Age. The minimum age is 20 for economy and compact cars at most companies. For SUVs, 4x4s, and luxury vehicles, the minimum is typically 23–25. Drivers aged 20–24 may face a young driver surcharge.
License. You need a valid driving license held for at least one year. Licenses in Roman script (English, Spanish, Polish, French, etc.) are accepted directly. If your license uses a non-Roman alphabet (Arabic, Japanese, Chinese, Korean, Thai, etc.), you need an International Driving Permit (IDP) alongside your original license.
Payment. A credit card in the main driver’s name is required for the security deposit. Debit cards are not accepted at most companies.
Driving rules and speed limits
Iceland’s traffic rules are straightforward but strictly enforced. Fines are steep.
Speed limits are 30–50 km/h in towns, 80 km/h on gravel roads, and 90 km/h on paved rural roads. There are no motorways in Iceland, and 90 km/h is the national maximum. These are upper limits, not targets. Reduce speed in rain, wind, fog, or on loose gravel.
Headlights must be on at all times, day and night, year-round.
Seatbelts are mandatory for all passengers, front and back.
Off-road driving is illegal and carries heavy fines. Iceland’s fragile moss and vegetation can take decades to recover. Stay on marked roads and tracks at all times.
Alcohol limit is 0.02% BAC, effectively a near-zero tolerance policy. Enforcement is strict, and penalties are severe.
For more on driving regulations, see our winter driving guide and license conversion guide.
Seasonal driving considerations
Summer (June–August) is the easiest time to drive in Iceland. Roads are clear, daylight is near-continuous, and almost all routes including F-roads are accessible. This is also peak tourist season, so book early and expect more traffic on popular routes like the Ring Road and Golden Circle.
Shoulder seasons (May and September) offer lower prices and fewer crowds, but weather is less predictable. Some highland roads may still be closed in early June or close again in September. Check road.is for current conditions.
Winter (November–April) brings short daylight hours, icy roads, snow, and powerful winds. Winter tires are mandatory from November 1 through April 15. Studded tires are legal during this period but not required. All rental cars come with winter tires during these months.
Road closures are common in winter, especially on mountain passes and in the north and east. Always check road.is before setting out and monitor forecasts at vedur.is. Our winter driving guide covers equipment, safety, and what to do if conditions turn.
F-roads and highland driving
F-roads are Iceland’s highland mountain roads, marked with an “F” before the road number (F26, F35, F208). They are unpaved, often steep, and may include unbridged river crossings.
A 4x4 vehicle is required on all F-roads. Driving a 2WD vehicle on an F-road is illegal, and insurance does not cover any damage incurred. Most rental companies will void the entire insurance policy if a 2WD vehicle is taken onto an F-road.
F-roads are only open during summer, typically from mid-June through September. The exact opening and closing dates change each year based on snow melt and conditions. Check the road.is map before heading into the highlands.
For a detailed breakdown of F-road categories, river crossings, and preparation tips, read our F-roads guide.
Major rental companies
Iceland has both international chains and well-regarded local companies. Local operators tend to be cheaper and often provide more Iceland-specific advice.
At Keflavík Airport
Hertz, Avis, Budget, and Europcar/Höldur have desks inside the terminal. Local companies like Blue Car Rental, Reykjavík Cars, Lava Car Rental, and Go Car Rental operate from nearby lots with free shuttle service. Blue Car Rental’s office is within walking distance of the terminal (3–4 minutes on foot).
In Reykjavík
Most companies have a city office or offer delivery/pickup in the capital area.
When comparing, look beyond the headline rate. Check whether the price includes CDW, unlimited mileage, the kílómetragjald surcharge, and airport pickup. Read reviews on independent platforms. Blue Car Rental, Lava Car Rental, and Reykjavík Cars consistently rank among the highest-rated local options.
Long-term rentals and alternatives
If you are staying in Iceland for several weeks or months, a long-term rental may cost less per day than a standard booking. Some companies offer monthly rates or lease-to-own arrangements.
For residents and newcomers, renting is also a practical bridge while you decide whether to buy a car. The used car market in Iceland is expensive due to import duties, and renting for the first few months gives you time to learn the market and test what vehicle type suits your needs.
If you plan to stay primarily in the capital area, public transport covers most daily needs. Strætó operates bus routes across the greater Reykjavík area, and the city is walkable and bikeable in summer. A rental for weekend trips outside the city may be more cost-effective than owning a second car.
For those already settled, car insurance is a separate consideration covered in our dedicated guide. For a broader overview of transport and everything else involved in the move, see our main guide to moving to Iceland.
Frequently asked questions
Do I need a 4x4 to drive around Iceland?
Not for the main roads. The Ring Road (Route 1), Golden Circle, and most popular attractions are accessible with a 2WD car year-round. A 4x4 is only required for F-roads, which are highland routes open in summer only. In winter, a 4x4 provides extra confidence on icy or snow-covered roads but is not legally required on paved routes.
How much does it cost to rent a car in Iceland in 2026?
Economy cars start from around 5,000 ISK/day in winter and 10,000 ISK/day in summer. SUVs and 4x4s range from 12,000 to 35,000 ISK/day depending on season. Add insurance extras and the kílómetragjald road tax (1,390–1,550 ISK/day at most companies) to get the true daily cost.
What is the new kilometer road tax?
Iceland introduced the kílómetragjald on January 1, 2026, replacing the old fuel-based road tax. The base rate is 6.95 ISK/km for standard passenger cars. Most rental companies charge a flat daily fee of 1,390–1,550 ISK instead of tracking exact kilometers.
What insurance should I get?
CDW is usually included in the base rate. For trips outside Reykjavík, add Gravel Protection. If you are driving in the south or east near glacial areas, Sand and Ash Protection is strongly recommended. Super CDW is worth it if you want to reduce your deductible to zero.
Can I drive in Iceland with a foreign license?
Yes, if your license is in Roman script and has been held for at least one year. Licenses in non-Roman scripts require an International Driving Permit alongside the original. EEA licenses are accepted directly for residents. Non-EEA residents who become permanent may need to convert their license.
Are rental cars equipped with winter tires?
Yes. All rental cars in Iceland come with winter tires during the mandatory period (November 1 to April 15). You do not need to request them separately.
Last updated: March 2026
Rental insurance in Iceland deserves careful attention. The weather is unpredictable, gravel roads are common, and repair costs are high.