Iceland is known for its distinctive landscapes and natural beauty. Over the years, it has attracted a wide range of people, from adventurous tourists to expats starting fresh, and those looking for something different.

Whether you already live in Iceland, are planning to move here, or are visiting, renting a car can be a key part of your experience. Why? Because having your own vehicle gives you the freedom to explore Iceland’s incredible scenery on your own terms.

This guide will walk you through everything you need to know about renting a car in Iceland, ensuring a smooth experience whether you’re a local, a newcomer, or just visiting.

1. Why Rent a Car in Iceland?

For those living in Iceland, especially outside big cities like Reykjavik, owning a car offers more freedom. Even though Reykjavik has good public transport, a car is handy for spontaneous trips or places not covered by buses. If you don’t need a car every day, renting a car when you need one can be a budget-friendly choice. A short-term car rental can be a lifesaver. It gives you time to figure out if you want to buy a car or find another long-term solution.

Tourists, listen up! Iceland’s magic isn’t just in the famous spots. It’s in the hidden corners, the distant waterfalls, the bubbling geysers, and the mysterious black sand beaches. Renting a car lets you discover these treasures on your own terms, away from the usual tourist trails.

2. Understanding Rental Options

Economy cars are a top pick for city explorations, especially for solo adventurers or couples. They’re not only easy to maneuver but also fuel-efficient, making them budget-friendly. However, during winter, the icy and snowy conditions in cities might require extra caution even for these vehicles. For those planning to dive deep into Iceland’s rugged terrains, especially the mesmerizing highlands, SUVs and 4x4s are the way to go. In the winter, these vehicles are essential due to their stability on icy roads and their ability to navigate through snowdrifts. During summer, the days in Iceland are longer, and the roads are clearer, but venturing into certain highland areas still demands the robustness of an SUV or 4×4.

Campervans have become a tourist favorite in Iceland. They offer a unique two-in-one solution: a vehicle to get you around and a cozy place to sleep. In the summer, with almost 24 hours of daylight, travelers can maximize their exploration time, driving and stopping at their leisure. Winter, with its shorter days, offers the magical experience of the Northern Lights, making campervan stays a memorable experience. However, it’s essential to ensure the campervan is winter-proofed and equipped with proper heating. With a campervan, you have the flexibility to set your own pace and itinerary, making spontaneous stops at hidden gems you discover along the way, regardless of the season.

3. Rental Costs and Considerations

For Residents and Newcomers: Long-term rentals can offer better rates. Some rental companies provide lease-to-own options, which can be economical if you’re unsure about purchasing a car immediately.

For Tourists: Prices fluctuate based on seasons. Early bookings, especially for summer months, can secure better deals.

Insurance: In Iceland, the weather can shift rapidly and unexpectedly due to its unique geographical location. Given the unpredictable nature of Icelandic weather, it’s highly recommended to opt for comprehensive insurance when renting a vehicle. This should ideally cover gravel damage, protection from sand and ash (common due to volcanic activity), and a collision damage waiver. Such coverage ensures that you’re well-protected against unforeseen incidents, providing peace of mind as you traverse the diverse terrains of the country.

4. Driving in Iceland: Tips and Regulations

• Speed Limits: Typically, 30-50 km/h in towns and cities, 80 km/h on gravel roads, and 90 km/h on asphalt highways.
• Always Wear Seatbelts: It’s the law, irrespective of where you’re seated in the car.
• No Off-road Driving: It’s illegal and can damage Iceland’s delicate environment.
• Headlights On: Whether day or night, ensure your headlights are on.

5. Benefits of Renting for Different Traveler Types

Residents: Renting can be a lifesaver when your vehicle is under maintenance or if you need a specific car type for special occasions.

Newcomers: It gives you the flexibility to understand your transportation needs in a new country before making a long-term commitment.

Tourists: Experience Iceland on your terms, stopping wherever and whenever the beauty captivates you.

6. Key Takeaways

• Compare Options: Numerous rental agencies operate in Iceland. Compare prices, vehicle options, and customer reviews.
• Understand the Fine Print: Ensure you’re aware of all rental terms, especially concerning insurance and mileage limits.
• Stay Informed: Especially for tourists, keep an eye on weather forecasts and road conditions.

In Conclusion

In Iceland, the beauty of the land is vast and varied. If you’re living there, just moved, or are simply visiting, renting a car can open up a world of exploration. It gives you the unmatched freedom to journey through the country’s captivating landscapes at your own pace. Whether you’re planning an extended stay or a short trip, making the right car rental choice can ensure that your Icelandic adventure is not only comfortable but also leaves you with lasting memories.

List of some of top car rentals in Iceland

• Reykjavik Cars
• Hertz Iceland
• Budget Iceland
• Avis
• Sixt
• Höldur – Europcar
• Go Car Rental
• Blue Car Rental
• My Car

When considering a car rental in Iceland, it’s essential to compare prices, read customer reviews, and understand the terms and conditions to ensure a smooth rental experience.