Complete Guide to Renting a Car in Iceland: Comparing Rental Companies, Costs, Insurance, and Pickup/Drop-off Procedures

Post date: 2025-08-03 | Categories: Iceland Travel

The previous article shared various information and experiences about self-driving in Iceland. This article continues with details about renting a car in Iceland, including comparisons and evaluations of major rental companies, pricing, locations, business hours, analysis of rental costs and budgets, types of car rental insurance and coverage, and the pickup and drop-off procedures. Finally, it will compare price differences across different rental channels to determine where to rent a car most affordably.

Complete Guide to Renting a Car in Iceland

This article primarily introduces information and experiences about renting a car in Iceland. For other questions related to self-driving in Iceland, please refer to the previous article: Complete Guide to Self-Driving in Iceland: Traffic Rules, Road Conditions, Parking, Refueling, and Important Considerations.

This article is divided into the following six sections, each detailing aspects of renting a car in Iceland.

1. Requirements for Renting a Car in Iceland: Driver’s License and Age
2. Vehicle Selection: What Type of Car Should You Rent for Self-Driving in Iceland?
3. Recommended Car Rental Companies in Iceland: Evaluations, Locations, and Business Hours of Major Rental Companies
4. Car Rental Insurance in Iceland: What Insurance Do You Need? Where to Buy It Most Affordably?
5. Car Rental Costs in Iceland: Where to Rent a Car Most Cheaply?
6. Pickup and Drop-off Procedures for Renting a Car in Iceland and Important Considerations

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1. Requirements for Renting a Car in Iceland: Driver’s License and Age

As mentioned in the previous article about self-driving in Iceland, anyone with a valid driver’s license from their home country can drive vehicles of the same class in Iceland, provided the license uses the Latin alphabet. To avoid complications, it is best to obtain an International Driving Permit (IDP) for renting a car in Iceland. With a valid IDP, you can rent a car in Iceland.

Although international regulations require that the IDP must be used alongside the original driver’s license to be legally valid, rental companies typically only check the IDP and do not require you to present your original license or passport. However, you will need a credit card that can be used for overseas transactions. If you cannot obtain an IDP, an English-translated version of your original driver’s license issued by a recognized notary authority is also acceptable for renting a car in Iceland.

Car rental companies in Iceland generally require drivers to meet a minimum age requirement, which varies by company. Most require drivers to be at least 20 years old, though some allow drivers as young as 18 but may charge additional fees for those under 20. For 4WD vehicles, the age requirement may be higher, such as 23 years old.

2. Vehicle Selection: What Type of Car Should You Rent for Self-Driving in Iceland?

Car rental companies or websites in Iceland typically categorize vehicles into small cars (Small), medium cars (Medium), large cars (Large), leisure vehicles (Luxury, also known as station wagons or MPVs), and SUVs. The first decision when renting a car for self-driving in Iceland is choosing the right vehicle. The most important factor is the number of passengers, but luggage space must also be considered. Generally, small economy cars (4–5 seats) and compact medium cars can accommodate up to 3 people (including the driver), while some 5-seat models with larger trunks may fit 4 people.

For groups exceeding 4 people, 7–9-seat leisure vehicles (large cars or MPVs) are suitable. However, even these vehicles may only comfortably seat 6–7 people with luggage, and 9-seaters may fit up to 8 people. For groups larger than 8, splitting into two cars may be necessary.

Vehicle categories on the rental website Rentalcars.com:

Beyond passenger capacity, other considerations when renting a car in Iceland include whether to rent a 4WD vehicle, whether the car needs air conditioning, and whether to choose an automatic or manual transmission.

1. 2WD vs. 4WD: Do You Need a 4WD Vehicle in Iceland?

Iceland is a sparsely populated country with few large cities, so its road infrastructure is less developed compared to more densely populated nations. Many roads are gravel-covered, and highland roads (F-roads) may lack even gravel, making them unsuitable for 2WD vehicles. Icelandic law prohibits 2WD vehicles from driving on F-roads. So, is a 4WD necessary for self-driving in Iceland?

If you are visiting Iceland for self-driving during the summer months (June to August) and do not plan to venture into highlands or remote wilderness areas, or drive extensively on gravel roads (e.g., Route 939), then a 4WD vehicle is unnecessary. A 2WD car is sufficient, as roads in populated areas are mostly paved. However, it is advisable to rent a higher-grade vehicle with at least 1500cc engine capacity, as even minor gravel roads can pose challenges for smaller engines. Most vehicle categories above small cars meet this requirement and are adequate for summer ring-road trips.

For winter trips, a 4WD vehicle is safer and better equipped to handle snowy conditions. However, if your itinerary is limited to the southern region between Reykjavík and Vík, a 2WD car with at least 1500cc engine capacity should suffice. Icelandic cars are fitted with winter tires during the colder months, so there is no need to request them specifically.

On rental websites or company listings, 4WD vehicles are typically labeled “4X4” or “4WD,” with some specifying suitability for F-roads.

If renting through Rentalcars.com, you can filter for “SUV-type vehicles” to find 4WD options. 4WD vehicles are invariably more expensive than 2WD, often costing at least one-third more.

2. Air-Conditioned Vehicles

Some vehicles offered by Icelandic rental companies do not have air conditioning (heating/cooling). For winter rentals, an air-conditioned vehicle is essential unless you are exceptionally cold-tolerant. For summer rentals, I recommend renting an air-conditioned car, as even though Iceland’s summer temperatures may feel like autumn or winter to some, strong winds and frequent rain often make it impossible to drive with windows open. Additionally, driving with windows open, even in good weather, is not advisable due to the risk of flying gravel.

Non-air-conditioned vehicles are generally slightly cheaper, but the price difference is not significant, typically around 10%. Some rental company websites do not specify whether a vehicle has air conditioning, but Rentalcars.com usually includes this information.

3. Automatic vs. Manual Transmission

Icelandic rental companies offer both automatic and manual transmission vehicles. Manual cars are generally 15%–20% cheaper than automatics. If you are accustomed to driving automatic cars, it is best to rent one.

4. Major Car Brands and Models

Different rental companies in Iceland offer vehicles from various brands, including Japanese, Korean, American, and European manufacturers. Common brands include Japanese Toyota, Mazda, Honda, Nissan, Suzuki, Subaru; Korean Kia, Hyundai, Ssangyong; American Ford, Chevrolet, Jeep; German Volkswagen, Audi, Mercedes-Benz; French Peugeot, Citroën, Renault; Swedish Volvo; Romanian Dacia; and Czech Škoda. The most common brands are Ford, Volkswagen, Hyundai, Kia, Toyota, Honda, Suzuki, Mazda, Peugeot, Škoda, Citroën, and Dacia.

(1) Vehicles Suitable for 2–3 People

For groups of up to 3 people, 4–5-seat compact cars (medium-sized on rental websites) are ideal. Common models in Iceland include the Volkswagen Golf, Ford Focus, Honda Civic, and Hyundai i30, followed by the Mazda 3, Honda Jazz, Skoda Rapid, Volkswagen Polo, and Kia Rio.

(2) Vehicles Suitable for 4–5 People

For groups of 4–5 people, 5–7-seat leisure vehicles are suitable. On Rentalcars.com, these can be found under “Large Cars,” “Station Wagons,” or “MPVs.” These vehicles typically have hatchback designs with ample luggage space. Popular models include the Citroën Berlingo and Peugeot Partner Tepee, which offer good value for money, and the slightly more expensive Citroën C4 Grand Picasso. For smaller luggage, consider estate cars like the Mazda 6 Estate, Kia Ceed Estate, Hyundai i30 Estate, or Skoda Octavia Estate.

(3) Vehicles Suitable for 6–8 People

For groups of 6–8 people, 7–9-seat MPVs are necessary. On Rentalcars.com, these are listed under “MPVs.” Common models include the Mercedes-Benz Vito, Toyota Proace, and Ford Transit.

(4) 4WD Vehicles

For those needing 4WD vehicles, search under “SUVs” or “Premium Cars” on Rentalcars.com. Popular and affordable 4WD models in Iceland include the Dacia Duster, Suzuki Vitara, Suzuki Jimny, and Skoda Yeti. Note that the Dacia Duster and Suzuki Jimny are only available with manual transmissions. These models, except the smaller Jimny, can accommodate 4 people with luggage. Other options like the Kia Sorento, Kia Sportage, Ford Edge, and Toyota RAV4 are also suitable but slightly more expensive.

For groups larger than 4, the 4WD Mercedes-Benz Vito is an option, listed under “MPVs” on Rentalcars.com.

3. Recommended Car Rental Companies in Iceland: Evaluations, Locations, and Business Hours

Car rental companies in Iceland can be broadly divided into two categories: international chains and local Icelandic companies. International companies operating in Iceland include Alamo, Avis, Budget, Dollar, Enterprise, Europcar, Green Motion, Hertz, National, Sixt, and Thrifty, totaling around ten companies. Local Icelandic rental companies are more numerous, possibly exceeding 30, many of which are newly established in recent years. Major local companies include Ace Car Rental, Auto Car Rental, Blue Car Rental, Cars Iceland, Firefly Car Rental, Geysir Car Rental, Go Iceland Car Rental, Ice Rental Cars, Iceland Car Rental, Islandiacar Car Rental, Keflavik Car Rental, Lagoon Car Rental, Lava Car Rental, Lotus Car Rental, Mex Rent a Car, Orange Car Rental, Procar Car Rental, Reykjavik Auto, Reykjavik Cars, Reykjavik Rent a Car, Route 1 Car Rental, Sadcars, Saga Car Rental, and Star Car Rental. Many local companies have similar names, so careful attention is needed when selecting one.

1. Evaluating Icelandic Car Rental Companies: How to Choose a Reputable One?

Foreign travelers generally rate Icelandic car rental companies poorly, with most online reviews being negative, leading to widespread concerns about renting cars in Iceland. The reasons for these low ratings are varied, including the higher likelihood of accidents due to weather, natural conditions, and road quality, which often result in costly repairs. Additionally, misunderstandings about rental terms and unexpected charges can further sour experiences.

Icelanders are known for their relaxed pace, which may lead to delays in processing issues like damage claims. Receiving unexpected charges on your credit card long after your trip can feel like a scam. Moreover, Icelandic customer service tends to be less warm, which can be off-putting for those accustomed to more attentive service.

With the recent surge in tourism, many new rental companies have emerged, leading to inconsistent service quality. Common complaints include overcharging for repairs, blaming customers for pre-existing damage, providing faulty vehicles, and poor assistance during breakdowns. Overcharging for repairs is the most frequent issue.

To avoid such problems, it is crucial to choose a reputable rental company, purchase appropriate insurance, and drive carefully to minimize risks.

How can you identify a reputable rental company? The simplest method is to rely on others’ experiences, but individual cases may not be representative. However, consistent patterns in reviews can provide reliable insights. Major rental websites like Rentalcars.com and Google collect and calculate user ratings, which can help gauge a company’s reputation.

Below is a comparison of ratings from Rentalcars.com and Google for major Icelandic rental companies. Ratings vary across platforms, with international companies often scoring higher on rental sites but lower on Google, where local companies tend to fare better.

Note: Ratings may differ between branches of the same company. The table above uses ratings from branches near Keflavík International Airport or those with more reviews.

When selecting a rental company, consider whether it is a member of the Icelandic Travel Industry Association (SAF). SAF membership allows consumers to lodge complaints with the Icelandic Consumers’ Association (NS), providing an additional layer of protection. Non-members are not subject to NS oversight, leaving disputes unresolved.

Of Iceland’s 40+ rental companies, fewer than 20 are SAF members. Among the 25 major companies listed above, SAF members include Avis, Hertz, Sixt, Geysir Car Rental, Reykjavik Rent a Car, Blue Car Rental, Procar Car Rental, and Route 1 Car Rental.

2. Locations and Business Hours of Icelandic Car Rental Companies

Most Icelandic rental companies are located in Reykjavík and near Keflavík International Airport. Outside these areas, only a few larger companies (e.g., Budget, Avis) have branches in major northern and eastern towns.

(1) Rental Companies Near the International Airport and Their Business Hours

Most travelers renting cars for self-driving in Iceland pick up their vehicles upon arrival and return them before departure. Nearly all rental companies have branches near Keflavík International Airport, the sole international gateway to Iceland. These branches are concentrated in three areas: adjacent to the airport terminal, in Keflavík (about 4 km away), and in Reykjanesbær (about 6 km away).

Except for Green Motion, all international rental companies have branches at Keflavík International Airport. Avis, Budget, Europcar, and Hertz have counters inside the terminal, with pickup locations in the adjacent parking lot, making them the most convenient. The airport terminal is small, and these counters are located in the arrivals hall on the ground floor.

In addition to international car rental companies, many local Icelandic car rental companies also have branches at Keflavík International Airport, including Cars Iceland, Lotus Car Rental, Orange Car Rental, Lagoon Car Rental, Reykjavik Rent a Car, Blue Car Rental, Sadcars, Geysir Car Rental, and more. The branches of these car rental companies at Keflavík International Airport are all concentrated northwest of the terminal building, approximately 400~500 meters away. If walking, it usually takes about 5~10 minutes to reach them.

However, you don’t need to walk to these rental companies. There are free shuttle buses outside the airport terminal that run between the terminal and the rental companies, with departures every 15~20 minutes. The shuttle buses are shared by all rental companies at the airport, so there are several stops, and the names of the rental companies are displayed on the bus.

For a visual guide on taking the shuttle bus from the airport terminal to the rental company offices, you can refer to this video produced by one of the rental companies:

Some rental companies that couldn’t secure space near the Keflavík International Airport terminal have set up their branches in Keflavík or Reykjanesbær, which are 4~6 kilometers away. These include Star Car Rental, Reykjavik Cars, Route 1 Car Rental, Lava Car Rental, Procar Car Rental, Green Motion, Firefly Car Rental, and Ice Rental Cars.

Rental companies with branches in Keflavík and Reykjanesbær provide their own shuttle services to pick up customers from the airport. If you book through their official websites, you can usually arrange the shuttle during the booking process or call the rental company upon arrival.

Car rental companies in Iceland operate year-round, and most branches at Keflavík International Airport, as well as in Keflavík and Reykjanesbær, are open 24 hours, with a few exceptions.

(2) Car Rental Companies in Reykjavík and Their Operating Hours

While most people prefer to pick up their rental cars at the airport, some may want to rest after their flight and start their self-drive journey the next day. Others may only need a car for a short trip during their stay. Therefore, most Icelandic car rental companies have branches in Reykjavík in addition to their locations near Keflavík International Airport. However, there are fewer branches in the city, usually just one per company, and they are often located far from the city center, making pickup and drop-off less convenient.

Besides the inconvenience, choosing to pick up a car in Reykjavík also means additional transportation costs from the airport to the city. The main public transport options between Keflavík International Airport and Reykjavík city center are the Flybus and Airport Direct airport buses. A one-way ticket from the airport to a hotel in Reykjavík costs around 4,000 ISK for adults. For groups of three, renting a car from the airport is often cheaper than taking the bus.

If you pick up a car in the city, rental companies usually offer shuttle services to transport customers from their hotels to the rental office or back after drop-off, though these services may incur a fee. For a more budget-friendly option, you can take the bus. Branches of Icelandic car rental companies in Reykjavík are not open 24 hours; their operating hours are typically from 8:00 AM to 6:00 PM, with some variations among companies, and they may close earlier on weekends and holidays.

The most conveniently located rental company in Reykjavík is Procar, whose city branch was right across from the Sun Voyager sculpture (Sun Voyager), close to the city center. We picked up and dropped off our car at this Procar branch during our July trip, just a 3-minute walk from our downtown hotel. However, as of writing this article, Procar no longer lists this branch as an option, so it’s unclear whether it’s temporarily closed for winter or permanently shut down. Another centrally located rental company is Geysir, with its Reykjavík branch in the underground parking lot of the Harpa Concert Hall.

4. Iceland Car Rental Insurance: What Coverage Do You Need? Where to Buy the Cheapest Insurance?

Due to Iceland’s weather, natural environment, and road conditions, the likelihood of accidents causing vehicle damage is higher. Additionally, labor and repair costs in Iceland are significantly more expensive than in many other places, making car rental insurance premiums higher. However, given the higher risk of accidents and potential repair costs, it’s advisable to purchase additional insurance coverage when renting a car in Iceland.

1. What Types of Car Rental Insurance Are Available in Iceland?

Like in all countries and regions, Icelandic law requires all vehicles driven on public roads to have Third-Party Liability Insurance, which covers damages to third parties (people or property) in the event of an accident. Some rental companies also include Personal Accident Insurance (PAI), which covers medical expenses for the driver and passengers in the rental vehicle. The costs for these two types of insurance are included in the rental fee and are not optional.

Third-Party Liability Insurance and Personal Accident Insurance do not cover the rental vehicle itself. Without additional coverage, the renter is fully liable for any damage to the rental vehicle, up to the cost of a new car. Therefore, rental companies offer supplementary insurance options that renters can choose to purchase based on their needs.

In Iceland, supplementary rental insurance options include Collision Damage Waiver (CDW), Theft Protection (TP), Gravel Protection (GP), Sand and Ash Protection (SAP), Tire Insurance (TI), and more. The types of coverage and their names may vary by rental company. It’s important to note that insurance coverage typically applies per rental period, not per incident. If two accidents occur during the same rental period, only the first may be covered.

(1) Collision Damage Waiver (CDW)

Collision Damage Waiver (CDW) waives the renter’s liability for damages to the rental vehicle in the event of a collision. However, it usually excludes damage to the windshield, headlights, tires, wheels (rims), engine, undercarriage, and damage caused by gravel, sandstorms, flooding, or collisions with animals. It also excludes theft, reckless driving, driving under the influence, or driving on restricted roads (e.g., F-roads or highland roads).

Basic CDW does not fully waive the renter’s liability. Renters are typically responsible for a deductible (excess), which is the maximum amount they must pay in the event of a covered claim. If the damage exceeds the deductible, the insurance covers the rest. If the damage is less than the deductible, the renter pays the actual cost. The deductible amount varies by rental company and vehicle type, with more expensive vehicles generally having higher deductibles. For standard 2WD cars, the CDW deductible usually ranges between 200,000~350,000 ISK, while larger or 4WD vehicles may have higher deductibles.

With very few exceptions, all rental companies in Iceland require renters to purchase basic CDW, and the cost is included in the rental fee.

In addition to basic CDW, many rental companies offer upgraded versions, such as Super CDW or Zero Excess, with different names depending on the company. The coverage is the same as basic CDW, but the deductible is lower. Super CDW typically reduces the deductible to 40,000~150,000 ISK, while Zero Excess eliminates the deductible entirely. However, few rental companies offer Zero Excess.

(2) Theft Protection (TP)

Theft Protection (TP) covers losses if the rental vehicle is stolen, but it does not cover personal belongings inside the car. Many rental companies require renters to purchase TP, and the cost is included in the rental fee. Most Icelandic rental companies offer TP with no deductible, though some may have one.

(3) Gravel Protection (GP)

Many roads in Iceland are gravel roads without asphalt, making it easy for flying stones to damage the vehicle’s body or windshield. Such damage is not covered by CDW, so most Icelandic rental companies offer Gravel Protection (GP), also known as Windshield Protection by some companies. GP usually covers the full cost of repairs, though a few companies may impose a deductible.

(4) Sand and Ash Protection (SAP)

In highland areas or places with loose sand, strong winds can create sandstorms that damage the vehicle’s exterior. This type of damage is not covered by CDW, so many rental companies offer Sand and Ash Protection (SAP or SAAP), also called Sandstorm Protection by some. SAP typically comes with a deductible.

(5) Tire Insurance (TI)

Tire Insurance (TI) covers the cost of replacing damaged tires but excludes rims. However, few Icelandic rental companies offer TI.

The supplementary insurance options, premiums, and deductible terms vary by rental company. Among Iceland’s major rental companies, only Sadcars allows renters to opt out of CDW; all others require it, and the cost is included in the rental fee. Most companies also require Theft Protection (TP), and some may even mandate Super CDW or Gravel Protection (GP). Booking directly through a rental company’s website and purchasing all supplementary insurance options often comes with discounts ranging from 20% to 45%.

2. Where to Buy the Cheapest Car Rental Insurance in Iceland?

Purchasing supplementary insurance directly from the rental company has its advantages: in the event of an accident, you either pay nothing or only the deductible, simplifying the process. Additionally, rental staff tend to be more accommodating, and vehicle inspections at drop-off are less stringent. However, insurance purchased from rental companies is more expensive, and even with full coverage, certain damages (e.g., rims, undercarriage, flooding, towing) may not be covered, and deductibles may still apply.

Alternatively, you can purchase third-party car rental insurance from specialized providers. Third-party insurance is usually cheaper and offers broader coverage, often with no deductible. However, in the event of an accident, you must first pay the rental company and then file a claim with the insurer, which can be cumbersome.

If you book through a car rental website, you can often opt for third-party insurance during the booking process. Different websites partner with different insurers. For example, Rentalcars.com offers third-party insurance through RentalCover.com.

How to Purchase Insurance from RentalCover.com?

RentalCover.com is a major online provider of car rental insurance. You can purchase insurance directly through their website after booking your rental. If you find the rental company’s insurance too expensive, this is a cost-effective alternative. If you book through Rentalcars.com, you can also opt for RentalCover.com’s insurance during the booking process, but it’s often cheaper to purchase it separately through RentalCover.com.

The process of purchasing insurance through RentalCover.com is straightforward. First, select the country (or region) where you’ll be renting, your country of residence, the rental period, and the vehicle type (Note: premiums differ for cars and 4WDs, so select the correct vehicle type). Then, obtain a quote.

After receiving the quote, provide your email address, name, age, phone number, and credit card details to complete the payment.

Once payment is processed, you’ll receive a confirmation email with an electronic copy of the insurance invoice. You can also log in to your RentalCover.com account using your email and booking reference to view your policy details or initiate a claim.

RentalCover.com calculates premiums per calendar day, not per 24-hour period. Longer rental periods typically reduce the average daily premium. Additionally, premiums vary by the renter’s country of residence, likely reflecting historical claims data and risk assessments for drivers from different regions.

3. What to Do in Case of an Accident?

If you’re involved in a traffic accident while driving in Iceland, you may not need to report it to the police if it’s minor and there are no injuries (to people or animals). However, you must complete an Accident Statement, which serves as proof for insurance claims. For serious accidents or those involving injuries, you must contact the police. Each rental vehicle carries an Accident Statement form. If the accident involves other vehicles, each driver must complete one. Since I haven’t been in an accident, I’m not familiar with the specifics of filling out the form or the subsequent process.

5. Iceland Car Rental Costs: Where to Find the Cheapest Deals?

1. How Iceland Car Rental Costs Are Calculated and Seasonal Price Differences

Icelandic car rental companies charge per day, with one day defined as a continuous 24-hour period. However, any additional time, even just half an hour, counts as an extra day. For example, if you pick up a car at 10:00 AM on July 1, 2019, and return it at 10:00 AM on July 11, the total rental period is 240 hours (10 days). But if you return it at 10:30 AM on July 11, the total becomes 240.5 hours (11 days). Some rental companies offer long-term rental discounts, such as “rent for 7 days, get 1 day free.”

Car rental prices in Iceland vary significantly between peak and off-peak seasons, with peak season rates often more than double off-peak prices. The off-peak season runs from October to April, when rental demand is low, making these seven months the cheapest time to rent a car in Iceland. During this period, renting a 1300~1500cc 2WD automatic car with air conditioning costs around US$30~US$45 per day, though prices may spike during Christmas.

July and August are peak tourist months, and renting the same car during this period costs around US$65~US$90 per day. May, June, and September fall somewhere in between, with daily rates averaging US$45~US$60. Since most tourists visit Iceland during the peak summer months, many find car rental prices steep.

2. Comparing Icelandic Car Rental Companies: Which Offers the Best Prices?

Icelandic car rental companies have official websites where you can book directly. When booking through a company’s website, payment is usually made at pickup, though some offer the option to pay online in advance, often with a discount. If you choose to pay at pickup, some companies may require a deposit. Most Icelandic rental companies allow free cancellations, with policies varying by company—the most lenient allow cancellations up to 24 hours before pickup.

Prices vary significantly among Icelandic rental companies, so it’s important to compare options to avoid overpaying.

Local Icelandic rental companies are generally cheaper than international chains. Some of the more affordable and highly rated local options include Blue Car Rental, Reykjavik Cars, Reykjavik Rent a Car, Lotus Car Rental, Cars Iceland, Orange Car Rental, Lava Car Rental, Lagoon Car Rental, and Sadcars. If you prefer international brands, Thrifty and Dollar are good choices, offering competitive prices and solid customer ratings.

3. Comparing Rental Channels: Where to Find the Best Deals?

In addition to booking directly through a rental company’s website, you can use specialized car rental platforms like Rentalcars.com. Some rental companies consistently offer lower prices on their websites, while others may be cheaper on third-party platforms, especially for bookings made within three months of pickup.

Before booking, it’s a good idea to compare prices on Rentalcars.com or other major rental platforms. You can also use price comparison tools like Skyscanner to check rates across different platforms. Unfortunately, many of the cheaper local Icelandic rental companies listed earlier are not available on third-party platforms and can only be booked directly through their websites.

Payment methods vary by platform. If you book through Rentalcars.com, the full rental fee is paid online, though it may be split into two charges: a deposit at the time of booking and the balance about a month before pickup.

4. Additional Equipment Rental Fees and Charges

Icelandic rental companies typically offer child seats (including infant seats), GPS navigation systems, and WiFi hotspots for rent. Some may even provide tents or camping gear. As mentioned in the previous article, The Complete Guide to Self-Driving in Iceland: Traffic Rules, Road Conditions, Parking, Fuel, and Important Tips, there’s no need to rent a GPS in Iceland—free mobile navigation apps are sufficient. Renting a WiFi hotspot from a rental company is also expensive, so purchasing a local SIM card with data is a more cost-effective and convenient option.

If you’re traveling with children or infants, child seats are mandatory. For Iceland’s child seat regulations, refer to the previous self-driving guide. Icelandic rental companies offer child seats for rent, which can be added during booking or at pickup. Child seat rental fees are charged either per rental or per day, depending on the company. For daily rates, there’s often a cap after a certain number of days (e.g., 7 days).

Most Icelandic rental companies charge extra for additional drivers, with fees structured per rental or per day, depending on the company.

6. Iceland Car Rental Pickup and Drop-Off Procedures and Important Tips

The pickup and drop-off procedures for renting a car in Iceland are similar to those in Japan or Australia. However, Icelandic rental companies conduct stricter vehicle inspections at drop-off, so extra care is needed during both pickup and return.

1. Pickup Procedures and Important Tips

To pick up a rental car in Iceland, you’ll need to present your booking confirmation and a valid driver’s license (international driver’s license). If there are multiple drivers, each must present their international license. A passport is not required. Even if you’ve prepaid online, you’ll need a credit card for potential damage deposits. Most Icelandic rental companies place a hold on your card for the deductible amount rather than charging it upfront.

Additionally, rental companies typically ask for an emergency contact number during pickup. If you’ve purchased a European SIM card, you can provide its number as your contact during the rental period.

If you haven’t purchased additional insurance from the rental company, staff will likely ask if you’d like to do so. If you’ve already arranged third-party insurance, you can decline. Before taking the car, you’ll need to sign a rental agreement, which includes details like the vehicle’s identification (license plate, make, color, etc.), rental period, renter information, deductible terms, and administrative fees for traffic violations.

After signing the agreement, staff will hand you the keys and a folder with rental documents, then direct you to the vehicle or its parking spot. Icelandic rental staff usually won’t inspect the car with you but will ask you to check it yourself. If you notice any damage or scratches, mark them on the vehicle condition report and inform the staff. It’s also a good idea to take photos of any pre-existing damage with your phone.

While pickup procedures are relaxed, drop-off inspections are thorough. Staff will examine the car inside and out, including the roof and undercarriage. To avoid being held responsible for pre-existing damage, inspect the vehicle carefully during pickup.

2. Drop-Off Procedures and Important Tips

In Iceland, rental cars are typically picked up with a full tank and must be returned full. Be sure to refuel before drop-off. If the car is excessively dirty, the rental company may charge a cleaning fee, so consider washing the car at a gas station before returning it. Additionally, all rental cars in Iceland are non-smoking. If the car smells of smoke, you may incur an extra cleaning fee.

At drop-off, staff will usually inspect the vehicle in your presence. If everything is in order, they’ll provide a document confirming the inspection. The format varies by company—for example, when I rented from Procar, the staff marked and signed the rental agreement before returning it to me as proof.