Hiring a Car in Iceland: Practicalities & How to Get a Cheap One

Before my recent trip to Iceland, I was really curious about how much it would cost to rent a car in Iceland. I had heard it was going to be really expensive and in winter perhaps a little dangerous. Wrong! It really can be cheap to rent a car in Iceland and it doesn’t have to be dangerous. Just follow these tips. Also read my posts about Driving Around Iceland’s Ring Road in Winter: Practicalities and Itinerarythe Secret of Travelling Iceland on a Budget, Driving Iceland’s Golden Circle and Chasing the Northern Lights in Iceland: A Practical Guide

Iceland Car Rental

Which Car Rental Company to Choose

Deciding which car rental company to go with is a difficult decision to make. The main factors are: location of pickup/dropoff, how many free miles are included and daily rental price.

Location of Pickup/Dropoff

I originally planned to pick up my rental car from Reykjavik city rather than the airport (which is 50km/30 miles away) because I thought it was silly to have a rental car sitting on the side of the road parked in the middle of Reykjavik for 2 nights not being used. But there are two reasons why I ended up picking up and dropping my car off at the airport. The first reason was that the daily rental price I got was much better at the airport. The second reason was that the cost of the bus to and from the airport is so expensive and in my case worth the equivalent of 2.5 days care rental. I saved money by renting the car from the airport even though I didn’t use it for 2 nights. Tip: Factor in the price of the bus to and from Reykjavik in your rental equation. Check the Flybus website here.Iceland Car Hire Pickup Keflavik Airport

How Many Free Miles are Included in the Rental?

Rental cars in Iceland often come with a limited number of kilometres you can drive in them before you start getting charged penalties. The penalties are so stiff that if you plan to drive any signifcant distances such as circumnavigating the island, you absolutely cannot rent a car that doesn’t have unlimited miles. Make sure you check this aspect of your car rental.

Daily Rental Price

I searched on a lot of rental car company sites for a good deal on car rental and I thought I got one for about €300 for 7 days of hire. But then I came across a car rental agency called Holiday Autos.

I’d never heard of them before, but their prices were incredible. They were basically able to aggregate all the special deals from all the different rental companies in Iceland to the point where they offered me a car with Hertz for 7 days for €166!! ($186/£130/AU$246) And on top of that, it had unlimited miles. Luckily for me, the car I booked was out of stock, so they upgraded me at the airport for free. In the end I got a medium sized 5 door hatchback with winter tyres, seat warmers, diesel engine and in perfect condition for just over €20 ($22/£16/AU$30) per day. What’s more, the fuel efficiency was out of this world with it averaging 4.8L/100km. I only spent 16,660ISK ($131/€117/£92/AU$174) on diesel for the entire 1400km trip.

And how much does gas/petrol cost in Iceland? 186ISK/L ($5.60/gal) for petrol (regular gas) and 169ISK ($5.08/gal) for diesel.Iceland Fuel Price

Anyway, the rental agency is Holiday Autos and they are very responsive to any enquiries you have and even let you cancel your rental agreement in many cases. I originally booked an even cheaper car, but changed my mind when I realised that it didn’t have unlimited miles. Please let me know if you book with this mob as well. I would really like to hear if you also have a good experience so I can share with my readers. Check Prices on Holiday Autos.

Damage to Your Rental Car

I have heard some horror stories about rental car damage in Iceland and some people even claim there are scams operating in the country, but I didn’t experience that. One “scam” is that after there have been high winds, the rental car company will inspect the paint on the car when you bring it back and claim that it has been damaged by sand. In fact, the companies even have a specific sand damage insurance cover so you don’t get trapped. My advice would be to just keep the car away from the ocean when the wind is blowing hard. I was lucky to be inland when there were strong winds and noticed no issues with my paintwork.

Other damage which is said to be common is chipped windscreens. I can imagine this happening on some of the more distant dirt roads you come across in Iceland for sure. Cars go fast along these dirt roads… and these dirt roads are often major thoroughfares, so you don’t even have to be going off the beaten track to experience them. Just drive slowly and hope other cars do too.

Road Conditions

Road conditions across the island are affected by weather. Two sites you absolutely have to visit are and As well as those sites, read my post about driving the Iceland Ring Road in Winter.Cheap Iceland Car Hire

Speed Limits

The speed limit in Iceland is 90km/h on sealed roads and 80km/h on dirt roads. No one sticks to these limits and I had people passing me at 150 a lot. They drive fast. Still, I did see the police pull over one driver for speeding and there are a number of speed cameras around the island, mainly in the west and northwest. I can’t remember seeing any in the south, but maybe that’s because I was going too fast! Nevertheless, drive to the conditions and you’ll be fine.

Renting a car in Iceland is easily the best decision I made for my trip to Iceland. It gave me the freedom and flexibility you absolutely need in a country so big as weather impacted as Iceland. Good luck with your Iceland Roadtrip!

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