Renting a Car in Iceland (Do’s and Don’ts)

So, you’ve booked your flights and accommodation, taken time off work, and taken care of the house sitter. While it may seem like you’re all set for a memorable vacation in Iceland, don’t forget that you’re going to need a car to help you get from place to place.

With so many car rental companies in Iceland, though, it helps to have insider knowledge to ensure that you’re making a sound choice. Well, if that’s what you’re looking for, then say no more!

I have created a comprehensive Iceland car rental guide for this very reason, so sit back, relax, and keep reading because I’ve got you covered.

But Wait – Why Do You Need an Iceland Rental Car, Anyway?

Planning your itinerary around a tour bus or public transportation system is not only tough but also restrictive. If you’re hoping to have the freedom and versatility to do the things you want to when you want to do them, then rental cars are the way to go.

Moreover, Iceland is renowned for its breathtaking natural beauty, and what better way to take in the natural beauty around you than with scenic drives? Plus, your own rental car will allow you to explore even the most remote areas that tour companies tend to overlook.

It’s also important to remember that while it is still present, public transportation is incredibly limited in this part of the world, so your best bet is to drive a rental car in Iceland. And then there’s the added benefit of saving on travel costs if you’re in a group.

However, if you’re planning on visiting the country in the winter months, I recommend booking a guided tour instead, as weather conditions can make driving difficult.  However, based on my two trips to Iceland, I can say that renting a car and “toughing it out” is the cost-effective way to go.

My First trip, we rented a VIP guide to show us four different destinations.  The cost?  $2500 for the entire day of being chauffered and showed around.

So trip #2 we did it ourselves and rented a car and saved well over $2,000 on a single day of sight seeing by driving ourselves.

Step-by-step Guide on How to Rent a Car in Iceland

Without further ado, let’s get into a step-by-step guide on how to go about renting a car in Iceland.

Step 1: Make Sure You Have an International Driver’s License

Before you go about comparing prices, make sure that you are licensed to drive in Iceland. To do so, you’ll need to obtain a valid driver’s license. Visit your local authority that is responsible for issuing these licenses.

In the U.S., the American Automobile Association (AAA) is the governing agency you’ll need to approach for an international driver’s permit (IDP). Follow the protocol, which typically involves submitting an application, and once it is processed, you will receive your license.

When traveling to Iceland, make sure that you have your IDP with you to avoid any run-ins with the law.

Step 2: Explore the Best Car Rental Companies in Iceland

If you’re worried about finding car rentals, then rest easy. The good news is that there is no shortage of car rental companies in Iceland. You will find major providers, such as Avis, Budget, and more, and there are also several local businesses that you can turn to. Examples include Lotus Car Rental, Blue Car Rental, Northbound, and MyCar Rental.

To locate and explore the options available to you, I recommend using websites such as:

• Guidetoiceland.is
• Kayak.com

They will not only help you find a car in Iceland but also learn more about the going rate for various types of vehicles. Keep in mind that these websites are just starting points, so you’ll need to visit the website of each car rental company you’re interested in to make a booking.

To identify the best car rental company for you, make sure that you are taking your needs and preferences into consideration. Look at what each provider offers before taking your pick.

If you need help making the right choice, I have included a segment later on in this article on how to select the right provider, so be sure to check that out!

Travel Hack Alert:  If you are looking for a cheap Iceland rental car and want to book with a company that can align you with local vendors in a one stop shop, I urge you to check out DiscoverCars.com.  

They offer a platform that has direct deals with both global and local rental car agencies in Iceland.  I use this service globally when I travel and there are many benefits.  Read more below.

Step 3: Choose a Car Type

Next, you’ll need to decide on a type of vehicle. There are several to choose from, and the one you go for will depend on factors such as the number of people traveling with you, the places you wish to visit, and your budget. Let’s look at some of the car rental types of vehicles available in the section below.

RVs and Camper Vans

If you suspect that you will spend a considerable amount of time on the road, then a fantastic option is hiring a camper van or RV. Although more expensive than the other options, these vehicles double as accommodation, which can actually save you a lot of money if you think about it.

However, this might be a better option for the warmer months, as a winter spent in a van might be the best way to spend your vacation. Besides, campsites often close at this time of the year, so keep that in mind.

SUVs or 4x4s

One of the most common vehicles for vacationers to use while traversing the magnificent landscapes is an SUV or 4×4. These vehicles are often able to handle adverse weather and road conditions and are quite spacious, which is great if you intend to spend a lot of time on the road.

Cars or Sedans

Although smaller than SUVs, camper vans, and 4x4s, cars are the cheapest rental vehicles and are suitable for a small group of travelers. This is a good option if you’re not going to be touring the country much in your rental vehicle. However, if you’re visiting Iceland in the winter, I recommend steering clear of this option, as the cheapest rental cars are not designed to withstand adverse road conditions.

Step 4: Get Insurance

Iceland car rentals are expensive, but even so, you should never skip insurance coverage. The reality is that there are several ways you can damage your rental car on your road trip, and having insurance ensures that you are protected from high repair or maintenance costs.

Whether unpaved paths (known in Iceland as F-roads), the presence of volcanic sand and ash, or crazy, unpredictable weather, there’s far too much that could go wrong for you to rent a car without insurance.

Every rental car company will have its own insurance plan offerings, so be sure to do your research and make sure that you have adequate coverage to take care of any costs that may arise.

Don’t forget to check the fine print. In certain circumstances, even the most expensive insurance coverage won’t absolve you of responsibility, so make sure that you understand the terms before finalizing your car rental booking.

The truth is that things like driving while intoxicated and running into animals won’t be covered by insurance. You may still have to cover all resultant damages even if you spend a lot of money on comprehensive coverage.

If you decide not to take insurance through the motor vehicle rental provider, make sure that the third party you use will cover your rental car. Verify this with the rental company as well. Bear in mind that you may have to pay for the damages out of pocket and then claim the cost from your insurance provider later.

Step 5: Finalize Your Booking

Once your car insurance has been taken care of, you can go ahead and finalize your booking. When you land in Iceland, you can pick up your rental car. Make sure that you have a copy of the details and your international driver’s license on hand.

Tips for Driving in Iceland

Before I end this article, I thought it would be a good idea to offer some advice on how to travel safely on the road in Icelandic terrain. Here are a few tips:

Understand Roadways

First, it’s important to be aware of how roadways work in Iceland. There are three main types that you need to know about:

• Gravel roads. When traveling on these roads, I advise going slowly to avoid any accidents.
• Paved highways and roads. Most major routes, such as Ring Road 1, are well-maintained.
• F-roads. These roads are unpaved and lead to the highlands. If you’re going to use these pathways, I recommend doing so with a 4×4.

Know that Driving in the Summer Is Different from Driving in the Winter

It’s important to keep in mind that road conditions are fairly clear in the summer, but things tend to get more complicated in the colder months, so make sure that you are prepared.

As I have already mentioned, it’s advisable to rent a 4×4 in winter or ensure that your vehicle is equipped with winter tires to ensure that you are able to move around in adverse weather. If you are not used to driving in snowy conditions, it would be best to hire a tour guide instead who is used to driving in Iceland.

It’s also best to leave the driving to the pros if you’re visiting the country in spring, as the ice starts to melt in these months, creating slippery surfaces.

Be Wary of Daylight Hours

Another thing to keep in mind is the number of daylight hours you have. In addition to creating dangerous conditions, winter also brings more periods of darkness, which can seriously affect visibility. Make sure that you are doing your research and planning your road trips so that you are traveling during the bright hours and resting when it gets dark.

Follow the Rules of the Road

Before you land in Iceland and pick up your new rental vehicle, make sure that you are familiar with the traffic rules.

• Don’t consume alcohol and operate a rental car.
• Stick to the speed limits.
• Make sure that everyone in the vehicle is wearing their seatbelts.
• Yield right of way where you are required to.

Watch Out for Wildlife

Keep in mind that wildlife, such as birds and sheep, can wander onto roadways, so make sure that you are being watchful and slowing down to avoid colliding with animals.

How to Choose the Right Iceland Car Rental Company

As promised, I have compiled a comprehensive guide on what to look for when deciding on a car rental company in Iceland. Here’s what you’ll need to keep in mind when taking your pick:

Vehicle Selection

Make sure that the provider you choose has a good selection of vehicles and offers the car type or model that you are looking for. Make sure that the cars are relatively new and well-maintained.

Reputation

Partnering with a company you haven’t used before can be daunting, especially in a new country. If only there were a way to learn more about its reputation… Wait, there is! You can look at past reviews and customer testimonials to learn more about the kind of service that you can expect. Use sites such as Trustpilot and TripAdvisor to view ratings and reviews.

Insurance Options for Iceland Car Rentals

Insurance is important, so make sure that the provider you choose offers comprehensive coverage. Make sure the terms and conditions are transparent and clearly displayed, and ask questions if anything is unclear.

Terms of the Contract

Another thing you’ll need to look at is the terms for the use of the rental car. Some companies restrict the distance you’re allowed to cover with the vehicle every day. Then, there’s the fuel policy. In some cases, you may have to hand the car back with a full tank, so choose an option that works best for you.

If you need to use the vehicle to cross borders, make sure that the provider allows this. It’s also a good idea to look at companies that offer free cancellation, just in case your plans change.

Affordable Pricing

Cost is an important factor when traveling, so make sure that you are working with a rental provider that offers deals and special offers. However, if you’re going to go with the cheapest car rental, make sure that you are reading the terms and conditions before confirming the booking.

Convenience

You’ll also need to think about accessibility. Suppose you’re landing at Keflavik International Airport and have no transport to get around. In that case, make sure that the car company you choose has a pick-up point near the airport for your convenience.

Excellent Customer Service

If you need more information or have an issue throughout the rental period, you should be able to pick up the phone and get the service you need. Make sure that there are multiple ways to contact the provider and look for roadside assistance, which can be pivotal, especially if you are visiting Iceland for the first time.

Look for Local Expertise When Renting a Car in Iceland

Ultimately, you want to work with a provider that understands Iceland’s unique terrain. This will allow it to offer valuable advice and recommendations, ensuring that you are warned of adverse conditions, road obstructions, and more.

How to Save Money on Rental Cars in Iceland

If you have browsed listings on the websites I posted at the beginning of this article, you’ve probably realized that car rentals in Iceland are expensive. However, there are ways to save money. In the section below, I’ll list some tips that I discovered on my trips to this iconic country.

• Book your car rentals early.
• Try planning your trip in the low season.
• Explore many different car rental companies to compare prices.
• Choose your car type wisely.
• Consider sticking to paved roads (this will allow you to choose a car instead of a 4×4 or SUV).
• Go for a manual transmission rather than an automatic one.

I hope that these tips help you save on your next car rental in Iceland.

Final Thoughts

Well, there you have it! I hope that this comprehensive guide has given you the information you need to have a seamless and fuss-free experience while touring Iceland. If you’d like to read more travel information to make the most of your next vacation, then browse my posts and learn from my experiences as I travel the world!

Should you need help planning your next trip, please comment below, reach out to me using one of the many contact methods, or make use of the forum.