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Car rental in Iceland

Date 10 April 2021

Car rental in Iceland

Car rental in Iceland

Renting a vehicle is an essential step in preparing a trip to Iceland.

Since car rental is quite a budget, it is essential to choose the right rental company and vehicle and make sure the offer is tailored to your needs.

Iceland Car Rental Tips

Louer une voiture en Islande

Whether in winter or summer, the vast majority of tourists who go to Iceland will rent a vehicle to have total freedom during their stay. Of course, there are alternatives, but they are less “flexible” and you won't have the freedom to make your own schedule.

These alternatives are:

In addition to the freedom of going wherever you want, if almost everyone recommends the rental option is because it is an absolute pleasure to drive around Iceland.

Indeed, not all roads and tracks are paved, which makes every drive an adventure. There are few people on the roads, no traffic jams except those caused by sheep... For those who choose to drive down highland trails such as the F225, F210, F208, or F910, they invariably say it was an unforgettable experience as these are among the most beautiful in the country with incredible panoramas.

A French or European Union driver's license is sufficient to drive in Iceland but you should know that there is an age restriction that varies depending on rental vehicle category. The minimum age is 20 to 25 years old, and the driver's license issue date maximum is 1 to 5 years ago.

Questions to ask before renting a car in Iceland

  • The price
  • The reputation of the renter
  • The type of vehicle
  • The age of the vehicle
  • The waiting time at the agency when picking up or returning the vehicle
  • Insurances
  • Proximity to the airport

We will these questions in the chapters below.

How much does it cost to rent a car in Iceland?

Location de voiture en Islande

Renting a car in Iceland is expensive, very expensive, more so than in the vast majority of countries. This expenditure will probably be the biggest on your trip. Generally speaking, international rental companies (Hertz, Avis, Europcar, etc.) are significantly more expensive than local rental companies.

You should know that the price will vary enormously based on certain factors:

  • The time of the year

As with many other things during your trip to Iceland, renting a car in summer will be more expensive than renting a car in April or October.

  • Early booking

Booking at the last moment is rarely a good idea if you want a bargain! For the best price, try if possible to book several months in advance, especially since most rental companies offer free cancellation.

  • The type of vehicle

As always the price depends on the product: city car, sedan, SUV, 4x4, luxury car, passenger vans and other motorhomes... These won't be the same budget. Also, many rental companies will offer a recently deployed vehicle at a certain price, and the exact same model with 200,000 kilometers on the odometer and a few years under the hood for a discount. The price will not be the same, but neither will the risk of failure.

  • The options 

Rental companies package options such as GPS, WiFi, car seats for children or boosters. These options generally have a daily rental cost, and for a 15-day stay it can really add up to a hefty bill.

  • Insurance

We detail insurance in another chapter but clearly, the choice of insurance will have a significant impact on the price.

  • Hidden costs!

Indeed, when you rent a car in Iceland there are a few costs they don't tell you about.

Some rental companies offer limited mileage per rental. What may seem attractive at first glance can become an issue, preventing you from visiting certain places simply because you didn't know you needed more range. We strongly recommend a rental with unlimited mileage.

Some rental companies have additional costs if several drivers alternate, so take this into account.

Also, drivers under 25 should check the conditions carefully because they are sometimes charged more.

Finally, the cancellation fees for your rental are sometimes billed with a non-refundable advance, so read the fine print.

Here are some car rental price ideas for a week with a local rental company (2022):

Vehicule type
High season
Low season
Small city car (ex: Kya Rio)
750$ - 850$
300$ - 350$
5-seater sedan (ex: Golf)
800$ - 900$
350$ - 400$
4x4 (ex: Jimny)
900$ - 1050$
400$ - 500$
SUV 5-seater (ex: Gran Vitara)
1000$ - 1300$
450$ - 600$
Van 2 seats 2WD (ex: Nissan NV200 Campervan)
1300$ - 1500$
700$ - 900$
Van 3 seats 4WD (ex: VW Transporter Campervan)
2300$ - 3000$
1600$ - 2000$

The type of vehicle

Louer un 4x4 en Islande

All cars are equipped with summer tires until November 1, when they switch to studded snow tires. The type of vehicle type will be chosen based on several criteria:

  • The budget

Of course, as you can see above, the price difference between a hatchback and a city car is enormous, and 4x4 vehicles are among the most expensive. The budget will of course be a limiting factor, but if you can afford it, we recommend a 4x4 or SUV.

  • The number of passengers

Obviously, the cramped 4x4 Jimny for a party of 3 with 2 suitcases in the tiny trunk is not ideal... The number of passengers will therefore inevitably guide your choice. Keep in mind you will be spending a lot of time in the car, so it's best not to be too cramped.

  • The time of the year

The time of year will be a decisive factor. Road conditions are not the same from one season to the next and the slush can be a huge issue in winter, which is why a 4-wheel drive car may be the safest option in most situations.

  • The itinerary

Of course, 4x4 driving is not the only way to enjoy driving in Iceland. The ring road that goes around Iceland gets you to the vast majority of sites of interest. It is paved and in very good condition for city cars. That said, if you plan to visit the highlands, or some trails near route number 1, it is essential to drive a 4x4 since F trails are forbidden to 2WD vehicles.

  • Accommodation

What does this have to do with the vehicle, you may ask? Visitors are increasingly opting to rent a van or campervan. Given the price of accommodation in Iceland, choosing a van can be a great budget option for those who don't mind cramped quarters and spartan amenities! The price of vans is quite high so you have to do the math to see if combining your car and accommodation budget turns out to be cheaper.

The best 4x4s for Iceland

Louer un 4x4 en Islande

As we explained earlier, the you don't need a 4x4 to travel the beautiful Icelandic roads, but we recommend it for the freedom and security that this type of vehicle provides in the wilderness of a country like Iceland, where the condition of secondary roads can be prohibitive.

Some choice offers from rental companies include the Dacia Duster SUV is a great deal. It is often the cheapest of the 5-seater SUVs offered and can get you to LandmannalaugarAskja via the F910, to Kerlingarfjöll and safely across the majority of Icelandic trails.

This ride will get you across most fords on these trails. Other options in the category include the Toyota RAV4Suzuki Grand Vitara or Hyundai Tucson. While a little more expensive, they make for a comfortable drive and have the space necessary to store two large suitcases and accommodate 4 or even 5 people.

In smaller models, the Suzuki Jimny is cramped but a true 4x4 capable of crossing fords and most bumpy roads.

However, more challenging trails with deeper fords will require a large 4x4 with no budget options. The top choice is undoubtedly the Toyota Land Cruiser, which is the most capable river-crosser and can get out of situations that other models couldn't. In the same range, we also recommend the Land Rover Defender and the Nissan X-Trail.

The best campervans for Iceland

Les vans en Islande

For #vanlife lovers, this can be a very good choice. Road trips in Iceland are a dream for travelers who want that perfect mix between freedom and comfort.

Not all rental companies offer campervans but some, like Lava Car Rental, have an extensive range.

Depending on your itinerary, the choice of a 4WD or 2WD van will be decisive. While 2WD is much less expensive, it won't allow you to explore the wonders that can be found inland.

The second thing to consider is size. Depending on the number of passengers you can pick a 2 or 3-seater van.

Les vans en Islande

Van interior view, waking up in Skógafoss - Theodor Vasile @Unplash

For example, the Renault Kangoo campervan and the Nissan NV200 are two 2WD vans ideal for tourists who are happy sticking to route number 1. Great for 2 people, with 4 doors and storage for 1 large suitcase and 1 hand luggage, while amenities include is a Webasto heating system, a kitchen kit, sleeping bags, a cooler, and camping tables and chairs.

For those who want the freedom of 4WD van, the Volkswagen Transporter is very popular. Much larger (5 doors), it can accommodate 3 people comfortably. It can also store more equipment: 2 big suitcases and a smaller one. Like the Renault Kangoo, it includes standard equipment: Webasto heating system, kitchen kit, sleeping bags, coolers, and camping tables and chairs.

Which rental company should you choose?

Many agree that you should avoid major international car rental companies. In addition to the much higher prices, the feedback isn't always better than smaller companies.

Beyond the price, the main questions to ask concern insurance, the reputation of the rental company, the waiting time at the agency, the age of the vehicles offered, the model selection, and the location of the vehicle drop-off point!

If we were to pick a favourite local rental company, it would definitely be Blue Car Rental.

  • The prices charged there are reasonable compared to others
  • It is the only rental company that offers insurance as standard package (excluding SAAP)
  • Recently BCR has been offering “zero wait time”. This means you won't have to wait too long before picking up your vehicle after arriving in the country. To get this service you have to provide most of the required information on the site in advance, but it's worth a bit of effort as you waste no time waiting.
  • BCR's reputation is well established among travelers and the feedback is excellent
  • The choice of vehicles is wide
  • The agency is near the airport enough to walk there

Other local rental companies worth mention include Geysir or Lava Car Rental, who both offers 4x4 vehicles as well as vans.

Finally, you have the option of using the Guide To Iceland comparison tool, which aggregates prices by type of vehicle for all local rental companies:

Louer une voiture en Islande


Choosing insurance is very important when renting a car in Iceland. A rental company like Blue Car Rental includes in its price all insurances outside the SAAP. This is a very important point to take into account.

Here are the different types of insurance offered:

  • GP - Gravel insurance

This insurance seems essential to us in Iceland, as you will be driving on dirt or gravel roads anyway. It is also the insurance that protects you against gravel on the windshield.

  • TP - Insurance against theft

Iceland is one of the safest countries, if not THE country, in the world. Therefore, this insurance is not really essential.

  • CDW - Anti-Collision Insurance

It is the classic insurance to insure against collisions, we strongly recommend taking it out.

  • SCDW - Super Collision Insurance

Extra coverage at the CDW, not essential, but for those who want to put on “belt and braces”, why not!

  • SAAP - Sandstorm and Ashstorm Insurance

In southern Iceland, especially in the Vik i Myrdal region, sandstorms are not uncommon. They are often signalled by the weather, the sand flies and damages the car's paint enormously. Apart from parking your car in a shelter, there is not much you can do to avoid this, except to take out this insurance. This is not essential, but unfortunately, many travelers have the unpleasant surprise of having to pay a deductible in the event of a problem, because the damage to the paint is very important for the rental company to repair.