Renting a vehicle in Iceland gives you the ultimate freedom to travel where you want to go and at your own pace! However, it is always a little scary when you rent a car in a different country. Driving laws may be different and road signs are unfamiliar. In my experience, renting a vehicle and getting around Iceland is much easier than you would think. I always recommend doing your research before you travel to new countries in order to look up laws, frequently used road signs, and whether or not you will need to have an International Drivers Permit to operate a vehicle.

In this article we are going to address the main things you should know before renting a car and driving in Iceland. Most of this information is based off our most recent trip to Iceland, in May 2021:

Our rental car off the main road in southern Iceland.

Costs:

The cost for renting a vehicle in Iceland was actually quite reasonable. We did not notice a difference in price when shopping for vehicles in the same class between different rental companies. Due to wanting to stay on a strict budget, we went with a compact vehicle. The vehicle we rented was a manual transmission, compact SUV that ran on diesel. The rental alone cost us about $390 for 8 days. I will say that is not the norm, however. We checked rental prices every day until it reached this low price. The average for most weekly rentals that we saw was about $500. We dreamed of renting an amazing 4×4 with off road tires to fit the rugged landscape, but ended up settling for our 2WD, basic vehicle to keep costs low. Although the 4×4 would have been nice, we have no regrets about saving an extra $400!

Gas:

Gas at the time that we traveled to Iceland was about $2.25 per liter, which equates to over $8.00 per gallon. This is a really scary number to a lot of us living in the USA. I don’t know if their vehicles get better gas mileage, or maybe it was because we drove a manual transmission run on diesel, but we ended up coming in way under budget on gas. We drove NON-STOP for 8 days, around the entire Ring Road, and spent under $350 in gas.

In Iceland, gas stations are not always frequent. Around Reykjavik and other bigger towns on the Ring Road, gas stations are all over. However, there is a lot of the country where there are no towns for hours, and gas stations are nowhere to be seen. As a general rule, fill up every time your gas meter hits a half tank, especially if you are travelling in east or north Iceland where gas stations are less frequent. Also, note that not all gas stations are attended, and some are just a pump with a pay machine and no building at all.

Something that we realized the first time we went to Iceland is that not all credit cards work at their gas stations. This s because European credit cards have a pin and chip to make payment, and most American credit cards require a signature. Even if you are used to paying at the pump in the United States without going in to sign, there is a very good chance that a signature WILL be required in Europe. There is also a chance that it wont process at all without entering a pin (a pin that you don’t have). This is especially a problem when there is no attendant or later in the evening when the buildings are closed. You might get stuck with no ability to get gas. Make sure you have a credit card or bank card with a chip and pin! Our bank debit card worked in Iceland because we were able to provide a pin, but check with your bank first to see if they have foreign transaction fees.

Options:

Iceland has many convenient, reputable companies with newer cars. There are companies that are right on site at the airport such as Avis and Sixt, and there are a handful of companies that provide shuttle service from the airport to there buildings (which are about a 5-10 minute drive away). We love using local favorites such as Blue Car Rentals or Isak 4×4 Rentals. Go with a company that has the benefits you are looking for: car seats, extra insurance, extra driver, etc…

Another thing to consider is renting a campervan, RV, or an off road 4×4 depending on the purpose of your trip. Some people visit Iceland for the sole purpose of doing off-road adventures or going into the Highlands/ on F-Roads. In that case, renting a 4×4 would make the most sense. Other people want to explore Iceland on their own terms, without needing to commit to being in a certain location, at a certain time, in order to check into their accommodation. They want to wake up to nature and experience Iceland in a different way. If that is what you’re looking for, there are a TON of amazing rental companies for things such as RV’s, roof-top tents, and campervans. Happy Campers and Campervan Iceland are just two examples of where you can find this type of rental.

4Runner with a rooftop tent for camping.

Roads

In Iceland, people drive on the right hand side of the road. Most of the accessible country has a very modern main highway, and the entire Reykjavik area is well maintained. However, off the main highway you really have to expect the unexpected. While on the Ring Road we encountered one short area where it was not paved and the gravel was extremely rough. We also experienced a couple of very steep climbs up into a mountain, as well as two snow storms while we were at the mountain’s summit. This was in mid-May. There was a lot of wildlife that was not maintained behind a fence, including horses, sheep, and reindeer. In addition, there were a couple of extremely bad wind storms near the southeastern coast. However, even with those factors, I would not call Iceland a difficult drive if you are sticking to the main highway or close to it. You just have to be attentive like you would normally be in your home state or country. We were able to complete the entire Ring Road with a 2WD vehicle.

Always consider the time of year and area you are travelling. DO your research ahead of time and download off-line maps, such as Google maps, before your trip. That way if you lose service, you can still find your way around. Sometimes the weather changes or you find that a backroad road leading to an epic hike was a lot rougher than you anticipated. If something doesn’t feel good, DON’T go any farther! Follow road closures or warnings. They are there for your safety, and remember the emergency number in Iceland: 2-1-1.

Another thing to note is that Iceland’s F roads are closed during winter and to certain vehicles. This means that the beautiful Highlands are off limit until usually the end of June. This also means that you need to pay attention to your rental agreement as you will not be covered if you take certain cars down these roads, and may even need to pay a fine if something happens.

Things to Consider:

  • Stay on the road! Not only is it illegal to drive off-road but Iceland’s ecosystem is fragile.
  • Look up laws before you go, and know that there are speed cameras all over the island. They will send you a ticket if speeding. These tickets are not cheap!
  • Weather can change quickly, from sun to rain to snow and back to sun all within a couple of hours. Be ready for anything!
  • Have fun! Iceland is one of the BEST countries we’ve been to!