Car Hire in Iceland

Why hire a car in Iceland?

Large, remote, and sparsely populated, Iceland continues to capture the public imagination as a truly wild destination. The island’s landscape of volcanoes, geysers, and rugged coastline is well-known while the capital, Reykjavik, is a cosy, but modern destination that punches way above its weight when it comes to arts and culture.

Top ways to enter Iceland

• Keflavik Airport. Serving the town of the same name and located some 50 km (31 miles) southwest of the capital, Reykjavik, Keflavik is the main international airport of Iceland. The airport has flights by around 30 airlines and offers connections with many destinations across Europe, as well as some in North America.
• Reykjavik Airport. Much closer to the national capital, but also much smaller, Reykjavik Airport only has domestic flights save for some seasonal connections with nearby Greenland.
• Akureyri Airport. Serving the main town of the remote North Iceland Coast, Akureyri Airport has some domestic routes but also has a seasonal flight to and from Amsterdam by the low-cost carrier Transavia.

Top cities and places to visit

• Reykjavik. Smaller than most capitals of Europe, Reykjavik is cozy and easy to navigate, but at the same time punches way above its weight when it comes to cultural life. In addition to many interesting museums and historic buildings, the city is also home to green spaces like Hljómskálagarðurinn (or Music Pavilion Park) and the Reykjavik Botanical Gardens, two places that are especially lovely during summer time.
• Blue Lagoon. Its origin story might not sound especially appealing — the famous geothermal spa was created as a byproduct of a nearby power plant —  but Blue Lagoon is nonetheless one of the most iconic destinations in Iceland. Relaxing in the distinctly blue hot spring is one of the highlights of any trip to the country, especially during the winter when there’s a marked contrast between the water and air temperatures. Better yet, the Blue Lagoon is only a 50-minute drive from the capital and 20 minutes from Keflavik Airport.
• Þingvellir National Park. Another source of national pride that’s practically a stone’s throw from the capital, Þingvellir’s name might not be easy for foreigners to pronounce, but it is nonetheless one of the most beautiful areas in the country. In addition to impressive landscapes, the area is home to the original site of the Icelandic parliament, the oldest of its kind in the world.

Most popular hire car

The most popular car in Iceland is the Toyota Yaris, followed by the Hyundai i10. The most popular car hire types are economy, mini, and compact. A smaller car is fine to travel in Reykjavik and along the main highways, but a more powerful vehicle might be required if you wish to go exploring the more remote parts of the country.

Driving licence requirements

• Iceland recognizes driver’s licenses from all the 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 (Cyrillic, Arabic, etc.), you’ll need an International Driving Permit (IDP).
• Similarly, if your driver’s license doesn’t show your photograph, you might be required to have an IDP in addition.
• Even if you have an IDP, you must also have 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 driving licence for at least two years.
• Some 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.

Most popular types of hire car

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

Top driving routes

• Akureyri. Akureyri might only be home to about 18,000 people, but that makes it by far the largest settlement of Iceland outside the country’s southwestern region. Things to see include two interesting museums, the northern lights in the winter, the midnight sun in July, and whales and dolphins year-round.
• Vatnajökull National Park. Located in the southeastern part of the country, Vatnajökull is home to some of Iceland’s highest peaks, largest glaciers, and mightiest waterfalls. Many car hire companies don’t permit driving inside the park, so make sure to ask in advance; either way, the locals claim that the best way to enjoy it is by walking (you can park your vehicle near the visitors’ centre at the entrance). 
• West Fjords. The large and remote northwestern peninsula is one of the wildest regions of Iceland. It takes some planning to get there — it’s a three-hour drive just to get there from Reykjavik, and the sparsity of population means there’s not a lot of accommodation or even petrol stations — but those travelers who do make the effort are rewarded with a truly fascinating experience.

Car hire prices in Iceland

• SUVs - starting at US$45 per day
• Small cars - starting at US$34 per day
• Medium cars - starting at US$46 per day
• Station wagons - starting at US$49 per day
• Large cars - starting at US$64 per day
• People Carriers - starting at US$91 per day

How can I save money on my hire car?

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

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