Essential Tips for Renting a Car in Iceland

Your complete guide to driving freedom, scenic routes, and staying safe on Iceland’s epic roads

Renting a car in Iceland is one of the best ways to uncover the country's spectacular landscapes, hidden gems, and natural wonders — all at your own pace. Whether you're chasing waterfalls, tracing the coastline of the Ring Road, or heading deep into the highlands, having your own vehicle offers unbeatable freedom and flexibility.

At Höldur, we’ve been helping travellers explore Iceland since 1966. As Iceland’s largest car rental provider with over 8,000 vehicles and a nationwide network of locations, we’re proud to offer reliable, eco-conscious transport and local expertise you can count on.

To help you get road-ready, here’s everything you need to know about renting a car in Iceland, from choosing the right vehicle to understanding the driving rules and insurance options.

Why Rent a Car in Iceland?

Simply put: Iceland was made for road trips.

Public transport is limited, and many of Iceland’s most awe-inspiring sights – like Dettifoss, Landmannalaugar, or the remote Westfjords – are only accessible by car. Renting a vehicle allows you to:

• Travel on your own schedule

• Reach off-the-beaten-path destinations

• Stop for photos and detours whenever you like

• Explore without relying on tour groups

For nature lovers, photographers, and families alike, a rental car transforms your Icelandic itinerary into a personal adventure.

Choosing the Right Vehicle

When selecting a rental car in Iceland, consider the season, destination, and type of roads you plan to drive on:

• Summer travellers (May–September): A standard 2WD is often enough for the Ring Road and popular routes.

• Winter travellers (October–April): Opt for a 4x4 or SUV to handle icy conditions safely. Read more about winter driving.

• Highland explorers: Travelling into Iceland’s rugged interior (F-roads)? A 4WD vehicle is required.

At Höldur, we offer everything from compact cars to rugged SUVs, campervans, and eco-friendly EVs – all maintained to the highest safety standards.

Understanding Icelandic Driving Laws

Driving in Iceland can be a unique experience – and it’s important to be well-informed before you hit the road.

Here are some key rules:

• Headlights must be on at all times, day or night.

• Seatbelts are mandatory for all passengers.

• Off-road driving is strictly illegal and heavily fined – it damages fragile landscapes.

• Speed limits:

  • 50 km/h in urban areas

  • 80 km/h on gravel roads

  • 90 km/h on paved rural roads

• Always check the weather and road conditions before driving – they can change rapidly. 

At Höldur, your safety is our priority. We encourage all customers to familiarise themselves with Iceland’s driving guidelines and seasonal road conditions.

What Insurance Do I Need?

Iceland’s terrain and unpredictable weather make insurance a smart (and sometimes necessary) investment.

Our Basic Protection package includes Collision Damage Waiver (CDW), Personal Accident Insurance (PAI), and Theft Protection (TP). The excess is 250,000 ISK for standard cars and 450,000 ISK for larger vehicles including 4x4 SUVs and prestige cars.

You can upgrade to our Medium Protection to access Super Collision Damage Waiver (SCDW) as well as Windshield and Glass (GP) with Zero Excess protection. The Medium package also reduces your excess to 60,000 ISK for standard cars or 110,000 ISK for larger vehicles.

The Premium Protection additionally covers gravel damage (GP) and sand and ash damage (SADW). As part of our premium package you can also benefit from zero-excess protection.

-Explore our comprehensive guide to vehicle protection.

Car rental at Keflavik Airport Iceland

Flying into Keflavík International Airport? It’s the most convenient place to pick up your rental.

With Höldur’s airport pickup location, you can:

• Skip long transfer times

• Start your journey straight from the arrivals hall

• Enjoy 24/7 customer service and flexible drop-offs

FAQs: Renting a Car in Iceland

Do I need an international driver’s licence to rent in Iceland?

If your licence is in Roman script and valid in your home country, you don’t need an international licence.

What side of the road do Icelanders drive on?

We drive on the right-hand side of the road.

Can I drive on F-roads?

Only 4WD vehicles are allowed on F-roads (mountain tracks). Driving a 2WD on these roads is both dangerous and illegal.

Are roads paved across the whole country?

Not all – expect gravel roads, especially in rural or highland areas.

What happens if the weather turns bad?

Always check vedur.is and road.is before driving. You may need to delay or adjust your route for safety.

Is fuel expensive in Iceland?

Fuel is relatively pricey. Many stations are self-serve and accept international cards. A growing number of pumps support smartphone payment options such as Google Pay and Apple Pay.

Can I sleep in my rental car?

Only in designated campgrounds – wild camping in vehicles is not allowed.

What should I do in case of an emergency?

Dial 112 for emergency services. Our support team is also available 24/7.

Can I rent a car in Reykjavík and return it elsewhere?

Yes – with Höldur’s nationwide network, one-way rentals are available for your convenience.

Is renting a car in winter safe?

Absolutely – with proper preparation and a suitable vehicle, winter driving is safe and magical. We equip all vehicles with studded winter tyres and offer winter-ready 4x4s.

 

Best car rental for Ring Road Iceland

There’s no better way to experience Iceland’s raw beauty than from behind the wheel. With Höldur’s trusted fleet, nationwide service, and expert local advice, your self-drive adventure is in safe hands.

Let the freedom of the open road lead you to volcanoes, glaciers, lava fields, and memories that last a lifetime.

Explore Iceland with confidence.
Drive with Höldur – your reliable road trip partner since 1966.

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