If you don’t want to spend your holiday in Iceland solely in Reykjavík or pay exorbitant amounts for organised coach tours (which cost several times more than hiring a car), your first port of call after landing will be a car hire company. After all, you won’t get to know Iceland without a car.

Where, when and how to book a car in Iceland

When booking a car in Iceland, the price depends mainly on the season. There isn’t much difference whether you book 14 days or 5 months before your trip (although booking earlier definitely gives you a chance of a slightly lower price). Rental prices in winter and summer can often differ by as much as threefold.

To make a booking, we recommend using a comparison site for most car hire companies, which will sort the results according to your chosen criteria:

• Compare prices and choose a car on rentalcars.com

Travellers have generally had good experiences with car hire companies such as IceRentalCars, Europcar and Budget. Geysir is also a popular choice; its terms and conditions explicitly state that it accepts debit cards. You can filter all these options on the aforementioned booking.com website.

Car hire prices in Iceland

Hiring a car in Iceland isn’t among the cheapest options in Europe. The price depends on the length of the hire (the longer the hire period, the cheaper the daily rate), but mainly on the season. Examples of prices are given below. For clarity, we have converted the prices to euros.

• Weekly hire in summer (small car): from 720 eur
• Weekly hire in summer (4x4): from 940 eur
• Weekly hire in winter (small car): from 210 eur
• Weekly hire in winter (4x4): from 400 eur
• Book a car at booking.com

In Iceland, it’s usually slightly cheaper to hire a car directly in Reykjavík, whilst it’s more expensive at the airport. If you’d like to spend at least a day exploring Reykjavík and are happy to take the public bus from the airport into the city, hiring a car in the city centre may work out more cheaply. Bear in mind that a one-way bus ticket costs 17 eur , so hiring a car in the city centre would need to be at least 33 eur cheaper; the difference increases further if you’re travelling with more people.

• Car hire prices at Keflavík Airport
• Car hire prices in Reykjavík
• Car hire prices at Akureyri Airport

Always read the hire terms and conditions carefully, particularly the insurance details, which you can also find on the website Booking.com. Some car hire companies include insurance in the final price, whilst others will charge an additional fee, ranging from 5 eur to 20 eur per day, depending on the type of car and the duration of the hire.

International driving licence and other documents

Iceland is not part of the European Union, but even so, EU citizens do not need to obtain an international driving permit before travelling. Car hire companies will accept a driving licence from any EU or EEA country.

Travellers from destinations outside the European Union will need an international driving permit.

Car hire companies usually requirea credit card to hire a car. Some companies will allow you to hire a car with a debit card, but either on less favourable terms or with a very high deposit, often exceeding1 000 eur. There are, however, exceptions, such as Geysir car hire, which does not require a credit card.

Petrol prices

Petrol is more expensive in Iceland than in mainland Europe and significantly more expensive than in North America. On average, prices are 30 per cent higher than in Europe and roughly 110 per cent higher than in North America.

Prices, converted to euros, range from 1,90 eur to 2,10 eur per litre of petrol.

How do petrol stations work in Iceland?

The density of petrol stations is nowhere near as high as in mainland Europe. Petrol stations are found in larger towns and cities, never outside towns and rarely in villages. So, particularly on longer journeys around Iceland, you should definitely not drive on empty.

If you hire an electric car, there’s no need to worry. There are significantly more charging points for electric cars in Iceland than there are traditional petrol stations, and they’re often found in very small towns far from civilisation.

Regular petrol is labelled ‘95’, whilst diesel is known by the standard name ‘Diesel’ at petrol stations. Prices are quoted per litre of petrol.

All petrol stations in Iceland are self-service. Once you’ve driven up to a petrol pump, get out of the car and select the amount in Icelandic kronur you wish to spend on the display.

When refuelling, the fuel flow will stop automatically once you have reached the amount you have entered.

If you wish to fill up your tank, select the ‘Full’ option on the screen; in this case, the fuel flow will only stop when you choose to. In this instance, the amount will be debited from your card immediately after refuelling.

Most petrol stations also have a shop with a till where you can pay for petrol in cash.

Toilets at petrol stations are usually free of charge. However, food, drinks and sweets sold at petrol stations in Iceland are significantly more expensive than in supermarkets (prices are 2–3 times higher).

Parking

Parking in Iceland really isn’t a problem. After all, in a country with such a low population density, it couldn’t be otherwise. The exception is the capital, Reykjavík, where parking in the city centre is subject to a charge (usually around 190 isk per hour), though even here you’ll find free car parks near the main attractions.

Traffic and road regulations

In Iceland, people driveon the right.

The rules here are very similar to those in other European countries. There is no need to prepare for any unexpected complications.

Speed limits

The following speed limits apply in Iceland.

• In built-up areas – 50 km/h, but in many places the speed limit is reduced to 30 km/h
• Outside built-up areas on tarmac roads – 90 km/h
• Outside built-up areas on gravel roads – 80 km/h

Speed limits in built-up areas are very frequently monitored, either by police patrols or by fixed speed cameras.

Roundabouts

Roundabouts are very common in Icelandic towns and at major junctions outside towns.

If a roundabout has two lanes (which is very common, particularly in Reykjavík), the vehicle in the inner lane always has right of way over the vehicle in the outer lane.

When using a roundabout, you are required to use your indicators as follows:

• If you are leaving the roundabout via the first exit, you must indicate right before entering the roundabout.
• If you are taking the second exit (i.e. effectively going straight ahead at the junction), indicate right from roughly the level of the first exit.
• If you are taking the left (last) exit, indicate left before entering the roundabout. Only when you reach the level of the penultimate exit should you switch your indicator to the right.

Right of way

In Iceland, the ‘right has priority’ rule applies at unmarked junctions. You’ll find such junctions mainly in towns and cities.

On stretches of road where the speed limit is set at 60 km/h by law or road signs, you are obliged to allow a bus to pull out from a bus stop without hindrance.

Pedestrians always have right of way over motor vehicles at pedestrian crossings.

Further rules

What other useful traffic rules are there?

• No level ofalcohol in the blood istolerated.
• Using a mobile phone whilstdriving is strictly prohibited and is often the subject of police checks.
• Headlights must beswitched on at all times (daytime headlights in good visibility, night-time headlights in poor visibility).
• Driving off the marked road is strictly prohibited.

Traffic density and road quality

There are no motorways in Iceland.

Icelandic drivers are generally considerate and the rules are generally observed. You may encounter heavy traffic in the centre of Reykjavík, but otherwise driving in Iceland is a relaxing experience on roads that are virtually deserted.

Country roads

Given Iceland’s very sparse population, you should expecta large number ofdusty gravel roads. Even on the 1,340 km-long main ring road around the island (the ‘Ring Road’), you may encounter short unpaved sections in the east of the country.

In this regard, it is advisable to read the car hire terms and conditions carefully, as some companies prohibit vehicles without 4x4 drive from using unpaved roads. If you were to disregard this ban and have an accident or damage your car on a gravel section, you would automatically be liable for the full cost of the damage.

It is also important to bear in mind that many natural attractions cannot be reached without an off-road SUV. The main problem is not so much the gravel roads – which are often passable even for conventional cars – but rather the numerous river crossings, which are very common in remote areas of Iceland.

• Find out the prices for SUV hire

Generally speaking, however, you won’t have any trouble driving all the way round Iceland or travelling along the so-called Golden Circle in a standard car. Information on whether a particular attraction is accessible by a standard car or not is also provided in the details of places to visit in Iceland.

Official website: road.is

A great resource for planning road trips around Iceland is the Icelandic government’s official website, road.is, which provides comprehensive information on current road conditions, maps of tarmac and gravel roads, and further details.

• Current road conditions
• Webcams, wind speeds and a map of rest areas
• Information on mountain roads
• Road maps

Another useful website is safetravel.is, which offers similar – and often better-presented – information on travelling around Iceland.

Driving in winter

Driving in Iceland during winter also has its own specific challenges. Only the very most important roads in major towns are gritted, and even then without the use of salt. So be prepared to drive frequently on compacted snow. The roads are lined with tall orange posts marking the hard shoulder.

• Book a car with our winter discount

You really should expect that if you’re travelling to Iceland in winter, you’ll be driving on snow almost 100 per cent of the time. Furthermore, a large proportion of rural roads – those that do not lead to permanently inhabited areas but only to tourist attractions – are closed in winter. And in Iceland, ‘winter’ usually refers to the period from October to the end of May.

Tolls

Icelandic roads, tunnels and bridges are all free of charge, with just one exception.

This is the Vaðlaheiðagöng tunnel, which, at 7.5 km, is Iceland’s second-longest tunnel, situated in the north of the country near the town of Akureyri. It lies on the main Ring Road, Route 1. You will be charged 1 500 isk. Tolls can only be paid online atveggjald.is/en/pricing. 

You can pay the toll up to 24 hours before your planned journey and no later than 24 hours after passing through the tunnel. The tunnel is monitored by a CCTV system and, if you fail to pay, a payment notice – increased by an administrative fee – will be sent to the car owner’s address (typically a car hire company) 400 isk. Car hire companies will automatically deduct this fee from your credit card.