How to Rent the Right Car in Iceland: 11 Tips You Need to Know🚗🇮🇸

If you're travelling to Iceland, renting a car is definitely worth considering. It gives you freedom, flexibility, and the opportunity to explore this magical country at your own pace. 
When planning a trip to Iceland and wondering where to rent a car, DiscoverCars is our go-to platform for comparing rental cars and finding the best deal for our trip. We use it every time we rent a car because it allows us to compare offers from different rental companies in one place, making it much easier to find the right car at the right price.

And trust us, choosing the right rental car can make a huge difference to your Iceland road trip!

Renting a car is, in our opinion, one of the best ways to explore Iceland. It gives you the freedom to travel at your own pace, stop whenever you want, discover hidden gems, and avoid the strict schedules of organised bus tours. You don't have to rush from one attraction to another or squeeze into a bus with dozens of other tourists.

We drove the entire Ring Road, and we always use DiscoverCars to rent our cars. It allows you to compare offers from different car rental companies in your destination and find the option that works best for your trip. 

The main roads are generally well maintained, and once you get away from the busiest tourist areas, you can enjoy some incredibly scenic drives without much traffic. You don't have to rely on organised tours, rush to keep up with a strict bus schedule, or squeeze into a bus with dozens of other tourists.

And that's not even mentioning the fact that renting a car can work out cheaper than booking multiple organised excursions, especially if you're travelling with someone else.

In this guide, we'll share our tips on how to choose the right rental car for Iceland, what to look out for before booking, and how to avoid unnecessary expenses.

But how do you choose the right car for Iceland? Here are our 11 tips to help you avoid unnecessary expenses and make the most of your trip!

What type of car do you need in Iceland?

Most of Iceland's popular tourist attractions are accessible with a regular car. You don't need a 4x4 to drive the Ring Road and explore the south and north of the island. We recommend allowing at least 8 days for this route so you have enough time to enjoy the destinations along the way.

If you're travelling on a budget, camping is another great option. Iceland has plenty of campsites, many of which are accessible with a regular car.

However, if you're more adventurous, have extra time, and want to explore remote places such as Ófærufoss waterfall in the Eldgjá area, or drive Iceland's rugged mountain roads, renting a proper 4x4 can be a great choice. Just remember that access depends on road conditions, the season, and whether the vehicle is permitted on the specific route.

And if you love camping but don't want to sleep in a freezing tent, consider renting a campervan. You'll have more comfort and the freedom to travel around the island with your accommodation on board.

You can compare different rental options through DiscoverCars and choose a vehicle that suits your itinerary and budget.

11 things to consider when renting a car in Iceland

1. Choose the right car size

This is one of the first things you'll need to decide.

If you're travelling as a couple with just a couple of suitcases, a small car might be all you need. If you're travelling with family, carrying lots of luggage, or bringing camping equipment, you'll probably want something bigger.

Think about how many people are travelling, how much luggage you have, and how comfortable you want to be on longer drives.

2. Set your budget and travel dates

Car rental prices in Iceland can vary significantly depending on the season, your travel dates, and how long you want to rent the car.

Compare different offers before booking, and remember to check what's included in the price. A cheap rental might not be the best deal if you have to pay extra for insurance, additional drivers, or other services.

Booking in advance is also worth considering, especially if you're travelling during the busy summer season.

3. Choose your pick-up and drop-off locations

The pick-up and drop-off locations can affect the total rental price. Returning your car to a different location from where you collected it may come with an additional fee.

For Iceland, we generally recommend starting and ending your road trip in the same place, especially if you're planning to drive the Ring Road.

One important detail: Keflavík International Airport (KEF) is Iceland's main international airport, located approximately 50 km from Reykjavík. It is not in Reykjavík itself, so check whether your rental company operates at the airport or requires you to take a shuttle to another location.

4. Check the driver's age

The driver's age can affect the rental price and eligibility requirements.

Some rental companies charge an additional fee for younger drivers, while others have minimum age requirements or require drivers to have held their licence for a certain period.

In our experience, it's worth comparing the terms carefully. If two people are travelling together and one is older, it may be cheaper to list the older person as the main driver, provided they will genuinely be driving and meet all the rental requirements.

Always check the specific company's age policy before booking.

5. Check the security deposit

This is one of the most important things to consider before renting a car.

Depending on the rental company, the security deposit can amount to hundreds or even thousands of euros. That money may be temporarily blocked on your card, meaning you won't be able to use it during your trip.

We prefer choosing cars with a reasonable deposit because we don't want to tie up a large amount of money or deal with unnecessary complications when waiting for it to be released.

We've never personally had a problem with a security deposit, but we still pay attention to this detail every time we rent a car.

Always check the deposit amount, how it is collected, and how long it may take to be released after you return the vehicle.

6. Don't overlook insurance

Even though we've never damaged or crashed a rental car, we always pay close attention to insurance.

Iceland's conditions can be unpredictable, and gravel, strong winds, sand, and volcanic ash can pose risks to rental vehicles.

We prefer arranging suitable insurance when booking online, as the options offered at the rental desk can sometimes be considerably more expensive.

However, don't assume that every policy described as "full coverage" covers everything. Check the excess, exclusions, and whether the policy is provided by the rental company or a third party. Also, verify whether damage caused by gravel, sand, ash, or wind is covered.

The best option is the one that gives you appropriate protection without unnecessary costs.

7. Add an additional driver if you plan to share the driving

If you're travelling with someone else and want to take turns driving, check whether you can add an additional driver.

Some rental companies include an extra driver for free, while others charge a daily fee.

It's worth comparing these offers because having another authorised driver can make a long road trip much more comfortable.

And remember: if someone who isn't authorised under the rental agreement drives the car, your insurance coverage could be affected. Always make sure every person who plans to drive is properly registered.

8. Look for unlimited mileage

This is especially important if you're planning to drive around the entire island.

Iceland may look small on a map, but you'll probably cover a lot of kilometres as you explore waterfalls, glaciers, beaches, small towns, and scenic viewpoints.

We always look for unlimited mileage because it means we can enjoy the journey without constantly worrying about exceeding a kilometre limit or paying extra fees.

Just make sure unlimited mileage is explicitly included in the rental conditions.

9. Check whether you need a credit or debit card

This is one of our most important tips because we learned it the hard way ourselves!

Some car rental companies require the main driver to present a credit card when collecting the vehicle, particularly for the security deposit.

If you only have a debit card, you might find out at the rental desk that you cannot collect the car under the conditions of your booking.

And trust us, that's not how you want to start your Iceland road trip!

Before booking, carefully check which types of cards are accepted, whose name must be on the card, and whether the card needs to have a sufficient available credit limit.

On DiscoverCars, you can use the filters and rental conditions to help identify offers that accept your card type. However, always verify the specific supplier's terms before confirming your reservation.

10. Check the mobile app for special offers

Here's another little trick worth trying: compare the prices on the website with those in the mobile app.

Sometimes, app bookings come with additional benefits or different offers, such as a free additional driver or a lower overall price.

We recommend checking both before making your reservation. Just make sure you compare the final prices and included benefits, rather than looking only at the advertised daily rate.

11. Choose the right vehicle for your itinerary

Our final tip is to think about where you actually want to go before choosing your car.

If you're planning to explore the Ring Road, visit the main waterfalls, drive along the south coast, and discover the popular attractions around the island, a regular car will generally be enough.

If you want to explore the Highlands, drive on F-roads, or reach more remote destinations, you may need a suitable 4x4 vehicle.

And if you're planning a camping road trip with extra comfort, a campervan could be the perfect option.

Remember that a 4x4 is not automatically permitted or suitable for every route. Always check the road conditions, seasonal access restrictions, and your rental agreement before heading into the Highlands.

Where do we recommend comparing rental cars?

We use DiscoverCars because it allows us to compare different rental companies in one place and check important details before booking.

You can compare car sizes, prices, rental dates, insurance options, mileage policies, deposits, and payment requirements to find a car that fits your trip.

Our biggest piece of advice? Don't choose a rental car based on price alone. Check the deposit, insurance, card requirements, and rental conditions before you book.

A little research before your trip can save you money, stress, and unpleasant surprises once you arrive in Iceland!

Happy road-tripping! 🇮🇸🚙