Car rental and traveling in Iceland

Expensive prices, broken engine, blown up tyres, huge fines for invisible scratches, additional fees for “needed” insurance – internet stories about car rentals in Iceland can sometimes be like taken straight from the horror movie. Is it really that bad? How to make it much more pleasant experience? What other options for traveling around Iceland you have?

How to rent a car in Iceland?

Traveling in Iceland

There are several ways that you can travel around Iceland. There are no trains, so your only possibilities is road or air transport.


Flights between cities can be a bit pricy, however, if you book it well in advance you can find some cheap deals.

For the road transport you can choose between:

  • Going to organized bus trips

They can be quite expensive and you need to adjust yourself to the schedule and another people existance next to you in all the locations (a big no for me, but some people may like it, especially if you are limited with time).

  • Public transport

There are some buses running between towns, but you may struggle with the timing of them, as sometimes there’s only one bus a day and only in the high season. They also can be a bit pricy (we checked possible buses from Reykjavik to Landmannlaugar, because our 2wd car wouldn’t manage to get there, and it was around £80 per person).

  • Hitch-hiking

It’s possible, provided that you are doing it on the Ring Road or places where there are some tourists and that you are prepared for standing outside in, sometimes very harsh, Icelandic weather (horizontal rain!). Tourists, who rent cars are usually fully packed with their bags, so it may be difficult for them to pick you up and you may need to wait a bit for the ride, but it will eventually happen. Better have some spare time and a lot of determination for it!

  • Car rental

This is the most popular option and if you can afford it, I would highly recommend doing it. It gives you flexibility of what you want to do and where to go, you can turn off the beaten track (and there are so many turns from Ring Road that in 90% of cases will bring you to amazing views!), and if you are travelling out of towns you can fit the weeks amount of food in the car easily.

Endless roads in Iceland
Some people have a bit bigger cars 😉

Car rental – which car to choose?

First question is always about what type of car to choose – do I need 4×4 or I will be fine with 2wd?

It depends on where you are planning to go and when. If you are going in summer months and you are planning to be on the Ring Road, just occassionally going off the beaten track, you will be fine with 2wd car. We did our whole south Iceland trip, going to amazing places, just with small Hyundai i10. You can check here the route that we did.

However, if you are going in winter time (keep in mind that this can be still as late as April/May and as early as October/November – check the weather forecast!), or you are planning to go to any gravel or “F” roads, then it’s better to take 4×4.


Which car rental company?

Here the problem starts. There are so many car hiring companies in Iceland and 99,9% of them have really bad reviews. We used Budget Cars, booking through the broker, because it had better deal. We payed £250 for 7 days for rental of Hyundai i10 and we didn’t have any problems with it. Before that we did quite a big research among different companies but we couldn’t make up our mind and before we managed to book it, the prices went up really quickly. £250 is still expensive if you compare it for example to the UK prices, but it was still high season in Iceland when we went and we started bookings a bit too late – the earlier the better! When you have your tickets and decide where you want to go – book the car straight away.

How to have problem-free car rental experience?

Here are a few important points that you need to check before renting a car and then the rental experience should be fine for you:

  • Get a relatively new car.

Before proceeding with our car booking we contacted different companies to make sure that their cars are new (at least from 2015-2016). Some of the companies, told us that their cars were 10 years old and it was big “no no” for us. Rental cars in Iceland are getting worn down really quickly because of the road conditions (a lot of pot holes and gravel). Our car was from 2016, we rented it in September and it already had 20 000 km on the clock. With a new car you have higher chance that it’s not going to suddenly break down in the middle of nowhere. I’ve heard stories from my friends before about the tyres that were blowing up in the road or the car that was suddenly breaking down. This is definitely not nice thing to happen during your holidays and it gives you unnecessary stress and lost time, so better to avoid it.

  • Compare different companies and utilize car brokers

Car prices can vary a lot between different companies. Quite often also the price offered through online broker (eg. Autoeurope) is much cheaper than through the car rental company itself. The only thing that you need to watch out are additional fees and T&Cs, ut if you read them carefully then you will know if it’s fine.

  • Read T&Cs

Know what you are paying for, what additional fees you can expect, what you are covered for and what additional insurance it’s worth to take. It also very often says in the T&C, that you need to have credit card with specific amount of money available on it – this is in case of the damage to the car. In our case it was around £400-500, which they blocked from Alex’s card for the duration of our trip (and actually a bit longer), so better make sure that you have that amount of money.

  • Check the car condition before rental and take pictures

When we got our car we just registered in the counter and got the keys to the car with all the documents. We were then instructed that if we find some problems with the car to return back to the office before setting off and let them know, so they can mark it on the sheet. As we discovered, the car had quite a few scratches on all its sides and the roof. We took pictures of it, went back to the office, they got marked (nobody even went out to check if what we are saying is true) and then we were fine to go. We had all the sides of the car marked on the paper as having some scratches, which actually was quite good for us, because even if we ended up having some more after our trip, then it would be probably classified as the old ones anyway 🙂

  • Get proper insurance

With most of the car rentals you are covered with basic insurance. However, if you are planning to drive on some gravel roads and you don’t want to worry about the car, you can get gravel protection. One of the main problems in the rented cars in Iceland are windscreens. There are a lot of rocks, even on the main road, that can easily scratch your windscreen, so you can get windscreen protections if you don’t want to worry about that. The law in Iceland is that if you damage the windscreen, it has to be replaced, so in that case, you would need to pay the price for the new windscreen, which is quite expensive in Iceland.

Saying all that, we didn’t get any of those additional insurances, because we decided, that we will be careful and although we travelled on some gravel roads, it was all fine.

And that’s all! We didn’t have any problems when we were returning the car. We gave it back in the early morning when it was still dark and the guy went around it, not even looking properly because there was not enough light on the car park. Then we just signed the papers and we were free to go.


As you can see, renting car in Iceland is not as bad as it seems. If you know what you are doing and you are careful enough, everything should be fine. Good luck! 🙂

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Iceland how to rent the car


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