Should I Rent a Car in Iceland? Here's What You Need to Know

Imagine standing in Iceland's rugged landscape, watching a bus disappear into the distance, realizing it won't be back for hours. Sounds fun? Didn't think so. That's the reality of relying on public transport here. So, should I rent a car in Iceland?

If you plan to explore beyond Reykjavík, skip rigid schedules, and dive deep into Iceland's wild beauty, you're already halfway to your answer. But what about costs, weather, or navigating Iceland's quirky road rules? Don't worry; we've got you covered.

In this guide, you'll discover the perks of renting a car, the challenges to watch out for, and tips to pick the right vehicle. We'll even compare car rentals with public transport to help you decide what fits your trip best. By the end, you'll be road-trip ready, with no second-guessing. Let's get started.

The Freedom of Renting a Car in Iceland

Renting a car in Iceland isn't just about transportation. It's about unlocking the country on your terms. Unlike packaged tours that stick to the usual hotspots, having your own wheels means you can embrace the unpredictability that makes Iceland so magical.

You don't have to ask permission to pull over for an impromptu photo of a glacier glowing pink at sunset. You don't need to justify why you've spent an extra hour at a random waterfall because the light hit it just right. Renting a car removes the 'can I?' from your travel vocabulary.

Instead of focusing on what public transport can't do, think of what you can:

• Redefine Your Journey: The road isn't just a route; it's part of the experience.
• Own Your Time: Spend longer in places that move you. Skip the ones that don't.
• Chase Moments: Whether it's a midnight aurora or a fleeting rainbow, you're always in the right place because you decide where that is.

Access Remote Destinations

Iceland's rawest beauty isn't found along well-paved highways. It's hidden in places where public buses don't dare to go. If you're craving landscapes that feel untouched, renting a car is your key to unlocking them.

Where your rental can take you:

• F-Roads & Highlands: These rugged routes, like F208 or Landmannalaugar, lead to geothermal valleys, volcanic craters, and glacier-fed rivers. A 4x4 is mandatory for these areas, but the reward is otherworldly scenery most travelers never see.
• Westfjords: A remote region filled with dramatic fjords, towering cliffs, and the epic Dynjandi waterfall. Public transport barely scratches the surface here, but with a car, you can explore every twist and turn.
• Snæfellsnes Peninsula: Known as 'Iceland in Miniature,' this region offers glaciers, lava fields, and black sand beaches. A regular car can handle the main roads, but a 4x4 makes exploring hidden gravel tracks effortless.

Still wondering whether you should rent a car in Iceland? If freedom, flexibility, and getting the most out of your time and budget matter to you, the answer's a resounding yes!

The Pros of Renting a Car in Iceland

While the freedom to roam is great, renting a car in Iceland comes with practical perks that go beyond just spontaneity.

Flexibility to Create Your Own Itinerary

This isn't just about driving wherever you want. It's about building an itinerary that's personal, efficient, and fits your interests.

• Tailored Routes: Focus on what excites you, whether it's dramatic waterfalls, volcanic landscapes, or quiet coastal towns.
• Time Efficiency: No waiting around for buses or sticking to rigid tour schedules.
• Weather Adaptability: Iceland's weather loves to surprise. With your own car, you can pivot your plans instantly, chasing clear skies or finding new routes when conditions shift.

Convenience Over Public Transportation

Public transport works if you're just bouncing around Reykjavík, but venture beyond the city, and it quickly becomes unreliable.

Many of the top attractions—like waterfalls, glaciers, and volcanoes—are in spots not covered by buses. Even where there is service, bus schedules can be unpredictable, especially during winter and the shoulder seasons, when services are even less frequent.

Why renting a car is more convenient:

• Direct Access: Go straight from your accommodation to Iceland's remote wonders without detours or transfers.
• No Time Wasted: Maximize your sightseeing hours instead of sitting at bus stops waiting for the next ride.
• Travel at Your Own Pace: Whether you're an early bird or a night owl, your plans aren't tied to someone else's clock.
• Comfort: More space, more legroom, and no strangers falling asleep on your shoulder.

Think renting a car is expensive? When you're traveling with friends or family, it's often cheaper than booking multiple tours or relying on public transport.

Where the savings stack up:

• Shared Costs: Split rental fees, fuel, and insurance among your group.
• No Tour Expenses: Drive yourself to popular spots instead of paying for overpriced guided tours.
• Flexible Meals: Stop at local grocery stores, pack picnics, and skip the pricey tourist restaurants.
• Accommodation Freedom: Stay in budget-friendly remote spots without worrying about how to get there.

Challenges to Consider Before Renting a Car

While renting a car in Iceland has plenty of perks, it's not without its challenges. Before hitting the road, it's smart to be prepared.

Weather and Road Conditions

Iceland's weather is unpredictable. One minute, clear skies; the next, a storm rolling in like it owns the place. Driving here isn't hard, but it demands respect.

Key points to consider:

• Rapid Weather Changes: Conditions can shift fast, even in summer. Always check weather updates before setting out.
• Winter Driving Hazards: From September to April, expect snow, sleet, and black ice. If you're not experienced with winter driving, this can be tough.
• Strong Winds: Gusts can be powerful enough to shake your car, especially in open areas.
• F-Roads & Gravel Roads: F-roads are only open in summer and require a 4WD. Gravel roads are common and need careful driving to avoid damage.
• Fuel Availability: Gas stations can be few and far between in remote areas. Plan your refueling stops in advance and check distances between stations, especially when venturing off the beaten path.

Understanding Iceland's Road Rules

When visiting Iceland, it's essential to brush up on the basics of driving in Iceland safely. Iceland's stunning landscapes come with unique driving rules designed to keep both you and the environment safe. Here's what you need to know to stay on the right side of the law and the road.

• Keep Right, Overtake Left: In Iceland, you drive on the right-hand side and pass slower cars on the left. Simple, but easy to forget if you're used to the opposite.
• Headlights On, Always: Day or night, rain or shine, headlights must be on. It's not optional.
• Speed Limits: 50 km/h in towns, 80 km/h on gravel roads, and 90 km/h on paved roads. Stick to these unless you want an unexpected souvenir—a speeding ticket.
• Seat Belts for Everyone: No exceptions. Buckle up, even in the backseat.
• No Phones: Using a mobile without a hands-free system is illegal.
• Roundabout Rules: The inside lane has the right of way, which can confuse first-time visitors.
• No Right Turn on Red: Unlike in some countries, this isn't allowed.
• Off-Road Driving is Illegal: Iceland's fragile ecosystem can't handle tire tracks. Stick to marked roads.
• Watch for Sheep: Yes, sheep. They're everywhere, especially in summer, and they have no respect for road rules.
• Single-Lane Bridges: Common in rural areas. The car closest to the bridge usually has the right of way, so approach with caution.

Rental Costs and Insurance Options

If you're wondering, 'Do I need a car in Iceland?' the answer often comes down to cost-related issues. A trip to Iceland isn't exactly cheap, but it's often worth every Króna for the flexibility it offers. Rental costs vary based on the type of vehicle, rental duration, and insurance coverage. The basic price usually includes:

• Collision Damage Waiver (CDW): This covers collision damage but comes with a high deductible.
• Third-Party Liability Insurance (TPL): Covers damage to others' property, not your own car.

But here's the catch: basic insurance often leaves you exposed to hefty out-of-pocket costs. That's where these extra add-ons come in:

• Super Collision Damage Waiver (SCDW): Lowers your financial liability in case of an accident.
• Gravel Protection: Essential for Iceland's rough roads, covering chips and cracks from loose gravel.
• Sand and Ash Protection (SAAP): A must if you're exploring volcanic areas where ash damage can be costly.
• Theft Protection: Covers the car if it's stolen, though theft is rare in Iceland.

At Cars Iceland, we strive to offer the best insurance options for a stress-free journey. That’s why we provide a liability waiver with zero liability, ensuring complete peace of mind on the road. Be sure to check it out when booking your rental for a hassle-free trip!

What to budget for:

• Base rental fees
• Insurance add-ons (ranging from $20 to $40 per day)
• Potential damage costs not covered by insurance
• Fuel expenses, which add up fast with Iceland's long driving distances

When Renting a Car Is the Best Option

If you've been asking yourself, 'Do I need to rent a car in Iceland?' the answer depends on how you plan to experience the country. While Reykjavík is compact and easy to navigate without a car, Iceland's real magic lies beyond the city limits, where public transport gets sparse, and tour schedules can feel restrictive.

Renting a car isn't just about convenience. It's about having the freedom to explore at your own pace, access remote locations, and create a trip that's tailored to your interests. Let's break down the scenarios where renting a car isn't just helpful but the smartest choice.

Travelers Exploring Outside Reykjavik

If you're sticking to Reykjavík, public transport and walking might do the trick. But if your idea of a memorable trip involves chasing waterfalls, soaking in hidden hot springs, or standing alone in vast lava fields, you'll need more than a bus schedule.

Renting a car is a game-changer for truly experiencing the raw beauty around Iceland. Outside the city, public transport gets sparse, and tours box you into rigid itineraries. With your own car, you control the playlist; the pit stops, and the pace. 

Want to pull over for an epic photo of a glacier glowing under the midnight sun? No one's stopping you. Feel like skipping the touristy spots and finding a quiet fjord instead? Easy.

Those Planning Road Trips Like the Ring Road or Golden Circle

If you're dreaming of epic road trips, Iceland's highway to adventure is calling your name. The Golden Circle and Ring Road aren't just routes; they're the ultimate self-drive experiences that tours can't match.

With the Golden Circle, you get the freedom to linger where it matters. Spend as much time as you like at Thingvellir National Park, marvel at the roaring Gullfoss waterfall, or watch Geysir erupt without glancing at a guide's watch. No rushing. No crowded buses. Just you and the raw Icelandic landscape.

For the bold, the Ring Road is a 1,332 km (828 mi) loop of pure exploration. Cruise past black-sand beaches, glacial lagoons, volcanic craters, and fjords, pulling over whenever something catches your eye. It's cost-effective, too. Split the rental and fuel with friends, and you'll save big compared to pricey tours.

Families and Small Groups

When traveling with family or a small group, comfort and convenience become top priorities. Renting a car gives you the space and flexibility to drive around Iceland without the hassle of juggling luggage, navigating crowded buses, or dealing with cranky kids stuck on someone else's schedule.

It's not just about getting from place to place. It's about creating a stress-free environment where everyone can relax. You control the temperature, the playlist, and the pit stops, making long drives more enjoyable for both kids and adults.

Packing for a group? No problem. Load up on snacks, extra gear, and whatever makes your trip easier without worrying about baggage limits. Plus, traveling together in one car keeps everyone connected, turning road time into quality time.

Choosing the Right Vehicle for Your Iceland Adventure

So, you've decided to rent a car for your Icelandic road trip. Smart move. But what kind of ride will actually make your trip smoother, safer, and more fun? It's not just about picking the biggest or the cheapest car. The right choice depends on where you're going, what kind of traveler you are, and how much comfort you want along the way. Here's how to figure out which vehicle from your rental company will match your adventure.

4x4s for F-Roads and Highlands

Sure, we've talked about F-roads before, but let's get real about why a 4x4 is more than just a rugged-looking car. It's your ticket to Iceland's untamed side. Without it, entire parts of the country stay off-limits. But beyond legal requirements, a 4x4 changes how you experience the landscape.

Why a 4x4 transforms tour trip:

• Confidence, Not Just Capability: It's not about surviving the roads; it's about enjoying them. No second-guessing whether you'll make it across that rocky patch or shallow river.
• The Views You Earn: F-roads lead to places that feel like another planet. It's not just about getting there; it's about the thrill of the drive itself.
• Weather Insurance: Iceland's weather doesn't wait for you to feel ready. A 4x4 gives you an edge when conditions shift suddenly.

Is It Worth It?

Think about your priorities. If you want Iceland's wildest landscapes, the extra cost of a 4x4 pays for itself in experiences you can't buy on a tour.

Economy Cars for Easy Road Trips

Not every Iceland trip needs to feel like an expedition. If your adventure involves scenic drives, cozy guesthouses, and quick stops at iconic sights, an economy car is all you need. But the real perk isn't just saving money. It's the simplicity.

When an economy car makes sense:

• Less Planning, More Cruising: Stick to the Ring Road or Golden Circle, and you won't spend your trip worrying about road conditions or fuel stops.
• More Money for Experiences: Spend less on the car more on whale-watching tours, geothermal pools, or that fancy Icelandic dinner you've been eyeing.
• Stress-Free City Driving: Reykjavík's narrow streets and tight parking spaces are much easier to handle with a compact car.

The Catch:

While economy cars are great for summer sightseeing, don't underestimate Iceland's unpredictable weather. A clear morning can turn stormy by afternoon. If your itinerary is flexible and sticks to paved roads, you'll be just fine.

Best Time to Rent a Car in Iceland

Choosing the right season to rent a car in Iceland can make a huge difference in your travel experience. The country’s dramatic landscapes and ever-changing weather mean that road conditions vary significantly throughout the year.

• During summer (May to September), driving in Iceland is at its easiest. Roads are clear, most routes are open, and daylight lasts long into the evening, allowing for flexible travel plans. This is the best time for first-time visitors, as conditions are generally mild, and access to popular destinations, including the Highlands, is possible.

• In winter (October to April), driving becomes much more challenging, particularly for those unfamiliar with icy roads and strong winds. Snow, sudden storms, and road closures are common, especially in rural areas and on mountain passes. Some routes, including F-roads leading to the Highlands, are completely inaccessible. Travelers visiting during this season should be prepared for unpredictable conditions, consider renting a 4x4 vehicle, and check road conditions and weather updates frequently.

For a smoother and safer experience, choosing the right season based on your driving confidence and planned itinerary is essential.

Renting a Car vs. Public Transport in Iceland

Public transport might seem like a budget-friendly choice, but is it really? If you're after flexibility, freedom, and getting the most bang for your buck, a car is the best way to explore Iceland. Let's break it down because sitting on a cramped bus while staring out the window isn't exactly the Icelandic dream.

Comparing Costs and Convenience

Think renting a car is pricey? Not when you do the math. A compact car rental costs around $40–$70 per day, totaling roughly $280–$490 for a 7-day trip. But don't forget about fuel and parking, which can add another $150–$250 depending on your route and driving habits. 

Now, stack that against public transport:

• Per-Person Tours: Visiting popular spots like the Golden Circle or South Coast? Expect to cough up $100–$150 per tour. That adds up fast.
• Bus Tickets Between Cities: $65–$100 each way, and that's without even factoring in extra excursions.

Why Convenience Wins with a Car

• Ultimate Flexibility: Go where buses fear to tread—the Highlands, Westfjords, and beyond.
• Time Efficiency: No waiting for schedules. You'll shave 25–50% off your travel time compared to buses.

Cost and Convenience: Car Rental vs Public Transport

	Car Rental	Public Transport
Cost (7 Days)	$280–$490 rental + $150–$250 for fuel/parking	$65–$100 per bus ticket, $100–$150 per tour (per person)
Travel Time	25–50% faster without waiting	Slower with indirect routes and stops

Limitations of Public Transport in Iceland

Public transport in Iceland? Let's just say it's not winning any awards for convenience. If you think you'll hop on a bus and effortlessly glide from one epic attraction to the next, think again. Here's where things fall apart:

• Scarce Rural Coverage: Once you leave Reykjavík, good luck. Buses are few and far between, and they have a limited schedule. You can check Straeto’s website for the latest updates. Do know they don't even bother with jaw-dropping spots like waterfalls, glaciers, or hidden hot springs. If nature's calling, public transport isn't answering.
• Tour Dependency: Want to see iconic sites like Jökulsárlón or Landmannalaugar? Get ready to fork over serious cash for guided tours—often more expensive than just renting a car and doing it yourself.
• Seasonal Disruptions: Winter doesn't just bring snow; it brings canceled bus routes and massive delays. Even when buses run, they're less frequent, leaving you stranded longer than you'd like.
• No Rail Network: Iceland skipped the whole "train system" idea. You've got buses or domestic flights, and neither screams flexibility.
• City Limits: Think Reykjavík is different? Nope. In summer, buses run every 15–30 minutes. In winter, that drops to once an hour. Miss it, and you're stuck waiting… and waiting.

FAQs About Renting a Car in Iceland

What's the minimum age for renting a car in Iceland?

The minimum age is typically 20, but some rental companies require drivers to be 23, especially for 4x4s. A valid driver's license and a credit card are also needed.

Do I need a 4x4 for my Iceland trip?

You'll need a 4x4 if you plan to drive on F-roads or explore the Highlands. For the Ring Road or Golden Circle in summer, a regular car will do just fine.

How much does gasoline cost in Iceland?

Gasoline costs around 320–350 ISK per liter ($2.30–$2.50 USD), but prices vary. Fuel up often in remote areas since gas stations can be few and far between.

Do you need a car in Reykjavik?

Not really. Reykjavík is compact and walkable, with decent public transport. But if you plan day trips beyond the city, having a rental car adds flexibility and convenience.

Do you need a rental car in Iceland?

If you want to explore outside Reykjavík, yes. A rental car gives you the freedom to visit remote attractions, avoid rigid tour schedules, and make spontaneous stops along the way.

Should I Rent a Car in Iceland? Only If You Hate Missing Out

So, should I rent a car in Iceland? If you're cool with missing hidden waterfalls, spontaneous detours, and jaw-dropping views, then sure, stick to buses. But if freedom, flexibility, and making your own rules sound better, renting a car in Iceland is a no-brainer.

Public transport won't take you to remote gems or let you pull over when the northern lights show up unannounced. Don't limit your trip to rigid schedules and crowded tours. Rent a car in Iceland and experience the country the way it's meant to be: wild, unpredictable, and entirely on your terms.