Renting a Car in Iceland – a Complete Guide

Renting the right car to explore Iceland is certainly one of the most important decisions affecting both the cost and overall shape of the trip, and ultimately our satisfaction with it. So in this article we answer questions about whether you need to rent a car in Iceland, how to do it, what the alternatives are, how much it costs, and what to look for when renting a car in Iceland.

Is it necessary to rent a car in Iceland

The short answer to this question is: yes, you have to. The slightly longer answer, on the other hand, is: well, you don’t have to, but it’s better to do it nonetheless.

Iceland is a fairly oval-shaped island with an interior accessible only in summer, and most of the (easily accessible) attractions are located on the coasts, along the popular road no. 1 called the Þjóðvegur 1, Hringvegur or simply: the ring road.

Hence, a typical trip to Iceland (see, for example.: Iceland round trip itinerary: 7 to 13 days) is based precisely on going around the island all the way on road No. 1. If we have more time, we can add to the plan especially visiting the Snaefellsnes peninsula north of Reykjavik, the West Fjords peninsula on the northwestern edge of the island, and finally the northern and northeastern coasts. And if you’re coming in the summer, it’s a must to see at least parts of the interior.

And all of these excursions are best accomplished just by renting a car yourself.

However, if you want to avoid renting and/or driving yourself, or if you want to explore Iceland by bike or on foot at all – read our tips here: Sightseeing Iceland without a car.

On the other hand, if you are considering renting an RV and are looking for a comparison of the costs of a car and RV trip, you will find this information in the following article: Renting an RV in Iceland.

How much does it cost to rent a car in Iceland

The lowest rental price we were able to find in Iceland for a tiny car in the off-season is USD 110 for 5 days, or about $22 per day. However, renting a large car in the summer (in high season) involves a cost up to 10 times higher, as much as approx. $1,000 for 5 days! So it is difficult to give a clear answer to the question of how much it costs – it depends.

Renting even the largest car in the off-season costs less than renting the smallest car, but in the summer – during the peak season. Similarly, often renting even a large car, but at the right time (usually: at the last minute), can cost less than renting a small car, but when prices are high in general.

All of this is based on a survey of car rental prices in Iceland, which we have been conducting since the beginning of 2023. Data from these surveys, in the form of charts, are presented below.

How much it costs to rent a car in Iceland at different times of the year

The biggest impact on the cost of renting a car in Iceland is when you rent the car for, or more precisely: whether you rent it for the summer or for another season.

The average prices of renting each popular type of car, depending on the month you rent it for, are as follows:

As you can see, rental prices for the second half of the year (October, December) are about 10% lower than for the first half (March, May), but the differences pale in comparison to summer. You can clearly see from the table that car rental prices for summer (represented by July) are usually about twice as high as rental prices for the same cars for any other time of the year.

Note that – as we wrote earlier – even renting a sizable SUV, such as a Toyota RAV4 or Mitsubishi Eclipse Cross in the off-season costs less (about USD 325-350 for 5 days) than renting a tiny Kia Picanto in the summer (an average of USD 440 for 5 days).

Perhaps a better illustration for this are the charts for individual models. See how rental prices for a popular model – like the Dacia Duster – vary depending on what month you rent the car for and WHEN you rent it:

Chart: The cost of renting Dacia Duster cars
for individual months, depending on the moment of rental
source: data and compilation

Of course, even larger cars are also available for rent – in particular: really big, off-road SUVs (with Toyota Land Cruiser at the forefront) and 7-9 passenger vans. We don’t research their prices that closely, because these cars are very expensive, less popular and a bit niche even. However, the search engines we recommend also show the prices of those models.

When are the lowest car rental prices in Iceland?
For each type of car, the cheapest month to rent it in Iceland is October, although rental prices in November and December are similarly low. During this period, we can rent the smallest cars (on average!) for as little as about 175 dollars for 5 days, and only the largest 4×4 SUVs cost more than $250 for 5 days of rental.

When are the highest car rental prices in Iceland?
For each type of car, the most expensive month of its rental in Iceland is July. These high prices appear already in the second half of June and usually last until the end of August. During this period (on average!) even the smallest cars cost more than $375 (for 5 days) and rental prices for large SUVs approach even $750 (for 5 days).

Is it better to rent a car in Iceland well in advance or at the last minute

Of course, the average prices we’ve shown above are only part of the whole picture. The prices for renting individual models do change a lot throughout the year, even if you don’t change the month for which you want to rent it.

The chart below shows how the rental prices for selected models have been changing for the past two years:

Chart: Car rental prices in Iceland in July, depending on the week you rent.

For example, for renting a popular Dacia Duster (for 5 days, for July 2024, the red line on the chart) one had to pay more than $600 for almost the entire period from October ’23, until the beginning of April ’24. But those who waited until the last minute could rent the same Dacia for as low as $375 by June 2024! That’s almost half the price!

Importantly: the prices for July 2023, while higher overall, behaved similarly. That is, they also began to fall sharply around May and were lowest in June. It seems that one can conclude that this is typical behavior and that car rental prices for July in Iceland are lowest at the last minute – only about a month in advance.

For other seasons (and months surveyed), prices do not change as much. You cannot see such a clear downward trend the closer you get to the time of rental. Nonetheless, even there you can see changes of up to 50%, although since these prices are generally lower, the 50% decreases are also of lesser nominal value.
GALERIA

So let’s go back to the original question: how early should you book/rent a car for a trip to Iceland? Generally speaking, it’s best to do it only about 1 month prior to your trip.

As you can see from the charts above:

How to reduce the cost of a trip to Iceland

Although car rental prices in Iceland are lowest in October, it is not necessarily also the case that the entire trip will be cheapest (let alone best) in October. Leaving aside the flight cost (see: When – and for how much – are the cheapest flights to Iceland (2025)), the total cost of the trip is also greatly influenced by the chosen standard or type of accommodation. And, of course, the “per person” cost is enormously influenced by how many people you are traveling with.

See the table below: a 4-person trip in May, based on driving a Dacia Duster and sleeping in guesthouses, can be cheaper (per person) than a 2-person trip, even if they both sleep in the back of that Dacia (since it can be both cold and wet under a tent in May).

Although July is obviously the most expensive for any type of trip, please note that a tent trip in July can be cheaper than a trip with a campervan or sleeping in hostels, at other, cheaper times of the year. See table:

In autumn, spring and winter everyone should rather opt for staying in hotels, guesthouses or hostels. Even campervans, although heated, do not provide a high level of comfort in that time of year (except for the largest and most expensive – motorhomes – maybe), especially since Icelandic “campsites” are often ordinary grassy campgrounds with only the basic sanitary facilities. Campervans work very well from June to September, but in July and August it is cheaper, and almost equally comfortable, to sleep in a tent (you can bring a large one with you, since you’re not carrying it on your back 🙂 ).

We write more about campervans and how the costs of an RV and car trip compare in the article Renting an RV in Iceland.

Is it worth buying full car insurance in Iceland?

Sample insurance cost

And yes, the cost of possible repairs is quite high, and yes you can find yourself in situations you are not familiar with from your everyday, home experience. But the insurance and rental companies prey on tourists’ sense of security and have learned to dictate very high prices for insurance.

How much does it cost to fully insure a car in Iceland?
Typical costs for full insurance are usually about 5,000 – 6,000 ISK or $35-$45 per day. Thus, full insurance can even double the cost of renting the car.

Sample prices and terms of car insurance in Iceland

First: in principle, no insurance covers the cost of flooding a car as a result of crossing a river or stream. Second: wind damage (usually: the wind breaking off your car doors) is also never included (but, unfortunately, can happen quite easily). Third: chassis damage, wheel or rim damage and towing back to a garage are also quite often excluded by individual companies. So you need to be careful when driving, somewhat regardless of your insurance package.

Iceland has right-hand traffic and laws very similar to those throughout Europe. Traffic on the roads is calm and, except in Reykjavik, very light. Therefore, if you are an experienced European driver and decide not to buy additional insurance, you should be mostly concerned and watching out for the following “most popular” insurance incidents in Iceland:

Small accident at Skaftafell

If you’re coming from the USA, please remember priority to the right is the basic rule for uncontrolled intersections in all of Europe. And it doesn’t matter who got to the intersection first.

And it is really tricky to switch sides even for the most experienced drivers. So if you’re coming from a left-hand traffic country, just be safe and buy the full insurance package, regardless of the inflated costs.

Is it worth renting a 4×4 car in Iceland?

Yes, as long as you come to Iceland in summer and intend to visit the interior, or you come in winter and intend to go all around the island, it makes all the sense in the world to rent a 4×4 or a 4WD/AWD vehicle. In other cases, a 4-wheel drive will be rather unnecessary.

4-wheel drive cars are very useful and even necessary if you are coming to Iceland in summer (mid-June to mid-September) and intend to enter the interior (see: The most interesting places of the Icelandic interior [Top10]).

When visiting in the summer, it’s definitely worth renting a 4×4 car and seeing at least some of the attractions of the Icelandic interior.

Landmannalaugar panorama

Four-wheel drive cars come in handy in the interior, both because they are good at crossing streams and steep gravel climbs, and because, as generally higher-suspension cars, they are less likely to suffer chassis damage on Icelandic gravel roads. That’s why in summer it’s definitely worth renting a 4×4 car.
GALERIA
In contrast, outside the summer season the usefulness of a two-axle drive is rather negligible. In winter, of course, it can sometimes be very helpful for climbing hills (if/when they are snowy or icy), but in southwest Iceland we very rarely encounter conditions in which a 4×4 car can cope and a 2×4 car can not. This is mainly because there are simply no such steep climbs here.

And when a heavy snowstorm strikes, the roads are closed for all traffic until the snow is cleared, so again it doesn’t matter much if your car is a two-wheel drive or a four-wheel drive.

beautiful Icelandic winter

Winter trips (see Going to Iceland in Winter) are best limited just to the southern coast, the area around Reykjavik and possibly the Snaefellsnes Peninsula.

However, if you still want to go around Iceland in winter, it is indeed worth equipping yourself with a 4×4 car. All-wheel drive can come in handy both in the eastern and western fjords, as well as in the north of the country.

It’sdefinitely worth renting a 4×4 car if you’re coming to Iceland in winter and plan to drive around it. On such a trip in general, you need to be prepared for various, sometimes serious, weather surprises, and a car with four-wheel drive can come in handy on such a trip. If you arrive in winter, but stay in the south and southwest, a 4×4 drive is not necessary.

In contrast, in spring and autumn, there is really no reason to rent a four-wheel drive car.

The cost of renting different classes of cars for May
[charts for other months can be found earlier/above in this article]

Another thing to note is that in the off-season, 4WD cars are often just a tad more expensive than 2WD ones. In the chart opposite, see that the cost of renting a 4WD Dacia Duster for May (red line) is often less (sic!) than the cost of a midsize 2WD car (like a Hyundai i30 or Mazda CX-30; purple line), and often even very close to the cost of the smallest 2WD cars – like a Toyota Aygo or Huyndai i10 (green line in the chart).

In such a situation, it’s probably worth opting for the Duster, because although the quality of plastics or electronics in the cabin will probably be worse than in, say, a Mazda, the Duster certainly has a larger trunk and higher suspension. And even if the 4×4 drive itself is unlikely to be useful for anything on a May trip, the larger trunk and higher suspension certainly won’t hurt.

Where is the best place to rent a car in Iceland

The vicinity of Keflavik Airport is teeming with car rental companies and their huge parking lots with hundreds of cars ready for pickup, so how do you find the best deal in such an expansive market?

Of course, it’s always best to start by analyzing the price charts on RumboMundo 🙂 Here you’ll find key information about what price level is actually attractive for a given car at a given time of year [see charts above]. But the car rental deals themselves are best found on online search engines.

The best search engines for renting a car in Iceland

The best, fastest and most convenient way to find a great car rental deal in Iceland is to use one of the online search engines. They collate and compare prices (and other terms and conditions) for renting hundreds, if not even thousands, of different types of cars.

In our experience, two of them work best: DiscoverCars.com and ReykjavikCars.com.

• DiscoverCars.com
  
  

  Suzuki Vitara cheaper than Hyundai i10 – discovercars

  Discover Cars is basically the best comparison site, or search engine, for car rental deals in Iceland that we can recommend.

  It has the widest selection of different types of cars, very convenient filters that allow you to quickly find exactly the car you are looking for and (almost always) the best prices.

  It’s also here (see opposite) that you can sometimes find an offer to rent a 4×4 car for a price lower than that of a tiny A-class car.
  Discover Cars almost always offers the best prices on cars in every category. “Almost”, because in some very rare occasions we were able to find even better prices on the site we present below – Reykjavik Cars. But outside of these two – we can never find better prices anywhere else on the web.

• ReykjavikCars.com
  Reykjavik Cars is not as international as Discover Cars. It is focused exclusively on Iceland and Icelandic car rentals. And perhaps that is why sometimes this is where we find the best car rental prices in Iceland.
  

  Sample insurance options at Reykjavik Cars

  An additional distinguishing feature of Reykjavik Cars is certainly the more extensive insurance section. Here, we don’t just have a choice of full insurance (PLATINUM) or none at all (i.e. TPL/CDW alone, which is always included in the price). We can also choose an intermediate option (PREMIUM) – full insurance, but with a deductible.

  It is however best practice to rent a car via a comparison website, but then buy the full insurance package directly from the rental company, as an up-sell. And don’t worry – they will come back to sell it to you. They will send you emails about it and they will try to up-sell it you when you pick-up the car. You’ll have plenty of opportunity.

Frequently asked questions about car rental in Iceland

Renting a car in Iceland is such an important and expensive thing that it raises many specific questions. We’ve collected them here, for the convenience of everyone reading.

Is it possible to rent a car in Iceland without a credit card?

Certainly. In practice this “forces” you to buy a full insurance package, but if this is what you are looking for anyhow, you don’t need a credit card for that.

Select “Debit card” and/or “no deposit” in the recommended Discover Cars search engine and you will get the best car rental deals without a deposit and credit card.

Is it possible to rent a car in Iceland without being 21 years old?

As it is, many companies (though not all) also rent cars in Iceland to people who are under 21 and those who are already 65 or older.

However, most companies require such customers to buy a full insurance package. And insurance for these drivers is usually much more expensive.

You can find many such offers on Discover Cars, which has been recommended here many times. Just enter your true age and country of origin anyway and get offers tailored just for that.

Do I need an international driving license in Iceland?

No, if you hold a European or US driving licence.
Yes, if your driving licence was issued in other parts of the world.

Is it possible to pick up the car at Reykjavik airport?

Yes, although the main, and practically the only international airport in Iceland is the Keflavik airport (KEF), about 50 km away from the capital. This is where planes from all over the world land, and where the vast majority of car rental companies are based. Sometimes – although incorrectly – it is referred to as Keflavik-Reykjavik, but it is still the same airport.

In contrast the Reykjavik Airport (REK) is a small municipal airport in the center of Reykjavik. It serves mainly domestic flights and a minimal number of international flights – mainly to Greenland. Only a very limited group of rental companies allow you to pick up a car here. These include, for example, Europcar.

I arrive in Iceland late at night – can I pick up the car then?

Yes, although directly in the arrivals hall there are stands of only a few international chains (such as Avis or Europcar), practically all rental companies operating in Iceland allow you to pick up (and drop off) a car at any time of the day or night.

This is usually done by shuttle buses, which constantly run between the airport arrivals hall and the headquarters of each rental company. Note that this applies to cars, but not to RVs. While RVs can be dropped-off at any time, pickup is (almost) always during office hours.

Do cars in Iceland have winter tires?

Yes, and in most cases they are not ordinary winter tires, but special, so-called studded tires. Special studs or spikes are embedded in such a tire precisely, which tremendously improves the tire’s grip on snow and ice. As a result, all cars are great at handling icy driveways or holding on icy corners. Unfortunately, these tires also make noticeably louder noise and slightly increase fuel consumption. However, for safe driving in winter conditions they are invaluable.

Video: studded tires in Iceland

Other tips on driving in Iceland

In summer and winter, the best option – both for reasons of convenience and cost – will be to rent a private car and sleep in hostels and guesthouses, or in a tent in summer. But in the fall and spring (and especially in June and September), RVs work very well in Iceland. They combine convenience, travel flexibility and, let’s say, ‘reasonable’ costs. All about what kind of RVs in Iceland are available, how much it costs to rent them and what to watch out for when doing so we have collected in the article Renting an RV in Iceland.

A huge impact on the total cost of renting your vehicle is the scope and cost of its insurance in Iceland. In Iceland we have at our disposal several types of insurance not known in other countries, and also the whole structure of insurance sold to tourists may vary different from what you are accustomed to in your home country. Learn about the structure, ranges and prices of car insurance in Iceland in this article: Car Insurance in Iceland.

Before coming to Iceland, it’s definitely worth familiarizing yourself with the specific conditions of Icelandic roads, the specific regulations in force there and – just in case – about the amount of fines for certain traffic offenses. You will read about all this in this article: Road conditions, regulations and fines in Iceland.

If you are wondering how to arrange your trip route and possibly what car to choose for it, read our description of a selection of the most important and interesting roads you may want to drive on. We have collected them here: The most important roads in Iceland.

Of course, we always encourage you to look at our Top10 lists to pick the most interesting places to see. It’s probably worth starting with Iceland’s Greatest Attractions [Top 10].

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