Renting a Car in Iceland

Renting a car in Iceland is easy, relatively cheap, and convenient! If you plan to explore more of the country than just Reykjavik, it is definitely the logical choice to make. There are some things you need to know before renting a car in Iceland, though, so keep reading for my top tips to make this process as seamless as possible!

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How do I reserve a car?

As is the case with most things, the internet will be your best bet to find the cheapest price. We searched rates and availability via the big travel booking sites (Expedia, Orbitz, etc.). It is important to book your car well in advance (several months), particularly if you are traveling during Iceland’s peak tourism season (May-September). You’ll get more options and less expensive rates if you secure your car early. Lots of people are renting a car in Iceland so you don’t want to wait too long to get that reservation made.

Which type of car should I reserve?

This question is best answered based upon your itinerary, number of travelers, and time of year. If you are traveling during times when snowfall is likely, I would suggest reserving a car with 4×4 capabilities. We visited in late March and ran into several snow storms which complicated driving; having the 4×4 option just make me feel safer.

If your intent is to drive only the Golden Circle, Iceland’s Ring Road is fairly well maintained and driveable by most any type of car. If you plan to travel on any of Iceland’s interior roads (known as F-roads), however, you will absolutely need a 4×4. Be sure you have checked your rental agency’s policies around driving on the F-Roads. Many agencies will prohibit you from taking their cars along these roads, particularly during the winter months.

We booked a Dacia Duster 4×4 for our trip. Based on the number of Dacias sitting in parking lots, this seems to be a very popular rental option. After several attempts at getting into the wrong car, I finally left a bright pink pair of gloves on the dashboard. Among a sea of silver Dacias, those pink gloves saved me from the further embarrassment of attempting to climb into someone else’s car.

Where do I pick up my car?

Rental options at or near the Keflavik airport are plentiful. We picked up our car at the airport but there are some companies who rent cars elsewhere, including Reykjavik. You’ll want to choose your pick-up location based on your own unique needs but for us, it just made sense to pick up and drop off at the airport.

If you do opt to pick your car up at the airport, here are a few tips that will help make your experience as seamless as possible.

Shuttle Busses

The rental car shuttle busses will pick you up just outside of the customs clearance area. Watch for the signs around the airport that will direct you to this shuttle area. Have your coat, hats, and gloves ready. It’s a bit shocking to hit that Icelandic cold air after sitting in a warm and stuffy airplane for hours. If you decided to pack your coat away for the trip, take a minute to open up that suitcase and pull it out before heading outside. You may have a bit of a wait before the shuttle arrives.

Some rental agencies are close enough to the terminal that you can walk to them. We used Blue Car Rental and since their office was quite close, we decided to try to beat the crowds waiting on the shuttle bus. Lugging our heavy suitcases in the cold wasn’t fun but the bigger issue was that there wasn’t really a sidewalk upon which we could walk; we had to walk in the road, cars driving right alongside us. The good news is that we did arrive before the masses of people getting off of the shuttle bus, but only by maybe a minute or two. If you’re traveling with kids, walking to the rental company probably isn’t the safest or most convenient method. Just wait for the shuttle.

At the Rental Agency

Put on your “patience hat” before you arrive at the agency. There were three or four people ahead of us when we arrived and we ended up waiting close to an hour before we were helped. There is a lot of “insurance conversation” to be had plus a brief “training session” on how to safely drive and park in Iceland’s fast-changing weather conditions, adding to the time spent with each customer.

As is the case with most airport pick-ups, swarms of people arrive at the same time. Be kind to your fellow human beings; every person in line is anxious to start their vacation. Just chill out and know that you’ll be on your way to an amazing experience soon.

What’s the deal with all this insurance?

Ah, insurance. Isn’t it such a sexy topic to discuss when planning your dream trip? No. It is not sexy at all. But it is necessary, particularly when renting a car in Iceland where the weather can change in a split second and Mother Nature will throw her full force at your car. Rental companies are going to offer you all kinds of insurance options, some of which you definitely should get while others are likely less necessary. Check with your credit card company and your own car insurance company before deciding on insurance packages. What do they cover, if anything? No need to buy insurance that you already have available to you.

CDW Insurance

Most companies will likely automatically include Collision Damage Waiver (CDW) as part of their rental price. You should check before booking that this is included in the price and if not, find out what it will cost to add it in.

Gravel

It is tempting to bypass the gravel insurance, particularly if you are used to driving on paved, well-maintained roads. Don’t opt-out of this one; many of the roads you will be traveling are covered with gravel, particularly if you are planning on driving beyond the Golden Circle.

Sand and Ash

This is one type of insurance you should think about. If you have no intention of traveling around the coast, you may find this insurance to be a bit excessive. The ash insurance would certainly be useful should a volcano erupt but…well, you can decide what you want to do with that. We did travel along the coast and for that reason purchased the sand and ash (they came together). And actually, with the intense winds along the water, we are glad we purchased this insurance.

Theft

Iceland is a very safe location and consequently, this insurance is probably the most logical to decline if you’re trying to save a bit of money. Does theft happen? Sure. Will your rental car be stolen? It’s possible, I guess. I’ll just say this: we did not include the theft insurance in our package. You do you, though. If you would just feel better having this insurance, then go for it.

Look, insurance is annoying and expensive but in the long run it’s cheaper than having to buff out scratches, repair a broken door, replace a windshield, or even replace an entire car. Insurance not only ensures that you’ve got money to spare leaving this beautiful country (unless you go crazy buying those incredible Icelandic sweaters!) but also gives you peace of mind. And really, that’s the most important thing when you’re on holiday. Take as much stress out of your trip as possible. At least, that’s my mantra when traveling.

Mileage: How much do I need?

There is so much to see in Iceland but the reality is, some of these attractions are far away from one another. Be sure you’ve identified your agency’s policies around mileage. If you plan to travel any distance, the unlimited mileage plan will likely be the best option. On countless occasions, we strayed from our planned route because we wanted to see something up close or because we decided to go see something that wasn’t on our original agenda. If you’re constantly worried about mileage, you may not get to fully enjoy all of the beautiful and remarkable things Iceland has to offer. Take advantage of the great fortune you have to be in this country without the added pressure of worrying about your mileage allowance.

Which “extras” do I need?

Snow Tires

Many agencies will include snow tires (studded tires) during months where snowfall is likely. We did need those snow tires on multiple occasions so definitely ensure that your agency includes them during colder months. If they don’t, either find another agency or upgrade to include them. (I would personally encourage you to find another agency as this seems to be pretty standard.)

Snow Brush

This seems a bit silly to include here but we should have asked about renting one. I honestly don’t know if these are rentable or not but it’s definitely something about which to ask. We (okay, let’s be honest, my husband) got stuck using his hands to brush off the car on a couple of occasions.

If your rental agency cannot provide you with a brush, take a look at this compact option and consider taking it with you. Just be sure it goes in your checked luggage due to the blade of the ice scraper.

GPS

GPS devices will undoubtedly be offered to you either at your booking or at pick-up. We did not reserve the agency’s GPS device because we just used our cell phones when needed. (We used our cell GPS multiple times, even with printed maps and turn-by-turn directions. Those Icelandic street names, roundabouts, and inclement weather can all result in getting turned around pretty quickly!) Check with your cell provider to see how much an international data package would cost and weigh your options. Although we personally never went without cell phone coverage, there are some areas of Iceland that do not have consistent coverage. It may be to your advantage to rent the agency’s in-car device if you’ll be traveling to more remote locations.

Multiple Drivers

Will multiple people be driving the rental car? I cannot drive a manual transmission (I know, I know…it’s a skill I need to learn!) so we did not need to register more than one as a driver. But if two or more will be driving (and that’s the nice thing to do so that everyone can just sit back and enjoy the views at one point or another), register each person with the agency.

What is the gas/fuel situation?

Gas is not cheap, particularly if you’re coming from the US where fuel costs are relatively inexpensive. Gas can range from $8-$10 per gallon (or even higher!) so factor this into your budget as you’re planning your trip. I also recommend filling up your tank any time you see a gas station. Gas stations are not consistently available; you can go over 100 miles without seeing a fuel station so it’s best to play it safe and get gas anytime you come across a station. Plus, many of these stations are great spots to grab a cup of coffee, tea, or a hot dog!

If you’d like more information about gas stations in Iceland, check out this helpful blog post for a very thorough explanation on filling your tank.

Will my driver’s license be approved?

If you have a valid driver’s license in your home country, renting a car in Iceland will not be a problem and you will be able to drive legally. All driving licenses from the US, Canada, and the European Economic Area (EEA) are valid in Iceland. If you are traveling from a different country, your license will likely still be approved if it has a license number, has your photograph, has a valid date (not expired), and is printed in the Latin alphabet characters. If your license does not have all of these requirements, apply for and acquire an international driving license before you arrive.

One quick reminder, though. Most car rental agencies require renters to be 21 to rent a car, and even older if you need to rent a 4×4 vehicle. Check out your agency’s policies for more information.

How do you drive in Iceland?

Drivers use the right-hand side of the road, as they do in the US, Canada, and many other parts of the world. Speeds are calculated in kilometers per hour and should be respected! You never know when the weather will turn on you, when an animal will just be hanging out in the middle of the road, or when a tourist will dart out in front of you (particularly along the Golden Circle stops). It is imperative to follow the speed limits!

There are some road signs that will likely be unfamiliar to you. This blog has a great tutorial on the road and traffic signs you’ll see in Iceland. Most rental agencies will give you this information at pick-up, but it never hurts to take a look before arriving.

Always check the road conditions before heading out on your adventure and again while on your way. The weather can change so quickly that road conditions can deteriorate without a ton of notice. We used this website throughout our stay.

Final Thoughts

This might seem like a lot of information to know in order to drive safely and be able to rent a car. I can assure, you, though, that renting a car in Iceland and driving the country is easy, safe, and enjoyable. You’ll spend a good chunk of time getting to and from locations and while tour groups are certainly available to drive you to the most popular attractions, there’s nothing like setting your own time schedule, stopping when and where you want, and having the freedom to enjoy your vacation on your own whims and fancy. Renting a car made the absolute most sense for us and I certainly recommend it for you too.

Now get out there and explore this incredible country!