Essential Tips for Renting a Car in Iceland: What You Need to Know

If you’re planning a trip to Iceland, renting a car is non-negotiable in my opinion!

Since Iceland’s sights are spread out, having your own car gives you the freedom to explore at your own pace rather than with a tour group.

In this guide, I’ll share tips for renting a car in Iceland, along with my personal experience to help you figure out the best decision for you.

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What to Know Before Renting a Car in Iceland

Renting a car in Iceland is an easy process, but there are a few things to keep in mind before reserving your rental car:

Book Early: Iceland is a popular destination, especially in the summer. I recommend making your reservation early to get the best deal and options. We booked about 6 months in advance.
Understand Insurance Options: Iceland’s weather and road conditions can be harsh, so it’s a good idea to get full insurance coverage. This usually includes gravel protection, sand and ash damage coverage, and collision insurance
Choose the Right Vehicle: If you’re planning to stick to the Ring Road and other paved roads, a normal car will be fine. If you’re planning to drive on the F-roads (unpaved mountain roads), you’ll need a 4×4 vehicle (it is the law!).
Automatic vs. Manual: Both types of cars are available but there seemed to be more manual cars when I was looking to reserve mine, and they were cheaper than the automatic cars. Since I can only drive automatic cars, I went with automatic. So just be aware of which type you’re choosing before you book.

If you plan to drive F-roads, you must rent a 4×4 vehicle. It is the law.

We did not drive on the F-roads, so a 4×4 vehicle wasn’t needed for us.

We will discuss the F-roads later on in this blog post.

The mossy green landscape surrounding Kvernufoss waterfall in Iceland which is surrounded by cliffs and a stream that we got to with our rental car. — **Kvernufoss Waterfall**

Best Rental Car Companies in Iceland

In my opinion, the best rental car companies in Iceland are the local companies.

They provide excellent customer service and are a great way to support local businesses.

I recommend comparing rates across these companies to find the best deal for your trip!

Here are some of the best rental car companies in Iceland.

Lava Car Rental

Lava Car Rental is a highly-rated local company in Iceland!

They have excellent customer service and reliable vehicles.

We rented our car from Lava Car Rental during our trip.

After searching through all the rental car companies listed here, we chose Lava Car Rental, because they had the lowest price for the car we needed.

They offer airport pick up and drop-off and a wide range of vehicles, including 4x4s for F-roads and camper vans.

Blue Car Rental

Blue Car Rental is another popular choice for rental cars in Iceland.

They are probably the company I heard of the most when researching for my trip and are highly recommended for their customer service and high-quality vehicles.

They offer online check in with zero waiting time, airport shuttle service, free cancellation up to 24 hours before, and a great selection of vehicles, including 4x4s for F-roads.

Lotus Car Rental

Lotus Car Rental is another locally-owned business with great customer service and vehicles.

They offer airport shuttle service, quality vehicles, including 4×4 options for F-roads and camper vans.

My Experience Renting a Car in Iceland

We rented our car from Lava Car Rental, and I highly recommend them for your trip to Iceland.

They offer airport pick-up and drop-off, which made getting to and from the airport super easy.

A shuttle van was waiting for us just outside of the airport, so we didn’t have to worry about transportation.

They had great customer service, and the car we got was in excellent condition.

We got a hybrid vehicle, which was very gas-efficient—we only had to fill up three times during our trip, even with all the long drives.

For car rental insurance, I recommend going with the full coverage package that includes gravel and ash damage insurance.

Normally, I skip rental car insurance in the U.S. because my Chase Sapphire Preferred credit card provides coverage.

However, since we were traveling internationally and Iceland is notorious for rougher roads and high winds, I opted for the full protection insurance package.

This was also a common recommendation in the travel blogs I read while planning.

The total cost for our rental car, including full insurance, was around $806 for five days.

Yes, it’s pricey, but Iceland is not a budget destination, and the flexibility and peace of mind it gave us was worth every penny!

If you plan to rely on your credit card insurance, make sure to read the fine print.

Many credit cards won’t cover taxes on repairs, which can end up being pretty pricey.

It’s better to know ahead of time what’s included so you can make the right choice for your trip.

➡️ Check out my blog post where I share my 4-day Iceland itinerary of everything I did during my trip in July!

The beautiful sunset casting an orange glow in the sky behind the Dyrholaey Arch which is a unique rock formation extending over the cliff and ocean and is near Vik in Iceland. — **Dyrhólaey Arch**

Is It Easy to Rent a Car and Drive Around Iceland?

Yes, renting a car in Iceland is easy!

The process is very similar to what you would experience in the United States.

Most rental car companies offer airport pickup and drop-off, making it easy to get your rental car right after you land in Iceland.

Driving around in Iceland is straightforward as well.

For our trip, we drove through Reykjavik, the Golden Circle, and past Vik to Diamond Beach.

We were almost always on well-maintained roads, and we never encountered any narrow roads or challenging terrain.

In Iceland, they drive on the right side of the road just like the United States which made it familiar for us.

Do be prepared for some unique driving conditions like gravel roads, sudden rain showers, strong winds, and maybe the occasional sheep wandering onto the road.

We visited Iceland in July and experienced favorable weather conditions and long daylight hours.

However, we did experience several pop-up rain showers that never seemed to last for too long.

Summer is the ideal time to visit Iceland for road trips, as the roads are clear, and the weather is much more favorable compared to winter.

I haven’t visited Iceland in the winter, but I think if I did, I would skip renting a car and join guided tours instead.

Slick, snowy roads and unpredictable weather could make driving dangerous, and I would rather avoid that stress.

For the best road-tripping experience in Iceland, I highly recommend visiting during the summer months.

The driving conditions are safer, and the longer daylight hours make exploring so much easier!

Where are the F-Roads in Iceland?

The F-roads in Iceland are mountain roads that are primarily located in the Icelandic Highlands which is a remote and rugged area in the center of the country.

These F-roads provide access to some of Iceland’s most breathtaking but hard-to-reach natural landscapes, including volcanic craters, glaciers, and remote hiking trails.

During our trip to Iceland, we focused on the southern coast along the Ring Road so we did not have to drive on any F-roads.

Common regions with F-roads include:

Landmannalaugar (a popular highland area for hiking)
Thórsmörk (a beautiful valley surrounded by glaciers)
Askja Caldera (a dramatic volcanic area)
Kerlingarfjöll (a geothermal mountain range)

If you’re planning to visit areas with F-roads, make sure to rent a 4×4 vehicle—it’s required by law to drive on these roads.

However, if you’re sticking to the popular Ring Road, a 4×4 isn’t necessary since you won’t encounter any F-roads along the route.

How Will You Know If You’re Approaching an F-Road?

One of my concerns was how I’d know if I was on or approaching an F-road since we didn’t have a 4×4 vehicle.

Thankfully, there’s no need to worry—F-roads are clearly marked with an “F” on road signs and maps, such as F208 or F26, making them easy to identify.

We didn’t come across any F-roads during our trip since we stuck to the Ring Road.

When driving, you’ll recognize F-roads by:

Road Signs: Signs at the start of the F-roads often have the road number (with an “F”) and may warn of limited access to 4×4 vehicles only.
Gravel or Uneven Terrain: As you approach an F-road, the road will change to gravel, dirt, or rocky terrain.
Remote Location: These roads typically lead away from major highways like the Ring Road and into more isolated, mountainous areas.
River Crossings: Many F-roads involve river crossings without a bridge meaning you would have to drive your vehicle over the river. These can range from small streams to large rivers depending on the season.
No Guardrails or Services: You’ll notice a lack of roadside services, gas stations, or barriers.

Important Tips for Driving on F-Roads

4×4 Vehicle Required: It’s illegal to drive on F-roads without a 4×4 vehicle. Rental companies will clearly specify if your vehicle is approved for F-road use.
Check Conditions in Advance: Check road.is for up-to-date road conditions and closures. F-roads are usually open only from late June to September due to snow and flooding.
Drive Slowly and Cautiously: Gravel roads can be slippery, and river crossings require slow, cautious driving to avoid getting stuck.
Avoid Traveling Solo: These roads are isolated, so having a travel buddy and a fully charged phone or GPS device is smart in case of emergencies. I would not drive on F-roads by yourself. Make sure to have a portable phone charger with you and maybe even a Garmin Mini if you don’t have cell service in case of an emergency. Your rental car company might rent out some of these items as well.

The dark black sand at Reynisfjara Black Sand Beach in the town of Vik that is surrounded on one side by basalt column cliffs and then the rough ocean waters with unique rock formations. — **Reynisfjara Black Sand Beach**

Getting Gas in Iceland

Another thing I was a bit nervous about was getting gas in Iceland.

Iceland’s gas stations are self-service, so you will pump your own gas.

Here are a few things to know about getting gas in Iceland:

Payment Methods: Most gas stations in Iceland accept major credit and debit cards. I recommend having a credit or debit card with a PIN, as some stations require it for payment. If you don’t have one, you can head inside the gas station, load money onto a prepaid card, and pay that way.
24/7 Availability: Many gas stations, particularly those along the main highways, are open 24/7, but be aware that some stations in more remote areas might not be staffed during the night. Always keep an eye on your fuel level, especially if you’re heading into a more remote area.
Fuel Types: Gas stations in Iceland usually offer two types of fuel: regular unleaded gasoline and diesel. Be sure to choose the correct one for your vehicle. We also noticed that the diesel pumps were black, while the regular unleaded gas pumps were green, which is the opposite of the U.S. So, it’s important to double-check the fuel type before filling up.
Refueling Tips: In more remote areas, there may be longer distances between gas stations, so it’s a good idea to keep your tank above half-full when traveling outside Reykjavik or the Golden Circle. If you’re planning to drive into the Highlands or other more isolated areas, be extra cautious.

How Much Does It Cost to Rent a Car in Iceland?

Renting a car in Iceland isn’t cheap, and the costs vary depending on the type of car, insurance coverage, rental duration, and the season.

On average:

Economy cars cost between $50–$80 per day during the off-season and $100–$150 per day in the summer.
4×4 vehicles are pricier, ranging from $100–$200+ per day.
You should also budget for gas, which is expensive in Iceland (around $8–$9 per gallon).
The rental car insurance is another $100-$200 depending on the coverage you choose, but it is worth the money.

For our 5-day SUV car rental with full insurance protection, we paid $806.

We spent $205 on gas during our 5-day trip which included a lot of driving.

➡️ Check out my blog post where I detail exactly how much my trip to Iceland cost!

Final Tips for Renting a Car in Iceland

Check Road Conditions: Iceland’s weather is unpredictable, and some roads may close due to snow or flooding. Check road.is for up-to-date information.
Fill Up on Gas When You Can: Gas stations can be hard to find in remote areas, so don’t let your tank get too low before going out into less populated areas.
Drive Carefully on Gravel Roads: Slow down to avoid skidding or damaging your car.
Watch for Wildlife: Sheep often roam near the roads, so keep your eye out for them.

The unique basalt column backdrop behind the stunning Svartifoss waterfall surrounded by bright green moss. — **Svartifoss Waterfall**

Commonly Asked Questions

Can Americans Rent a Car in Iceland?

Yes! If you have a valid U.S. driver’s license, you’re good to go.

You don’t need an international driving permit (IDP) if you’re from the United States, Canada, or other EU countries as long as you have a valid driver’s license in English.

Are Rental Cars in Iceland Automatic?

Yes, Iceland offers both automatic and manual rental cars.

If you prefer an automatic vehicle, be sure to select that option when making your reservation, as there are also several manual options available.

If you’re comfortable driving a manual, they are usually more affordable!

Should I Rent a Wi-Fi Device or GPS?

Renting a portable Wi-Fi device is a good idea if you want reliable internet access on the go.

Most rental companies offer these for an additional fee.

We didn’t rent one since I downloaded an offline Google Maps of Iceland on my phone, which worked perfectly when we lost cell service.

We also had a USB plug in the car to charge our phone, along with portable chargers to ensure our phone battery never ran low.

But, if it makes you nervous to rely on your phone, renting a GPS from your rental car company is a good idea.

We stuck to more populated areas of Iceland as well such as Reykjavik, the Golden Circle, and Vik, and we only drove along the Ring Road.

If we were heading into more remote areas and on F-roads, I would have purchased a Wi-Fi device or GPS to be sure we always had driving directions if we lost service.

Are Winter Tires in Iceland Necessary?

If you’re visiting Iceland between November and April 15th, your rental car will come with winter tires by law.

These are necessary for safe driving in snowy or icy conditions.

Can I Drive Around the Entire Ring Road?

Yes, driving Iceland’s Ring Road is the most popular way to road trip around Iceland!

The road is well-maintained and open year-round, but be prepared for varying weather and road conditions, especially during the winter.

If you’re driving during the winter months (December through March), allow extra time for delays or detours.

Should I Rent a Car for Reykjavik Only?

If you’re staying in Reykjavik and don’t plan to explore beyond the city, a rental car would not be necessary as the downtown area is pretty compact.

Reykjavik is walkable, and public transportation or guided tours can take you to nearby attractions like the Blue Lagoon or the Golden Circle.

A rental car is necessary if you’re wanting to see the sights outside of Reykjavik which you definitely should if you have the time.