Iceland Car Rentals: 10 Common Mistakes

Iceland Car Rentals: 10 Common Mistakes

Ewan Maccormick
(Updated: )
15 min read

There is no doubt about it, the best way to experience Iceland is by renting a car and discovering this incredible island nation at your own pace. There are so many hidden corners, idyllic villages and overwhelmingly beautiful natural wonders that you will want to explore the parts that speak to you the most.

Seeing this from the window of a coach? Not so great.

The way to go is definitely car hire! Iceland opens up before you with your own wheels, allowing you to choose your own adventure in this geological wonderland.

There is a ton of advice online about hiring a car in Iceland. Every rental company wants you to come and hire their cars, which is fair enough (it's just that none of them is as good as us) but there is another side to this.

We have many blogs talking about the splendour of our country, of why Iceland car hire is the way to go, but what we want to talk about here are the mistakes, the things that people often forget about when they come to explore.

We want your time in Iceland to be as safe and beautiful as possible, so we are going to list the 10 most common mistakes when hiring a car in Iceland, just so you are armed with all the information you need before you come.

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Mistake 1 - Thinking Iceland Car Rentals are too expensive

This is a fair assumption. We know that Iceland can be an expensive place for many people to visit, but honestly, you can bring the prices right down when you tailor the car hire to your needs.

Most people think a 4x4 is the only way to go in Iceland, that the roads demand such a powerful beast, but that is not always the case. The main road that circles the country is paved and well maintained and many of the smaller, gravel roads are so compact and well looked after, that you can drive a normal car on them with no problem.

There is also the option of hiring a campervan, so you can head off to these remote locations and truly enjoy the peace of them, lost in nature. This way, you are offsetting your accommodation costs too, which can often save quite a lot of money!

Image of a camper in Iceland - Iceland Car Rental
Renting a Camper in Iceland is a great option.
The other things to think about when you are booking your [Iceland car hire]( are the season and how far in advance you are booking. The off-season is a great time to book as prices tend to drop quite substantially and, of course, the further in advance you book, the more likely you are to get better prices on your car hire.

So, don't rule out car hire in Iceland, just because you think it is going to be too expensive. Give us a shout here at Northbound and we will openly and honestly, give you the best vehicle prices tailored completely to your needs. We are a good bunch, no-nonsense, just plain, honest service and great quality vehicles.

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Mistake 2 - Thinking you should just pass up the additional insurance on your car hire

Iceland has a whole different vibe to it than most countries, so insurance is a really good idea. We are in no way pushing additional insurance here just to try and make more money, quite the opposite actually!

Why should you go for it and get insurance? Well, one word should sum it up quite nicely.


The weather in Iceland can be a little on the crazy side. Snow, ice, high winds, heavy rain. Hey, don't let this put you off coming, it is still a magnificent country to explore. As the Scottish comedian, Billy Connoly says ?There is no such thing as bad weather, only inappropriate clothing!'

So, we all feel like rental companies are trying to get one over on us with insurance and it is an extra cost that we just don't want to pay. We get that, we are customers too! But, honestly, when you are renting a car in Iceland, you might want to change your mind.

Image of a sand storm in Iceland - Iceland Car Rental
Sandstorm in Iceland
Aside from the obvious accidents that could happen with the weather, there is a more subtle weather damage in Iceland, one which is relatively unique to the island. Here, even slight winds can blow up gravel and volcanic dust onto the car, causing scratches. Sounds mad right, but it happens all the time and you can't prevent it, no matter how careful a driver you are, It is something that is completely outwith your control. We are not saying it happens all the time, but you would be surprised at the number of vehicles that come back to us with this kind of damage.

If you choose not to take insurance, we will always be as cool as possible, but make sure you go around the car with your local rep, checking for scratches and dents that might already be on the car. Again, openness and honesty are what we trade on, and this careful attention to detail benefits us both.

Many people think that their credit card covers insurance, and in some cases, they do, but check 100% before you come, because many credit cards do not cover Iceland car rental, for the reasons we listed above.

So, we advise you to take the policy when you arrive, so that if the wind rips your door off (it happens!) you don't come back to us, door in hand with a sheepish grin, hoping to get away without an additional charge.

Check out our Help Page for more information on insurance.

Mistake 3 - Coach trips are the best way to see the highlights of Iceland.

Many people are coming to Iceland for a couple of days, as a layover between Europe and the USA. They think ?we just want to see the highlights, so we will jump on a coach tour,' and of course, this is cool. We have friends who run coach tours, they are cool people, but?.

Just like in any country, the highlights are spectacular, but the highlights are also generally pretty busy and often quite impersonal. Waiting to get that Insta pic under that waterfall can take 15 minutes waiting because all the coach tours arrive at much the same time.

Car rental in Iceland makes everything much easier to navigate and plan in your own time. And honestly, while the big highlights are spectacular, in Iceland, there is generally something else a few miles away that is just as beautiful. Something that the coaches do not visit, so you can get the IG photo that nobody else has!

Setting your own agenda also gives you flexibility in where you stay too. Gone are the big soulless coaching hotels and in are the boutique little places with traditional Icelandic flair. You can stay on farms in the shadow of volcanoes, in unique pods on the banks of ice-blue lakes or just find the cheapest option to suit your budget.

Renting a car in Iceland gives you the flexibility you need to truly enjoy your time here. The driving is easy, the navigating is pretty straightforward forward and you get to see and do what you want, not what someone in an office somewhere dreamed up for you.

Mistake 4 - Paying extra for a GPS in your rental car

Iceland has one road, so there is no need for a GPS.

We are joking of course, but there is a little truth to it. Route 1 circles the whole country, in a big, massive, glorious loop, so if you were going for the big drive, you could literally get on the main road and keep driving.

Adding a GPS to your car hire in Iceland is an expensive affair and it is just not worth it. There is a great connection everywhere, so using an in-phone app like Google or Apple maps works perfectly well.

Image of a person holding a phone with Google Maps on the screen of Iceland - Iceland Car Rental
Google Maps works perfect in Iceland
Obviously, the thing to watch for here is your global roaming policy for your phone carrier. Make sure you have enough daily allowance to utilise your in-phone GPS so you don't return home to massive charges. You can always rent a hotspot, a portable wi-fi unit to stick in your car and you can also download Google Maps offline, so you can access the maps feature without using any of your roaming allowance.

Mistake 5 - Paying Locally will not save you money!

A lot of people still think that online prices can be beaten if you just turn up and talk to a local agent. The best deals are done face-to-face, right?

Wrong! This is not how the car rental industry works, unfortunately. The whole industry runs on scarcity, so the fewer cars there are, the more expensive they are. If you turn up and there is one car left, I am afraid you are paying way more for it than you expected.

So, get yourselves online, and get a booking as far in advance as you can. We are, of course, directing you to our own website, just because we are genuinely the best, most friendly local company around. You can go for one of the big, faceless international companies, or try your luck on the roulette of price comparison sites, where you think you are getting one thing and end up getting another. You should definitely shop around, we all do it.

But we guarantee, you will not find anyone as friendly and knowledgeable as the team here at Northbound, and our prices are pretty outstanding too!

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Mistake 6 - Don't assume that all car rentals in Iceland have automatic transmission

This is one more for our American friends. We know that most cars in the US are automatic, but here in Iceland (and most of Europe) we are old school and drive stick.

In fact, if you are opting for an automatic when you are renting, you will find that it is often more expensive than a manual car rental. Iceland just does not really do automatic, though, with the rise of electric cars, they are becoming a little more popular.

Because they are a little rarer, if you cannot drive a manual car, make sure you book your automatic as long in advance as possible. There is absolutely no way you should just turn up and expect to drive a manual car if you never have before.

"How hard can it be?"

Hard. That is the answer! To get from the airport where you will likely hire your car, to Reykjavik, means heading straight on the motorway. Doing this without experience driving a manual will be a terrifying venture and is also massively dangerous.

So please make sure to book your automatic transmission car hire in Iceland as far in advance as you can.

Check out our Complete Guide to Keflavik Airport

Mistake 7: Booking Your Iceland Car Rental With Mileage Limits

Yes. Big mistake! Now, if you know exactly where you are going, have a route planned for your time in Iceland and there is no chance of you deviating at all?.well, go for a mileage limit. It might cost you a little bit less after all.

Mileage limits simply mean that you are completely restricted to how far you can drive for the duration of your rental. So, if you have a limit of 200km per day and you are renting for 3 days, you have 600km that you cannot exceed. You can drive 20km one day and 300 the next, that's cool, but if you hit over 600km, you are looking at additional costs when you return. And nobody wants that. Even us, the renter. It makes us feel awful to charge extras. We are not those kinds of people!

The thing about car rental in Iceland is that there is always something else just around the corner. You may plan to go and visit one particular waterfall, but as you drive up and check the map, wait! There is a fjord of towering beauty just 30km away, and when you get there, wait! There is a town which is amazing for whale watching! You could easily get drawn into driving around the whole country!

We feel that the best way to explore Iceland is to have a rough plan, but to let the country guide you, to be a little free and open to changing your plans and delving deeper. It can make the difference between a good trip and an outstanding trip that lives forever in your memory.

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Mistake 8 - Returning the car with an empty tank

Yes, another extra charge scenario that we really want to avoid! You should always return your car with the tank filled up to the same level that it was when you started your journey.

The rate that we charge to fill your tank is higher than if you went to a gas station, so it works out in your favour. This is not because we are mean, but we have to pay staff to drive them down to the gas station and fill them up, so we have to charge you more, simple as that.

There are around seven gas stations within ten miles of the airport, so it is not difficult. Even if you are pushed for time, it only takes a few minutes to fill up, so we would highly recommend it. There are also some rental companies that offer you to pre-pay for your gas. Don't do it! You will always end up paying more than just paying locally. And hey, we are not one of those, so if you are booking with us, it's all happy days!

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Mistake 9 - Leave time for airport shuttles

There are a couple of locations for car rental when you arrive in Iceland. Some of the big old boys have their stands right in the airport terminal, which is fine, but most of us are a little outside the airport, where all the good people are.

This means that when you step into the arrivals hall, you might have to take a shuttle out to see us. We always try to get to you first and meet you in arrivals, but this is not always possible depending on how busy it gets, so if we are not waiting, waving shiny keys in your general direction, just follow the massive signs to the car rental shuttles.

It only adds about 15-20 minutes to your journey, but if you are in a rush to get somewhere, you might want to take this into account and plan ahead.

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Mistake 10 - Don't worry it will get light soon!

Daylight. Seems like a crazy thing to mention, but like the weather, the daylight in Iceland is pretty special. Depending on which time of year you plan on visiting Iceland, you might be a little stuck for time.

Winters here can seem pretty bleak to non-natives, and occasionally pretty bleak to us too. From around November on, the daylight hours get really short, around 5-7 hours. So if you are planning on long journeys, or getting some amazing photos, make sure you are doing it when there is actual light to help you.

Image of the midnight sun in Iceland - Iceland Car Rental
Midnight sun in Iceland
Winter is a great time to come to Iceland. [Car rental]( is much cheaper as it is off-season and honestly, there is a great buzz in the towns and cities as bars and restaurants get quite busy because nobody wants to be outside.

However, summer has the complete opposite effect. In June, you might be lying awake at 3 am, wishing for some darkness! Either way, it is a beautiful and very different phenomenon and worth enjoying no matter what time of year you come. Just make sure you take it into account when you are planning your trip.

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