Renting a car in Iceland is the best way to explore the country’s majestic landscapes on your own schedule. Whether you’re planning a self-drive tour of the Ring Road or just need a reliable ride from Keflavik Airport, these 10 essential tips will help you save money, stay safe, and make the most of your Iceland road trip. If you’re traveling in Iceland soon, read on as this this ultimate guide covers everything you need to know!
1. Book your rental car well in advance
Don’t wait until you land! Iceland is a wildly popular destination, and rental cars can sell out quickly in high season. Booking your car ahead of time (especially for summer months or holiday periods) guarantees you get the vehicle you want at a better price. Last-minute rentals at Keflavik Airport tend to be more expensive and limited in selection. As soon as you know your travel dates, reserve your car. This is doubly important if you need an automatic transmission or a specialty vehicle, like a 7-seater, inventories for those are smaller. Early booking not only secures your wheels, it often saves you money with early-bird rates.
2. Choose the right vehicle for your Iceland itinerary
Not all cars are suited for all adventures. Pick a rental car type that matches your plans:
- Economy 2WD cars – Perfect for couples or solo travelers sticking to main roads and summer travel. They’re fuel-efficient and ideal if you plan to drive around cities or do the classic Golden Circle route. Keep in mind 2WD vehicles are not allowed on F-roads (mountain roads) and may struggle in winter conditions.
- SUVs and 4x4s – A 4x4 (four-wheel drive) is recommended if you’re visiting in winter or if you want to explore beyond the paved Ring Road (for example, driving into the Highlands or on gravel backroads). A midsize or large 4x4 provides higher ground clearance and better traction on snow or rugged terrain. It’s a must for routes like Landmannalaugar or any road marked with an “F”. Even in summer, a 4x4 SUV offers extra stability and space for families or groups with luggage.
- Luxury & Passenger vans – If you want to travel in style or you have specific needs (like a minibus for a big group), Iceland’s rental companies offer everything from luxury sedans to 9-seater vans. Match your choice to your comfort preference and group size. Always consider the season and road types: a convertible might be fun in summer, but in winter you’ll be happier in a toasty SUV!
3. Consider if you really need a 4x4
A common question is “Do I need a 4x4 rental in Iceland?”
The answer depends on your plans. In winter months (November–March), a 4x4 is highly recommended – Icelandic roads can be snowy and icy, and a 4WD vehicle with good winter tires offers better control and safety. If you’ll only be in Reykjavik and doing easy day trips (like Blue Lagoon or Golden Circle) in summer, a 2WD car will suffice – no need to pay extra for capabilities you won’t use. However, for the Highlands (Interior) or any itinerary including F-roads (like going to Askja, Þórsmörk, or Kjölur route), a 4x4 is mandatory by law and for good reason – those roads involve dirt, gravel, and even river crossings.
Ask yourself where you’ll go: stick to paved tourist spots = 2WD is fine; seeking remote waterfalls or volcanoes = get the 4x4. Also consider your comfort with driving a larger 4x4 SUV sits higher and can feel more secure in rough weather. Many visitors opt for a Dacia Duster or Toyota Land Cruiser for versatility.
4. Get familiar with Iceland’s car insurance options
Insurance might not be the most exciting part of renting a car, but it’s extremely important in Iceland. The country’s unique natural hazards (think gravel roads and ash storms) mean you should understand your coverage:
- CDW (Collision Damage Waiver) – Included with most rentals, this covers collision damage but usually with a deductible (self-risk). It’s basic protection if an accident occurs. You can often upgrade to Super CDW to lower the deductible.
- Gravel Protection (GP) – Highly recommended because Iceland’s roads often have gravel sections. It covers damage to the car’s body or windshield from flying gravel (a common occurrence, especially when passing other cars on gravel roads).
- Sand & Ash Protection – If you’re traveling in the south coast or in dry summer conditions, volcanic sandstorms can sandblast cars and cause costly damage to the paint and windows. Sand & Ash Protection covers those specific damages. Areas like around Vík or the south coast glaciers occasionally see these wind-blown sand incidents.
- Theft Protection – Iceland has a very low crime rate; theft is rare. But this coverage may be included or optional for peace of mind.
- Water Coverage – Standard insurance usually does not cover water damage (e.g., if you try to cross a river and flood the engine) – and river fording is not allowed in rental contracts unless explicitly stated. It’s best to avoid river crossings entirely with a rental. If your route requires it, consider a guided tour instead.
When picking up your car, the rental agent will explain these options. It might be tempting to decline extras to save money, but at minimum take Gravel Protection. Windshield chips are the #1 damage in Iceland.
Luckly you don't have to worry about any of this when renting from Blue Car Rental. Offering tailored insurance bundles, like the liability waiver and roadside assistance so you can drive worry-free knowing you’re protected against Iceland’s elements.
5. Plan your pickup: Keflavik Airport vs. Reykjavik
The majority of travelers land at Keflavík International Airport (KEF), about 45 minutes from Reykjavík. It’s easiest to pick up your rental car right at the airport so you can begin your journey immediately. Keflavik has several car rental options:
- On-site desks: A few big companies have desks in the arrivals hall at KEF. If your rental provider is one of these, you can simply walk over after baggage claim and drive off.
- Shuttle pickups: Many local companies (like Blue Car Rental and others) operate just outside the airport (a 5-minute drive). Typically, a representative will meet you in arrivals or you’ll take a free shuttle to the nearby rental lot. For example, Blue Car Rental’s office is a short shuttle ride from the terminal – our staff will greet you with a sign and get you to your car quickly.
- Reykjavik city pickup: If you’re spending a couple of days in the city first, you might choose to pick up your car in downtown Reykjavik instead of the airport. This is easy to arrange, though keep in mind city rental offices might have more limited hours. Some companies also offer to deliver the car to your accommodation, but more than often it is for an extra fee.
Pro Tip: Don’t mix up Keflavik Airport (KEF) with Reykjavík’s small domestic airport (RKV). If you search online for “Reykjavik car rental,” make sure you know which location you’re booking. KEF is the international airport where most rentals for tourists are handled. Always double-check pickup location in your reservation to avoid confusion.
6. Know the basic road rules and driving etiquette
Driving in Iceland is generally straightforward, but there are unique rules to follow:
- Headlights ON at all times – It’s Icelandic law to drive with headlights on 24/7, even in daytime.
- Speed limits – Typically 90 km/h on paved rural roads, 80 km/h on gravel roads, and 50 km/h in urban areas (unless signs say otherwise). Speed cameras are in use, and fines are hefty, so stick to the limits.
- Seat belts – Mandatory for all passengers, front and back.
- No off-roading – It’s illegal to drive off established roads/paths. The terrain is fragile and going off-road can result in big fines (and rental insurance won’t cover damage).
- Single-lane bridges – Many countryside roads have one-lane bridges. The rule is first-come, first-served: slow down, check if another car is coming. If two cars meet, the one closer to the bridge usually has right of way, but always approach with caution.
- Roundabouts – In Iceland, vehicles inside the roundabout (inner lane) generally have right of way over those entering or in the outer lane. Use your turn signal when exiting.
- Parking – In Reykjavik and larger towns, pay attention to parking zones (marked with P signs and a number for the zone). You often need to pay at a meter or via an app. Illegally parked cars can be fined or towed.
Take a few minutes to familiarize yourself with Icelandic road and traffic signs. They might be in Icelandic, but many are self-explanatory pictograms. For example, “Malbik endar” means paved road ends (i.e., it’s about to turn to gravel). Blue Car Rental provides a quick reference guide to road signs in our glovebox booklet for your convenience.
7. Prepare for rapid weather changes
Iceland’s weather is famously fickle. “If you don’t like the weather, wait 5 minutes,” the locals joke. As a driver, you need to be prepared for sun, rain, wind, and snow all in the same day. Key tips:
- Check the forecast daily – Weather can vary greatly by region. Use websites like Vedur.is (the Icelandic Met Office) for forecasts, and SafeTravel.is for road condition warnings. If a storm is forecast, adjust your plans (e.g., maybe postpone that highland drive).
- Wind is no joke – Strong gusts can occur anytime, especially in open areas or near mountains. Hold onto your car door when opening – wind can catch doors and cause damage. Also, keep two hands on the wheel in heavy wind and slow down.
- Snow/ice – In winter, roads are cleared regularly, but black ice can form. Drive slowly and maintain longer braking distance. Consider winter tires (which your rental will have in winter season, usually studded tires for extra grip).
- Fog and rain – Use fog lights or low beams in fog. In heavy rain, be cautious of hydroplaning – again, slowing down is key.
- Daylight – Note that daylight hours swing dramatically. In summer you have near 24-hour daylight (no darkness to worry about), but in winter, daylight might only last 4-6 hours. Plan drives accordingly so you’re not caught on a tricky road after dark in winter.
Always err on the side of caution. If conditions turn severe (e.g., a sudden snowstorm), find a safe place to pull over (like a parking area) and wait it out. Flexibility is part of any Iceland road trip. The good news is Iceland has an excellent system for alerting drivers to road closures or hazards – heed the electronic signs and never attempt to drive on closed roads.
8. Plan your fuel stops
Iceland is sparsely populated, and gas stations can be 100+ km apart in some rural areas. A top rule for driving here: don’t let your fuel drop too low. Fill up whenever you’re in a town or when you see a station and you’re at half a tank or less. This is especially important in the Westfjords, North Iceland, or the interior. Most gas stations are self-service and accept credit/debit cards with a PIN. Common station brands are N1, Olís, and Orkan. Many are open 24/7 (automated after hours). Pro Tip: Some pumps require you to select an amount (like 5000 ISK) before fueling – estimate a bit high (fuel you don’t use won’t be charged). Also, consider buying a prepaid fuel card inside if your card lacks a PIN. Keep an eye out for stations that have restaurants or rest stops; they’re great places to grab a snack, use restrooms, and ask locals about any road advice. By planning fuel stops ahead (mark them on your map or GPS), you’ll avoid the stress of running on empty in the middle of nowhere. Here's how you can read more on how to refuel with confidence in Iceland.
9. Budget for gas and tolls
Fuel in Iceland is pricey (one of the few downsides to road tripping here). As of 2025, petrol costs can be around 250-300 ISK per liter (roughly $7-8 USD per gallon, though prices fluctuate). Factor this into your travel budget – long drives can add up, especially with a larger vehicle or 4x4 which has lower fuel economy. There are no traditional road tolls except one: the Vaðlaheiðargöng tunnel in North Iceland, near Akureyri, which requires an online payment (about 1,500 ISK) if you use it. Otherwise, Iceland’s roads are toll-free. Parking in downtown Reykjavik isn’t free on weekdays, so expect to pay for that as well. Also consider other potential add-ons: if you need a GPS device (though most just use smartphones now), mobile Wi-Fi rental, child car seats, or additional drivers – each might come with a fee. By knowing these costs upfront, you won’t be caught off guard. Blue Car Rental always outlines all fees transparently, so you know what’s included. To save money, return the car with the same fuel level as given (to avoid refueling charges) and avoid traffic fines by driving responsibly.
10. Enjoy the journey (Safely)!
Our final tip: remember that renting a car gives you freedom – so embrace it, but drive safely. Some of the best moments in Iceland happen when you take your time: pull over at a scenic viewpoint, linger at that waterfall, or take that detour down a picturesque side road. The beauty of a self-drive in Iceland is you set the schedule. Just do so safely by using pull-outs to stop, never stop in the middle of the road and keep an eye on weather and traffic behind you. If you’re unsure about a road’s condition, ask locals or check the official road info website (Road.is). Respect nature, stay on marked tracks and leave no trace at picnic spots.
With good preparation and the right mindset, driving in Iceland will be the adventure of a lifetime. Blue Car Rental is here to support you at every step. From trip planning advice to 24/7 roadside assistance if you need it. By following these 10 tips, your Iceland car rental experience should be smooth, safe, and unforgettable. Keep them in mind as you plan, and you’ll be well prepared to explore the Land of Fire and Ice on four wheels.
Now hit the road and enjoy your Icelandic adventure! Happy driving or as we say in Icelandic, “Góða ferð!”
