The Ultimate Guide to Renting a Car in Iceland: Tips for Driving, Purchasing Gas and More

Are you considering renting a car for your Iceland trip? This guide covers what to expect when you rent a car in Iceland and helpful tips to make your trip enjoyable and stress-free.

This is based on my experience renting a car and driving in Iceland in December 2021.

Is it worth it to rent a car in Iceland?

In my opinion, yes! Renting a car gives you the freedom to road trip between incredible destinations in Iceland and go at your own pace.

If you are only traveling to Reykjavík, there is a good system of city buses to get around. But if you plan to explore outside of the capital city, you’ll need to either book a tour or rent your own car to get around.

A guided tour can be a great way to explore if you’re not comfortable driving. However, I found Iceland to be very easy to travel and really enjoyed exploring on my own. If you’re not sure where to start in planning, check out my 5 day Iceland winter itinerary.

Where to Rent a Car in Iceland

Most likely, you will fly into the Keflavík International Airport and pick up your rental car there.

Iceland has several international rental car companies like Sixt, Hertz and Enterprise. In addition, there are local Iceland rental car companies such as Lotus Car Rental, Blue Car Rental and Geysir.

I rented from Enterprise and had a good experience. I always like to compare prices between rental car companies and look at their reviews (although all rental car companies tend to have bad reviews no matter what!).

When to Book Your Iceland Rental Car

As you probably know, Iceland is a very popular tourist destination. Therefore, it is best to rent your car ahead of time a few months in advance. Not only will this ensure the cars don’t sell out, but this will help you get the best deal and allow you to select the exact car that you want. I recommend renting at least 3 months in advance as a general rule.

Important Things To Know About Renting a Car in Iceland

• Most cars in Iceland have a manual transmission. We paid a little extra to have an automatic transmission. It was not very much more to rent an automatic in the winter, but the prices may be higher in the summer. Be sure to check what you’re renting and rent a car that you know how to drive.

• In my experience, Iceland rental car companies were much more strict about damage than most rental car companies in the United States. They checked each car for damage as it was dropped off and charged other groups for small scratches. Consider purchasing additional car insurance if your credit card does not have rental car damage protection.

• You do not need an international driver’s license to drive in Iceland. In most cases, you need to be at least 21 years old and have a valid driver's license in your home country.

• Iceland has a series of F-Roads: roads that are unpaved, only accessible in the summer and require a 4WD vehicle. It is illegal to drive on F-roads in a 2WD vehicle and your rental car insurance will not insure damage in these situations. Be sure to plan accordingly if you’ll be driving on any of these roads.

• Depending on what time you land, plan extra time in your schedule to pick up your rental car. During the check in process, there was a long line and the staff went over many details with each group. Be patient and expect the process to take time.

Tips for Driving in Iceland

• Iceland follows the EU standard for road signs and markings, but are written in Icelandic. Most signs have symbols, but it can be smart to review common signage in advance.

• Make sure you follow the speed limit when driving around Iceland. It may seem slow for the wide open roads, but the weather changes rapidly so the speed limits keep everyone safe. There are a handful of speed cameras around the country (which are always marked).

• The two lane roundabouts in Iceland work differently than in the United States! The inside lane has right of way, so you can exit directly from the inside line. This means that you must yield to cars on your left if you are in the outside lane at each exit. This definitely took some getting used to, but it’s important to know because you’ll pass through many roundabouts while traveling around the country.

• There are a few essential main roads in Iceland, such as Route 1 (known as Ring Road), and there are few alternatives if an accident occurs. I got stuck in a couple hour delay on Ring Road and ended up taking a huge detour (that they did a great job marking). To check on traffic and road closures, visit road.is.

• Iceland often experiences high winds. There are many exposed areas of the Ring Road where there are few trees or other things to break the wind. Smaller vehicles are more susceptible to strong winds, so you may want to consider renting a larger vehicle. It is not uncommon for doors to blow off of vehicles, so be careful when opening doors on a windy day.

• In my opinion, it's important to have reliable data and cell coverage when you're driving in a foreign country. If you don't have cell coverage on your phone plan, eSIMs are a great option. Learn more about Iceland eSIMs from Airalo.

Driving in the Winter in Iceland

Iceland does a great job of keeping the roads as clear as possible and open throughout the winter. However, inclement weather is definitely possible. Consider renting a car with 4WD and/or studded tires. Most of all, keep your plans flexible. Roads could close due to icy weather and you’ll want to have a backup plan.

My experience driving in December was very good. We had no icy weather and were able to do everything as planned.

How to Buy Gas in Iceland

As an American, filling up on gas/petrol was a bit of a learning curve in Iceland. Many fuel stations have no additional services or attendants, so you will want to have some means to pay by card.

It is important to note that you’ll need a chip and pin card to pay for gas at the pump, a typical US credit card will not be accepted regardless of what your bank advertises. We were able to use our debit cards but planned ahead by checking for international fees and if travel notices were required. (We have no international fees on our Capital One 360 debit cards and do not need to alert them of travel. Many other banks will have fees.)

Some visitors purchase prepaid cards in cash at larger stations to make it easier to purchase gas at the pump at smaller stations. For example, you can buy a gift card from the chain N1 and put as much money on it as you would like. It can be hard to predict exactly what you’ll spend on gas, but this is a good option if all of your cards have international fees.

Another thing to keep in mind is to pay attention to the kind of fuel your car needs. Our rental car took diesel, something we weren’t used to as Americans.

The pump will ask you how much fuel you wish to purchase before it allows you to pump anything into your car. The pump will automatically stop at the price entered. Do not worry if you pick too much, it will refund any extra fuel back to your card after a couple days. However, you may have to plan ahead to have extra money available in your account during your trip for these holds!

If you leave the capitol region, be very conscious of how much range you have in your tank and fill up often. In the rural parts of Iceland, it can be a long distance between fuel stations. This is especially true if you are limited to purchasing from a specific chain.

Pro Tip: Most attended gas stations in Iceland have fresh and affordable food! They are a great option for a quick meal while you’re on the road. If you eat meat, try the hot dogs!

Final Thoughts

With the proper preparation and knowledge, renting a car and driving in Iceland is straightforward and very much worth it!

For more information to help plan your trip to Iceland, check out my 5 day itinerary for winter in Iceland.

For more information on visiting Iceland, read my other travel guides:

• The Perfect Iceland Winter Itinerary (5 Days)
• An Easy Iceland Packing List
• A Guide to Norway vs Iceland in the Winter

Thanks for Reading!