Renting a car in Iceland provides the freedom to explore the country at your own pace. This guide will cover everything you need to know about driving in Iceland, returning your rental, and how to save money on your car rental.
Exclusive Discount on Car Rentals
If you choose to rent with Acarrental, use the code SPECIAL5 to get 5% off your entire rental—a great way to save on your trip!
When to Book a Rental Car for Your Iceland Trip
The best time to book a rental car depends on when you plan to visit. The peak season in Iceland is from mid-June to mid-September. Demand is high during these months, so rental prices increase, and availability decreases. If you’re visiting in summer, book as soon as you secure your plane ticket.
For those traveling between September and May, rental cars are more affordable and widely available. Comparing prices across different rental services and checking reviews will ensure you get the best deal.
Requirements for Renting a Car in Iceland
Renting a car in Iceland is straightforward. Here’s what you need:
A valid driver’s license (written in English or Latin characters; otherwise, an international driver’s permit is required).
A credit card for payment and deposit.
Minimum age: 21 years old for 2WD vehicles, 23 years for 4WD and vans.
Choosing the Right Rental Car in Iceland
Iceland offers different types of rental cars based on your travel needs:
2WD: Ideal for driving on paved roads, including the Ring Road and popular attractions.
4WD: Necessary for driving on F-roads (mountain roads) in the highlands.
During winter, rental companies provide studded tires for added traction on icy roads.
Rental Car Insurance Options
Iceland’s weather is unpredictable, making insurance an important consideration. Many rental companies offer:
CDW (Collision Damage Waiver): Usually included.
SCDW (Super Collision Damage Waiver): Reduces deductible.
Sand & Ash Protection: Protects against damage from strong winds carrying volcanic sand.
Gravel Protection: Covers windshield and headlight damage (highly recommended).
Gold or Zero Protection: A package including all the other insurance options plus Theft insurance, usually at a discounted rate from buying the insurance options individually.
If your credit card includes rental car insurance, verify what is covered before declining the rental company’s options. Also keep in mind that you will have to fully pay for the damages with the car rental and then claim for reimbursement with your credit card insurance.
Picking Up Your Rental Car
Most international travelers arrive at Keflavík Airport. Some companies offer shuttle services to their rental offices. Others provide pick-up in Reykjavík at hotels or designated locations.
Inspect Your Vehicle Before Driving Off
Take photos of any existing scratches or dents.
Check for dashboard warning lights.
Inspect tire condition, especially in winter.
Driving in Iceland: Important Tips
Stay on marked roads—off-roading is illegal and subject to heavy fines.
Always keep headlights on, even in daylight.
No right turns on red.
Wind can damage car doors—hold onto them when opening.
Check road conditions daily at road.is and weather updates at safetravel.is.
Speed Limits & Traffic Fines
Speed limits in Iceland vary:
Urban areas: 50 km/h (31 mph)
Sparse residential areas: 70 km/h (43 mph)
Highways/gravel roads: 80 km/h (50 mph)
Paved country roads: 90 km/h (55 mph)
Speeding fines are expensive, ranging from 20,000 ISK to 250,000 ISK ($140–$1,730). Speed cameras are marked, but unmarked police cars with cameras are also used.
Parking in Iceland
Some areas, especially in Reykjavík, require paid parking.
Check parking zones (P1, P2, P3, P4) and hours at reykjavik.is.
Roadside Assistance
Roadside assistance varies by company. Acarrental offers 24/7 support, though renters are generally expected to change flat tires themselves.
In case of emergencies, call 112 (Iceland’s emergency number).
Fueling Up in Iceland
Gasoline (bensín): Green handle
Diesel: Black handle
Check gas prices at gasvaktin.is
Use fuel discount keychains provided by rental companies.
Summer vs. Winter Driving
Summer
24-hour daylight, making sightseeing easier.
Watch out for free-roaming sheep crossing roads.
Reduce speed on gravel roads to avoid damage from flying rocks.
Winter
Shorter daylight hours—plan trips accordingly.
Spiked tires help with icy roads but don’t eliminate braking distance concerns.
Be prepared for whiteout conditions and road closures.
Returning Your Rental Car
Refill the fuel tank to the same level as received.
Take photos of the car before drop-off.
Confirm with the rental company that everything is in order.
Ways to Save Money on Your Rental
Use SPECIAL5 for 5% off at Acarrental.
Book in advance, especially for summer trips.
Travel in the low season (September–May) for lower prices.
Choose a hybrid vehicle to save on fuel.
Rent for 7+ days for an extra 5% discount, and 14+ days for an additional 5% off.
By following this guide, you can ensure a smooth and cost-effective rental car experience in Iceland. Happy travels!