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Renting a car in Iceland is the best way to travel around the country. The majority of Iceland’s attractions are natural and scattered around the country, making it difficult to visit without a vehicle. But there are some important tips to know before renting and driving a car in Iceland which this post will go over.

Renting a car in Iceland isn’t super cheap, but split with a few people it can be one of the most affordable ways to get around the country. Plus, it gives you the flexibility and freedom to go wherever you want, when you want. Who doesn’t love a good road trip?

Driving around Iceland
Driving through Iceland is amazing

All that said, there are some things you should know before renting and driving a car in Iceland to ensure you stay safe on the road and don’t run into unexpected fees. Because Iceland is notoriously expensive, and the last thing you need is unexpected expenses.

Well more then likely everything will be fine while driving in Iceland, it is foolish to think that nothing can go wrong. The first time I went to Iceland, I rented a car in September for five days and drove around the entire ring road. We had zero issues.

The second time I visited Iceland in June, one of the best months to visit in terms of driving conditions, everything possible went wrong. We got a flat tire, a massive speeding ticket, and someone even stole our rental car.

But through all that, I learned a lot about renting and driving a car in Iceland. And I’m here to share it all with you.

Tips for renting a car in Iceland

Book your car ahead

Renting cars in Iceland is a popular thing to do, and during peak season there’s a huge demand. It’s an island, so there’s only a limited number of cars on it! It’s a bad idea to plan to just pick one up at the airport on arrival because there are limited options if that doesn’t work out.

Plus, you can get a better rate by booking ahead and shopping around. Check here for the best prices on car rentals in Iceland.

Where to pick up the car

You can pick up the car from Keflavik International Airport upon arrival in Iceland. You will have to take a free shuttle from the airport to the car rental which is just a few minute’s drive away.

Alternatively, if you want to spend a few days in Reykjavik before heading off on your Iceland road trip and don’t need it in the city, you can pick a car up in Reykjavik later. There is a bus that goes from the airport to Reykjavik city center which costs approx. $30 each way.

Choose a good company – sometimes the cheapest isn’t worth it

It can be tempting to go with the cheapest company if you’re on a budget in Iceland, but sometimes this can end up costing you more.

I’ve heard nightmare stories but from travelers who booked with cheaper non-reputable companies. And that’s all fine and dandy until something goes wrong.

I recommend using Enterprise as they were so fantastic to deal with after someone burgled our Airbnb in Iceland and stole our rental car. The car was later found smashed out on the side of the road but I was so scared that I would be on the hook for the damages.

Fortunately, Enterprise was amazing about the situation and didn’t charge us anything. They even brought us a new, better rental car right away so we could continue the trip. I found out after that my car insurance with VISA would have covered the theft and damage, but it was a huge relief not having to deal with insurance while going through everything else.

Check here for the best prices on car rentals in Iceland.

Pick the right type of car

A regular 2x2 is fine for driving Iceland's main roads!

Do you need a 4×4?

If you are only planning to drive on the main highway 1 (the ring road) and the nearby sights around it, you will be OK with a regular economy car. Just be prepared that you will often have to drive on dirt roads if you go off the main highway.

The regular 2×2 cars can handle these roads but it is stressful driving on them. You need to go slow and be prepared for the possibility of a flat tire. We got one.

Tip: Make sure there is a spare tire in the rental car, and check the quality of tires on your rental car when you pick it up. Our tires were almost completely bald but we didn’t realize until we got the flat tire.

flat tire iceland
Fixing a flat tire in Iceland!

There were moments driving on the Snaefellsnes Peninsula that I did not feel comfortable driving in a small car over the long, winding downhill dirt roads. Nothing bad happened, but during those times I wished I had a 4×4 as the stress made the drive less enjoyable for me.

Having a larger 4×4 will make your road trip around Iceland significantly easier. But it is a cost-benefit choice as these cost about double the price. Renting a small car in Iceland is going to cost between $40 – $100 USD per day whereas a 4X4 SUV in Iceland is going to cost between $75 – $250 USD per day.

Note: It is important to check if you are renting a manual or automatic car as many cars in Iceland are manual. You may have to pay a bit more for an automatic car.

Driving on the F-Roads

If you plan to drive the F-roads, which are designated dirt roads in the interior of Iceland, then you absolutely need to get a 4×4. It is illegal to drive them without one. It is also recommended you drive these roads with two cars together as they are dangerous and you can go days without seeing another person.

Renting a Campervan

A popular thing in Iceland is to rent a Campervan. Although they are significantly more expensive, it also takes away the cost of accommodation. Plus, you can cook from them which saves a lot of money as food ain’t cheap in Iceland.

I haven’t personally taken a campervan across Iceland, but I get so jealous when I see those dreamy pictures on Instagram. It looks amazing. If you have time and money, this is a great way to see the country.

Cozy Campers is a family-run camper rental company in Iceland that offer a wide selection of quality, hand-designed campervans equipped with all the essential you need. They have budget campers for as low as €99 a day, as well as premium campers you can take on the f-roads.

Make sure you’re covered

It’s important to make sure you have the proper car insurance on your rental car in Iceland. It’s illegal to drive in Iceland without it. Most rental companies offer a basic Collision Damage Waiver (CDW). This isn’t exactly insurance – it means the rental company won’t charge you over a predetermined limit if you drop off the rental car with damage.

BUT the limits can still be quite high – up to $2000. You can opt to pay more to upgrade to a Super CDW or Premium CDW, which will lower the amount you have to pay in case of damage. These premium insurances also come with extra added protections like ice and gravel protection.

However, you don’t want to pay for extra insurance that you might not need. If you are putting the rental car payment on your credit card this may cover you.

For example, while we rented a car in Iceland we only had the basic CDW insurance and got a flat tire. We had to bring the car back to Enterprise to get a new tire and had to pay out of pocket. But this was covered with my insurance through VISA. Check with your credit card company beforehand to see what you’re covered for.

Some additional insurance you might want to consider in Iceland is:

  • Gravel protection – on the dirt roads rocks will fly everywhere and can cause damage to your car, so this is a good one to have.
  • Sandstorm & Ash protection – high winds can blow volcanic ash on your car which can cause excessive damage. Yes really!
  • Ice protection – it is the land of ice after all! This is a good one to have if you’re driving during wintertime as sliding off icy roads is a common occurrence in Iceland.

Don’t bother with a GPS

A really good way to waste money is to rent a GPS in Iceland. Even in an expensive country like Iceland, data is relatively cheap so you can use it to view maps on your phone. But better yet, don’t even waste your data. Download offline Google Map or use the app. I actually find these better than using a GPS as they have more accurate information.

Tip: If you plan to go backcountry hiking download the Gaia GPS Hiking App which will help you get around Iceland’s backcountry hiking trails, even if you don’t have cell service.

Check your Mileage limits

Make sure you have unlimited miles with your rental car agreement, or at least enough miles to cover the distances you want to go. The last thing you need is an overcharge per KM!

The majority of car rental agreements in Iceland come with unlimited miles, but you want to double-check before hitting the road. If you are only using the car within Rekjavik you won’t need that many KM, but the distances around the rest of the country can be huge. And if you are in Iceland, you definitely want to explore all the amazing attractions it has to offer!

Driving in Iceland

Tips for driving in Iceland

Watch your speed

If you are going to be driving in this area in Iceland I recommend NOT speeding. I was caught speeding on a speed cam while driving on the Snaefellsness Peninsula and got a lovely $850 dollar ticket – no joke! Below are the speed limits in Iceland:

speed cam sign iceland
  • 90 kmh | 55mph on paved roads/highways
  • 80 kmh | 50mph on gravel or dirt roads
  • 50 kmh | 30mph in any cities or small towns

There are signs for speed cams though that look like this. I was just too busy being distracted by the beautiful scenery and missed it!

Tip: download Waze to use while driving. It will notify you when there’s a speed change on your route.

Look out for sheep, horses, and birds

You will always find Iceland Sheep on the road!
Iceland sheep on the side of the highway

Driving through Iceland you don’t have to worry much about traffic but you do need to be on the lookout for animals!

During the summertime sheep and goats are free to roam the countryside and often end up in the middle of the road. They are adorable and make for amazing photographs – but you don’t want to hit one!

Iceland also has a lot of beautiful Icelandic horses to look out for. They are generally behind a fence but can move between pastures and end up on the road.

horses during sunset iceland in june
Icelandic Horses

Listen to the weather warnings and be prepared for sudden changes

Iceland is the land of extreme weather and even during the summer season, you can still run into high winds, snow, and ice. There were points driving in my little Ford Ka that I felt we were going to blow off the side of the road – and this has actually happened to people!

During high winds you need to be careful when opening the car door, as they can be VERY strong. To prevent wind damage to your doors try to park your car facing the wind. Open the door SLOWLY and test with your hand first through the window to ensure it’s safe.

Tip: Iceland whether can change seasons in a matter of hours and it’s important to listen to the weather warnings and not test the limits. Iceland has a great website to check real-time road conditions called

Fuel up when you can and don’t push the limits

Gas is expensive in Iceland, so make sure you factor this into your budget. During my visit, it was about $2/L .

In Reykjavik, there are tons of gas stations so fuel up before you hit the road. Stations are found throughout the rest of the country but can be scarce at parts it’s a good idea to gas up when you see one. It’s best not let your gas tank get below half a tank.

This is especially true if you plan to go to less populated areas – the last thing you want is to be stranded on the road! On the F-roads, it’s a good idea to bring a spare tank with you.

Tip for gas stations: Oftentimes my credit card wouldn’t work at the machine pump. If this happens you can just go inside and ask the employee to start the pump and then you pay inside afterward. Also for some reason at N1 gas stations if I tried to use my card at the pump it would trigger my bank to block it, so I always went inside to pay first.

Don’t drive off-road 

driving in Iceland
Many areas in Iceland are not populated

There’s a difference between driving on a marked dirt road and driving completely off-road. Driving off-road in Iceland is illegal and will get you a large fine. Plus, you’ll probably get stuck if you go off-road on the wrong vehicle. I knew someone who tried to drive on one of the black sand beaches and ended up having to be towed out.

There’s also F-roads in Iceland, which are basic and marked dirt roads in Iceland. You can drive on these but ONLY with a 4×4 – it is against a rental agreement to bring a regular economy car into them.

Keep your headlights on!

Another unique law in Iceland is that you have to have your headlight on at all times, even during the day. If you see someone flash their headlights at you in Iceland, it’s probably because yours are turned off.

This makes sense because the weather in Iceland is often so foggy that you can’t see much ahead of you, so having the lights on will help other drivers see you.

Other things to know about driving a car in Iceland

You drive on the right side of the road, which will be familiar to those from North America. If you’re coming from the UK or other countries where you drive on the left side of the road, make sure you’re comfortable with this!

You do not need an International Driver’s License. You just need a credit card, passport, and driver’s license from your home country.

Wearing your seatbelt is required by law and you will be fined if caught without one. Seatbelts save lives, seriously. It saved mine from a car accident with a moose in Canada.

112 is the emergency number in Iceland. There is also a 112 Iceland App, which lets you “check-in” before going on a hike or doing anything risky, so there is location information in the event something goes wrong.


I hope this post didn’t scare you off from driving in Iceland! It truly is the best way to see this beautiful country. Most likely nothing will go wrong while driving in Iceland, but by following these tips you will be prepared even if something does.

Need more help planning your trip to Iceland? Check out these posts!

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