Welcome to my guide with my best Iceland car rental tips! Renting a car in Iceland is not difficult, and I’ve done it many times over the past decades. I’ve now visited Iceland 11 times, in both summer and winter, and on many of these trips I’ve explored the country by rental car.
For many trips, a regular rental car is perfectly fine and you don’t necessarily need to spend a fortune on a 4×4. However, there are some important things to consider before you book, from choosing the right type of car and understanding insurance to knowing when you actually need a 4WD.
In this guide, I’ll share 8 essential Iceland car rental tips based on my own experience, so you can choose a rental car that suits your trip and avoid unnecessary costs or surprises along the way.
Note that this article was first published in 2021 and updated in 2026 after my most recent visit to Iceland.
The beauty of Iceland’s nature by rental car
Exploring Iceland by rental car guarantees plenty of ‘ohhh’ and ‘ahhh’ moments. The regular buses or organized tours take you to the tourist spots, but they don’t stop everywhere and won’t take you down the smaller side roads. With your own rental car, you can stop whenever you want to take pictures, enjoy the scenery or simply take your time.
If you feel comfortable driving in Iceland, renting a car is a great way to explore the country at your own pace and with the freedom to change your plans along the way.
Renting a car in Iceland
Iceland is ideal for exploring by car. Most of the roads are in good condition and most sights are easily accessible with your own vehicle. The most important thing to know, however, is that there are also quite a few unpaved roads in Iceland. These are the so-called ‘interior routes’ – and marked as an F-road. The best known of these are the Kjölur and the Sprengisandur. These routes cross the island from north to south and are only accessible in summer and with a 4×4. You can find more about this in the 4×4 section later in this article.
To rent a car in Iceland you must have a valid driver’s license for at least one year. In addition, a credit card in the name of the main driver is usually necessary. Check the conditions of your rental car company for this when renting a car. The minimum age is 20 or 21 years, this varies per car rental company. Sometimes there is a surcharge for drivers under the age of 25.
How does renting a car in Reykjavík work?
This paragraph is extremely important! Most visitors arrive in Iceland via Keflavík – Reykjavík’s international airport. This is about an hour’s drive from Reykjavík city. Please note that there is also an airport in the city (Reykjavík) but this is only used for domestic flights. So don’t make the mistake of booking a rental car in Reykjavík instead of in Keflavík.
However, if you are going on a city trip in Reykjavík for a few days and you don’t need a rental car, you can take the Flybus to Reykjavík and as soon as you start traveling around, pick up your rental car at the city office. The options for this are more limited because most depots are located at Keflavík airport.
Also note that parking your car in Reykjavík can be quite expensive so it may be worth checking whether picking up in the city is cheaper than renting at the airport if you plan to stay in Reykjavík longer than a day.
Car rental tips Iceland: do you need a 4×4 or regular car?
Technically, you can get very far with a regular 2WD car. If you plan to stay on the ring road and only visit the main sights such as the South Coast, you don’t need a 4×4 car at all. This is only necessary if you want to take an unpaved route, a so called F-road. Think of the previously mentioned inland routes, but also some routes in the Westfjords and the routes to the popular Landmannalaugar (the starting point of the famous Iceland Laugavegur Trail) and Thórsmörk.
Although more and more bridges are being built, some of these routes still include river crossings. This can lead to exciting situations, especially when it has rained a lot. If you plan to make a river crossing, always check whether this is possible. See what others are doing and always do a wade-through (i.e. before crossing) before you decide to drive through the water. Water damage is not covered by most insurance policies, so caution is necessary.
What’s also good to know is that most interior roads do not open until the end of June or the beginning of July. If you travel outside this season, a 4×4 will not be of much use, other than that it may be a bit more comfortable.
Renting a car in Iceland in the winter
Do you want to rent a car in Iceland in winter? Note that winter tires are mandatory. Most car rental companies have packages that already offer this as standard and most tires come with studs. Driving with snow chains is usually not necessary, depending on the snowfall. The times I went to Iceland in the winter there was hardly any snow (yes really) and the roads were in great condition. A 4×4 is therefore not typically necessary in winter.
Also read: what to pack for Iceland in winter
Should you rent a cheap car in Iceland?
If you want to rent a cheap car in Iceland, you can compare rates on Booking. There are numerous options here, including cheaper options. However, keep in mind that the cheap rate often pays for itself in high additional costs, such as a limited number of kilometers, a high deductible or limited insurance. Make sure to research all options in advance before you choose a budget rental car in Iceland and know what expected extra costs are.
I usually rent from Alamo or Herz, they are usually a little bit more expensive but have a low deductible and offer good insurance options. I’d rather not have a large own risk in case an accident happens or in case someone else causes damage to my car.
You can check options via Discover Cars here, they have a mix of more expensive rental companies as well as some budget options.
Is renting a car and driving in Iceland safe?
Yes, driving in Iceland is very safe. The roads are generally in good condition. Sometimes you have to drive a short distance on an unpaved route, for example to get to your accommodation. This is of course no problem. You can fill up your gas along the ring road and Icelanders are generally very friendly and helpful. When you pick up the rental car you will also receive an overview of the traffic rules in Iceland, read this carefully before you set off. Fines are relatively high and it is better to avoid them.
Note that most cars are not automatics and you will need to know how a manual gear box works. Automatic cars are quite uncommon in Iceland so if you want to rent an automatic car, make sure to book well ahead of time.
In short, always check the following things when making a rental car booking:
- How many drivers are included and what are the requirements?
- What is the amount of the deductable (own risk)
- How many kilometers are included each day
- Are there restrictions when it comes to roads that can be driven on
Do you need a GPS or navigation?
Renting a navigation system is not really necessary, but can be useful. Of course you can also just use your mobile phone with a navigation app, there are often extra costs for renting a navigation. Once you are on the Ring Road, taking the wrong way is almost impossible, we only used it around Reykjavík and occasionally to see how far we were from a certain destination.
If you’d rather rent a camper van, you may check rates and availability for Cozy Campers, and choose from a range of well-equipped, custom-built campers tailored for Iceland’s diverse landscapes. Their fleet caters to every explorer, offering premium 4×4 campers for challenging terrain and affordable options for travelers looking to maximize their adventure.
Conclusion and further reading
I hope you found these Iceland car rental tips useful. I have rented a car 5 times in Iceland and in an ever changing business, I found that this was the information you really should know before renting a car in Iceland.
You can compare rates and check availability below:
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Plenty of options for rental cars in Iceland
If you want to continue reading, you may also enjoy the following posts about Iceland:
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