Renting A Car In Iceland: The Who, What, Where, Why &... Why Not!

One of the top ways to explore Iceland is to rent a car and drive from one scenic spot to another across the country.

But just because it’s the most popular, doesn’t mean it’s right for you!

I’ll go over all the five W’s of renting a car in Iceland… starting with why you might want to rent a car in Iceland or avoid it entirely! Then I’ll get into the logistics of who should rent a car, where and when to pick it up, and what are the best cars to rent in Iceland.

Psst! This blog post contains affiliate links in it which sends me a bit of extra money if you use them… at no extra cost to you!

Why Rent A Car In Iceland?

Renting a car in Iceland is the most popular, and maybe even the best way to explore the country.

Unless you’re in Reykjavik, viewpoints and activities in Iceland are quite far from on another. There is also no train system or even public transit throughout the country.

So there’s A LOT to see in Iceland that can only be accessed by car.

Renting a car in Iceland also offers you the most flexibility over your itinerary (P.S. see my recommended Golden Circle route here).

With a rental car in Iceland, you’ll be able to go where you want, when you want! Spend as long, or as little as you want at each destination.

You might also be interested in reading…

The Best One Day Iceland Golden Circle Route From Reykjavik

raise-suv-suzuki-jimny-renting-a-car-in-Iceland

Why Shouldn’t You Rent A Car In Iceland?

Sure, renting a car in Iceland comes with a few perks, but it also comes with several downsides…

For starters, it’s expensive to rent a car in Iceland. The rental car itself will cost you, and that doesn’t include any of the extras that come with renting a car, like gas and parking.

And by the way, Gas is NOT cheap in Iceland!!

You might also have to pay extra for rental car insurance (more on that in a bit!). All this to say, the cost of renting a car in Iceland will never be the price you see at checkout.

And not to mention all the added stress that comes with driving an unfamiliar car that isn’t yours… in a new country!

Who Should Rent A Car In Iceland (& Who Shouldn’t!)

If you’re only planning on staying in Reykjavik in Iceland, you definitely don’t need a car.

Most attractions are within walking distance, and if they aren’t, you can take public transport or taxis to go a bit further in the city.

But as soon as you’re interested in leaving Reykjavik you should consider renting a car in Iceland to make getting around easier.

Alternatives To Renting A Car In Iceland: Organized Tours

Even if you’re exploring outside Reykjavik, there are some alternatives to renting a car in Iceland. For example, you can go on an organized tour.

You can stay in Reykjavik and go on organized tours everyday from the city. My parents did this, as they preferred it to changing hotels every night.

Or you can also go on a several day tour around the country. You’ll be able to get a lot further in Iceland this way.

See some organized tours in Iceland from Viator here.

When & Where To Pick Up The Rental Car In Iceland?

There are three options for where to pick up and drop off your rental car in Iceland.

You can either rent a car at the airport, in Keflavik, or in Reykjavik.

On top of that, there are a few rental car companies to choose from in Iceland, both mainstream and others that are Icelandic companies.

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Car Rental Iceland Airport – Pick Up/ Drop Off

There are a few rental car companies at the airport in Iceland, including Enterprise, Blue Car Rental, Europcar, Avis, Budget, and more.

There’s one shuttle that will pick you up at the airport and drop you off at each rental car company. But, the Keflavik airport is so small, you could also just walk to the offices since they’re less than a 5 minute walk away.

I would say this is the easiest place to rent a car in Iceland. I also always like getting the rental car right away because I don’t have to figure out any other means of transportation.

The negative though is that you’ll have the car the entire time you’re in Iceland, whether you need it or not. For example, you really don’t need a car when you’re in Reykjavik.

renting-a-car-at-the-airport-in-Iceland — *Rental car companies at the Keflavik Airport in Iceland*

Getting A Rental Car In Keflavik NOT At The Airport!

Another option for renting a car in Iceland is to rent it in Keflavik. Keflavik is about a 10 minute drive from the airport and is the closest city to the airport.

There is a small hub of more car rental companies here, including Thrifty.

You won’t be able to walk here from the airport, but most car rental companies here offer a shuttle service. The catch is that it’s not on a schedule, so you might have to call them when you arrive (as was the case with Thrifty… see their instructions here).

Watch out though! Some car rental companies in Keflavik will actually say that they’re at the airport (for example, this is the Thrifty Keflavik Airport branch…), but as I said, they’re a good 10 minute drive away!

So if you don’t want to go to Keflavik and deal with calling a shuttle, double check the location of your car rental company on Google Maps before you book!

Or Rent A Car In Reykjavik

Most car rental companies will also have a branch in Reykjavik.

As I said, if your plan is to explore Reykjavik for a day or two, you might want to rent a car from Reykjavik instead of the airport. You might be able to save money by not having a car for a few days, and not paying for overnight parking in Reykjavik.

The catch is if you’re renting a car in Reykjavik, now you need to find your way from the airport to Reykjavik…

There are shuttles that will take you from the airport to Reykjavik (and vice versa). Keep in mind though that this is another additional cost! See a Reykjavik Airport shuttle here.

P.S. There are even shuttles that take you from the airport to the Blue Lagoon if you’re interested in a pit stop first (see why I recommend going after you land in Iceland here)!

But double check prices of car rentals before you book a car in Reykjavik! Sometimes renting a car from the airport is actually cheaper than in Reykjavik.

Parking in Reykjavik…

If you need to park in Reykjavik, book a hotel with a parking lot!

Not all hotels will offer parking in Reykjavik, and even if they do, it may not be guaranteed…

For example, our hotel actually had parking, but it was on a first come, first served basis. Some days the lot was full and we had to find parking on the street… which is easier said than done.

Reykjavik has paid street parking during the day, and then it is free overnight, and on Sundays… If you can find a spot that is!

What’s Best Place To Rent Car In Iceland: Blue Car Rental Iceland

We actually booked two other rental cars in Iceland before finding Blue Car Rental Iceland (the others were with Enterprise and Thrifty).

Blue Car Rental was way cheaper than Enterprise and about the same price as Thrifty. BUT! We booked a better car with Blue Car Rental Iceland, and we could walk there from the airport instead of having to call for a shuttle.

There are also a few other reasons we chose this company, and we were very happy with our experience!

24 Hour Service (i.e. Pick Up – Drop Off)!

Depending on when your flight times arrive and departs from Iceland, this may or may not be a deciding factor for you, but it was very important for us.

Our departure flight left at 7:00 A.M., which meant we had to drop off our rental car quite early in the morning.

As it turns out, a lot of rental car companies do not offer after hours pick up and drop off. Or if they did, the shuttle to the airport didn’t run during closed hours.

Blue Car Rental Iceland is open 24 hours a day and within walking distance to the airport.

Extra Upgrade Options You Might Want

In the end, we didn’t opt for any of the upgrades offered, but I could see the appeal if you’re heading to more obscure Icelandic destinations.

They offer a Wifi router in your car, which means you have unlimited data wherever you go. We stayed on the main path and bought Icelandic data packages with Airalo (use my code MEGHAN4678 or click here for a discount on your first plan!).

If you’re traveling with some camping gear, you can also rent a Roof Box for more luggage space with Blue Car Rentals!

What Are The Best Cars To Rent In Iceland: A Raised SUV

And now the question you’ve all been waiting for: what car should you rent in Iceland!

Normally, I would say the car doesn’t really matter as long as it drives…. This is not the case in Iceland.

When renting a car in Iceland you really want to book a raised SUV, and if it has 4 Wheel Drive that’s even better! It will cost more to rent, but trust me, the extra cost is worth it.

The road conditions can change in an instant from paved to unpaved – even if you’re planning on staying on the main highway. You’ll have to turn off the main highway at some points to get to certain attractions in Iceland.

highway-turned-into-gravel-road-in-Iceland

My friends booked a sedan on their trip to Iceland a few years before we went, and they ended up needing to repair the bottom of the car because of the rocks that they couldn’t avoid driving over. A sedan is just too low to drive on all the rough, uneven roads.

This cost them a lot more than if they had just rented a raised SUV, and not just money wise. They wasted an entire day in a garage when they could have been traveling Iceland. And there was all the added stress that came with it.

4 wheel drive was good to have as well because we ended up driving on dirt and sand roads… And like I said, you can’t really help it!

You might also be interested in reading…

10 Important Tips You Should Know Before Driving In Iceland

suzuki-jimny-best-cars-to-rent-in-Iceland

Renting A Suzuki Jimny

Once we were paying extra for a raised SUV, we figured we might as well have fun with it!

We ended up renting a Suzuki Jimny which isn’t available in North America. My partner has always wanted a Jeep, so he had a blast driving it!

We were very happy to be in our Suzuki Jimny with TONS of ground clearance. We never had to worry about driving on dirt or gravel roads if we needed to.

Let’s just say, driving this car was an experience we will never forget!

driving-in-Iceland-bugs-on-the-windshield

Do You Need Extra Insurance When Renting A Car In Iceland?

Iceland driving is unpredictable. You end up driving off-road even if you don’t plan on it, trust me it’ll happen. As I said, you have to turn off the main paved highway often to get to your final destination.

But getting extra insurance will depend on what insurance you might already have.

Obviously, if you don’t have any insurance, then book a rental car with insurance. You never know what will happen.

Credit cards will often offer travel and even rental car insurance. But you should double check their terms and conditions before you book. As it turns out, our credit card insurance doesn’t cover trucks for some reason, and we only found out after we rented a truck in Texas!

You Might Have To Decline The CDW When Renting A Car In Iceland…

If you’re planning on going with your credit card insurance, double check their policies.

Rental car companies in the EU are obliged to provide insurance called the CDW – don’t ask what it stands for, I don’t know! And renting a car in Iceland is no exception.

But my credit card company will void my insurance if I accept the CDW.

You will have to ask to decline the CDW when you pick up the car, BEFORE YOU SIGN THE CONTRACT.