The Ultimate Guide to Renting a Car in Iceland

All Things Iceland

I decided to focus on everything you need to know when renting a car in Iceland because I get a lot of questions about this from travelers. I did my best to be very thorough in this episode because there are so many things you need to keep in mind. For links or additional information, I recommend checking out the show notes of this episode below.

Iceland Rental Car Guide Table of Contents

1. Is it Worth it to Rent a Car in Iceland?
2. Go Car Rental Iceland
3. When to Book Your Rental Car
   • Price comparison between seasons when renting a car in Iceland
   • What is Needed to Rent a Car in Iceland
   • Type of car that is right for your adventure
   • Do you need extra insurance for your rental car in Iceland?
   • Mileage limits
4. Picking Up Your Rental Car
   • Reykjavík or Keflavík?
   • Inspecting the car before heading out
5. Driving Around Iceland
   • What to check before driving around the country
   • Navigating Iceland by car
   • Speed Limits in Iceland
   • Speed Traps on the road
   • What Happens When you Get a Speeding Ticket in Iceland
   • Road Signs that are unique in Iceland
   • Paying for Parking
   • Tolls
   • Roadside Assistance
   • Fueling Up your rental car
   • Summer vs Winter Driving
   • Very Important to keep in Mind when driving in Iceland
6. Returning Your Rental Car
7. Ways to Save Money When Renting a Car in Iceland

Is it worth it to rent a car in Iceland?

As a person that loves to explore and do things at my own pace, renting a car is the best option for me. If that same feeling resonates with you, then you’ve come to the right post. I’ve broken this episode into different sections. First, I will go over when you should consider booking your car, then I talk about what to know when picking up your vehicle.

Next, is what is important for you to keep in mind while driving in Iceland. After that is what to do when returning your car, and lastly is ways in which you can save money when renting a car in Iceland.

Of course, I will also have my Icelandic word of the episode and random fact about Iceland sections at the very end.

Go Car Rental Iceland – My Preferred Local Icelandic Rental Company

Before I jump into the first section, I’d like to thank Go Car Rental Iceland for sponsoring this episode. They are a local car rental company based in the Reykjavík area. Some of my listeners who have been tuning into the show for a while know that I am picky about who I collaborate with because it‘s important that the company is reputable and will bring value to my audience.

I‘ve personally used Go Car Rental Iceland and I highly recommend them. They have transparent pricing, a great selection of vehicles, and are friendly.

Get 10% off Your Entire Car Rental

If you plan to rent with them, you can get 10% off your entire rental, which will save you a lot of money, when you use my code Iceland10. I‘ll be getting into the cost of car rentals in Iceland in this episode, but be sure to keep in that code in mind.

When to Book a Rental Car in Iceland

When to book your rental car in Iceland will, of course, come down to when you plan to visit. If you haven’t already booked your trip, then here is what I advise for you to think about. The peak season in Iceland is the summer (June, July, and August).

Because renting a vehicle allows you to have more freedom, many travelers choose this option, which means that the closer you get to the peak season, your choices of rental cars diminish quite a bit. Additionally, the cost of rental cars in Iceland is much higher during this time.

This is not meant to discourage you from coming to Iceland during summer, but I think it’s important for you to know. From September to May, there are usually more rental cars available, and they are not as expensive.

If you plan to rent a car during the summer here, I recommend booking your car as soon as you have that plane ticket. Some people get their tickets as early as six months ahead of time, but I find that most are booking withing a few months.

Due to COVID, things have been a little different because people have needed to delay their trips for more than a year, but tourism has definitely picked up this summer.

Price comparison between renting a car in Iceland the high season vs the low season

To give you an idea of the difference in cost between summer and the off season, like fall /winter. I went to Go Car Rental Iceland’s website to see what it costs to rent a VW Polo Automatic

From July 27^th to July 30^th, it’s $556

From October 11^th-14^th, it’s about $189 for three days.

What is needed to rent a car in Iceland?

Thankfully, it’s simple to rent a car here. You can easily do it online (put a link to Go Car Rental Iceland). You only need a valid driver’s license, a credit card or debit card and meet the age criteria.

You must be at least 20 years to rent a car in Iceland. Well, to get any 2-wheel drive. If you want to rent a 4-wheel drive vehicle or a van, then you must be 23 years of age or older.

What type of license is accepted in Iceland to rent a car?

Many rental companies have a similar policy, but I’ll just reference the one from Go Car Rental as an example. In essence, if your valid driver’s license is written in English or western alphabetical letters, you’re fine.

If a translated copy of the license in English cannot be provided, then you need an international driver’s license.

What Type of Rental Car in Iceland is right for you?

The types of rental cars you will typically find in Iceland are 2WD, 4WD, vans, and camper vans. While there are a decent amount of manual car, there are usually of plenty of automatic cars for those that need that option.

The great news is that if you plan to just drive around Iceland’s ring road and go to some of the most popular attractions here, then you only need a 2WD.

4WD is great for people that plan to go into the highlands, which require you to drive on F-roads (these are mountain roads). Some people also like to rent 4WD during the winter, but 2WD cars do just fine here during that season.

One important thing to know is that rental car companies in Iceland put studded tires on their cars during the winter season. Those tires make sure that the car has better traction while driving and will for sure come in handy when you drive on country roads.

Renting a Campervan in Iceland

A camper van is a great budget friendly option. Go Car Rental Iceland has a sister company called Go Campers. My discount code doesn’t apply to the vans, but you can check them out via this link, if you are looking to book that type of vehicle. I have traveled via camper van around Iceland and did enjoy it, but I’ll go into that in another episode.

Insurance for your rental car

One of the questions I probably get asked the most about renting a car in Iceland is if the additional insurance is necessary. Personally, I always opt for it because I know that Icelandic weather can result in damage to the car that is out of the renter’s control. An example of this is sand and ash protection.

Icelandic Weather is Unpredicatable

Iceland is notorious for being windy. During a windstorm, or just a very windy day, it’s possible for the wind to pick up sand and ash that scraps the car. This can result in the paint of the car coming off in places. In extremely windy conditions, windows and lights can be broken.

Windstorms can happen any time of the year. While I don’t know the likelihood of it happening during your trip, I will just say that my personal preference to have everything covered. You can use this information as a way of knowing what’s possible and just decide for yourself if you want to have the additional insurance or not.

It varies among rental car companies as to what insurance is covered. For instance, Go Car Rental Iceland includes CDW (Collision Damage Waiver), SCDW (Super Collision Damage Waiver) and Gravel Protection. Many rental car companies I know don’t include gravel protection, which would cover you if there is a crack in the windshield and headlights.

The Option to Use Your Credit Card For Rental Car Insurance in Iceland

If you opt to use a credit card that includes insurance coverage on rental vehicles, that is certainly one option but I highly recommend checking with them first about what is covered. If you decide to use the insurance of your credit card, then you have to decline the insurance from the rental car company.

Sand and ash, as well as gravel protection, in Iceland are a must, in my mind. If you are renting with a company that includes everything except sand and ash, that’s less that you have to worry about cost wise.

Mileage limits on Rental Cars in Iceland

The fine print is worth reading regarding this topic because mileage limits can become costly, if you aren’t aware of them and plan to do a lot of driving.

I highly recommend going with a company that has unlimited mileage on your vehicle. For some companies, the unlimited mileage is for short-term rentals, which are rentals that are for less than a month.

Most travelers are visiting for up to two weeks, so that shouldn’t pose an issue. My only advice is to double check that mileage is unlimited so you can freely drive to as many places as you want without hesitation.

Picking Up Your Rental Car

Now that you have an overview of what to know and look for when booking your car, we can move on to picking up your rental in Iceland.

Pick up from Keflavik vs in Reykjavík

Keflavík airport is where most people flying internationally land in Iceland. Many people opt for picking their car up there but some companies, like Go Car Rental Iceland, have shuttles to and from Reykjavík for free, so you can pick up your car there.

It honestly just depends on where the car rental company is located and their policies. Again, reading thoroughly through the FAQs on a rental car site and the fine print will keep you informed as to what is included or is an additional cost.

Inspecting Your Vehicle When You Pick It Up

One of the most important parts about renting a car anywhere is to be meticulous about inspecting it, and writing down, as well as taking pictures, of any damages and scratches the car has before leaving the lot.

While I have not experienced any shady behavior with a car rental in Iceland, I have encountered renting a car that had different controls and settings to make it operate.

Some European models have functions that people from the US or other regions might not be familiar with. I highly recommend testing out how to turn the car on and off, the windshield wipers, turn signals, how to change the settings for the lights and so on.

Be Meticulous When Inspecting a Rental Car in Iceland

It’s encouraged to take photos and videos of the car, in addition to marking off any damages you see on the paper given to you by the car rental office.

Also, make sure to check if the car has any warnings popping up, such as an engine light or anything like that. It is easy to miss these things, especially if you are on that red eye flight 6 or 7 in the morning.

Lastly, check the tires of the car to ensure that are in good condition. You can use a penny, if you are from the US, a 20 pence coin, if you are from the UK or some equivalent to check the tread. Here is where you can find information that describes this type of test.

In Iceland, it can be rainy, snowy, and icy on roads, so good tread is a must. Also, there are some gravel roads that are not mountain roads, which can be a little slippery when wet or have loose rocks, so you will need good tires to safely drive there.

Driving Around Iceland

Thankfully, driving around Iceland is simple and easy. If you’re from a place where you drive on the right side of the road, you’ll be happy to know that Iceland does the same.

There is one road called road 1 that goes around the whole country. Many of the most popular attractions are just a turn off of this road. Nevertheless, having some type of navigation system is highly recommended.

Some people opt to download Iceland on Google Maps, so they can navigate without needing the internet. I do think that is a good option. At the same time, I like having phone service, or at least WIFI so I can look things up, check social media and so on.

Before Heading Out on Your Adventure in a Rental Car in Iceland

Always make sure to check the conditions of the road and weather before heading out on your trip. I recommend safetravel.is for weather warnings and road.is for road closures.

The worst thing is to head out not knowing the conditions and running into a severe storm, or a closed road that you could have known about beforehand.

Navigation: Choosing GPS or WIFI for Your Rental Car

Most rental car companies give you the option of purchasing GPS or WIFI. I prefer WIFI because you can then use apps like Google Maps to navigate and have access to other things on your devices.

Another option is to check if the phone service you have in your home country, or wherever you have a phone service provider, has an inexpensive international plan. If that is not available or is too expensive, you can go the route of buying a SIM card in Iceland.

I’ll have links to phone companies in Iceland in the shownotes, so you can look further into the cost, if you are considering that option.

But just to give an example of a package (not sponsored), the phone company Síminn offers 5GB of data, 50 minutes of calling and 50 text messages in Iceland, Europe, the USA and other countries they have listed on the site for 2.900 ISK, which is abouy $21. That is for 30 days of service.

Speed Limits in Iceland

If not posted, then the general speed limit for cars in Iceland is 50 km/h, which is about 31 mph, in urban areas. If a place is scarcely populated, it‘s common to see 70 km/h (about 43 mph).

Some highways and gravel roads are 80 km/h (50 mph) and many country roads, meaning the roads outside of the urban areas, are 90 km/h (about 55 mph) on asphalt roads. In some residental areas, the speed is 30 km/h or 19 mph.

Depending on where you are coming from, these speed limits might sound slow. Honestly, they are quite slow, especially when you are out on the open road and there are hardly any other cars around.

While it might be tempting to go much faster, the speeding tickets here are a big incentive to not go faster.

Speed Traps & Speeding Ticket Cost if Caught

There are two types of speed traps in Iceland. The first is the old-fashioned way in which a police officer is parked with a speed reader somewhere. Their placement can be obvious sometimes but there are other times when they are hidden.

The second type of speed trap is by camera. There are speed cameras placed at certain points in urban areas, like Reykjavík, and along the road out in the countryside. Unlike the first kind of speed trap, you are warned with a sign that a speed camera is coming up.

A speeding ticket can range from 30.000 ISK to 150.000 ISK ($220 – $1,101) but that depends on how much over the speed limit you are. The speeding fines are high on purpose because the police want discourage people from going too fast.

What Happens if You Get a Speeding Ticket in Iceland?

If you caught by a police officer, you could pay on the spot and get a discount. I´ve read that it is 25%. Another option is to pay later but then you won’t get a discount.

If you are caught by a speed camera and get the ticket in the mail, you are normally given a certain time to pay the ticket with a discount.

When a person does not pay the ticket on their rental car, the rental car company will normally pay it and charge you a surcharge for them having to take on the responsibility of paying it. Basically, you end up paying the fine and an additional charge.

Lastly, if feel that there was an error with speed camera, you can dispute the ticket, but I don’t know the likelihood of that working out in your favor.

Road Signs in Iceland

1. Start of a gravel road

2. Single Lane Bridge

3. Single Lane Tunnel

4. Blind Hill

5. F-road: only 4×4 cars on these difficult roads

6. Roundabout up ahead

You can see all of the road signs in Iceland here.

Where You Have to Pay for Parking Iceland

There are some places where paying for parking is required in Iceland, so it’s good for you to keep that mind because parking ticket fines are common in those areas.

In Reykjavik, there are certain streets in the downtown area where it is required for you to pay to park. It’s normally from Monday to Friday in between 9:00 AM – 6:00 PM, and on Saturday from 10:00 AM – 6:00 PM. No parking fees on Sundays.

There are 4 parking zones and they are labeled P1, P2, P3, and P4, so keep a lookout for those signs when trying to find a parking spot.

Costs for Parking in Different Zones in Reykjavík

In a P1 zone, the price is 385ISK ($3) per hour.
In a P2 zone, the price is 200ISK ($1.56) per hour.
In a P3 zone, the price is 200ISK ($1.56) for the first two hours, then it’s 55ISK ($0.4) per hour.
In a P4 zone, the price is 200ISK ($1.56) per hour.

While there are physical parking meters that you can use to pay on the streets of Reykjavik, I suggest using an app. It is easier, faster, and sometimes the parking meters don’t work. The two apps I’m aware of are EasyPark and Parka.is.

Parka.is is also used at Vatnajökull National Park and for parking in Akureyri. In other places where you have to pay for parking, there is a machine where you use your card to pay and get a physical receipt.

Tolls to Pay When Driving in Iceland

Luckily, there is only one toll to pay here and that is for a tunnel in north Iceland. The tunnel is called Vaðlaheiðargöng and you can pre-pay the toll. Cars under 3.5 tons are 1.500 ISK per trip.

If you opt to pay 24-hours before the trip or 24-hours after you have gone through. If you drive through without paying the toll, a bill is sent to the registered owner of the vehicle with an additional fee for collection.

Conveniently, there is an app for paying the toll and you can find it here.

Roadside Assistance for your Rental Car

The level of roadside assistance for your rental car varies by company in Iceland. For instance, Go Car Rental Iceland has 24/7 roadside assistance.

If you contact them between 8:00 AM and 7:00 PM, then you get someone at the desk of the company to guide you. After those hours is a different number but you will get assistance either way.

While some of us might be used to a person coming to fix our tire, if it were to puncture, that is quite an expensive cost for the renter.

You might end up paying close to 100.000 ISK or more than $700. Most rental car companies here guide you through changing the tire, if you are not aware of how to do it yourself.

In the case of an emergency, please call 112, Iceland’s emergency phone line.

Fuel Stations in Iceland For Your Rental Car

There are many gas stations around the country, so you won‘t have a problem filling up on either gas (green handle), which is called bensín in Icelandic, or diesel (black handle) as you travel around.

When I am out in the countryside, I don‘t like to let my tank get below a quarter because the next gas station might be a fair distance away.

If you plan to drive into the highlands, definitely make sure to have a full tank because there aren‘t places for you to fill up.

Gas Prices in Iceland

As of this recording, the lowest gas price I found was 314 ISK per liter, which is $2.14 per liter.

In US gallons, that is $8.11 per gallon. This price can go up or down depending on exchange rates and the cost of fuel. This was specifically calculated for gas prices but the price of diesel is similar.

Winter vs Summer Driving in Iceland

There are a few factors to take into account for each season in Iceland.

Summer Driving in Iceland

• You have 24-hour bright days, so you don’t have to worry about dark roads, but there are things that can still be hazardous
  • On many roads outside of Reykjavík, you will find sheep roaming freely. It’s common for them to cross the road without warning. They have the right of way. The best advice is to slow down or even stop, if you see sheep/lamb close to the road. If a lamb is on one side of the road and the mother is on the other, just expect for it to cross to be with its mommy.
  • Birds is Iceland seem to have death wish sometimes because they will actively fly in front of the car during the summer. I don’t understand why they do this. It often happens so quickly, that it can be hard to react. Just be aware that this can happen.
  • Wind storms can happen during this season

Winter Driving in Iceland

• Road conditions in Iceland during the winter can be a little challenging, especially if there it has been a particularly stormy season, and lots of ice and snow are on the ground.
  • One big factor to consider for this season is the daylight hours. We have much shorter days in winter, which will impact the number of places you can visit in a day. I recommend using the link I provide that shows the daylight hours for each day in winter to plan your trip because it’s a bummer to try to cram a bunch of activities in a day only to find that the sun has set and you can’t see the attraction or place.
  • Rental car companies put spiked tires on cares during the winter to help with traction on icy and snowy roads. This is very useful, but you still need to take caution when driving
  • Snow and windstorms happen during this season. Sometimes, they are combined, which can cause extra trouble.
  • People have gotten stuck on the road because of storms, so please take heed and check the weather advisories before heading out.

Very Important to Keep in Mind with Driving a Rental Car in Iceland

• Icelandic roads are often very narrow. Please do not stop on the road to take pictures or videos. Unfortunately, accidents have happened because of this behavior. It‘s best to find a safe place to pull over, if possible.
• The wind in Iceland can blow so hard that it can damage car doors when they are opened. One way to mitigate this is to hold onto the doors when opening them and not to open two doors at the same time. Basically, each person should turns getting out of the car on very wind days and make sure you are holding onto them. It‘s very expensive to fix a door damaged by the wind.
• Off-roading is illegal in Iceland and you will get heavily fined if you are caught.
• It‘s required that your headlights are always on here, even during summer when it is 24-hour bright days.
• There is no right turn on red anywhere in Iceland.
• The emergency number in Iceland is 112

Returning Your Car

• Make sure the tank is full or at the same level as how you received the car or you will be charged.
• Choosing the drop off location that makes sense for you.
• Sign off on the condition of the car at the company

Ways To Save Money When Renting a Car in Iceland

1. My 10% discount. Use my code Iceland10 when you book with Go Car Rental Iceland
2. If you have other travelers with you, then you can split the cost
3. Use the little keychain scanner for gas stations, that most car rental companies provide, to save on gas or diesel. Every little bit helps!
4. Book a hybrid car to save on fuel costs
5. Book a car during the low season. There is even a drop in cost as you get towards the end of August. July is the most popular month of the year for visitors to the country.
6. Rent a smaller car because it is normally not as expensive
   • Of course this only applies if you are not planning to use F-roads
7. When you book 7 days or more with Go Car Rental, you get one day for free

Icelandic word of the episode

Bílaleigubíll or Leigubíll

Random fact of the episode

According to this website, Iceland ranks as the most expensive country to rent a car, with an average of $1,383.24 per week.

Granted, that was back in March, and the exchange rate has changed that amount in favor of the dollar, but I just thought it was helpful to share that so people have an idea of what to budget.

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Þakka þér kærlega fyrir að hlusta og sjáumst fljótlega (Thank you for listening and see you soon.)

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