some seemingly ordinary rules might cost you a ticket — or worse, an accident. For example, no right turns at red lights threw us off the whole trip. Review Visit Iceland’s driving safety guide for more information.

Rent Early If You Can’t Drive a Manual (Stick Shift)

Most rental cars are manual (stick shift) in Iceland. Book well in advance if you need to reserve an automatic vehicle. They sell out very quickly!

Download the Parka App

Reykjavík and the surrounding areas are divided into parking zones. Download the Parka app to remove the headache from trying to figure out which zone is which. The app is super easy to use and makes it virtually impossible to get a ticket with frequent reminders and simple payment options.

Uber and Lyft Don’t Exist

The absence of Uber and Lyft is another major reason we recommend renting a car in Iceland. You can book drivers and taxis through other companies, but the lack of rideshares makes renting a car the simpler choice when visiting. 

You Can Leave Your Belongings in the Car

Iceland is a very safe country to visit. The highest crime rates fall under traffic violations. I never felt uncomfortable leaving our belongings in the car. It’s smart to keep expensive valuables out of direct view, though, just in case.

Research the Terrain & Book Accordingly

The Golden Circle is one of the most-visited driving routes near Reykjavík. But there are dozens of roads that require different levels of navigation. Any car will do if you plan to stay on the paved roads. But rugged terrain will require a more durable vehicle. Figure out how you want to navigate Iceland and book accordingly.

Prepare to Parallel Park

The city streets in Reykjavík are narrow and crowded. We had to parallel park nearly every time we stopped. It’s pretty easy to do if you rent a small car, but bigger vehicles will definitely pose a challenge in the cramped parking spaces.

Winter Driving is A Whole New Ball Game

The paved roads so seamlessly traveled in the summertime? Not so easy to navigate in the winter. I highly recommend renting a 4×4 vehicle if you visit the shimmering landscapes during the snowy season (November through March). 

Rent a car equipped with snow tires at the very least. Those gorgeous, snow-covered landscapes won’t be as enticing from a ditch on the side of the road.

Gas Up Before You Reach the Airport

You have the option to prepay for a gas refill when you first rent at KEF. But you’ll likely spend more that way, so I recommend stopping at the Orkan gas station just outside of the Keflavík Airport before returning your car. We only gassed up once the entire trip after driving over 300 miles, and it was less than $50 to fuel up here. Our car had incredible mileage!

FAQs About Renting a Car in Iceland

Do I need a rental car for Iceland?

You need a rental car in Iceland if you plan to visit the best geographical sites. Iceland might be the prettiest road trip destination on Earth, so you want to have your own wheels to see all the beauty the country has to offer.

How much per day is a rental car in Iceland?

The average rental car price per day in Iceland is $25 – $200, based on a sample search on Discover Cars. Prices vary based on many factors including availability, season, type of car, and the age of the driver. Rental car fees are impressively low considering how expensive Iceland is as a whole.

Which rental car companies are on-site at Keflavik (KEF) Airport?

Keflavik Airport (KEF) rental car companies include Avis, Alamo, National, Budget, Europcar, Hertz, and more. You can compare prices at any of our recommended car rental sites.

Is driving in Iceland easy? 

Driving in Iceland can be challenging, but it depends on the driver and environmental factors. We recommend getting comfortable with your rental vehicle before hitting the road to ensure the safest driving experience.

Can you Uber or Lyft in Iceland?

Unfortunately, you cannot take an Uber or Lyft in Iceland. The companies do not exist in the country… for now. This is just another reason why we recommend renting a car.

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The road trip of a lifetime awaits! Always remember to prioritize safety and stay informed on how to navigate the roads in a foreign country. See my Iceland packing list to further plan for your trip.