Renting a Car in Iceland: Pain Points, Common Questions and Tips

Daniel Cramer

(Updated: )
16 min read
Renting a Car in Iceland: Pain Points, Common Questions and Tips

When planning a trip to Iceland, one of the most important decisions you will make is whether or not to rent a car. While many visitors to Iceland opt to take public transportation, a rental car can offer the freedom and flexibility to explore the country at your own pace.

However, renting a car in Iceland can also come with its own set of challenges, such as high prices and unfamiliar road conditions. Here, we'll provide answers to common questions and tips on how to prevent some of the most common pain points when renting a car in Iceland.


Too lazy too read? Here's a summary of the article:

  • Common pain points of renting a car include hidden fees, unfulfilled expectations, poor customer service, and more
  • To prevent these pain points, research rental companies and read reviews, check insurance coverage, confirm pick-up/drop-off location, review fuel policy, and familiarize yourself with terms and conditions
  • Consider factors such as budget, driving experience, and trip itinerary when choosing the right car to rent in Iceland
  • Car rentals can be expensive in Iceland, but it can make sense depending on individual travel needs and budget
  • It is not necessarily easy to get around Iceland without a car, but bus tours and taxi services are available as alternatives
  • Check fuel policy and be mindful of road conditions when renting a car in Iceland
  • Foreigners can rent cars in Iceland, but be sure to check rental requirements and bring necessary documents
  • Iceland can be considered overpriced compared to other countries, but the unique natural beauty makes it worth the cost for some travelers
  • To rent a car in Iceland, you need a valid driver's license, a credit card, and often an international driver's permit
  • Iceland's F-Roads can offer scenic and challenging driving experiences, but research road conditions before driving on them
  • Driving in Iceland can be difficult, with unpredictable weather and road conditions, but with proper preparation and caution, it can be a manageable experience
  • Bus tours and car sharing are the cheapest ways to get around Iceland, while renting a car can offer more flexibility and independence for travelers.
  • People leave Iceland for various reasons, including high cost of living, remote location, and harsh weather conditions, but for many, the unique natural beauty and unique experiences make it worth a visit.

Search here for your Iceland Car Rental
--- ## Choose the Right Car

Choosing the proper car rental in Iceland may make or break a pleasant vacation. Consider aspects such as the size of the car, the sort of route you intend to travel on, and the weather conditions to guarantee a comfortable and safe driving experience. For example, if you want to travel on Iceland's rough and difficult F roads, you might wish to rent a 4x4 vehicle.

Image of a 4x4 suv jeep rental car in Iceland
Correct vehicle for the right job is important.
When driving in the winter, it is essential to examine the vehicle's safety measures, such as tire chains and winter tires, to guarantee that you can handle the snowy and icy road conditions. Additionally, if you are traveling with a large group or with a lot of luggage, you may want to consider a larger vehicle with more space and storage options.

When choosing the right car rental in Iceland, it is important to take your specific needs and travel plans into consideration to ensure that you have a smooth and enjoyable driving experience.

Read the Reviews

When choosing on the finest care rental for your vacation to Iceland, reading reviews from previous customers may be a very valuable resource. By reading reviews, you may obtain insight into other people's experiences and gain a better picture of what to anticipate while renting a car in Iceland.

When reading reviews, check for comments on the condition of the vehicles, the level of customer support offered by the rental business, and any other pertinent information that may effect your rental experience.

Image of the reviews from Northbound an Iceland Car Rental Booking Office
Reviews for
It is also vital to check the source of the review, as certain websites may only provide good or vetted evaluations. To ensure that you are getting a well-rounded and accurate representation of the rental company, it is best to look at multiple review sources, such as Facebook, TrustPilot, and Google.

By taking the time to read reviews before making your car rental reservation, you can make a more informed decision and have a better overall experience when renting a car in Iceland.

Check out Northbound's reviews:

Check the Insurance Coverage

When renting a car in Iceland, it is important to carefully review the insurance coverage options available to you. Not all rental companies offer the same level of insurance coverage, so it is important to understand what is included in the rental agreement and what is not.

Some rental companies may offer basic insurance coverage as part of the rental agreement, but this may not provide adequate protection in the event of an accident or other unexpected events.

Additionally, it is important to understand what you are responsible for in terms of damage to the vehicle and any third-party liabilities. Some rental companies may offer additional insurance options, such as collision damage waiver or liability insurance, which can provide additional protection and peace of mind.

It is recommended that you carefully review the insurance coverage options available to you and make an informed decision based on your specific needs and travel plans. By thoroughly understanding the insurance coverage options, you can ensure that you are properly protected during your car rental experience in Iceland.

Check out our Help Page for Insurance

Northbound's Insurance Help Page

Confirm the Pick-up and Drop-off Location

When booking a vehicle rental in Iceland, it is critical to check the pick-up and drop-off locations ahead of time. This will guarantee that you can simply locate and access the rental place when you arrive, as well as eliminate any confusion or misconceptions regarding the location. Many vehicle rental companies provide various pick-up and drop-off sites around Iceland, so choose the spot that best suits your trip needs.

Image of Keflavik International Airport in Iceland
Keflavik International Airport
When verifying the pick-up and drop-off location, keep in mind the availability of transportation to and from the place, as well as the rental company's operation hours. This will ensure that you are able to smoothly and efficiently start and end your rental experience in Iceland.

By carefully considering and confirming the pick-up and drop-off location in advance, you can help to make your rental experience as stress-free and enjoyable as possible.

All of our rental suppliers offer free Pickup & Dropoff in Keflavik Airport

Our Pickup & Return Help Page

Review the Fuel Policy

Before hiring a car in Iceland, it is critical to properly research the rental company's fuel policy. The fuel policy might have an influence on both the cost of your rental and the simplicity and comfort of driving the car. Some rental businesses may require you to return the car with a full tank of gas, but others may offer you with a full tank and charge you for any gasoline consumed during the rental.

It is also crucial to examine the cost of fuel in Iceland, which might be greater than in other countries, therefore it is critical to find a rental business with a cheap and fair fuel policy for your vacation plans.

Image of a person pumping fuel
Fuel is expensive, so being in the know can save you money.
Additionally, check to see whether the rental business provides a fuel-efficient car, since this might assist to reduce the cost of petrol throughout your vacation. By thoroughly examining the rental company's fuel policy, you can guarantee that you are well-informed on the cost and logistics of fuelling the vehicle, and that you can prepare appropriately to prevent any unexpected charges or difficulties during your trip.

Whether you fill the tank yourself or choose a full-to-full policy, reviewing the fuel policy will help to make your rental experience in Iceland as cost-effective and stress-free as possible.

Northbound's Fuel and Mileage Help Page

Fuel & Mileage

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Know the Terms and Conditions

Before renting a car in Iceland, it is important to thoroughly read and comprehend the rental agreement's terms and conditions. The terms and conditions define both the rental company's and the renter's duties, as well as vital information concerning the rental time, vehicle usage, insurance coverage, and any additional fees or costs. You can avoid misunderstandings or disagreements throughout the rental time by becoming acquainted with the terms and conditions.

It is critical to properly study the terms and conditions, as some elements may not be immediately clear. Some rental businesses, for example, may have limits on where the car may be driven, as well as regulations governing extra drivers, one-way rentals, or late returns.

Understanding the terms and conditions will ensure that you are completely informed of your rights and obligations as a renter, allowing you to plan ahead of time to prevent any potential difficulties or penalties.

Image of a person looking at waterfall in Iceland
Have a look at our terms
Furthermore, before making a reservation, it is a good idea to read the terms and conditions, as they might vary greatly between rental businesses. You can prevent unpleasant surprises by comparing the terms and conditions of numerous rental providers.

Whether you are a seasoned tourist or a first-time renter, familiarizing yourself with the terms and conditions can help to make your rental experience in Iceland as pleasant and pleasurable as possible.

Check out our Terms of Service

Northbounds Terms of Service

FAQs about Renting a Car in Iceland

Are car rentals expensive in Iceland?

Car rentals in Iceland may be costly, particularly during the busy tourist season. A car rental in Iceland costs between $50 to $100 per day on average, however rates can rise to more than $200 during peak season.

However, keep in mind that Iceland has a high cost of living, and rental vehicle costs reflect this.

How much is car rent in Iceland?

The cost of hiring a car in Iceland varies according on season, vehicle type, and length of hire. During the peak tourist season, a compact car can cost up to $200 per day, but off-season prices for the same vehicle can be as low as $50 per day.

Does it make sense to rent a car in Iceland?

Whether or not it makes sense to rent a car in Iceland depends on your individual travel plans and budget. For some, the cost of a rental car may be too high, while for others, having a rental car is essential to seeing the country and all it has to offer.

If you're planning to explore Iceland's vast wilderness, a rental car is the best way to do it. If you're just visiting Reykjavik for a city break, a rental car may not be necessary.

Why car rental prices are so high in Iceland?

Car rental prices in Iceland are high for several reasons. First, Iceland has a high cost of living, which affects the prices of all goods and services, including car rentals. Second, the country's remote location and challenging terrain make it expensive to maintain a fleet of rental cars. Finally, the high demand for rental cars during the tourist season also drives up prices.

Is it easy to get around Iceland without a car?

It's possible to get around Iceland without a car, although it can be more challenging and less convenient. Public transportation options are limited, especially in rural areas, and the country's sparse population makes it difficult to reach some of the country's top attractions without a car.

What is the best vehicle to rent in Iceland?

The best vehicle to rent in Iceland depends on your individual needs and travel plans. If you're planning to explore the country's rugged terrain and F roads, a 4x4 is your best bet. If you're just visiting Reykjavik and surrounding areas, a smaller car will suffice.

Northbound has hundreds of vehicles to choose from so that you will not be in any trouble finding the correct vehicle for your Iceland journey.

Can foreigners rent cars in Iceland?

Yes, foreigners can rent cars in Iceland. However, you will need a valid driver's license from your home country, as well as a credit card to secure the rental. Some rental companies may also require an international driving permit.

Is Iceland overpriced?

Yes, Iceland is considered by many to be an expensive country, and the cost of living is higher than in many other countries. Is it worth visiting though? Absolutely.

What do you need to get a car rental in Iceland?

If you're planning to rent a car in Iceland, there are a few things you'll need to bring with you in order to pick up your rental car. These include:

  • A valid driver's license: To rent a car in Iceland, you'll need a valid driver's license from your home country. If you have an international driver's license, it's a good idea to bring this with you as well.
  • A credit card: Most car rental companies in Iceland will require a credit card for security deposit purposes.

Once you have all the necessary documents and information, you're ready to rent a car and explore all that Iceland has to offer!

Are Iceland F roads worth it?

One of the biggest draws for many visitors to Iceland is the chance to drive on the country's famous F roads, which are known for their stunning landscapes and off-the-beaten-path destinations. While these roads can be challenging, they're also one of the best ways to experience Iceland's natural beauty.

Whether or not Iceland's F roads are worth it ultimately depends on your personal preferences and travel style. If you're looking for a more rugged and adventurous experience, then they're definitely worth considering. However, if you're looking for a more leisurely road trip, you might want to stick to the main roads.

Is driving in Iceland difficult?

Driving in Iceland can be challenging, especially if you're used to driving on roads in other countries. Some of the challenges you might face when driving in Iceland include:

  • Narrow roads: Many of Iceland's roads are narrow and winding, which can make for a bumpy and slow journey.
  • Unpredictable weather: Iceland's weather can change quickly, so you need to be prepared for rain, snow, and even ice at any time.
  • Challenging road conditions: Some roads in Iceland are unpaved and can be very rough, so be sure to rent a car with good clearance and 4-wheel drive if you're planning to drive on these roads.

Despite these challenges, driving in Iceland is also one of the best ways to experience the country's breathtaking landscapes. With a little preparation and a sense of adventure, you'll find that driving in Iceland can be a truly unforgettable experience.

What is the cheapest way to get around Iceland?

If you're looking to save money on your trip to Iceland, there are several ways to get around the country without breaking the bank. Here are a few options to consider:

  • Public transportation: Iceland has an extensive network of buses that connect many of the country's major towns and tourist destinations. While this option is not the quickest, it is the most budget-friendly.
  • Hitchhiking: Hitchhiking is a popular and cheap way to get around Iceland. Just be prepared to wait a bit longer for rides and to have some interesting conversations along the way!
  • Self-drive tours: If you're comfortable driving in Iceland, you can save money by renting a car and taking a self-drive tour. Just be sure to plan your route carefully and keep in mind that petrol prices in Iceland are among the highest in the world.

Regardless of how you choose to get around Iceland, the most important thing is to plan ahead and budget wisely. With a little bit of planning, you can have an amazing trip to this stunning country without breaking the bank.

Tunnel Fees and Tickets

When exploring the landscapes of Iceland by car, you might come across several tunnels, especially if you're traveling in the northern or western parts of the country. While these tunnels significantly shorten travel times and offer a unique driving experience, it's essential to be aware of the associated fees.

Toll Tunnels: There is only one tunnel that has fee]s and that is Vaðlaheiðitunnels, do. Ensure you're prepared to pay the toll either online or at designated payment points. This is the Vadlaheidigong website and you can pay there.

Payment Methods: Most toll tunnels offer online payment options, and it's advisable to pay within a specific timeframe (usually within three days) to avoid additional charges. Some tunnels might also have automated payment stations.

Avoiding Penalties: Ensure you pay the toll fees on time or before hand. Late payments can result in penalties, which can add unnecessary costs to your trip.

Alternative Routes: If you prefer to avoid the tolls, there are often alternative routes available. They might be longer but can offer a different scenic experience.

Why do people leave Iceland?

People leave Iceland for various reasons, such as career opportunities, personal relationships, and education. The country's small population and remote location can also be limiting factors for some individuals. Additionally, Iceland's high cost of living can be a factor in people's decisions to move elsewhere.

Despite these challenges, many people are drawn to Iceland for its unique and beautiful landscapes, rich cultural heritage, and vibrant community. Whether you are here for a short visit or planning to stay for a longer period, Iceland has a lot to offer to those who are willing to experience it fully.

How many days in Iceland is enough?

This ultimately depends on personal preferences and travel plans, but most travelers recommend spending at least 5 to 7 days in Iceland to get a good sense of the country. This allows enough time to see the main attractions, such as the Golden Circle, the Blue Lagoon, and the glaciers, and to also explore more off-the-beaten-path destinations.

If you have more time, you can also consider taking a road trip along the Ring Road to see even more of what Iceland has to offer.+

Check out our 5-Day Northern Road Trip for inspiration.

Do you need much cash in Iceland?

Iceland is generally considered a cashless society, with most transactions being conducted using credit or debit cards. This makes it relatively easy for travelers to use their cards to pay for most expenses, including rental cars. However, it is still a good idea to have some cash on hand for emergencies or for places that may not accept card payments.

Additionally, some car rental companies may require a deposit in cash or on a credit card. Be sure to check with your rental company ahead of time to find out what their specific policies are.

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