How to find the best car rental in Iceland and other ways of travelling

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 find the best car rental in Iceland? What other options for traveling around Iceland you have?

Best car rental Iceland - how to rent a car
How to rent a car in Iceland?

Travelling in Iceland

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

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Flights between cities can be a bit pricey. 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

Organized bus trips can be quite expensive. You need to also adjust yourself to the schedule and another people existence. It’s a bit difficult for me, but some people may like it, especially if you are limited with time.

  • Public transport

There are some buses running between towns. However, you may struggle with the timing, as sometimes there’s only one bus a day and only in the high season. They also can be a bit pricey. 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

Hitch-hiking is possible, provided that you are doing it on the Ring Road or places where there are some tourists. It also helps with travelling Iceland on a budget. You just need to be prepared for standing outside in, sometimes very harsh, Icelandic weather (horizontal rain!). To avoid bad conditions, find out the best time to visit Iceland.

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 in Iceland

This is the most popular option and if you can afford it, I would highly recommend doing it. It gives you the 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 the towns you can fit the weeks amount of food in the car easily. With our small rented car, we managed to do jam-packed Iceland road trip itinerary in 7 days and you can too!

Best car rental in Iceland - how to rent a car
Endless roads in Iceland
Best car rental in Iceland - how to rent a car in Iceland and travel around
Some people have a bit bigger cars 😉

How to find the best car rental in Iceland & what type of car to take?

With many companies to choose from, it might not be the easiest to find the best car rental in Iceland. However, it’s also important to know what type of car to choose. Do you need 4×4 or you 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 occasionally going off the beaten track, you will be fine with the 2wd car. We did our whole south Iceland trip, going to amazing places, just with small Hyundai i10. You can check our route here.

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.

How to find the best car rental in Iceland?

How to find the best car rental in Iceland and what car rental company to choose?

Here the problem starts. There are so many car hire companies in Iceland and 99,9% of them have really bad reviews. We used Budget Cars, and we booked through one of the car rental search websites, as they had much better deals. I can recommend checking RentalCars or AutoEurope.

We paid £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. We couldn’t make up our mind and that’s why the prices went up really quickly. £250 is still expensive if you compare it for example to the UK prices,. It was still high season in Iceland though, 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. We wanted 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. This was a big “no no” for us. Rental cars in Iceland are getting worn down really quickly because of bad road conditions. 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 a higher chance that it’s not going to suddenly break down in the middle of nowhere. I’ve heard stories from my friends about the tyres blowing up on the road or the car suddenly breaking down. This is definitely not a nice thing to happen during your holidays. 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 the online broker (eg. Autoeurope) is much cheaper than through the car rental company itself. The only things that you need to watch out are additional fees and T&Cs, but 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 a credit card with the 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 by the 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 in the car park. Then we just signed the papers and we were free to go.

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As you can see, renting a car in Iceland is not as bad as it seems. I hope the tips above will hel you to find the best car rental in Iceland. If you know what you are doing and you are careful enough, everything should be fine. Good luck! 🙂


Have you rented a car in Iceland before? What is the best car rental in Iceland according to your experience? What tips would you give others? Share your experience below!


More Iceland read:

Ultimate South Iceland road trip itinerary

Best free and wild hot springs in Iceland

How to travel Iceland on a budget

Icelandic food – what to eat and what to avoid

Must-see places in South Iceland

Iceland off the beaten path 

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