Car Rentals Iceland: A complete guide 2023

There are many natural waterfalls, natural landscapes, and many of Iceland ‘s most scenic spots, which are far from Reykjavik, that cannot be reached without your own transportation.

There is no better way to explore this natural beauty other than by rental car!
In Iceland, public transport is limited mostly to the capital city. The issue is there are only three lakh people in the whole country of Iceland. So literally a car is your best option.

With wide open roads and epic viewpoints around every corner, renting a car in Iceland is the ultimate way to explore.
This guide is filled with money-saving tips and safety advice, this will help ensure you have a safe and fun-filled road trip!


Where you should rent a car the airport or Reykjavik city?
It is wise to rent a car at the airport because getting to Reykjavik city is about €25 with the bus or €58 with Airport direct premium and €130 for a taxi.
Even, though you can rent a car in Reykjavik city, there are many car rental offices.

Most car rental agencies give you the option to purchase insurance in their online form:
* check if your vehicle insurance covers car rentals. Some do and that would save you a lot of money.
* if you need to buy the insurance: it starts from €3 per day. Make sure the insured person is the one in the rental contract and needs to buy the insurance before you start driving, and you are good to go!

Tip: once the car keys are handed over to you. Please take pictures or even a video because of any small scratches that were not mentioned earlier and can be used against you afterward. This will be a record.

How to reach car rentals at Keflavik airport?
As you exit through customs simply turn left in the arrival hall and keep walking until you see the car rental desks.

Which are the rental cars in the terminal at Keflavik international airport?
The car rentals in the terminal at Keflavik airport:
* Europcar
* Ras
* Avis
* Budget
* Hertz

 There is a car rental which is outside the airport, takes a couple of minutes to walk. There are also shuttle buses that run between the arrival terminal and the car rentals every 15 minutes from 5 AM to 6 PM daily. If you arrive between 6 PM and 2 AM you can contact 415-2500 on your arrival to arrange pickup.

To access the shuttle bus, simply exit the customs area and continue straight ahead. The stop is located just outside of the entrance to KEFLAVIK international airport.

If you prefer to walk, the journey from the airport to the office is around 5 minutes.

Following are the car rental brands:
Thrifty and Dollar
Lagoon car rental
Blue car rental
Sixth rent a car
Geysir car rental
Lotus car rental


Where is the car rental drop-off at Keflavik airport?
Many car rental agencies prefer that you bring the car back to their office in Keflavik and will then provide you with shuttle transport to the airport. There is a drop-off area for many car rentals on the right side where it says car rentals.

How much does it cost to rent a car in Iceland?
Car rental prices in Iceland vary depending on the season, and type of car. Expect to pay around €55 to €100 per day for a cheaper car, you may get a better discount for a longer period. A bigger luxurious car costs around €120 to €220 per day.

When to book your rental car?                                                                                                             

It’s good to book your rental car at least 3 months prior or else the price will go up. During summer the choices are limited as it’s high season.

What type of car do you need in Iceland?                                                                                   

2WD car – This is best suited for ring roads where most of the roads are paved roads. You can drive around the whole country and to most of the highlights.  

4WD car – You can rent this car when you want to explore F-Roads in Iceland. Most of the Westfjords and highlands in the west are explored with 4WD cars.                                            So if you have more time to spend in Iceland and want to explore to the next level, a 4WD is the car that suits you.

Which is the best month to go to Iceland?
Mid-July, August, and early September is the best time to visit Iceland as it has the best weather for sightseeing outdoors.

You don’t have to spend money on hotels
If are you a budget traveler then you can pack a sleeping bag and tent for your Icelandic adventure. Camping in Iceland can be a fun and budget-friendly way to experience the country. Just make sure you come prepared with warm clothes, a good quality tent, and plenty of food and water.
With the right care and mindset camping in Iceland can be an unforgettable experience!

Experience campervan in Iceland

In Iceland, a campervan is a perfect way to explore everything the country has to offer.
This is an affordable and practical way to see the country. Think about it, you have got all your belongings with you in your home and four wheels, there is no set schedule, and you drive as much or as little as you want every day.

If you are willing to have a home-cooked meal, this is the option for you. You can enjoy your freshly brewed morning cup of coffee with breathtaking views from the back of your camper rental in Iceland.
Here you have got a comfy bed and a warm sleeping bag where you’ll have sweet dreams and remember all the day’s adventures. This can help in avoiding expensive accommodation in Iceland.

Whether it’s glacier, hikes, or a whale-watching excursion, you can rest and recharge for the next two days’ outing in a cozy, comfortable, spacious place.

What is the cost of a Campervan?
This usually costs around €80 to €200 per day depending on the number of passengers and the sleeping space (minimum two or max five people can be accommodated)

What is the currency used in Iceland?
Icelandic kroner
1000 Icelandic krona is equal to €6.70

What type of credit card is used in Iceland?
The two major credit card providers in Iceland are VISA and MasterCard

Do you want to save money on a rental car in Iceland?

1. Take a rental car from Keflavik airport that avoids extra transfer costs to the hotel.

2. Avoid the high season (May to September)

3. Skip GPS, you can use your phone.

4. You can plan for a campervan, as expensive hotel costs are avoided.

Iceland gas stations:

There are four different fuel companies that you will find in Iceland differentiated based on color: the red and white company(N1), the green and yellow companies (Olis and OB), the white and pink company (Orlando), and the blue and red company (AO). Most of the gas stations are N1 stations. All these gas stations, dispense, fuel and diesel. Some of them also have coffee shops, grocery stores, liquor stores, and souvenir shops.

High gas prices
When you are filling your car in Iceland, you can expect to pay anywhere between €8 (1200ISK) for a gallon of gas. This means that filling up your small car might cost you roughly 10,000 Icelandic kroner, which is a lot.

This is why whenever you are planning a road trip across Iceland, make some budget for gas. Keep in mind that gas in Iceland is expensive and make your travel budget accordingly.

Gas station discount programs
The most popular discount cards:
1. Olis discount card
This is one of the largest gas companies which provides discount cars at every gas station. You get free coffee., free Wi-Fi, 3ISK off discount for every liter of petrol, along with it 10% discount at their restaurants.

2. N1 prepaid card
The fuel stations charge 25,000 ISK as on-hold expenses from your credit card. To avoid this, there are three different prepaid cards: 3000 ISK, 5000 ISK, and 10,000 ISK. These cards can be used for fuel, food, or equipment at N1 stores across the country.

Gas station brands
1.N1 gas station
N1 is the most popular chain of fuel stations in Iceland. They Are everywhere from big cities to smaller rural areas. N1 gas stations are great Xavier if you are visiting towns that a far away from the main areas. They are operational 24/7 but you might not always find employees there. So, make sure you have a card with a pen so that you can fill the gas at any hour of the day.

2.Olis gas stations
These are mostly seen around Ring Road and Westfjords. While N1 gas stations are locally owned and operated, Olis is a bigger national brand with grocery stores and other convenience stores located within the gas stations

3. Orkan gas stations
This has 56 automatic fuel stations in Iceland. Their self-service stations are open 24/7, so you can rely on them when low on fuel at night.

4.Costco gas stations
It’s a recent addition in Iceland but offers some of the best gas prices in the country.
There is only one Costco in Iceland, and it is in the Reykjavik area. So, if you pass by this area, make sure to fill your tank up every time to save on high fuel costs.
Good to know: Costco in Iceland, is a great way to save on food expenses when traveling in Iceland.

Is it a good idea to use a credit card at a self-service fuel station in Iceland?

No., the machine will charge you a prepaid fee of anywhere between 15,000 ISK and 25,000 ISK and allows you to pump the fuel. Once that is done, the machine will either return the feedback to you minus the amount of money needed to pay for your fuel or the machine will return the entire fee back to you and then charge the fees separately. This refund may take some time, up to a few weeks for international travelers. In order to keep track of what refunds you are due, it’s advised to keep all your receipts for all of your fuel purchases so that you can contact the fuel station if you don’t receive your refund within a month.

 This could be cumbersome so it’s better to purchase a prepaid fuel card from an Iceland chain fuel station(N1, Olis, and OB are all fuel stations that offer these cards, so as long as they’re staffed and not self-service stations) you pay for the card and can add more funds to it as needed throughout your trip and then just use the card at any self-service fuel stations you come across.

Car washes
Iceland has free car wash facilities at many gas stations. This is a nice opportunity to clean up your muddy car because it will get dirty throughout your road trip through the rural countryside. Not all gas stations will offer this service, so when you see 1, you should take advantage of it.

Gas Station, Iceland map
This map helps you to find gas stations in Iceland easily. As fuel stations are few and far between, make sure to fill up your tank every time. Always plan to always fill at least half to 3/4th of the tank.

Camping in Iceland
Being in Iceland is all about spending as much time in nature as possible!

Camping in a tent
This is restricted to camping spaces or to uncultivated land for one night provided there is no campsite in the immediate vicinity and the land owner has not restricted or prohibited Axis by means of signs.

Where can I find good camping spaces?
Most camping grounds of situated in a beautiful environment, some even in spectacular locations!
They are equipped with toilet facilities and access to electricity. The majority includes a common house with kitchen facilities and an outdoor barbecue pit. Playgrounds, nearby, swimming pools, horse, and kayak rentals, and closed by hiking parts, or only some of the many extras that camping spaces and provide.

Car camping restrictions
According to the environment agency of Iceland (EAI):
Camping with no more than 3/10 is allowed on the uncultivated ground for a single night unless the landowner has posted a notice to the contrary. However, campuses should always use designated campsites where they do exist. Please use the designated campsite when it’s available.

When must I get the permission of a landowner?

• If you plan to camp near places of human habitation or farms
• If you plan to camp for longer than one night
• If you plan to pitch more than two tents
• If the land is cultivated
• If you plan to use tent trailers, tent campers, or campervans.

What does camping in Iceland cost?
The price per night costs around
€12 to 20 € per night

Renting camping equipment in Iceland
Tents, sleeping bags, crampons, clothes, and many more can be rented in Reykjavik for a small fee per day so that you can save a lot of space in your luggage.

Camping in summer
Most camping spaces are open during the summer months from May to September. Since camping is popular among Icelander’s places popular areas can become quite crowded in summer, especially when there are festivals in towns (almost every town has its own summer festival).

With your own set of wheels, you will have the freedom and flexibility to stop anywhere and take stunning pictures whenever you feel like it!
So why limit yourself to only tourist spots when you can go beyond and see Iceland like it true adventurer?


Driving in the Icelandic countryside is a great way to see the country and renting a car in Iceland is a fantastic option for those interested in doing so!

Don’t forget to check out Ultimate Guide 2023: Driving in Iceland