Car Rental in Iceland

Iceland is a great country to explore by car. Despite having a population of less than half a million people, it offers plenty to every traveler, especially in terms of natural beauty. Iceland is surprisingly vast and there is no public transportation to many of the landmarks outside the capital, so getting your own ride is a smart investment.

If you want to know more about renting a car in Iceland, don't miss our complete guide.

• Keflavík Airport: Located about 50 km (31 mi) southwest of Iceland’s capital, Keflavik is by far the largest and busiest airport in the country.
• Reykjavík Airport: Also known as Reykjavik Domestic, this airport handles domestic flights to destinations in the rest of Iceland, as well as to Greenland such as Ilulissat and Nuuk.
• Egilsstaðir Airport: Located on Iceland’s eastern coast, Egilsstaðir only has one regular commercial flight which connects it to Reykjavik.

• Reykjavik. Home to nearly two-thirds of Iceland’s population (if you include its suburbs), Reykjavik is a world-class destination in terms of culture, arts, and even food. Highlights include the National Gallery of Iceland and the Culture House with exhibitions on Icelandic sagas. For many travelers, Reykjavik is also a hub for exploring the southern and western parts of the country.
• Akureyri. Small, but full of life and invention, the capital of North Iceland is a five-hour drive from Reykjavik, but the long drive is worth it. The town is known for its art district, scenic waterfront, and, of course, access to local nature.
• Húsavík. About an hour’s drive north of Akureyri, being in Húsavík can literally feel like you’re on the edge of the world. The town is known as one of the most reliable whale-watching spots, the nearby migrations of the gigantic mammals attracting thousands of visitors every summer. Naturally, there is also the Whale Museum, as well as the Exploration Museum, making this one of the best places to visit in Iceland.
• Blue Lagoon. Although temporarily closed as of December 2023 due to a volcanic eruption, there is no doubt that as soon as the situation improves, the Blue Lagoon will be back as one of the country’s most popular tourist attractions. Located about halfway between the Keflavik Airport and Reykjavik, the large geothermal spa is one of a kind, normally welcoming more than one million visitors annually.
• West Iceland. Located just north of the capital region thus making it one of the most accessible parts of the country, West Iceland is a charming place to explore. Famous for its wild nature that is exemplified by landmarks such as Snæfellsjökull National Park (located only a three-hour drive from Reykjavik), it also boasts Europe’s largest hot spring in Deildartunguhver and the wonderfully remote archipelago of Breiðafjörður. 

The most popular rental car in Iceland is the VW Polo, but the Jeep Renegade Trailhawk and the Fiat 500 are also popular.

• Iceland recognizes driver’s licenses from all member states of the European Union (EU) and the European Economic Area (EEA) as long as they are valid.
• Other licenses in the Latin alphabet are generally also recognized, provided that you have been in Iceland for less than one month and are visiting on a short trip (drivers who have been in the country for longer than this period are required to obtain a local license instead).
• If your driver’s license is printed in a non-Latin alphabet (i.e., Cyrillic, Arabic, etc.), you’ll need an International Driving Permit (IDP).
• Similarly, if your driver’s license doesn’t include a photograph, you might be required to have an IDP.
• Even if you have an IDP, you must also carry your original license with you at all times.
• You must carry your driver’s license, not a copy, with you at all times. 
• You need to have had your driver’s license for at least two years.
• Some rental car suppliers charge a young driver fee for drivers between the ages of 22 and 25 and a senior driver fee for drivers over the age of 65.
• There may be additional requirements depending on the car supplier and category, so make sure to check the rental conditions before booking.

The most popular rental car type is an Economy, followed by Intermediate and Compact.

• North Iceland. We already mentioned Akureyri and Husavik, but if you’ve made it this far, it would be a shame not to explore everything else that this wild region has to offer. The Goðafoss waterfall, Mývatn crater lake, and Vindbelgjarfjall volcano are just some of its dramatic natural attractions you will find here.
• Westfjords. Another awesome off the beaten path destination that can be accessed if you rent a car and are visiting during the warmer months of the year, this wild peninsula is a great place to marvel at the fjords (naturally), spot a puffin or another rare bird, and feel like a true explorer.
• South Iceland. The breadbasket of Iceland’s tourism industry, this region is very popular with visitors not only for its relative proximity to the capital but also for all the fun things to see and do. Highlights include the otherworldly landscapes of Landmannalaugar, the black sand beaches of Vík, and Þingvellir National Park–a UNESCO World Heritage site.
• Vatnajokull National Park. This stunning national park, located in the center of Iceland, is full of opportunities to enjoy Iceland’s amazing nature. Full of hiking trails to explore, you’ll cross hills, glaciers, and waterfalls. There’s even campsites available if you want to spend more than a day at this incredible park.

You can do a number of things to get a good car rental deal in Iceland:

• Compare rates of different rental suppliers
• Book your rental car well in advance
• Plan your route before you go
• Know your fuel and mileage requirements
• Visit in the month when the rental prices are the lowest. According to our data, visiting Iceland is the cheapest in October when renting a car is about 55% cheaper than the yearly average
• Check out our list of the best rental companies in Reykjavik.