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Car Rental in Iceland

A rental car is the whole point of Iceland - it's how you drive the Ring Road, chase waterfalls and stop wherever the light is good. Here's what it really costs, the insurance and gravel-road rules that catch people out, and the drives worth planning around.

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By Sophie4 min readPublished
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The Ring Road winding through Iceland's green mountains
Photo: Alexandre Breveglieri · CC BY 2.0

In Brief

Is it worth renting a car in Iceland?

Yes - renting a car is the best way to see Iceland, and for the Ring Road it's essentially the only way. Public transport barely reaches the sights, and a car lets you stop at every waterfall and viewpoint on your own schedule. Prices start around $35/day for a small car in summer (more in peak July-August, much less in winter). Book a 4x4 if you plan to drive the Highland F-roads, take the extra gravel-and-sand insurance, and reserve early because automatics and larger vehicles sell out.

Key takeaways

  • From about $35/day for a small car; 4x4s and campervans cost more.
  • You drive on the right; most cars are manual, so book an automatic early.
  • A 4x4 is required for the Highland F-roads - a 2WD is fine for the Ring Road.
  • Take the gravel/sand-and-ash insurance and never open a door into the wind.

$35/day

economy class, before extras

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How much does car rental cost in Iceland?

Rough daily prices by car type. Rates rise in peak season - book early for the best deal.

Car typePrice / dayGood to know
Small / economy (2WD)$35-70/dayFine for the Ring Road and Golden Circle in summer; cheapest option.
Compact SUV (2WD)$60-110/dayMore clearance and comfort for long days; still not for F-roads.
4x4 SUV$90-180/dayRequired for the Highland F-roads and river crossings; the safe all-round choice.
Campervan$120-250/dayCar and accommodation in one - popular in summer, book months ahead.
Winter (any 2WD)from ~$40/dayCheaper base rates, but studded tyres and 4x4 are worth it for ice and snow.

Transmission: Most rentals are manual; automatics are available but cost more and sell out - reserve early.

Driving in Iceland: what to know

  • F-roads need a 4x4 - by law

    The Highland interior routes (numbered F35, F208…) are legally 4x4-only, and 2WD insurance won't cover you there. They open only in summer, roughly late June to September, and often include unbridged river crossings.

  • Take the gravel & sand-ash insurance

    Standard cover excludes gravel chips, and windblown sand or volcanic ash can strip paint in minutes on the south coast. The extra Gravel Protection (GP) and Sand & Ash Protection (SAAP) are cheap next to the excess.

  • Wind will rip a door off

    Iceland's wind is no joke - opening a car door into a gust can bend it back, and door damage is almost never covered. Hold doors firmly and park facing into the wind.

  • Fuel is pricey and self-service

    Pumps are unmanned and need a card with a PIN (or a prepaid fuel card); fill up whenever you can in the sparsely populated east and Highlands.

  • One-lane bridges and blind rises

    Route 1 has single-lane bridges (einbreið brú) and blind summits (blindhæð) - slow right down; whoever's closer goes first.

  • Off-road driving is illegal

    Driving off marked roads or tracks carries heavy fines and damages fragile moss that takes decades to recover. Stay on the road.

Best drives in Iceland

The routes worth renting a car for - see our road trips guide for more.

  • The Ring Road (Route 1), Iceland

    The Ring Road (Route 1)

    The 1,332km loop around the whole island - 7 to 10 days to do it justice.

  • The Golden Circle, Iceland

    The Golden Circle

    Þingvellir, Geysir and Gullfoss in an easy day loop from Reykjavík.

  • South Coast to Jökulsárlón, Iceland

    South Coast to Jökulsárlón

    Waterfalls, black-sand beaches and the glacier lagoon - a stunning 2-3 day out-and-back.

  • Snæfellsnes Peninsula, Iceland

    Snæfellsnes Peninsula

    "Iceland in miniature" - Kirkjufell, lava fields and fishing villages in a day or two.

Best time to visit Iceland

Car rental in Iceland: FAQ

The questions travelers ask most before renting a car here.

Small 2WD cars start around $35/day and rise to $50-70 in the July-August peak. Compact SUVs run roughly $60-110/day, proper 4x4s (needed for the Highlands) $90-180/day, and campervans $120-250/day. Winter base rates are lower, but budget for the gravel and sand-ash insurance add-ons, which are inexpensive but important. Booking early is the single biggest way to save.

Only if you plan to drive the Highland F-roads (the interior routes like F35 and F208), where a 4x4 is legally required and open only in summer. For the Ring Road, Golden Circle, south coast and most tourist sights, a 2WD is perfectly fine in summer. In winter, a 4x4 with studded tyres is worth it for ice and snow even on the main roads.

The main roads are easy - Route 1 is paved, well-signed and quiet - but Iceland has its own hazards: fierce wind, single-lane bridges, blind rises, gravel sections, sudden weather and unbridged river crossings in the Highlands. Drive to the conditions, take the recommended insurance, check road.is for closures, and it's very manageable. Iceland drives on the right.

Beyond the standard collision cover (CDW), the two worth adding are Gravel Protection (GP), for stone chips on gravel roads, and Sand & Ash Protection (SAAP), for windblown grit that can wreck the paint on the south coast. Some also add tyre/undercarriage cover. These add-ons are cheap relative to the high excess, and standard policies specifically exclude this damage.

For touring, June to August gives the best weather, midnight sun and fully open Highland roads - but the highest rental prices, so book months ahead. May and September are cheaper with most roads still open. Winter (October-March) has the lowest base rates and northern-lights potential, but shorter days, closed Highland roads and a real need for 4x4 and studded tyres. See our best-time-to-visit guide for the month-by-month breakdown.

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Photo credits (4)

Photos via Wikimedia Commons, used under their respective licences.