The Ultimate Guide to Car Rental in Iceland
Everything truly interesting, breathtaking, and extraordinary — the stuff that makes Iceland worth visiting — is found outside Reykjavik: lunar landscapes, lava fields, powerful waterfalls, geysers, glaciers, and volcanic craters. The only way to see the most is by renting a car.
I went through dozens of forums and chats, noted all the key points, and personally checked everything during a week-long trip across Iceland. Today I’m sharing which car is best to rent, everything about parking, how to refuel, where you shouldn’t drive, and whether you can sleep in your car. At the end of the post, there’s a super useful FAQ and tips.
Which Car to Rent for Traveling Around Iceland
Highway No. 1, or the Ring Road, runs around the entire island. This is the country’s main route, connecting towns and passing by countless natural attractions. All the most famous waterfalls, glaciers, and volcanoes are accessible from the Ring Road. The road is paved and in excellent condition. Any regular car will do for traveling along Highway No. 1. You can easily reach Dyrhólaey, Vik, and even Svínafellsjökull Glacier without any issues.
You might need to drive a couple of kilometers on decent gravel to get to some spots. But that’s not a problem for a regular car or a crossover if you prefer a bit more comfort.
When an SUV is Necessary
If you plan to explore remote areas, like the central highlands or hard-to-reach sections marked as “F-roads,” a four-wheel-drive vehicle is essential. These roads are unpaved, often rocky, and sometimes have water crossings.
I’ll explain what an “F-road” is later. But I hope it’s clear that having an SUV doesn’t automatically mean you can ford rivers. You also need the right skills for that. Since extreme driving isn’t my thing, my Iceland trip was planned to hit all the top spots strictly along the Ring Road, preferably without long detours on F-roads.
Where to Rent a Car
I highly recommend booking a car in advance. It seemed to me that 90% of the cars driving on Iceland’s main road are rented.
Check options on DiscoverCars — they list many local and international rental companies.
I had a few important requirements:
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I arrived at one in the morning. I needed a car immediately, which meant the rental office had to be open 24/7, located at the airport, or provide a transfer/pick-up. I didn’t want to spend money on a taxi to a hotel at night and then go to the rental office in the morning.
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After my trip around Iceland, I wasn’t flying out right away; I had a cruise from Reykjavik. So the rental company needed an office in the city as well. Driving to the airport to drop off the car and then back to the city would have been too long and inconvenient. Keflavik Airport (the only international one) is far from Reykjavik.
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It would be nice to avoid a one-way fee (when pick-up and drop-off locations are different).
BlueCarRental fit my requirements. They don’t have a desk at the airport — the office is a 15-minute walk away.
For seven days, a Kia Rio cost €445, and a Dacia Duster €510. DiscoverCars had cheaper options, but again — only Blue met my requirements. The Duster seemed a bit bigger inside than the Rio, so I chose it. As it turned out, half of the rental cars across Iceland are white Dacia Dusters.
The deductible was 120,000 ISK (€800), and the same amount was held on the card as a deposit.
I didn’t buy additional zero-deductible insurance from the rental company; I used the standard coverage. I also have separate deductible insurance from my bank. If you don’t know about the types of car rental insurance, I have a separate post about it.
BlueCarRental allows online check-in up to seven days before the rental — supposedly to speed up the process. In reality, it didn’t speed anything up. But the paperwork took only 10 minutes. At half past one in the morning, I got the documents and keys. We didn’t inspect the car together — I photographed everything myself. Always do the same. Also, record a video.
The Duster was almost new, with only 5,000 km on the odometer.
Surprised it was half past one in the morning and still light outside? Haha, it’s mid-June — the Midnight Sun, baby. Only Norwegians will really get it.
Roads in Iceland
Paved roads. As I mentioned, the most famous is the Ring Road No. 1. It loops around the entire country. You could drive it non-stop in 20 hours, but in reality, that’s impossible. Besides driving on the road, you need to make small detours and pull over, and sometimes even approach locations on foot to get closer to the coolest spots.
Secondary roads. These lead from villages to the main highway. They can be either paved or gravel/dirt, but without potholes. They are short roads and nothing to worry about. Any car is allowed on them.
F-roads (Fjall — “mountain” in Icelandic) are roads that aren’t regularly maintained and can only be driven on with a 4×4. They consist of gravel, rocks, potholes, and rivers. The condition of these roads varies. All rental companies immediately warn that F-roads are only for SUVs. And if your imagination conjures huge monster trucks — no. Even a Duster can handle F-roads.
F-Roads in Iceland: What You Need to Know
Most F-roads are in the central part of the country, which is mostly mountainous. An F-road doesn’t automatically mean it’s terrible. It can very well be a good gravel road where you can drive close to 80 km/h.
There are no gas stations, cafes, or shops on F-roads. Housing is out of the question. Food, water, and a full tank are mandatory. Compared to other roads, very few cars travel on these routes — no passersby, no oncoming traffic. You’re alone with the intimidating landscapes.
F-Roads are only accessible in the summer. They open at different times — some in June, some in July. There’s no fixed schedule because the weather is unpredictable every year, especially in Iceland. This website has up-to-date information. On safetravel.is, you can check road conditions (open, closed, under repair) across the country. Safetravel also has an app, which I recommend installing — Google Play, App Store.
Only 4×4 vehicles with high ground clearance are allowed on F-roads, not just any all-wheel-drive car. Cars like the Subaru Legacy are 4WD, but due to their low clearance, you can’t drive them on F-roads. Dacia Duster, Suzuki Vitara, and even Jimny or Toyota RAV4 can handle most of these roads. With a Toyota Hilux, you could go anywhere, but you probably won’t like the rental price or its fuel consumption.
All F-roads require intense driving. A gravel road can turn into a rocky path, and thanks to Icelandic weather, a small stream can easily become a proper little river. Do you really need this? Decide for yourself.
For my first trip, I chose a few popular spots so that I didn’t have to cross rivers or spend half a day driving through the middle of nowhere just to see more lava fields, which are already plentiful. We left Road No. 1, drove around F-roads for three to four hours, then returned to the Ring Road and kept going. I’ll explain in a general post about Iceland which roads lead where and what’s worth seeing (link will appear here).
Speed Limits
In Iceland, the following maximum speeds apply:
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In populated areas: 50 km/h (unless otherwise indicated).
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Outside populated areas: gravel roads: 80 km/h, paved roads: 90 km/h.
Gas Stations in Iceland
Most gas stations you’ll encounter on the road are automatic. No cashiers — just the pump. English is available on all menus. They use a prepayment system.
Drive up, turn off the engine, insert the nozzle into the tank. Choose either how many liters or the amount in currency, pay, fuel up, and return the nozzle.
If you select liters, for example 20 liters, but only 18 liters fit in the tank, the difference will automatically be refunded after a short while. You don’t need to do anything. I don’t keep track of the increments/liters, so I always chose a full tank. There’s a peculiarity here as well. If you choose a full tank, about €200 (30,000 ISK) is immediately authorized. After refueling, only the actual amount is charged, and the €200 deposit is instantly released.
There are plenty of gas stations in Reykjavik, but beyond that, I recommend refueling at every station along the way — there won’t be many. There aren’t many towns either, just small settlements, and roadside cafes are almost non-existent.
Parking
Parking in Iceland, especially near natural attractions, is organized in designated areas. Most of them are paid — 700–1,000 ISK.
There are no attendants. Payment is made at kiosks or terminals. You need to select the type of vehicle, enter the license plate number (I recommend photographing it for reference), and provide an email for the electronic receipt. Payment is by card. No paper tickets are printed, and you don’t need to place anything under the windshield. The parking is valid for the entire day, so there are no time limits.
For example, across the road from the Geysir Geothermal Area, there was a free parking lot near a large restaurant with a souvenir shop. But at Seljalandsfoss waterfall, you had to pay 700 ISK for parking. There are no barriers, but cameras at the entrance monitor everything — Big Brother is watching.
I didn’t notice a paid parking sign near Jökulsárlón Glacier Lagoon (next to Diamond Beach) and didn’t pay 1,000 ISK. After the trip, once I returned the car, the rental company sent a message: a fine of 2,000 ISK plus 1,000 ISK for parking.
So pay attention. If it’s not a lot located a few kilometers down a gravel road after exiting the main road, you probably need to pay. A paid parking sign will be posted at the entrance.
Tips and Frequently Asked Questions
- The biggest danger is rocks kicked up by other cars. Keep a safe distance.
- “Wow!!! Look at that view! Stop, we have to take a photo!” In the first couple of days, this will happen constantly. Don’t slam on the brakes and swerve sharply to the shoulder. Slow down and gently pull over. There’s gravel, and the car could slide.
- The second danger is wind. No, it won’t blow the car away, but it can rip a door off. Not a joke. If possible, park facing into the wind. Hold the door firmly when opening it. In most insurance policies, this isn’t covered.
- When stopping on the shoulder, be careful and don’t stay long. Roads aren’t wide, so don’t block the lane.
- If there’s a private property sign — do not enter. Even if there’s no fence and an incredible waterfall is ahead. Photograph it from a distance.
- There are no wild animals, but livestock roam wherever they want — including onto the roads.
- Over long distances, the landscape can be pretty monotonous: burnt-out land with not a single tree. After a few dozen kilometers of this monotony, it can make you sleepy. Switch drivers or stop to rest.
- There are no allowances for exceeding speed limits. A “maximum 50” sign means exactly that: no more than 50 on the speedometer.
- Low beam headlights must always be on, day and night.
- Sleeping in your car on a parking lot, shoulder, or near a gas station is not allowed. Only stay overnight in designated campgrounds. It doesn’t matter if you have a tent or plan to sleep in the back seat — sleeping anywhere else is prohibited.
