Renting A Car in Iceland: 13 Things to Know (2024)

13 Important Things to Know Before Driving in Iceland

1. Rent a Car From a Local Company

Let's begin with one of the most important decisions you will have to make when you want to rent a car in Iceland: where should you rent a car from? Based on my experience, the best way to rent a car here is to pick a local rental car company over international brands like Hertz and Sixt because most of the global policies these international companies provide are not well suited for the extreme weather you will be experiencing in Iceland.

Even a single scratch can land you a hefty fine which can be outrageously expensive. I have heard reports that some travelers were fined for little scratches that were there before, for more than the actual car rental fee, which is pretty ridiculous.

There are several car rental companies in Iceland with excellent reviews you can check out but based on my actual experience, I highly recommend you rent a car with Lotus Rental, an excellent local car rental company with a large fleet of cars you can choose from, from a small car like Toyota Yaris to a full-on 4WD jeep with the price ranging from 120 EUR per day to over 240 EUR depending on the type of car you pick.

You will also get certain benefits by renting a car with Lotus Rental Car like the discounted gas price at N1 gas stations, which is one of the most widely available gas stations in the country. You will also get unlimited mileage which is essential for driving long distances like Iceland's Ring Road itinerary. Best of all, deposits are not required to rent a car here.

I rented a Toyota Yaris (automatic) (which is all you need for this itinerary) with Lotus Rental together with their Gold Insurance plan which offers gravel, sand, and ashes protection for around 700 EUR for 10 days, and we didn't get a single fine afterward.

The pickup and return service were swift and stress-free. We were picked up at the airport by them and they took us to their headquarters located not too far from there. In 20 minutes, we were already on the road driving ourselves to Reykjavik. When we returned the car at the headquarter, it only took a few minutes for us to complete the return process and they were dropping us off back at the airport in no time.

If you are looking for a reliable local car rental company to rent a car from. I highly recommend you give Lotus Rental a go. You can reserve the car with the link below:

Rent a Car in Iceland

2. You Do Not Need an International Driving License to Rent a Car in Iceland

One of the cool things about renting a car in Iceland is that you don't actually need an international driving license to legally drive in Iceland, no matter which country you are from, as long as you have your home country's driving license in hand with you when you rent the car.

That said, not all local driving licenses will work in Iceland. You need to make sure that your local driving license has your name in English since the car rental company will have to document that as well as the license number in their system before they will allow you to take the car, so make sure your driving license is in English.

3. You Do Not Need a 4WD Unless...

Now, let's answer another important question about renting a car in Iceland: Which type of car do you need for Iceland? For typical trips like the southern coast, the Golden Circle, and the entire Ring Road, all you need is a regular 2WD car like a Toyota Yaris, which is what I rented, and I was able to visit all the highlights of the Ring Road and more.

Since most of Iceland's Ring Road (Route 1) is paved, there is no need to rent a 4WD unless you plan to go off-road and explore the remote areas of Iceland which are not where most travelers go. If you are not sure whether the places you want to visit in Iceland require a 4WD, all you have to do is check out the road leading up to it on Google Maps and see if it is designated as F-Roads.

F-Roads are a designation given to roads that are truly remote with unpaved dirt tracks, river crossings, and hard terrain, all with varying difficulty from small river crossings that require only a small 4WD car or big river crossings that require a jeep and no insurance would dare cover.

Of course, renting bigger cars can get pretty expensive real fast from the high daily rental fee to the gas requires to drive, so it is important for you to pick the right car for the type of trip you are making in Iceland. In most cases, a regular 2WD like a Toyota Yaris should get the job done.

For a complete itinerary to Iceland's Southern Coast, check out:5 Days In Iceland: A Perfect Itinerary

4. Do Not Skimp on Insurance

Insurance is not something you should be skimping on when it comes to renting a car in Iceland. Most local car rental companies have varying insurance policies to choose from with a wide range of coverage from basic requirements like theft and damage protection to policies designed for those who are planning to travel the F-roads like river crossing damage and more.

For the most part, I highly recommend you get mid-tier car insurance that comes with gravel, sand, and ash protections to cover damages to the windscreen, headlights, front bumpers, mirrors, or any other parts of the car the rocks get thrown on by anything as well as ash and sandstorm damage in case your find yourself in that situation.

With Lotus Car Rental, I went with their Gold insurance coverage which covers third-party liability, collision damage waiver, and theft, as well as gravel, sand, and ash protection. Basically, all the protection I needed to drive around the Ring Road stress-free.

If you are wondering which insurance you should get with your rental car, make sure that you get the one with gravel protection, which is usually the policy that is second to the full-on off-road policy, and you should be good to go. Do not try to save a little bit of money and get the minimal one as I can guarantee you, you will definitely get your car scratched by debris at some point when driving in Iceland, and you are going to save more paying for the premium insurance than to pay a hefty fine for it later.

Tip: To ensure that you don't get wrongly charged for any pre-existing scratches on the car, it's recommended to take a video of the entire vehicle before receiving the key from the rental company. This way, you will have visual evidence to prove your innocence if the company claims any damages caused by you.

5. You Don't Need to Get a GPS with your rental car

If you are planning to drive the Ring Road and other typical tourist routes you do not need to rent a GPS with your rental car. All you need to do is get a local sim card or an esim with data and you should be able to reliably navigate the country with Google Maps.

I drove the entire Ring Road with an esim installed on my phone to provide a data connection and I was able to navigate around the country using Google Maps without issues. There were only a few places, mostly the ones that are far away from the Ring Road (Route 1) where there was no connection. As long as you stick to the Ring Road, you should have no problem with Google Maps.

If you have a smartphone that supports esims, I highly recommend you take a look at these esims. They have a variety of data packages, price points, and durations for you to choose from.

The setup is fast and instant and you can buy it prior to your trip so you don't have to scramble your way to get one at the airport after a long flight. The data speed is also equivalent to what you get with a local sim card with 4G speed across the entire country.

Or if you are traveling to Iceland as part of a bigger Europe trip, I highly recommend you get the regional Eurolink esim which will give you access to data from over 39 countries across Europe. I have personally used this esim on my 3-months trip around Europe and it has worked wonders.

For more information on esims in Greece, click here: Check Iceland's Available eSim.

6. Follow Iceland's Driving Rules & Regulations

No matter how remote it is, it is always important for you to follow the driving rules and regulations of the country you are driving in especially in a country like Iceland where you will be sharing roads with a ton of other travelers who might not be aware of the rules and regulations themselves.

Important Iceland's driving regulations you should be aware of are:

• They drive on the right here, like most of the world, so you should have no problem here. Unfortunately, I am in the minority here as I am from Thailand, and they drive on the opposite side. So, it took me a few hours to get used to driving on the right. 😅
• Always fasten your seatbelts, even if you are sitting in the passenger seat.
• Going off-road (outside of the F-roads) is illegal, and you will be heavily fined if someone reports you.
• Keep your headlights on at all times.
• Stick to the speed limit of 90 km/h on paved roads outside of town, 80 km/h on unpaved roads, and 50 km/h in populated areas. Go even slower than the speed limit when it's windy outside.

7. Watch Out For Speed Cameras

I know, I know. When you see an empty straight road in remote areas, we, as human beings, tend to want to go over the speed limit unknowingly but in Iceland, with all the speed cameras hidden away in discrete boxes around the country, you are going to have to be extra careful with it.

The speed limits in Iceland can be divided into 3 categories, one for populated areas like cities and towns which is set at 50 km/h, one for paved roads in unpopulated areas at 90 km/h, and one for unpaved roads in unpopulated areas at 80 km/h.

As long as you stick to these rules religiously while driving in Iceland, you should be able to travel around Iceland, return the car, and get back home scot-free without being fined later on via credit card deduction which can happen a month or more after you have returned from the trip.

8. Check For Road Closures and Weather Warnings Before Driving

In Iceland, one of the most important things to keep an eye out for is the weather which can be pretty extreme at times and may result in road closure that can affect your trip drastically.

For your safety, watch out for weather warnings and road closures on Road.is, a website that keeps track of road closures and weather warnings across the island and heed their warnings seriously. If the wind is going to be strong en route, be sure to drive slowly so that your car doesn't get tipped over by the wind which can become extremely violent at times.

When I was in Iceland in mid-September, there were reports that the wind speed in certain areas was over 140 km/hr! That is a hurricane-speed level of wind that can shake your car violently and easily knock your car off the road. There were many cars that go blown off the roads that day as I read in the newspaper a few days later.

I can not stress how important it is to heed the warnings from Road.is. The best practice for dealing with extreme and unpredictable weather in Iceland is to check the website every morning before you embark on the journey.

Also, it is always a good idea to plan a few buffer days into your trip in case you have to postpone your itinerary due to road closures as I did. In fact, I was stranded for more than 3 days in Hofn due to that hurricane-speed wind and road closures and I almost had to turn back and call my trip off since we were running out of days.

Fortunately, I decided to push through and travel the entire length of the northern coast of Iceland in 2 days after the roads were open to get back to Reykjavik in time for our flights out. It sure was stressful and tiring as we had to adapt to the situation as it happened but it all worked out in the end, despite us having to sleep in the car for a night due to accommodation shortages during road closures.

All in all, if you want to travel around Iceland stress-free, be sure to prepare for the worst and plan a few buffer days to give you enough wiggle room to complete your itinerary without begin affected by the weather.

Stick to the 90 km/h speed limit along the Ring Road and the 60 km/h speed limit in urban areas since speed cameras are everywhere in Iceland and you might find yourself with a hefty fine at the end of your trip because of it.

9. Refueling Cars at Gas Station is Easy

Most people will likely struggle to refuel their cars at gas stations in Iceland during the first few days as you will have to refuel and pay by yourself without someone helping you but as it turns out, refueling your cars here is pretty straightforward as long as you follow my instruction below:

First and foremost, you are going to have to find a gas station that can refuel the type of fuel your car needs. Most of the rental cars in Iceland use 95 octane/unleaded petrol which is widely available around the country but check with your car rental company just in case.

There are several petrol stations with 95 octane/unleaded you can refill at like N1, Orkan, and OB. When you enter the gas station, pick the pump that is labeled 95 oktan / blylaust, and keep note of the number of the pump on the signage located above.

Once you take note of the number, go to the closest unmanned paying machine which is often just a machine with a screen located in between the pumps nearby. Each machine is often shared with other surrounding pumps so when you approach the machine, you are going to have to select the language (English), insert your credit card with the security chip facing up as shown on the screen, and enter your credit card pin.

Optionally, you can also get a bit of discount if your car company partner with a certain brand of the petrol stations, and provide you with an NFC token, that you can tap on the machine to get the discount before you insert the credit card. For Lotus Car Rental, you will get a discount every time you refill at N1 gas stations and the NFC chip is often provided with your car key, so be sure to tap it on the little square area on the machine, below the credit card slow, before you insert the credit card.

Once that is done, you are going to pick the amount of money you want to spend on gas. I would recommend picking a specific amount instead of going full tank as some people have reported that they sometimes withhold an unnecessary amount of money in your credit card when you pick full-tank for many days before they got it back so to avoid it, simply pick the predefined amount provided by the machine or type in the amount you want yourself.

To give you a ballpark of which predefined amount you should select, I had the Toyota Yaris which has around 40L tank capacity. With the gas price at around 300 - 350 ISK per liter, you can expect to spend around 6,000 ISK for half a tank of gas. You can use this as a ballpark to see how much you should refill for your car.

Once you pick the amount, you will have to select the pump number you took note of previously, get your card back, and you just have to grab the handle under the 95 oktane label, insert it in your car's gas tank, and squeeze the handle until it stops. Put the handle back into the machine and you are good to go!

10. Be Sure to Fuel Up Your Car Before Leaving Town

In order to prevent your car from running out of fuel in the middle of nowhere, I highly recommend you refill your car when you pass through a town or a city at the beginning of every day.

That way, you should be able to drive your car for the entire length of the day and some more without having to worry about the gas running out mid-way. Since you will likely be sleeping near a town or in a city every night, you can simply do this every morning and you should not have to worry about being stuck without gas during your trip to Iceland.

11. Gas Station's and Supermarket's Foods are Awesome Here

If you are looking for a quick lunch break while you travel, you should be able to find a large gas station like N1 and Orkan somewhere along the Ring Road (Route 1) where you can grab all kinds of foods, quick bites, and some supplies like burgers, hot dogs, and other snacks, and you can continue your trip in no time.

Or if you are passing through a town or a city, there will often be a supermarket like Bonus, Nettó, and Kronan where you can find bakeries, pre-prepared foods, and coffee you can buy. These supermarkets will also have a seating area where you can sit and eat your snacks and food before you continue your journey in Iceland.

They are cheap, delicious, and easily accessible around the country and so if you find yourself hungry during one of your drives, you can always rely on gas stations and supermarkets to keep you fed throughout Iceland. Plus, they also have free toilets you can use!

12. Do Not Stop in the Middle of the Road!

Iceland is beautiful. No matter where you look, you can always find something to take photos of. Trust me, I am a photographer and this place is almost like heaven to us and I just want to stop everywhere and take photos of the incredible landscapes of Iceland but please do stop in the middle of the road to take photos, especially if you are driving on a one-lane road!

Parking your car on one-lane roads in Iceland can be highly hazardous. This is because not only do the locals detest seeing parked cars obstructing their daily commutes, but you'll also be sharing the road with inexperienced tourists who might not spot your parked vehicle until it's too late.

If you're planning on taking pictures of Iceland's beautiful landscapes, it's best to do so at the designated tourist parking spots dotted all over the country. These spots are easy to find since they have park signs along the main road. By using these parking areas, you won't create any hazards on the road or upset the locals who rely on the road to get to work or run their errands. So park safely, take in the breathtaking scenery, and snap away as many photos as you want!

13. In Case of an Emergency, Call 112

With all the precautions you take, accidents can still happen and if you find yourself in an emergency and require assistance, you can dial 112, which is a single emergency line where you can report everything from accidents, and crime to search and rescue, and natural disasters.

The number can be reached anywhere in Iceland via phone calls or text messages or you can get the official 112 app to check in before you do any dangerous hike or anything adventurous. The app is available on both Android and iOS.

For non-emergency situations like a minor car accident, car breakdown, or you have a flat tire, contact your car rental emergency number first. If that fails, then you can contact the 112 emergency number.

Further Reading for Iceland

I hope you found this Iceland travel guide useful. If you want to read more about Iceland, here is a selection of articles you might like:

• Looking for a complete Iceland's Ring Road itinerary? Check out: 7 Days Iceland's Ring Road Itinerary.
• Have only 5 days in Iceland? Here's a perfect itinerary for you: 5 Days In Iceland: A Perfect Itinerary.
• Looking for a great day trip to make from Reykjavik? You can explore the best of Iceland and drive around the Golden Circle with our One Day Iceland's Golden Circle Itinerary.
• First time visiting Iceland, but not sure where to begin? Check out: 13 Best Places to Visit in Iceland.
• Every trip to Iceland begins in Reykjavik, and if you plan to spend a day there, be sure to check out the 11 Best Things to Do in Reykjavik.
• Not convinced by my words? Here are 125 photos that will inspire you to visit Europe.
• To see all the articles about Iceland, visit the Iceland Travel Guide page.
• Traveling in Europe can be cheap, really cheap. These are the 12 Cheap European Countries to Visit.
• Looking for more travel guides for Europe? You can find more on my Europe Travel Guide page.
• Or if you want something more specific to the region, visit our Northern Europe Travel Guide, Western Europe Travel Guide, Southern Europe Travel Guide, or Central Europe Travel Guide pages.
• For more of my travel guides like this, visit my Destinations page.