Renting a Car in Iceland

Renting a car in Iceland can be one of the best ways to fully experience this beautiful country, whether you are visiting as a tourist or settling in as a new resident. With expansive landscapes, remote natural wonders, and unpredictable weather, having a car allows you the flexibility to explore Iceland beyond the typical tourist routes. From exploring Reykjavik’s vibrant culture to venturing into the untouched Highlands, renting a car allows you to plan your journey at your own pace. In this guide, we will cover everything you need to know about renting a car in Iceland, from practical tips and costs to insurance considerations and seasonal driving advice.

Why Renting a Car is Ideal for Iceland

Freedom to Explore

Iceland is known for its vast open spaces, dramatic landscapes, and hidden gems. Renting a car allows you to visit these natural wonders at your own pace, without relying on the schedules of organized bus tours. You can stop wherever you want—whether it’s a scenic viewpoint, a quiet village, or a geothermal pool off the beaten track. Having a car provides unparalleled freedom, especially if you wish to explore places like the Golden Circle, the Ring Road, or the Westfjords, where public transportation options can be limited or inconvenient.

Flexibility in Travel

Seasonal changes in Iceland significantly impact travel, and renting a car lets you adapt your plans accordingly. In summer, you have almost endless daylight to explore iconic spots like Gullfoss, Jökulsárlón, and Seljalandsfoss. In winter, a car gives you the flexibility to wait for favorable road conditions or to chase the elusive Northern Lights. Unlike rigid bus tours, having your own vehicle lets you move at your own pace, take detours, and adjust to sudden weather changes, which are common in Iceland.

Regional Considerations

Reykjavik and Surroundings

For day trips from Reykjavik, renting a car is ideal. The capital city itself is compact and walkable, but having a car allows you to explore nearby attractions such as the Blue Lagoon, the Golden Circle, and Thingvellir National Park. While public transportation is available within Reykjavik, the flexibility of having your own vehicle makes it easier to explore the nearby attractions efficiently.

Remote Areas: Westfjords and Highlands

Reaching Iceland’s remote areas, like the Westfjords or the Highlands, often requires a more robust vehicle. For these areas, a 4×4 is highly recommended, especially for navigating the F-roads (mountain roads), which are typically only open during the summer months. These areas are less crowded, and having your own vehicle allows you to access remote hot springs, fjords, and picturesque landscapes that aren’t reachable by standard buses.

Seasonal Factors

Summer Driving vs. Winter Driving

Summer driving in Iceland is considerably easier than winter driving. During the summer months (June to August), roads are generally clear, and nearly all of Iceland’s famous routes, such as the Ring Road and Golden Circle, are accessible. The extended daylight hours mean you can plan long excursions without worrying about darkness.

However, winter driving presents its own set of challenges. From October to April, Iceland experiences short daylight hours, icy roads, and unpredictable snowstorms. Drivers must be extra cautious, particularly on rural roads that may not be frequently cleared of snow. Renting a vehicle equipped with winter tires is essential. Additionally, road closures are common in the winter, especially in the Highlands. Always check current road conditions at Vegagerðin, Iceland’s official road administration site, before setting out.

Winter Road Safety

Driving in winter requires careful preparation and caution. Many routes, especially F-roads, are completely impassable during winter. Gravel protection insurance is highly recommended, as many roads in Iceland are unpaved and can damage your vehicle. Additionally, Icelandic roads can be narrow, and strong winds are a common hazard. Before setting out, always consult SafeTravel Iceland for weather alerts and driving advisories.

Costs and Considerations

Rental Costs and Additional Charges

The cost of renting a car in Iceland can vary greatly depending on the type of vehicle, time of year, and additional services. Basic rental prices range from around $50 per day for a small car in low season to $150 or more for a 4×4 in high season. Make sure to account for additional costs like insurance, extra drivers, and fuel. Most rental companies offer Collision Damage Waiver (CDW) as a base insurance option, but extra coverage for gravel protection and theft is advisable, especially if you plan to explore rural areas.

Insurance Types

Rental insurance is crucial when driving in Iceland. Standard rental agreements usually include a CDW, but this often comes with a high deductible. Adding coverage for windscreen damage, gravel, and sand or ash storms can save you from unexpected expenses. Icelandic roads are frequently gravel or paved with rough tarmac, and the risk of debris damage is real, especially during high winds or if traveling off the main roads.

Alternatives to Car Rentals

Public Transportation

While renting a car is highly recommended, public transportation is an option if you plan to stay in Reykjavik or visit only major sites. Buses operate throughout the Reykjavik area and to a few key locations, but the schedule is often limited and may not align with your travel plans. For those without the desire to drive, guided bus tours are available, but they don’t provide the same flexibility or privacy as a rental car.

Tour Buses vs. Self-Drive

Tour buses are convenient for those who prefer not to drive, especially in winter conditions. However, they follow strict itineraries that may not include some of Iceland’s hidden gems. Renting a car allows for a personalized experience and lets you spend as much or as little time as you like at each location, perfect for photographers or nature lovers who prefer to avoid the crowds.

Buying a Car in Iceland

If you are planning to stay in Iceland for an extended period, buying a car may be a cost-effective alternative to renting. Purchasing a car provides long-term freedom without the recurring expenses of rental fees. Many newcomers opt for used cars, which can be found at local dealerships or through online marketplaces. Keep in mind that maintenance costs, insurance, and registration fees should be factored into your decision. Additionally, certain vehicles are better suited to Iceland’s terrain, especially during winter months, so choosing a reliable and appropriate model is crucial.

Practical Tips for Renting a Car in Iceland

Booking Tips

To secure the best rates and availability, book your rental car well in advance, especially during the summer months when demand is high. Booking directly through rental company websites can sometimes yield discounts, and it’s often worth checking for included insurance packages or extras like free GPS. Compare multiple rental companies to get the best value.

What to Pack

When embarking on a self-drive adventure in Iceland, packing the right items is key. Essentials include a detailed map, snacks, extra layers of clothing, and a fully charged phone. It’s also wise to bring a portable phone charger, a first aid kit, and blankets, especially if you are driving in winter conditions. Renting or buying a local SIM card can also be helpful for getting real-time updates on road conditions.

FAQ Section

1. Do I need a 4×4 to drive in Iceland?
   • A 4×4 is not necessary for main roads, but is essential if you plan on exploring the Highlands or F-roads. Note that the F-roads are only accessible in the summertime. Most travelers don’t go into F-roads so a 4×4 car is not necessary. 
2. What are F-roads, and can I access them with any car?
   • F-roads are mountain roads, often unpaved, requiring a 4×4 vehicle.
3. How much does it cost to rent a car in Iceland?
   • Costs vary by season and vehicle type, ranging from $50 to $150+ per day.
4. Is insurance necessary for renting a car?
   • Yes, basic insurance is included, but additional coverage is recommended.
5. Are Icelandic roads safe for tourists to drive?
   • Generally yes, but caution is needed in winter and on gravel roads.
6. Can I rent a car during winter in Iceland?
   • Yes, but make sure it is equipped with winter tires and check weather conditions.
7. Do I need to refill the fuel before returning a rental car?
   • Most companies require you to return the car with a full tank of fuel.

Conclusion

Renting a car in Iceland offers unmatched flexibility and access to some of the most stunning natural landscapes in the world. Whether you are here for a short visit or settling in for the long haul, understanding the costs, conditions, and requirements of driving in Iceland will make your experience more enjoyable and less stressful. Plan ahead, drive safely, and you will have an unforgettable adventure. Click here to see our list of recommended car rentals in Iceland.