You all know that I think the best way to experience Iceland is by renting a car and driving around the country yourself, but there’s so much to consider when choosing a rental vehicle and a rental company and insurances, and all of the things. So, today, we’re talking about everything that you would need to consider for renting a car in Iceland.

This post is Part 1 of the ultimate road trip planning series:

Here are the main points you want to consider before purchasing a rental car for your Iceland road trip.

Why rent a vehicle

First of all, I want to talk about why you would even rent a car in Iceland in the first place. The obvious reason and most important to me is freedom and flexibility. Renting a car allows you to drive around Iceland and enjoy all of the gorgeous landscapes that the country has to offer. Not only that, you’re on your own time schedule, so you can literally control every minute of every day, where you go, how long you stay, things that you can’t do when you join an organized tour. Next and also very importantly is that the public transportation system in Iceland is just basically non-existent. Compared to other countries especially in Europe, there are no trains. The bus system is very, very limited. It’s just not a great way to get around, so public transportation is not going to be useful for you in Iceland.

4wd vs. 2wd

This is by far the most common question I get asked, and definitely something worth considering.

The answer primarily depends on a) where you are planning to go and b) the season you are traveling in.

  • If you are driving the Golden Circle, the ring road, or cruising around during summer, then no.
  • If you’re visiting in the winter and/or you’re not used to driving on icy roads, then yes. Roads in Iceland are not very well maintained, especially outside of Reykjavik. Not only that, but the wind in Iceland can be so strong, you might feel like it could blow you right off the road! The weight of the bigger vehicle will give you peace of mind when traveling.
  • If you are planning to drive on any F-roads (off the main roads, usually in the interior of Iceland), then yes you will for sure need a 4wd. All of the rental cars have a sticker on the dashboard that warns you against driving off-road. Not only can it be dangerous to you if you violate this rule, but it can also get you a hefty fine if the rental company finds any damage.

GPS vs. WiFi

The next consideration might be if you need some extras like a Wi-Fi or GPS rental. These are add-ons that a lot of rental car companies will offer to you. I would say that these services usually cost $10 per day per service. Every rental car is different, but in general, that’s kind of what I’ve heard for a price. I do believe that a Wi-Fi device is a lot better option than a GPS. I can’t speak from personal experience because I’ve never used GPS in Iceland, but I have heard from some other travelers that the GPS didn’t work as well as they thought or maybe didn’t have all of the places listed, and so, it was difficult and maybe kind of a waste of money.

Make your own decision, of course, but in my opinion, a Wi-Fi rental will get you so much further because you can use Wi-Fi to navigate in Iceland. You can link up maps from your phone or your iPad to navigate you. I think that’s a lot better deal. Not to mention that if you rent a Wi-Fi device of some sort, then you can usually link that up with multiple users in your vehicle, so I think that this is not only more economical. This makes more sense for your trip.

BONUS! You can use the Google Map in my Ring Road eBook when you rent a Wi-Fi, which is literally the best navigation you would ever need!


Insurance for a rental car in Iceland is an absolute must.

The first thing that you need to know is that all vehicles are required to be insured. For example, in other countries around the world, you can sometimes deny insurance coverage. That’s not the case in Iceland. All vehicles have to have insurance. With that being said, most companies include the basic, basic option, which is called CDW or Collision Damage Waiver. From there, you will most likely have the opportunity to add on other insurances there for a lower deductible or things like that.


It’s important to remember that Iceland is a small island in the middle of the Atlantic…things are expensive up here! Don’t forget to budget for gas, especially if you will be driving a lot (~$60 USD/day).

  • You can expect fuel to be around $6-70 per gallon / $2-3 per liter.
  • If you rent a diesel vehicle, it’s cheaper per liter and gives you better fuel economy
  • Fill up literally wherever you can. Gas stations in Iceland are few and far between, and sometimes it’s just one pump on the side of the road!


Make sure your rental includes unlimited miles. You never know where you’ll going to want to go!

Types of Transportation

Obviously, the two most common ways to travel are by car and SUV. But one thing I love is that Iceland offers unique ways to travel around this country so that you get the most out of your vacation.

  • Car – adequate for the main roads (Golden Circle, Ring Road, Reykjavik)
  • SUV – required for F-roads, recommended for winter driving
  • Camper Van – Does having your vehicle and accommodation rolled into one sound good to you? Do you want to be able to cook your own meals rather than spend money at expensive restaurants? Then Camper Vans are for you! Not only is this option your wheels and your bed, but it is also equipped for cooking as well!
    • The BEST and first original campervan company in Iceland that I have used and highly recommend: Happy Campers
  • Big Rig – These vehicles are serious heavy duty 4×4’s that have been modified to handle anything that the Icelandic wilderness throws at you. You will be able to get you into the interior places of Iceland like Landmannalaugar and Thorsmork.  If you want to drive through streams and take the F-roads head on, these bookings are for you.

Choosing a Company

Your choice of a rental company depends entire only on the above preferences and your needs as a driver. There are big name rentals and smaller companies, and each will have something good to offer. Consider your individual needs for your trip.

No matter who you choose, I would recommend getting pick-up at Keflavik airport. If you are thinking about getting transported into Reykjavik, a bus or taxi will cost you $20-$50 each way.

If the car company is not on-site at the airport, make sure free pick up is included!

The rental car company I recommend is Blue Car Rental – they’re a local business with great customer service and insurance already included in their prices. OH, and don’t forget to grab my VIP discount!

What else do you need to know?

  • The peak rental season in Iceland is May-September. Outside of those months, rentals become cheaper. This can allow you significant savings!
  • In Iceland, we drive on the right side of the road, so my American travelers will have no problem with this.
  • Also really important is that an international driver’s license is not required to drive or rent a vehicle in Iceland.
  • When you pick up your rental car is to take lots and lots of photos in and around the car. Usually, the company will go outside with you and look through the vehicle and mark down all of the damages, but just to totally make sure that you’re fine when you return the car, they will be checking again for damages, so anything that you think is suspicious and you want to document, I recommend taking pictures so that you have that to refer to later.
  • Always, always, always check the road conditions, especially if you are traveling in winter. I cannot stress this enough. The weather in Iceland is very unpredictable and road conditions can change rapidly. Be prepared, and don’t take any chances.
    There is a great app called 112 Iceland that can be used in an emergency to notify a response center.
    In an emergency, call 112

Remember that Iceland is incredibly beautiful, but safety comes first. Invest in a rental vehicle that is right for your itinerary, and most importantly keeps you safe!

Happy planning,

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