Rent a Car in Iceland

To rent a car in Iceland, you’ll need a valid driver’s license, a credit card in your name, and be at least 20 years old for most vehicle types. If your license isn’t in Latin script (like Japanese, Arabic, or Cyrillic), an International Driving Permit (IDP) is mandatory. Car rental agencies in Iceland require you to hold your license for at least one year. Always double-check age policies, as some car classes may require drivers to be 23 or older.

Driving in Iceland is safe, but it requires extra attention, especially in winter. Roads are well-marked and maintained, but rural routes—especially in the Highlands—can be unpaved or gravelly. Foreign travellers should stay informed about weather conditions, which can change rapidly. For example, strong winds on the south coast or icy roads near Akureyri can surprise unprepared drivers. Finalrentals offers 4x4 options ideal for tougher terrain and seasonal conditions.

Whether you need a 4x4 depends entirely on your travel plans and the time of year. If you stick to popular routes like the Golden Circle or stay around Reykjavík during summer, a compact or standard car will do just fine. But if you plan to explore Iceland’s F-roads in the Highlands or drive through snow-covered regions in winter, a 4x4 vehicle is strongly recommended—and often required.

Most rentals in Iceland come with basic third-party liability insurance, but due to Iceland’s unique environment, many travelers choose additional coverage. Gravel protection, sand and ash coverage, and Collision Damage Waiver (CDW) are frequently recommended. For instance, roads around Lake Mývatn can kick up volcanic ash, which might damage paintwork.

F-roads are rugged mountain tracks in Iceland, accessible only by 4x4 vehicles and open during summer months. Not all rental vehicles are allowed on F-roads; doing so without permission or the right car can void your insurance. Finalrentals provides a clear classification of which models are F-road approved. Always check road conditions through the Icelandic Road and Coastal Administration (vegagerdin.is) before heading out, as sudden weather shifts can close routes without warning.

Most international travellers land in Keflavík International Airport (KEF), making it a convenient spot to pick up your rental. It saves you time and an extra shuttle to Reykjavík. However, if you're staying in the city for a few days first, renting later from Reykjavík may save money. Finalrentals offers flexible pick-up and drop-off locations across Iceland, so you can customise your booking based on your itinerary and avoid unnecessary charges.

Car rental prices in Iceland vary based on the vehicle type, season, and rental duration. In the low season, compact cars start around $34–$48 per day. During peak summer months (June to August), prices can rise to $80–$120 per day, especially for 4x4s. Iceland’s weather, terrain, and long travel distances often make it worth paying for better protection and reliability. Finalrentals regularly offers deals and free upgrades to help travellers save on longer rentals.

There are no traditional toll roads in Iceland, except for the Vaðlaheiðargöng Tunnel near Akureyri, which requires a small fee. Most highways and scenic routes, like the Ring Road (Route 1), are toll-free. However, fuel can be pricey, and off-pavement driving without permission is illegal and could result in fines. Also, returning the car without refuelling might incur additional charges. Always ask Finalrentals about included fees and whether your rental covers the Vaðlaheiðargöng Tunnel toll.

Iceland is an island nation without connecting land routes to other countries. Ferry transport to mainland Europe is not an option for most rental cars, and no rental company, including Finalrentals, permits driving their vehicles outside Iceland. If you’re planning a multi-country trip in Europe, booking rentals separately for each country is better. Focus on exploring Iceland’s stunning natural wonders—like Jökulsárlón Glacier Lagoon and Þingvellir National Park—at your own pace.

Summer (June to August) is the most popular time to rent a car, as roads are fully open, the weather is milder, and daylight lasts nearly 24 hours. However, this is also the busiest and most expensive season. Spring and fall offer fewer crowds and cheaper rates, but the weather can be unpredictable. Winter brings snow and ice, but also the northern lights. Finalrentals recommends choosing a 4x4 with winter tires and booking early if you rent during winter.

Mobile coverage is generally strong along the Ring Road and around major towns like Egilsstaðir and Akureyri, but the signal can drop in remote or mountainous areas. GPS navigation works well across most of the country, but offline or physical maps are handy backups. Some rental cars from Finalrentals have built-in navigation systems or offer GPS units for an extra fee. Always check ahead, especially if heading into the highlands or less-travelled paths.

Icelandic law requires children under 135 cm (4 ft 5 in) to be secured in appropriate child seats. Children under 7 must use a booster or child seat that fits their age and size. Rental companies, including Finalrentals, offer child seats for a small daily fee, but they should be booked well in advance, especially during high season, to ensure availability. Police checks for child seat compliance are standard, so following the rules is essential.