Hiring a Car in Iceland – A Comprehensive Guide

So you have decided you want to explore Iceland’s ring road, but how do you do it?

Iceland does have a network of bus routes but these only run regularly from June to mid September. There aren’t any trains to get you around and taxis would be mega expensive.

If you want to explore the beauty of Iceland your only real option will be to hire a car.

Driving in Iceland is like nothing I have experienced before. Around the ring road you will experience a bit of everything. Coastal drives, mountain passes and lava fields to name a few.

I won’t lie to you it was downright scary at times when the weather came into play, but I’d do it again in a heartbeat. Iceland is that beautiful.

Me and my hubby drove the entire Ring Road (also known as Route 1) over a 2 week period in April. Along the way we learnt a lot.

Keep reading to find out everything you should know about driving in Iceland before you go.

This post contains affiliate links. This means I may receive a small commission if you make a purchase after clicking on one of my links. This comes at no extra cost to you.

Last updated: 2nd May 2020

Everything You Need To Know About Hiring a Car & Driving In Iceland

Which side of the road do they drive on in Iceland?

In Iceland they drive on the right hand side so if you are coming from the UK like us, be prepared. We opted for an automatic so we didn’t have to deal with a manual on the wrong side.

What are the Speed Limits in Iceland?

Speed limits are a lot slower than here in the UK but once you get out there you will understand why.

The majority of the ring road is paved and the speed limit is 90km/h (56mph). This is the maximum speed limit anywhere in Iceland.

Gravel roads are 80km/h (50mph) although I wouldn’t drive that fast (more on that later).

When you are approaching a town the speed drops to 70km/h (43mph), then further to 50km/h (31mph). Occasionally it drops even further whilst in town to 30km/h (19mph) so keep an eye out.

Speed limits are well sign posted. Don’t always listen to the Sat Nav if you have one as we found ours wasn’t always up to date.

There are speed cameras in all tunnels and around the Ring Road. We only really encountered them in the south; we didn’t notice any in the east or north.

You will occasionally see police cars patrolling the ring road. Apparently fines for speeding are high. They are there to protect you so just don’t do it, it’s not worth it.

Read More: My 2 Week Iceland Road Trip Itinerary

What are the road conditions like in Iceland?

The main road in Iceland as I mentioned earlier is Route 1, also known as the ring road. It circles the whole island connecting the major towns.

Along the route you experience many driving conditions and it can change from flat coastal driving to driving through mountain passes in an instant.

The majority of the ring road is paved and easy to drive. The exception was a section we came across in the east fjord area which was gravel.

All other roads are gravel and should be driven with caution. Driving on gravel seems like driving on ice, any sudden movements the car slides along the road. Drive slowly and don’t make sudden speed changes. Begin braking well before any downhill sections you don’t want to be slamming on the brakes on the way down.

Mountain roads which lead to the highlands are called F roads and will be marked as such on road signs. These are closed in winter and don’t generally open until June time as they are impassable. You can only drive these roads with a 4×4, it is illegal to attempt it with a 2WD and rental insurance will not cover you.

F roads are not maintained so there will be potholes and damaged sections which will mean difficult driving conditions. It can also involve fording rivers. Remember though that you rental insurance won’t cover this either unless you have specifically paid for it.

There are also other things to be aware of such as one lane bridges on the ring road. Slow down as you approach, if there is someone coming in the opposite direction the one who gets there first has right of way. Blind hills and corners are also signposted along the route.

Off road driving is strictly illegal in Iceland as it can damage the flora and fauna.

Read More: What to Pack for 2 Weeks in Iceland

Renting a car in Iceland

What type of hire car should I get in Iceland?

We rented our car from Thrifty. We ummed and ahhed other whether to hire a 2WD or a 4WD.

As we were visiting in April, which is the end of winter, we figured a 2WD would be sufficient. We weren’t planning on any highland driving and were mainly sticking to the ring road.

Our rental car came equipped with studded winter tyres which was a relief. Winter tyres are mandatory from around 1 November to 14 April in Iceland.

We did encounter snowstorms and icy road conditions whilst we were there but not enough to warrant hiring a 4WD for the whole 2 weeks. They are a lot more expensive!

If you are visiting in the spring or summer and sticking to the ring road a 2WD will be sufficient.

If you are planning on highland (F road) driving in the summer or are visiting in winter you will need a 4WD.

I would note however that winter driving in Iceland can be dangerous and roads can become impassable very quickly. I wouldn’t recommend visiting in the winter time myself unless you will be taking guided tours rather than self driving.

Do I need rental insurance in Iceland?

Rental insurance is very important. You don’t want to be footing the bill for a cracked windscreen or paintwork damage from gravel at the end of your holiday.

Thrifty comes with theft protection and basic Collision Damage Waiver (CDW) as standard. The excess is €1600 (£1355) for a 2WD and €2300 (£1948) for a 4WD but it doesn’t cover windshields or gravel damage.

Ideally you want to be looking at the next level insurance packages. Super CDW reduces the excess only which I don’t think it that useful (€400 (£339) 2WD/€600 (£508) 4WD).

Grand CDW is the insurance package we took. It is obviously more costly but it covers damages to windshields, front lights and paint damage caused by gavel or stones. It also covers damage to the chassis, exhaust system, gear box and engine from scraping on uneven road surfaces.

In my opinion after having taken this road trip this insurance is a MUST. We experienced both gravel flicking up and extremely potholed roads which made the car groan a bit! Our excess was €170 (£144) as we had a 2WD, a 4WD was €240 (£203).

You can also take out Sand and Ash Protection (SAAP) which covers for sand and ash damage to the vehicle. We didn’t think this was very likely so we didn’t take this one out.

Thrifty also offer River Ford Crossing insurance which is a specific water damage insurance for 4x4s crossing rivers at less than 4km/h. You may find this useful if you plan on highland driving although the excess is still €3,000 (£2,541).

Read More: Visiting the Secret Lagoon in Iceland

Figuring out your hire car in Iceland

When we collected our car from Thrifty we first had to go round checking for damage so it could be noted on the vehicle paperwork. Then they gave us the keys and shooed us off.

Don’t be like us. Make sure you figure out the controls of the car before you drive off!

We accidently put it in Manual mode in an automatic (who knew?) and drove about 15 minutes in 2^nd gear wondering why the car was crying and not changing gear!

Also find your headlight switch as they have to be on at all times day and night, and keep your wipers on automatic so they can do their thing.

How much does it cost to hire a car in Iceland?

We travelled in April which is shoulder season and hired a 2WD automatic Fiesta for 15 days (we actually got given a Peugeot 3007).

Our total cost in British pounds was approximately £850 or £57 per day.

If you travel in summer and/or hire a 4WD the cost will be significantly higher than this.

What will the weather be like in Iceland?

Iceland’s weather can be very unpredictable. Overall we were lucky with the weather, our first few days saw glorious sunshine. We did however experience quickly changing conditions on the roads. You could be driving through the rain and suddenly it turns into a snow storm (this happened on our last day!)

Sunny skies

Sunshine driving is beautiful, enjoy the views and bring your sunnies. In fact bring them even if it’s snowing because the white snow is super bright.

Rain and wind

Driving in the rain can be difficult especially when it is accompanied by high winds. We experienced this one day and it makes it hard to see as the windscreen wipers cannot clear the screen quick enough. The winds were also trying to blow us off the road.

Don’t worry if this happens to you, you can always just pull over in a safe spot and wait it out. Remember Iceland weather changes often.

We soldiered on as a little bit of rain wasn’t slowing us down!

Snow and ice

It can also get interesting when you find yourself driving up mountain pass roads. The roads will be icy and/or snowy (and FYI there may or may not be barriers).

We experienced temperatures of -8 degrees on one particular drive which froze my door shut. This also came with winds blowing snow off of the mountains and across the already icy roads making them almost invisible apart from the mesmerising patterns it made.

Blizzards

Lastly, snow storms. These are downright scary. We experienced one of these on our last day. The snow came down thick and fast covering the roads completely.

Luckily (sort of) we were on the motorway back to Keflavik so had other cars ‘footprints’ to follow.

When you looked around you could see nothing but white, the sky was gone, the slip roads had vanished and suddenly there was a warning about our tyres being underinflated.

Watch out for anyone overtaking you as the slush will shoot up and cover your windscreen rendering you blind for a few seconds. Scary stuff.

Honestly though I’m not trying to scare you; I just want you to be prepared for anything because there may be no warning.

Make sure you check the road conditions every day before you travel on www.road.is and the weather conditions on www.vedur.is. There is a super useful map that shows you the conditions of roads in real time and if any are closed. There are also webcams you can take a peek at to see if for yourself.

One last tip that doesn’t really fit anywhere else. Make sure you hold onto the steering wheel firmly when lorries come at you in the opposite direction. They can kick up some wind as they pass!

Filling up with gas around the Ring Road in Iceland

It is super important to keep your tank full. You have to hand it back to the rental company full so you may as well keep on top of it.

Some areas of Iceland you won’t see a gas station for miles so when you see one do stop.

Our favourite stations were the N1 stations. They were pretty much everywhere. The majority of gas pumps are pay at pump and some gas stations are literally just a pump in the middle of nowhere.

Our prepaid travel debit card didn’t work in any gas station pump. Instead we had to purchase prepaid cards from the larger N1 stations and carry them with us as they could be used in any other N1 pump along the way.

You can get them in 3,000ISK, 5000ISK or 10,000ISK increments. We generally got 5,000ISK as this filled half our tank.

FYI – We did try a credit card once and this worked fine so it looks like it just didn’t like our debit card.

Petrol cost was 200ISK/litre when we visited (April 2017) which is about £1.45/litre.

Over the entire 15 days we spent 44,727ISK / £326.24 on fuel. An average of £21.75 per day.

Read More: How Much Does a 2 Week Iceland Road Trip Cost?

Can I stop to admire the scenery on the roads in Iceland?

Iceland is for sure very scenic and you will want to stop every 5 seconds. Please, please, please don’t just stop in the road to take photos. It is dangerous to both yourself and other drivers.

There are scenic picnic stops all along the route and they are generally in the best sightseeing spots so wait for these before you pull over. There are also sometimes unmarked pull offs which you can fit one or two cars in and you can also use these.

Why SatNavs can’t be trusted in Iceland

Be sure to find out the Icelandic names for the places you are visiting. That is what you will have to put in the Sat Nav.

For example the Secret Lagoon is Gamla Laugin.

You may also want to have co-ordinates to hand as on a few occasions the sat nav just wasn’t playing ball and we had to enter co-ordinates to find our hotels.

Always review the route the SatNav has chosen before you set off because of two things:

1. there are sometimes more than one place called the same thing and obviously she (we named ours!) likes to take you to the wrong one.

2. she doesn’t always choose the quickest route. Sometimes she would choose a gravel road as a shortcut on which the max speed is 80km/h, but you can’t really drive that fast so it would end up being the longer route.

She also liked to play games with us such as trying to take us across bridges that were no longer there….what a joker!

Just keep an eye out and be sensible you will be fine.

Keeping entertained on the road in Iceland

The radio stations aren’t very good..Sorry Iceland! Make sure you bring your USB cable to plug in your phone so you can listen to your own music.

How much can you drink in Iceland?

Iceland has a zero tolerance policy on drink driving. The blood alcohol limit is 0.05% so one drink can put you over the limit. Just don’t drink at all if you are driving anytime soon.

If you want to be extra safe whilst driving in Iceland

There is an app you can download called 112 Iceland. Although I haven’t tested it myself it does sound pretty clever.

When you click the green Check In button the app sends a text message to the Icelandic emergency services with your GPS location.  Your last 5 locations are stored with them to be used in case of emergencies.

You can also call for help using the red Emergency button in the app and it sends your current GPS location to the 112 response centre.

Read More: My Iceland Road Trip Diary

That’s a lot to remember!

I know i’ve just thrown a lot of info at you so let me summarise it for you now.

• Remember to drive on the right
• Paved roads are 90km/h
• Gravel roads are 80km/h
• Approaching a town reduce to 70km/h then to 50km/h, sometimes to 30km/h
• There are speed cameras on the Ring Road and in tunnels
• The majority of the Ring Road is paved
• Side roads off the Ring Road are gravel and gravel is like driving on ice!
• F roads are unmaintained mountain roads – no 2WD’s allowed
• Look out for one lane bridges, blind hills and blind corners
• Rent a 2WD in spring/summer as long as you are mainly staying on the Ring Road
• Rent a 4WD in the winter of if you plan to tackle F Roads in the summer
• Rental insurance is important – get it! Including gravel insurance
• Don’t put your automatic car into manual and wonder why it doesn’t work!
• The average cost in shoulder season for a 2WD is £57 per day
• The weather is unpredictable, you can see 4 seasons in one day
• Road conditions map – www.road.is
• Weather forecasts – www.vedur.is
• Keep your gas tank full, fill up whenever you can
• Fuel costs 200ISK/litre approx £1.45/litre (as at April 2017)
• Buy prepaid fuel cards from N1 gas stations
• Make use of picnic spots to pull over and enjoy the scenery – don’t stop in the road!
• Always question your Sat Nav’s motives
• Bring your USB cable so you can enjoy your tunes
• Don’t drink and drive, Iceland has a zero tolerance policy
• Download the 112 Iceland app before you go

Phewwwww! I’m all tipped out. Let me know if you found this post useful and if you have any questions leave me a comment below! 🙂

If you are looking for a good hire car company in Iceland don’t forget to check out Thrifty!

Pin it for later?