Last Updated on December 11th, 2024

Practical Tips When Buying a Car in Iceland

Are you thinking about buying a car in Iceland? Whether you’re new to the country or have been here for a while, getting your own set of wheels can make a huge difference in how you experience life here. While public transportation is an option, especially in Reykjavik, having a car can be essential for those living outside the city or wanting to explore the stunning landscapes beyond the main roads. At the end of this article, you’ll find a list of car dealerships in Iceland to help you get started.

Choosing Between New and Used Cars: Understanding Your Financing Options

Buying a car in Iceland: sleek blue car parked by a glass building at sunset.
Buying a car in Iceland: sleek blue car parked by a glass building at sunset.

Your first major decision in the car buying process is whether to purchase a new or used car. New cars, equipped with the latest features and technologies, often come with a warranty. However, they carry a higher price tag. To assist with the purchase, many dealerships offer financing options or loans.

On the other hand, used cars are generally more affordable and could be a more economical choice if you’re on a tighter budget. It’s crucial to remember that many financial institutions in Iceland also provide loans for used cars, so this could be a viable option.

Conducting Your Research

The next phase involves thorough research. Start by browsing online classifieds and dealership websites to gauge what’s available in the Icelandic car market. Assess different makes, models, and understand what types of cars are popular and reliable in Iceland. Reviews and car buying guides can provide valuable insights during this stage.

Test Driving and Mechanical Inspection

Once you’ve identified a potential purchase, arranging a test drive is an essential step to understand how the car performs. It’s also advisable to have a mechanic inspect the car to identify any potential issues. This step could save you from unforeseen repair costs in the future.

Watch our video guide on how to buy a car in Iceland

Finalizing the Purchase: Negotiation is Key

When you’re satisfied with your choice, negotiation begins. In Iceland, the advertised price, especially for used cars, is often a starting point. Negotiation is expected, and most sellers anticipate some level of price discussion. After a price agreement, the official paperwork is signed, the ownership of the car is transferred, and you will need to register the car with the Icelandic government. You can register your vehicle online at the Icelandic Transport Authority website. Keep in mind you have to have already a kennitala in order to buy a car and insurance in Iceland.

Cost Analysis

Buying a car in Iceland involves various costs that you need to take into account. These include the initial purchase price, registration fees, maintenance, fuel, and insurance. New cars tend to have higher upfront costs, but they usually offer lower maintenance expenses in the first few years. Used cars are cheaper to buy but may require more frequent servicing. Additionally, fuel prices in Iceland are relatively high, which can make owning a car more costly over time. Budgeting for regular maintenance and unexpected repairs is also crucial to avoid surprises.

Insurance Information and Approximate Cost

Car insurance is mandatory in Iceland, and you will need to secure coverage before you can legally drive your car. The main types of insurance are Liability Insurance (รกbyrgรฐartrygging) and Collision Insurance (kaskรณtrygging). Liability insurance is required by law, while collision insurance is optional but highly recommended. The cost of car insurance can vary depending on factors like the carโ€™s age, model, and your driving history. On average, basic liability insurance may cost between 120,000 and 160,000 ISK per year, while more comprehensive coverage can go up to 200,000 ISK or more annually. Comparing quotes from multiple providers is advised to get the best deal.

Click here to read our article on car insurance in Iceland.

Here are some links to car dealerships in Iceland:

In conclusion, buying a car in Iceland, while requiring careful consideration and understanding of the local market, can be a beneficial investment. It not only offers greater mobility but also the freedom to explore the beauty of Iceland at your own pace. Remember to negotiate well, and you’ll find the perfect vehicle to meet your needs in Iceland. Happy car hunting!


Movingtoiceland Editor

Movingtoiceland Editor

Contact by email info@movingtoiceland.com