Guide to Best Car Rental in Iceland: Quick and Simple

Renting a car in Iceland

Renting a car in Iceland is one of the most convenient and rewarding ways to explore the country’s dramatic landscapes, hidden gems, and cultural highlights. Whether you're embarking on a full road trip around the Ring Road or just planning to explore the areas around Reykjavik, having your own vehicle gives you complete freedom and flexibility.

With limited public transport options and countless destinations off the beaten path, a car rental is not just convenient, it’s often essential. From watching the northern lights in winter to chasing waterfalls and glaciers in summer, renting a car helps travelers experience Iceland’s magic on their own terms. You can drive at your own pace, make spontaneous stops at scenic vistas, or venture off onto lesser-known F roads that buses and tours often avoid.

When choosing a car rental in Iceland, it’s important to compare pricing, insurance coverage, and vehicle types to match your travel needs. Consider things like weather conditions, the type of roads you’ll be driving on (especially F roads), and how many people you’re traveling with. Whether you need a compact car for solo travel or a rugged 4x4 to access remote terrain, Iceland offers plenty of options for every type of vacation.

Types of car rental companies in Iceland

Iceland has both local and international car rental providers, each with their own strengths and offerings tailored to different types of travelers. Understanding the difference between these two can help you choose the option that best suits your needs, whether you're looking for affordability, local insight, or added conveniences.

Local companies are generally smaller, Iceland-based operations that prioritize personalized service, deep local knowledge, and traveler-focused policies. Many of them, like Blue Car Rental, offer benefits that larger companies don’t, such as flexible pickup times, fewer hidden fees, more generous insurance inclusions, and better responsiveness to Iceland’s unique road conditions. These providers also tend to have better customer support for emergencies, including well-connected service networks across rural Iceland.

International brands, on the other hand, bring the reliability and consistency of large chains familiar to seasoned travelers. Companies like Hertz, Europcar, and Avis offer a wider presence and loyalty rewards, which can appeal to frequent renters. However, these providers may also come with stricter policies, higher security deposits, or exclusions in insurance coverage that may not be suited for Iceland’s unpredictable conditions.

Additionally, some local providers offer more practical information during the rental process, such as guidance on how to handle high winds or which F roads require a 4x4, which international providers may overlook. For those looking for a smoother, more locally supported road trip experience in Iceland, local companies often provide greater peace of mind and added value.

Comparing both types of companies carefully—especially in terms of insurance, customer service, and added flexibility—can ensure you make the right choice for your vacation or winter trip around Iceland's stunning countryside.

Local companies

Local brands like Blue Car Rental and Go Car Rental are known for their deep understanding of Icelandic conditions and exceptional customer service. These companies often include more comprehensive insurance packages and offer valuable local support, including roadside assistance even in remote areas. They also tend to have better flexibility when it comes to booking and modifying reservations, making them ideal for travelers with changing plans or those navigating Iceland's unpredictable weather.

In addition to coverage and support, local companies frequently provide thoughtful extras that enhance the rental experience such as tips for driving in wind-prone regions, insight into safe gas station stops, and detailed route recommendations for less-visited attractions. Travelers who rent from local providers also benefit from more personal interaction, with staff who can offer advice based on real experience rather than standard scripts.

They're a great choice for travelers looking for a flexible, dependable, and locally-informed rental experience especially for those taking on the Ring Road, tackling F roads in a 4x4, or venturing out during challenging winter conditions. By choosing a local provider, many travelers feel more prepared, more supported, and more connected to the true spirit of travel in Iceland.

International brands

Big names like Hertz, Europcar, and Avis operate across Iceland, including at major hubs like Keflavík Airport and Reykjavik. These brands may appeal to frequent travelers familiar with their loyalty programs. However, extras such as insurance, mileage limits, and additional driver fees may apply.

Price and service comparison

While international companies can offer consistency and familiarity, especially for those who are part of loyalty programs, local car rental agencies typically offer better value—particularly when factoring in insurance options, vehicle availability, and more tailored customer service. Local providers are often more flexible in their booking policies, cancellation terms, and pick-up/drop-off arrangements. Many allow for after-hours services, vehicle delivery to hotels or gas stations, and contactless handoffs, which are especially helpful for travelers arriving late or departing early.

Another advantage of local companies is that the price you see is often the price you pay. They are more likely to include full insurance coverage and extras like a second driver, GPS, or mileage in their base rates—while international brands may list lower base rates but add significant fees during checkout. This pricing structure can be especially beneficial for budget-conscious travelers or families looking to minimize unexpected costs.

When comparing service, local companies like Blue Car Rental shine by offering real-time customer support, local road condition advice, and even route recommendations. They’re also more in tune with Icelandic driving challenges and are quick to assist with weather updates, changes in road access, or tips for navigating the Highlands. Overall, while both types of providers have their place, local rental services often provide a more comprehensive and personalized experience for travelers looking to explore Iceland in a rental car.

Tips for renting a car in Iceland

Understand insurance options

Icelandic roads are diverse, with some areas requiring higher levels of caution due to gravel, ice, and strong wind. Every rental includes basic insurance, usually Collision Damage Waiver (CDW), but you'll want to upgrade to include protection against gravel, sand, ash, and wind damage. Given the potential costs of car repair in Iceland, having full insurance coverage can make all the difference in your vacation peace of mind.

Choose the right car

Your vehicle choice depends largely on the season, your destination, the road conditions you expect to face, and your comfort preferences. A compact car may be fine for summer road trips or city drives or short trips from Reykjavik, especially for solo travelers or couples sticking to the main paved routes. These vehicles are fuel-efficient, easy to park in Reykjavik, and ideal for visiting popular attractions like the Golden Circle or the South Coast during the warmer months.

However, if you’re driving in winter, heading into the countryside, or planning to explore areas like the Highlands, the Eastfjords, or the rugged Westfjords, then a 4x4 or SUV is strongly recommended. These vehicles are better equipped for Iceland's challenging road conditions, such as snow, ice, steep inclines, and gravel surfaces commonly found on F roads. They also offer more stability and traction, which can be crucial when sudden weather changes or strong crosswinds occur.

For environmentally conscious travelers, an electric or hybrid car might be the best fit. Iceland’s growing network of charging stations makes it increasingly feasible to travel sustainably, especially around the populated southwest and Ring Road. Meanwhile, families or groups may prefer larger vans or estate cars to ensure enough room for luggage, gear, and passengers.

Whether your priority is affordability, environmental impact, rugged capability, or spaciousness, Iceland’s rental offerings cater to a wide variety of preferences. Blue Car Rental ensures that whatever your travel style, they have the right vehicle to match your Icelandic adventure maximizing your comfort and ensuring you reach your destination safely and confidently.

If you're looking for the perfect rental car in Iceland, here you can find our cars selection. 

Understand driving conditions

Weather in Iceland is famously unpredictable. Even in summer, conditions can shift from sunny to snowy in a matter of hours. Always check road conditions through websites like road.is, and keep an eye on wind warnings, especially along the South Coast. Gas stations can be few and far between in rural areas, so fill up when you can. Iceland also has many single-lane bridges and blind curves, so caution and attentiveness are essential.

See our guide on how to refuel your rental car in Iceland.

Book early vs. on arrival

While it’s possible to find a car rental on arrival, it’s strongly recommended to book in advance, particularly during peak vacation months like June through August. Early booking ensures better pricing, availability of the vehicle class you want, and peace of mind.

Popular car rental locations in Iceland

Keflavík Airport

This is where most international visitors arrive and where many begin their road trip adventures. Most major car rental companies have desks or shuttle services here. Booking a vehicle at Keflavík Airport is convenient if you plan to hit the road right after your flight.

Downtown Reykjavik

If you’re staying in the capital for a few days first, consider picking up your car rental from a local provider in downtown Reykjavik. Companies like Blue Car Rental offer flexible options, and this can be a great way to avoid paying for days when you don’t need the car immediately.

Other cities and towns

Cities like Akureyri in the north or Egilsstaðir in the east part of Iceland also offer car rental options. These are great starting points for regional trips or those flying domestically within Iceland.

Comparing availability and prices

Prices may vary depending on your location. Airport pickups may come with additional convenience fees, while downtown options could offer better walk-in deals. Comparing both can help budget-conscious travelers save.

Additional information for renting a car in Iceland

Age Restrictions

To rent a car in Iceland, drivers generally must be at least 20 years old for smaller vehicles and 23 for larger or 4x4 models. Some providers may charge a fee for younger drivers.

Driver’s license requirements

You can drive in Iceland with most licenses from Europe, North America, and other countries using Latin characters. If your license is not in Roman script (like Cyrillic or Chinese), an International Driving Permit is required.

Rules and regulations

• Seat belts are required for all passengers in the vehicle, regardless of where they are seated.
• Headlights must be on at all times, day or night, and during every season. This is not just a safety tip—it is a legal requirement in Iceland.
• Speed limits vary based on road conditions: 50 km/h in urban areas, 80 km/h on gravel roads, and 90 km/h on paved roads. Always adhere to posted signs, as certain areas may have lower limits due to weather, visibility, or wildlife.
• Off-road driving is strictly illegal in Iceland. It is not only dangerous but also harmful to the country’s fragile volcanic and moss-covered landscape. Fines for off-road driving are severe, and many rental insurance policies will not cover any damage incurred from such activities.
• Use caution on single-lane bridges and blind curves, which are common across the country. Yield to oncoming traffic when necessary and approach with care.
• Be aware of high winds, especially when opening car doors. Sudden gusts can damage vehicles and are one of the most common causes of claims in Icelandic car rental.

Saving money on car rentals

• Book early for better rates, especially during peak summer and winter travel seasons.
• Rent from city locations like Reykjavik to avoid convenience surcharges often added at airport pickups.
• Use gas station loyalty cards if available—they can save you money over the course of a long road trip.
• Bundle insurance options when booking to get better deals and avoid purchasing more expensive coverage at the rental counter.
• Travel in shoulder seasons (late spring, early autumn) when prices are typically lower, and availability is higher.
• Consider choosing a fuel-efficient or hybrid vehicle to cut fuel costs, especially useful for those driving long distances on the Ring Road.
• Look for promotional codes or pop-up discounts from providers like Blue Car Rental, which frequently offers seasonal deals directly on their website
• Travel in shoulder seasons (late spring, early autumn) for lower prices

Final thoughts

A car rental in Iceland is more than just a convenience it’s the gateway to some of the most breathtaking travel experiences in the world. Whether you're planning a serene summer road trip to coastal villages or braving a snowy winter journey into the Highlands, the freedom of the open road is unmatched.

From geysers and glaciers to lava fields and northern lights, Iceland rewards the curious and the independent. Renting a car allows you to go beyond the obvious, escape crowded tour buses, and discover what makes Iceland truly unique. With the right vehicle, proper insurance, and a bit of local knowledge, your Icelandic vacation will be an unforgettable adventure one only possible with your own set of wheels.

Ready to book your rental car in Iceland? Take the first step to your greatest adventure with Blue Car Rental.