03-10-2025
One of the first questions you need to answer when planning your trip is “Should I rent a car in Iceland?” The answer largely depends on what you expect from your trip and your comfort level. As you search for the correct answer for your trip, you’ll have to consider several important factors that can drive you to the right choice.
Should you get a car rental in Iceland?
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Yes… |
No… |
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You want freedom in your itinerary |
You’ll stay in Reykjavík and prefer to take tours |
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You’re comfortable driving in Icelandic conditions |
You don’t have winter driving experience or are uncomfortable with other driving conditions (gravel roads, right-side driving, etc.) |
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You can split the costs in your group |
You’re traveling solo and find tours cheaper |
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You value flexibility |
You want a stress-free, guided experience |
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You want to go to more remote locations |
You’re interested in seeing the main highlights |
Whether to get a car hire in Iceland depends on numerous factors. Each visitor must look at each of these factors independently to determine whether it’s a good idea to rent a car or look into taking tours. The following list will help guide your decision, answer your questions, and help you find the best solution for a memorable trip.
If you don’t want to be restricted by tour itineraries and timelines, renting a car in Iceland is your best choice. You’ll be free to go wherever you like and stay as long as you wish without worrying about getting back to the tour bus on time. You are in full control of your Iceland road trip.
Iceland is filled with beautiful locations beyond the major highlights that most tourists visit. When you book a tour, you will be limited to the spots listed in the itinerary. However, when you rent a car, you can visit more of the remote areas or hidden gems and spend as much or as little time as you want at each stop. The freedom and flexibility you gain with a rental car are priceless.
The next important consideration when choosing whether to rent a car is the cost. A rental car can be costly compared to taking a tour, at least if you are traveling solo. You will also need to factor in the cost of fuel. However, the Iceland car rental cost can be less expensive if you are traveling with a group since each tour charges per person.
What about public transportation? Iceland public transport can be a great, cost-effective option if you’re staying in Reykjavík or are only interested in going between towns. However, if you’re expecting public transportation to drop you off at the tourist sites, you will be disappointed. There are only a few tourist sites that have public bus stops.
Getting where you want to go in Iceland is all about convenience and access. If you mainly want to see the most popular sites, booking tours can be the best option, allowing you to take in the sights without the stress of driving yourself. If you’re staying in Reykjavík for a short trip, it often isn’t cost-effective to rent a car either.
On the other hand, if you want to access locations that are more remote or want more control over your itinerary, renting a car is the best solution. Driving in Iceland is relatively straightforward and often easy for most experienced drivers. However, if you aren’t familiar with driving in winter weather, it isn’t advised to drive yourself in the winter months.
Is it safe to drive in Iceland? For the most part, driving in Iceland is very safe. The roads are well marked, and although there are no shoulders in most places, there are few areas that feel dangerous to drive. Keep in mind, though, that many mountain roads don’t have guardrails, and if you aren’t a confident driver, it can be nerve-wracking to drive them.
When you rent a car in Iceland, you will need to pay close attention to the weather and road conditions. Check them every morning before you leave your accommodations, and then recheck them periodically throughout the day because the weather can change quickly. As long as you follow weather warnings and road closures, it is perfectly safe to drive in Iceland.
There are certain instances where it simply makes sense to rent a car. For instance, if you want to drive the entire Ring Road in Iceland, you won’t find many options for tours that cover the whole country, at least at a reasonable price. However, this isn’t the only time when renting makes the most sense.
If you’re traveling with your family or a few friends, splitting the cost of a rental car between each person often makes it a more budget-friendly option than taking tours. Iceland is also a road tripper’s or photographer’s dream. You’ll find beauty at every turn with plenty of places to explore along the way. These individuals benefit most from renting a car and taking full control of their itinerary.
While there are times when renting a car makes complete sense, there are other situations when renting a car isn’t necessary. Some individuals or groups visit Iceland with the sole intent of taking a short city trip, staying in Reykjavík the entire time. These travelers won’t have much use for a rental car and would most likely be wasting their money on one.
If you aren’t comfortable driving in Icelandic weather conditions, particularly in the winter, or simply prefer to take tours, renting a car isn’t needed. Most tour companies pick up and drop off in Reykjavík, which means it makes sense to stay in the city. With bus transportation available from Keflavik to Reykjavík, you won’t need a rental car in these situations.
If you’re still struggling to decide whether you should rent a car or consider one of the other alternatives, a simple cost breakdown can help you make a final choice. The following is a brief overview of the costs of each option:
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Travel Option |
Typical Cost Range |
What’s Included/Not Included |
When It’s Better |
|
Rental Car |
Economy Car: $50-80/day non-peak $70-$100+/day peak 4x4: $100-200/day peak |
Most include base insurance, but you’ll have to pay for additional insurance. Fuel, GPS, parking fees, and other costs aren’t included. Be aware of mileage limits and other restrictions. |
Renting a car is better if you have multiple people in your group and when you want to travel to more remote locations. You will get more flexibility with this option. |
|
Public Transport |
Local Bus: $4-5 per ride. |
Fares vary, and you will be restricted to a set bus schedule. You have no control over where it stops. |
This option is best if you are staying in Reykjavík or simply need to get between towns. |
|
Organized Tours |
Day tours can range between $80 and $150 per person. Multi-day tours depend on the number of days, distance covered, and other options. |
Tours include a guide, transportation, and sometimes meals. You won’t have to pay parking fees or for fuel. You may need to pay extra for food. |
Tours are a good option for solo travelers who want to save money or those who are uncomfortable driving in Iceland. |
Once you’ve answered the question, “Should I rent a car in Iceland?” it’s time to start thinking about how to go about it. These renting a car in Iceland tips will ensure you make the right choices before you set off on your Iceland adventure.
Most car rentals will include base insurance in the rental cost. However, that often isn’t enough when you’re driving in Icelandic conditions. Increasing your CDW (Collision Damage Waiver) insurance to SCDW (Super Collision Damage Waiver) reduces your out-of-pocket costs if damage occurs.
In addition, you should add other types of insurance. For instance, sand and ash insurance is necessary, especially if you’ll be driving on the South Coast and some areas of the north, where big, open lava fields and high winds can cause sandstorms. Gravel protection is also useful, even if you don’t plan on driving on F-roads. Read the fine print carefully, so you know what is covered and what isn’t.
The cost of fuel is higher than in other parts of the world. To help keep your costs down, ask your rental company if a discount fob is available. Also, never choose the “fill” option because this will often place a large hold on your card that can take several days to clear. Pay close attention to whether your vehicle needs diesel or gasoline, and double-check the pump before filling your vehicle.
If you’re visiting Iceland in the summer and want to drive into the highlands, you will need a larger 4x4 vehicle. However, not all vehicles are permitted by the rental company to drive these routes. Ask your rental company which F-roads are allowed to ensure you don’t void your insurance or damage the car.
Most car rental agencies in Iceland require drivers to be at least 20 years of age and to have had their license for at least a year. Some 4x4s and larger vehicles may require renters to be at least 23 years old. Some companies may have exceptions to these rules, so be sure to ask if you are outside of these requirements.
Iceland takes drink driving very seriously. In fact, the legal limit is extremely low (0.02 bac), and in many cases, if the driver tests with any alcohol in their system, they will not be allowed to continue driving. If you intend to drink at a tourist lagoon or while you are out for dinner, be sure to have a designated driver. Even one beer can put you over the limit. Consequences of drink driving include fines, getting your driver’s license confiscated, or even jail time, depending on the level.
If you decide that renting a car isn’t the right choice for you, there are alternatives to getting around the country. While these other options will require careful planning, you can still have a fantastic trip to Iceland.
Do I need an international driver’s license in Iceland? No, most drivers don’t need an international driver’s license. If your license is in English or has Roman characters, you don’t need one.
How much is gas in Iceland? Gas prices in Iceland vary, but are roughly $8-10 per gallon. You can see current prices on the Bensin website.
Is it safe to drive in winter? While it is overall safe to drive in winter, if you don’t have winter driving experience, it isn’t advised. You must also watch for weather warnings and road closures before setting out.
Can I drive the Highlands in a normal car? No, driving on the F-roads to reach the highlands requires a 4x4 vehicle, preferably with high clearance. Ask your rental agency which car you need for your plans.
After reviewing this driving guide and the various other factors to consider, you can decide whether booking a vehicle is the right option for you, your itinerary, and your budget. For many visitors, renting a car allows you to see more and do everything at your own pace. However, if you don’t want to drive on your vacation or the road and weather conditions make you nervous, there’s no reason not to consider other options.
The decision to rent a car relies solely on your comfort level, what you want from your trip, and how much your budget is. Are you ready to plan your road trip in Iceland? Book a rental car and start creating your perfect itinerary!