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Car hire in Reykjavik turns five days in the capital into two weeks across Iceland. Most itineraries start and end here, and a car gives you the calm version of the trip: land, settle into the city for a day or two, then drive out for the Golden Circle, the south coast or Northern Lights without shuttles or someone else's timetable.
A couple landed at KEF on a 23:40 flight, picked up the car at arrivals and were checked into a 101 hotel inside the hour. The FlyBus had stopped by then; otherwise it was a wait until morning.
The first two days in 101 on foot are sensible — that's how you actually get the city. Everything beyond walking distance is a car job, and Reykjavík sits at the centre of a tight day-trip radius: Golden Circle, Sky Lagoon, Mount Esja, each a single-day round trip.
Pickup at KEF or in Reykjavik
Most travellers pick up at Keflavík (KEF). Almost every international flight lands there, supplier choice is widest, prices are equal or lower, and you skip the FlyBus (~€35). KEF to Reykjavík is 50 km on Route 41, around 45 minutes, paved and reliable year-round.
If you land at KEF and head straight to town, collect the car at the airport. If you're staying in 101 without a car for the first couple of days, pick up downtown instead.
A city pickup makes sense in one scenario: you spend the first day or two in 101 on foot, and only need a car for day trips. That way the car doesn't sit in a paid zone burning €15–25 a day in parking.
City offices and delivery
The offices cluster near the BSI bus terminal, the domestic airport RKV and around Skipholt. Most local operators work out of KEF and deliver to your address in Reykjavík on request, which saves a second trip to the airport just to collect the car. Delivery to a downtown hotel is the norm rather than the exception — message the supplier ahead of time and agree on a meeting point and a slot.
Dacia Duster in Iceland
everything went well, except for a one hour delay in delivering the car to the port of Reykjavik.
Where to Drive from Reykjavik in a Day
Golden Circle
The classic 230–250 km loop: Þingvellir, the Strokkur geyser and Gullfoss. Six to eight hours with stops, all paved, no 4×4 needed. Parking is free or close to it at all three sites.
A family with three or four days in Reykjavík did the Golden Circle on day two and called it the day that justified the rental. Þingvellir, Strokkur and Gullfoss in one loop — tectonic rift, geyser, waterfall, done by dinner.
South Coast
Seljalandsfoss, Skógafoss, Reynisfjara black-sand beach and Vík. 130–190 km one way. Doable as a long day, but a stopover in Vík makes it far more relaxed.
Sky Lagoon vs Blue Lagoon
Sky Lagoon is 8 km from the centre — 12 minutes, free parking, tickets 25–30% cheaper. Blue Lagoon is 50 km, 50 minutes, and a timeslot reservation is mandatory.
Sky Lagoon is Reykjavík's underrated secret. Twelve minutes from 101, free parking on site, tickets a third cheaper than the bigger lagoon.
Northern Lights
September to April: Þingvellir (45 km), Grótta lighthouse (5 km, often busy), Heiðmörk (15 km) and Reykjanes. Check the aurora forecast at en.vedur.is before driving.
Parking in Central Reykjavik
Central Reykjavík has four paid zones. P1 is the most central at ISK 600 per hour (~€4). P2 sits at ISK 200/h (~€1.40), with cheaper P3 and P4 closer to the edges. Pay at the meters or via Parka, EasyPark or PayByPhone — the apps are easier when you're sitting in a café and need to extend your session.
A guest stuck three Saturday-evening hours in P1 onto the wrong app account and paid twice. Set the plate once, check the receipt screen, then forget about it.
The local trick is Sundays. Parking is free in every zone, centre included. The same applies after 18:00 on weekdays and after 16:00 on Saturdays. Across a weekend that easily saves €30–40 if you're staying in 101.
One traveller deliberately schedules the busy city day on Sunday: museums, the church tower, a long brunch on Laugavegur. No apps, no meters, the car parked outside the hotel for the whole day.
Boutique hotels in 101 usually don't have their own parking — check this before you book the hotel, otherwise you'll be feeding the meter every day or hunting for a street outside the paid zone. Hallgrímskirkja, Harpa and the Old Harbour each have their own car parks, but within a block you'll always find a P2 street at ISK 200/h, and on the outer blocks it's often free.
Rates in Reykjavik vary throughout the year depending on the season and the rental length.
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How expensive is renting a car in Reykjavik: average daily rates for a one-week car rental, across all car classes.
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Delivery of the car to your hotel in central Reykjavik
Saves time and the FlyBus fare, especially with a late or very early arrival.
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Transparent deposit and card type before booking
You see up front which card you need and how much will be held on it.
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Manager advice on routes from Reykjavik
Message us before the trip and we'll match the right car to Sky Lagoon, the Golden Circle or a Northern Lights run.
Practical Bits in Reykjavik
Headlights and winter tyres
Icelandic law requires headlights on 24/7, regardless of weather or time of day. Modern cars handle this automatically, but it's worth confirming before you leave the rental yard. From 1 November to 14 April, winter or studded tyres are standard on rentals — that's the norm in Iceland, not an upsell.
Currency and payment
Iceland is not in the eurozone. Suppliers usually quote in EUR, but on-the-ground charges are taken in Icelandic Króna (ISK). Pay by card in ISK and let your bank do the conversion — that's typically 3–6% better than the rental company's rate.
Pay by card in króna, not euros. It feels like a small detail, but over a week it adds up to a decent dinner out.
Alcohol and nightlife
The legal limit is 0.5‰ blood alcohol, but many rental contracts insist on zero. This matters in Reykjavík: bars on Laugavegur run late, and the police know exactly where to look.
After 11 p.m. in Reykjavík nobody drives unless they're sober. Less a rule than a habit — taxis and Bolt are cheap and arrive in five minutes.
If it's a night out, leave the car parked until morning. The walk from Laugavegur back to most 101 hotels is fifteen minutes; everything outside that radius is a quick Bolt.
Frequent Questions
Most travellers find KEF cheaper: wider supplier choice, similar or lower prices, and no FlyBus fare (~€35). City pickup makes sense if you're spending the first day or two in 101 on foot — otherwise the car sits in a paid zone burning €15–25 a day in parking.
Yes — on Sundays every zone (P1–P4) is free, including the very centre. The same applies after 18:00 on weekdays and after 16:00 on Saturdays. The exception is major events at Harpa or city festivals, but those are rare. Across a weekend that's €30–40 saved.
The closest options are the church's own car park (ISK 600/h) and Skólavörðustígur in zone P1. Cheaper, often emptier: residential streets one block south, 5–7 minutes on foot, frequently free outside the zones. On Sundays everything around the church is free.
The underground car park directly beneath the venue runs at ISK 250/h or ISK 1,800/day — handiest in rain and winter. The alternative is street parking around the Old Harbour in zone P2 at ISK 200/h, five minutes' walk away. Both are free in the evenings and on Sundays.
Street parking along Mýrargata and Geirsgata is zone P2 (ISK 200/h). Free options: around Grandi (the western tip) and behind the Maritime Museum, 5–10 minutes on foot. For whale-watching boats, arrive 30 minutes early — the closest spaces fill quickly in season.
Usually not. Larger hotels (Reykjavík Marina, CenterHotels, 101 Hotel) offer paid valet at €10–20 per day. Smaller boutique hotels in 101 typically have no parking at all — guests use street parking and apps. Always confirm this before booking the hotel.
Sky Lagoon is seven times closer: 8 km and 12 minutes from the centre versus 50 km to the Blue Lagoon. Parking on-site is free, tickets are 25–30% cheaper (~€55–90 vs €70–115). For a 3–4 hour visit Sky is ideal; for a half-day with the drive, go Blue.
Twelve minutes by car, 8 km south on Route 41. Parking on-site is free, and timeslot booking isn't mandatory, though weekends are smoother with a reservation. The road is well maintained in winter and an economy car handles it without issue.
The key is getting 20 minutes clear of city light. Þingvellir (45 km), Grótta lighthouse (5 km, often busy), Heiðmörk (15 km) and Reykjanes all work. Check the aurora forecast at en.vedur.is before leaving, and only stop in marked laybys.
50 km and 45 minutes via Route 41 (Reykjanesbraut) — a free dual carriageway in good condition year-round. If you're returning the car at KEF, leave the city a clear two hours before your flight: refuelling, the supplier handover and the airport transfer take time.
Yes. Specialist campervan operators (Happy Campers, KuKu Campers, CampEasy and others) all have depots in the Hafnarfjörður and Mosfellsbær area, 15–20 minutes from the centre. Prices from €70–120 a day in the off-season, €150–300 in summer. Overnight stays are at designated campsites only.
Almost none. The Hvalfjörður tunnel north of the city was free for years and may now have a small fee — confirm with the supplier. All city roads, the route to KEF, the Golden Circle and the south coast are free. The only firm toll tunnel is up north, near Akureyri.
Yes — both malls offer free covered parking. Kringlan is 1.5 km from the centre, Smáralind is 7 km in Kópavogur. Some travellers leave the car at Kringlan and walk or take the bus into 101 to skip downtown meters entirely on city days.
Yes — the road to the Esjustofa visitor centre is paved, 15 km and 20 minutes from the centre. Parking is free. The hike itself is 2–4 hours up to Þverfellshorn rock; in winter you'll want crampons and poles, but a 2WD reaches the trailhead all year.
About 9 hours with stops — a 600 km loop via Borgarnes, Stykkishólmur, Hellnar and Búðir. Mostly paved, doable in a 2WD. As a single day it's a brisk pace; for a calmer trip with photo stops, plan a night in Stykkishólmur.