Guide to Renting a Car in Iceland

Iceland Rental Car

Renting a car in Iceland can be as treacherous as the Icelandic weather. A trip to an online forum on the subject will have you feeling discouraged. You’ll find many negative reviews and some positive ones. Curiously, many of the positive reviews don’t seem quite genuine. However, it is possible to have a great experience. You just need to do your due-diligence.

A Bumpy Road

Iceland Highlands Driving

A week before our arrival in Iceland, we set out to order a rental car online. Our journey started on Trip Advisor, where we quickly realized we should have given ourselves more time for research. We read review after review from unhappy travelers whose experiences with rental car companies had tarnished their trip. Determined to avoid issues with something as silly as a car rental, we forged ahead cautiously. Here are a few of the common situations we read about:

●      High charges for damages: scratches, dents, undercarriage damage, wind-damaged door hinges, gravel damage

●      Charges for possibly pre-existing damage

●      Insurance not covering the cost of repairs

●      Being held hostage over these charges while trying to catch a flight

●      Unmentioned damages that appeared on credit card statements after leaving Iceland

●      Speeding tickets and the processing fees charged by the rental car company for them

●      Over-priced or sold out car rentals for last minute bookings

Finding Our Wheels

Iceland Rental Car

We finally found a car rental company with many positive, authentic-looking reviews…. and not a single negative one! We compared the prices with a few other companies. They weren’t the cheapest, nor were they the most expensive. They even offered to meet travelers at the airport. We found a little automatic car that met our needs. Through their website, we were able to book the car for the dates we needed and select insurance options. In the United States, car rental companies often offer a Collision/Loss Damage Waiver that ensures the renter won’t have to pay for any damage to the car. We noticed that Icelandic car rentals don’t seem to offer this. They offer multiple insurance options that only cover up to a certain amount of damage. This seemed to be a pain point in those reviews we read, so we took out ALL the insurance they offered.

Our Experience

Iceland Driving

A few days before the trip, we received an email from the car rental company greeting us and confirming that an employee named Ollie would be waiting for us at arrivals when we got off the plane. We arrived on-time at 6:45 am, tired and sluggish after our 7+ hour red-eye flight. Sure enough, Ollie was there to greet us with a sign. He drove us to a nearby hotel, where we used the lobby to go over the paperwork. He gave us some good tips for driving in Iceland. We went out to the car to go over any pre-existing damage. He had a sheet, on which he had already marked some damages. As we thoroughly went over the car, he even pointed out a few small dings and scratches before we could. We used a phone to take a video of every inch of the car with the flash turned on. Then we took the keys and headed out.

We were extremely careful throughout the trip not to damage anything on the car. Before we returned it, we stopped at a gas station, filled up the tank, washed the car, vacuumed the interior, and even wiped down the interior surfaces with some auto wipes. Overall, we had a great experience!


After all of our research and personal experience, here is the best advice we can give you for renting a car in Iceland:

Start Early

Give yourself enough time to fully research companies and decide what type of vehicle you’ll need for your trip. Hint: you’ll need a 4×4 (4 wheel drive vehicle) if you plan on driving in the Highlands. Factor in the high fuel prices. As well, the summer is high season in Iceland. Car rentals are much more expensive from about May to September.

Research, Research, Research

Use websites like Trip Advisor to read reviews about different car rental companies in Iceland. Even if you choose not to go with a particular company, you can still use their website to compare pricing to ensure you get a good deal. If you’re planning a lot of driving, ensure that the company you select doesn’t have mileage limits.

Reserve Your Car in Advance

Book your car online prior to your trip to avoid last-minute price hikes or low inventory upon arrival. Specify whether or not you want a car with a manual transmission or a 4×4. You should be able to select your insurance options at this time. I highly recommend taking out all of the offered insurance, including the Gravel Protection. Even if you aren’t driving on F-roads, you will still drive on gravel roads periodically. If your rental company offers theft protection (ours did not), you may want to skip it considering the crime rate in Iceland is so low.

Do a Detailed Inspection of the Car

Regardless of how jet-lagged you are, thoroughly inspect the car before signing the contract! Photograph and film every inch of the car for scratches, dents, and dings. If you can, get a picture or video of the rental company employee while doing this just in case you ever need to prove that these photos were taken before you rented the car. Point out every blemish on the car to the employee who is doing the inspection with you or mark it on the sheet they gave you.

Sign the Contract

Read the contract before signing. If it’s fully in Icelandic, ask them for an English version. Almost everyone in Iceland speaks English and any reputable company dealing with tourists regularly should be able to provide this. If they cannot do this, you can always use a translator app, like Google Translate… although this could take a bit of time. Don’t hesitate to ask any questions that you may have about the rental or the car. This is a good time to double check whether or not the company imposes mileage limits. As well, make sure you know the type of fuel that the car requires.

Drive with Caution

Follow all traffic laws, especially the speed limits. There are cameras that will ticket you throughout Iceland, particularly when entering or leaving a city. If you get a speeding ticket from one of these cameras, the ticket will initially go back to the car rental company. They will either give information to the authorities, who will mail you the ticket or they will just pass the charges along to you. Either way, you will be required to pay these tickets and some rental companies add a processing fee for handling them. Drive slowly and safely on gravel roads and when pulling off the road at rest stops. Contrary to what you may expect, gravel protection generally covers the bumpers of the vehicle, but not the undercarriage.

Return The Rental Car In Better Condition Than You Received It

Before returning the rental car, inspect it yourself for any new damages. Refer back to your video, photos, and copy of the initial damage report to see if the damage was there prior to renting. Fill up the gas tank, wash the car, vacuum the interior, and wipe down the interior surfaces. When you return the car, don’t bring up or point out any questionable damages, but stay a step ahead of them by being prepared with an explanation or evidence if they mention any issues.

Our Choice

Iceland Rental Car

Our car matched our first Airbnb!


We used Route 1 Care Rental for this trip and had a great experience. However, we recommend doing your own research to find the right rental company for you. As with any other service business, car rental company’s customer satisfaction can change over time. We will certainly be researching car rentals and reviews again before ur next trip. If Route 1 still seems like a good choice, we will use them again.


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