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Car hire in Iceland turns a holiday from a list of excursions into a real journey — waterfalls, black-sand beaches, hot springs and mountain roads that no coach will reach. And when one does, it runs on a timetable that politely ignores the Icelandic weather.
Most visitors land in one of two camps. Group tours that show you the same five viewpoints in a week, or a car from the airport that covers half the country in the same time. The second option is usually cheaper with two to four people on board, and a lot more interesting.
Buses in Iceland have a timetable. The weather doesn't. A car is the only way to rebuild your day when the glacier lagoon suddenly clears up at breakfast.
A couple from Manchester planned three days in early August. By the morning of day two they extended the rental and pointed the car east toward Höfn. The Ring Road has that effect.
Below: what it actually costs, how Icelandic insurance works (more here than almost anywhere else), what car you really need and where to drive it. No fluff, no upselling.
What it costs
Prices swing hard with the season. In peak summer (June–August), economy 2WD runs €60–90 a day, a 4×4 sits at €150–230, premium SUVs start from €280. Shoulder months (May, September) bring the same cars in at €30–60 and €100–160. In winter (November–March) economy can drop to €25 a day, with the obvious caveat that you're not coming for a tan.
Booking rule is simple: the earlier, the better. Summer cars sell out 3–6 months ahead, and prices double or triple between January and July. For winter, a month or six weeks ahead is plenty.
The smartest months for Iceland are May and early September. Crowds have thinned, prices drop, weather is gentler and almost every road is open.
A family of four flew into Keflavík last June without a booking. They walked away with a Dacia Duster at €240 a day — three times what the same car would have cost in February.
Two more items surprise first-timers: petrol (around €2 a litre, full tank €85–110) and insurance. Without a sensible insurance package, the gap between a lovely trip and a five-figure return invoice can be one stone chip on the windscreen. More on that next.
Most tourists in Iceland start their trip here
Insurance, plainly
Iceland has its own logic with cover. Third-party liability sits in every rental by default. CDW protects the car itself, but with an excess of €1700–2500 — that's the amount you pay if you bend it. SCDW drops the excess to €350–1000. Zero Excess removes it entirely and usually waives the deposit hold — the calmest option for a holiday.
On top of the standard package, Iceland adds two local extras: Gravel Protection (GP) and Sand and Ash Protection (SAAP). GP covers stone chips on windscreen and paintwork — almost everyone takes it, because more than half of Iceland's roads are unpaved. SAAP covers volcanic ash and sandstorms, critical on the south coast between February and April.
A guest in March took the basic CDW on a Yaris near Vík. A pebble flew up between Skógafoss and Reynisfjara, cracked the windscreen across the corner. The repair bill almost matched the rental.
Zero Excess in Iceland isn't a marketing line. It's the difference between sleeping calmly in your guesthouse and refreshing your bank app at 2 a.m. with a sandstorm rattling the windows.
Three things no insurance will ever cover: river crossings on F-roads, undercarriage damage from rocks, and a door ripped off by the wind. These are Icelandic specialities — more on each below.
Dacia Duster in Iceland
We were very happy with the car and service!
SsangYong Tivoli in Iceland
my experience whit the car rental was flawless. Everything has been perfect. The pickup from and to airport was also ok.
Dacia Duster in Iceland
Everything perfect!!
Dacia Duster in Iceland
very good, 3.5 the car was a older model. And was described as a 2022 model
SsangYong Tivoli in Iceland
Everything was perfect
Dacia Duster in Iceland
everything went well, except for a one hour delay in delivering the car to the port of Reykjavik.
Dacia Duster in Iceland
It went very well and we were really satisfied about the car and the service! Kind regards Ludwien Stark
Mitsubishi Outlander in Iceland
It was fine, everything well organized without any problems. Thanks for asking!
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Real reviews per specific car
You see ratings of the exact vehicle you're booking, not an average across the company.
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Plain terms, no fine print
The deposit amount and how it's taken are visible before you book, no surprises at the counter.
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Direct contact with the supplier
Message them before your trip and meet at Keflavík by flight number, no waiting for a shuttle bus.
Driving in Iceland
Ring Road
Route 1 is a 1,332 km paved loop, open year-round. It reaches the south coast, Jökulsárlón and most major waterfalls without touching gravel.
The Ring Road isn't scary. The road itself is fine — it's the wind and visibility that catch people out. Check road.is over your morning coffee, it takes thirty seconds.
F-roads
Gravel mountain tracks in the interior, marked with the letter F. Law allows only registered 4×4s; a 2WD on an F-road voids your insurance instantly. Open mid-June to early September. They're not off-road in the sport sense — gravel mountain tracks where you sometimes ford a stream — but without a 4×4 and some experience, this isn't where you start.
Winter tyres
From 1 November to 14 April law requires winter or studded tyres on every rental — reputable suppliers fit them automatically. Studded tyres are legal here, unlike most of mainland Europe. Iceland in winter isn't an ice rink in the usual sense; it's weather that changes every hour. Don't rush, and check the forecast before each leg.
Wind and doors
Strong gusts are the most underestimated hazard. A door opened against the wind can be torn off its hinges, and most policies won't cover it. Hold the door, park nose-into-wind, don't open both at once.
A guest at Skaftafell parked sideways to the wind for a quick photo. The driver's door went over the hinge in one gust. €2000 repair, none of it covered.
Old habit on the island: park nose-into-wind and step out slowly. Five seconds of care saves a serious bill.
Documents, deposit, practical bits
Age and licence
Minimum age is 20 with 1 year of experience. 4×4s usually require 23, premium SUVs 25. Licences from the EU/EEA, UK, US, Canada, Australia and Japan are accepted without an IDP; non-Latin alphabets need an IDP or notarised translation.
Bring your home country licence and an IDP if you have one, even when only one is required. At the Keflavík desk it costs you five seconds and saves an hour if anything goes sideways.
Deposit and payment
Almost every supplier requires a credit card in the main driver's name. The deposit hold is €1700–2300, released 2–14 days after return. With Zero Excess insurance the deposit hold is usually waived. TakeCars accepts any card for the prepayment; if the supplier needs a separate deposit hold on arrival, we show you the amount and the method up front.
Fuel
Full-to-full as standard: collect a full tank, return it full. A litre of 95-octane is around €2, a full tank €85–110. Forecourts are self-service and pumps require a card PIN — check yours supports chip-and-PIN.
Airport or city pickup
Most visitors collect their car at Keflavík (KEF). Car hire in Keflavik means you're behind the wheel within minutes of landing and never touch the FlyBus. If you arrive at night, rent a car in Reykjavik is the calmer alternative, often at lower prices than the airport.
Where to drive
Golden Circle — 1 day
Classic short itinerary. Þingvellir (where two tectonic plates meet), Strokkur geyser, Gullfoss waterfall. About 250 km on tarmac, doable in a day. Not the most spectacular thing Iceland offers, but compact, year-round and 2WD-friendly — perfect for a stopover or a short break.
South Coast — 2–3 days
The most popular drive after the Golden Circle. Seljalandsfoss, Skógafoss, the black-sand beach at Reynisfjara, Jökulsárlón. 370 km from Reykjavík, fully paved, year-round.
A couple with four days asked where to go. South. Five waterfalls, a black beach, a glacier and floating icebergs in one trip — they came back saying day three felt like a different country to day one.
Full Ring Road — 7–10 days
The full loop, 1,332 km plus side trips. Day seven is when Iceland opens up: eastern fjords, northern farms, the whale coast at Húsavík. Economy will do it; many take a small SUV in summer. A week is brisk, ten days is calm — time for side valleys and hot springs. Under seven days isn't a loop, it's the south and back.
Westfjords — summer, 4×4
Iceland's quietest corner. Some paved sections, plenty of gravel, inner roads close in winter. Open mid-June to mid-September.
A guest in July spent five days in the Westfjords without seeing another car for the first two hours of every morning. Sheep on the road outnumbered drivers easily — not a figure of speech.
Pace yourself: distances feel small on the map and stretch on the road, and most fuel stops west of Ísafjörður close by six.
Rates in Iceland vary throughout the year depending on the season and the rental length in days.
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How expensive is renting a car in Iceland: average daily rates for a one-week car rental, across all car classes. Delivery across Iceland not included.
Frequently Asked Questions
Even Zero Excess won't cover three things: river crossings (a flooded engine equals the full value of the car), undercarriage damage from rocks, and a door ripped off by the wind. Stay off F-roads without a 4×4, take it easy on gravel, and always hold the door open with your hand.
F-roads open from mid-June to early September, exact dates depend on the snowmelt and are published on road.is. By law only registered 4×4 vehicles are allowed on them. A 2WD on an F-road voids your insurance instantly and adds a fine on top of any repair bill.
Gusts above 50 km/h are routine. Park sideways and the wind can rip the door off its hinges when you open it. Nose-into-wind, the door opens into the airflow and stays put. Most insurance won't cover wind damage, and a door repair runs €1500–2000.
A 360° walk-around with a timestamp, plus close-ups of every scratch, dent, chip, the windscreen, the wheels, the bumpers and the underside if visible. Every car on Icelandic gravel has marks — without video, any return-time argument will not go in your favour.
Technically yes, legally at your own risk. No insurance covers water damage, and a flooded engine equals the full value of the car (easily €25,000+). If it's your first highland trip, do the river crossings with a guide or pick a route that goes around them.
SAAP matters most from February to April, especially on the south coast — Vík, Mýrdalssandur and the surrounding plains. In windy season the sand can strip paint to bare metal in half an hour. The extra costs a few euros a day; without it, a respray runs €5000–13,000.
You can, if you go slowly and check road.is before each leg. Winter or studded tyres are mandatory by law from 1 November to 14 April. A 4×4 gives more confidence in ice and wind, but an economy car copes fine — it's a question of pace and weather, not metal.
road.is — the official Road Authority site, updated live with closures, ice, gravel status and F-road conditions. Plus safetravel.is for general weather and vedur.is for wind forecasts. From October to May, checking before each drive is the norm, not paranoia.
Almost never. Iceland is one of the strictest credit-card-only markets — international and major local suppliers all require a credit card in the main driver's name. A few smaller companies may take a debit card with prepayment and a larger deposit, but it's the exception.
No. Wild camping in vehicles and campervans has been banned since 2015. You can only sleep at designated campsites — there are about 150 around the country, €15–25 a night. Sleeping at viewpoints or laybys is fined, and enforcement is reasonably strict.
The one-way surcharge between Reykjavík and Akureyri runs €180–370 depending on company and season. It's the only widely available one-way route; other directions are rare and expensive. Most travellers do the loop and return the car to the same depot they started at.
For Reykjavík and the Golden Circle — yes, charging coverage is fine. For the east coast or winter trips — combustion is safer: chargers are sparse, range drops 30%+ in cold weather, and in a storm you can simply fail to reach the next station. Plan very carefully if you go EV.
Diesel is usually a touch cheaper than petrol — both around €2 a litre. Larger 4×4 rentals tend to be diesel; small economy cars are mostly petrol. The bigger saving is fuel economy: a small petrol car will out-cost a diesel only on long highland trips with heavy loads.
Technically the Smyril Line ferry runs to the Faroe Islands and Denmark, but suppliers very rarely allow it and only with written approval and an extra fee. Most companies simply forbid it. If you genuinely need this, plan and confirm in writing months before you travel.
Don't try to drive through it. Pull into the nearest shelter — a petrol station, a small village, a roadside layby — point the nose into the wind, close the windows tight and wait it out. Storms usually pass in 1–2 hours. Don't leave the car broadside, and don't open doors in the open.