Driving a Rental Car in Iceland

Can you drive your own car to Iceland? Sure, you can—but you’ll have to take a long ferry crossing from Hirtshals in Denmark. That crossing takes 3 nights and is only suitable for people who have plenty of time. The advantage, though, is that you can make a stopover on the Faroe Islands. But if you’ve traveled to Iceland by ferry, you’ll have to take that same ferry back, so you’ll easily spend a week on the round trip.

For most people, renting a car is therefore the best option for a vacation in Iceland. It’s by far the best way to enjoy everything the country has to offer. There are a few things that require extra attention, though. In this blog, we’ll explain everything you need to know about Iceland’s roads, where you’ll need to pay tolls, where you’ll need to pay for parking, and how that one single-lane tunnel works. That way, you’ll be well prepared once you’ve rented a car for your vacation in Iceland.

Which Car to Rent in Iceland: 4×4 or Not?

It’s often claimed that you need to rent a four-wheel-drive vehicle for Iceland. That’s by no means always necessary and depends entirely on where and when you’ll be driving. The roads around the capital, Reykjavik, are well-paved, and the more than 1,300-kilometer-long coastal ring road is also perfectly drivable in a regular rental car. If you’re visiting Iceland in the summer and will only be driving on these roads, you really don’t need to rent a 4×4.

The situation is different if you plan to drive on the so-called F-roads. These are gravel roads leading into the interior, and it’s actually prohibited to drive a regular rental car on them—you do indeed need a 4x4 for that. Incidentally, these roads are closed for most of the year. After the first snowfall in the fall, the F-roads close and don’t reopen until May, June, or even July. During those winter months in Iceland, it’s also nice to have a 4x4 rental on other roads. The roads are often slippery due to snow or sleet, and a 4x4 gives you better traction.

Rental Car in Iceland: Watch Out for Gravel and Flying Rock

As mentioned above: you may only drive on F-roads in a 4x4 vehicle—and even then, only when the road is open. That doesn’t mean you’ll never encounter a gravel road while driving your regular rental car in Iceland. For example, many roads in remote areas and some access roads to attractions are unpaved. You may drive your rental car on these roads, but be sure to adjust your speed accordingly. Even sections of Ring Road 1 consist of gravel, especially in the southeastern part of the country. Also keep in mind that roads in Iceland suffer greatly from the winter climate, and any damage cannot always be repaired immediately.

If you’ve rented a car in Iceland, you must remain constantly alert to suddenly changing conditions while driving. For example, a paved road might suddenly turn into gravel, or a well-maintained paved road might have loose gravel on it. Always drive carefully in these situations, because flying stones can not only hit other cars but also cause damage to the undercarriage of your rental car. If a heavy truck is approaching from the opposite direction, slow down and steer the car as far to the right as possible. Another thing to watch out for when driving a rental car on Icelandic roads: animals roaming freely, such as sheep or horses.

Want to see exactly what the conditions are like on Icelandic roads? There’s a particularly handy tool for that: the umferdin (traffic) website features a clear map of the country with information about all the roads. You can also zoom in on a specific part of Iceland. In addition, the website provides information about the weather, traffic volumes at certain points, and roadwork locations.

Renting a Car in Iceland: Keep an Eye on the Weather

As we mentioned earlier, you should always be prepared for unexpected circumstances in Iceland. This also applies to the weather. In Iceland, you can truly experience all four seasons in a single day. If the sun is shining in the morning, that’s no guarantee it will stay sunny and dry all day. Always check the weather forecast before heading out, even in the summer! While the website we mentioned above provides weather information, it only shows current conditions—not a forecast. For that, use the app (Google Play / App Store) from the Icelandic Meteorological Office. If you are nevertheless caught off guard by bad weather, don’t hesitate to interrupt your trip and seek shelter.

If you rent a car in Iceland, the local rental company sometimes offers insurance “against damage caused by a car door being blown open by the wind.” You might laugh it off, but the fact is that Iceland can be quite windy. Strong gusts of wind are particularly notorious during the winter months. Therefore, always hold the door firmly when getting in and out of the car. That way, you won’t need that kind of insurance.

Always Keep Plenty of Fuel in Your Rental Car

There are plenty of gas stations in Reykjavik and the surrounding area, as well as in the towns and villages. But if you’re planning longer trips in your rental car, keep in mind that gas stations can be far apart. The rule of thumb is: the farther you are from the Icelandic capital, the greater the distance between gas stations. Don’t rely blindly on road maps or electronic navigation, because you won’t be the first to discover that a gas station shown on the map has since closed.

Incidentally, along many main roads in Iceland, there are signs indicating the distance to the next gas station.

Parking Your Rental Car in Iceland

Until not too long ago, you could park for free in many places in Iceland, but that’s changing. It probably won’t surprise you that you have to pay to park your rental car in downtown Reykjavik. But the same applies in other cities, such as Akureyri. Parking is no longer always free at an increasing number of attractions. If you drive your rental car to places like Thingvellir National Park or the Seljalandsfoss waterfall, you’ll find that you have to pay for parking. This is expected to become the norm at more and more popular attractions in Iceland in the coming years.

You can usually pay with cash or a credit card. There’s also an Icelandic app for paying parking fees, called Parka, but it has received rather mixed reviews.

Rental Car in Iceland: How Do You Pay Tolls?

There are no toll roads in Iceland, but there is one toll tunnel. If you follow Ring Road 1 in the north, you’ll drive through the Vaðlaheiðargöng tunnel near Akureyri. There are no toll booths; you can pay in advance or afterward (within 24 hours) via the veggjald website. Don’t forget to do this, because otherwise the car rental company will be billed for the toll plus a fine, and you’ll have to pay administrative fees on top of that.

Some websites mention that you have to pay for the Hvalfjarðargöng (Whale Fjord Tunnel) in Reykjavik. That toll was abolished back in 2018.

A tunnel with only one lane… help!

For some drivers of rental cars in Iceland, it’s a fun challenge; for others, it’s enough to break out in a cold sweat: a tunnel with just one lane. Not one lane per direction, but for both directions combined! Yes, it exists in Iceland: in the northwest, between Ísafjörður and Önundarfjörður. Two-thirds of the way through this Westfjord Tunnel, there’s even a T-junction leading to the fishing village of Suðureyri.

When heading toward Ísafjörður, you can always keep driving through the tunnel, but in the opposite direction, you have to watch carefully for oncoming traffic and pull into a bay to let them pass. The trick is to judge the right moment to pull your rental car into one of these pull-offs. If you do it too early, the traffic behind you will get annoyed; if you do it too late, the oncoming driver will honk, and you’ll have to back up into the pull-off. It’s best to follow another car and hope the driver isn’t a tourist too…

Incidentally, the section of the tunnel from Ísafjörður to the T-junction—which is over 2 kilometers long—is a standard two-lane road; the tunnel becomes a single lane from that junction onward for 4 kilometers.

Winter Tires for Car Rentals in Iceland

It probably won’t surprise you that sub-freezing temperatures, snowfall, and black ice are common in Iceland during the winter. Under these winter conditions, winter tires are mandatory between November 1 and April 15. They will therefore be fitted as standard on the car you rent. Be sure to check whether winter tires are included in the rental price. This is often the case, but not always. So pay close attention to this when renting a car during the winter months in Iceland. In our search system, you can check the “winter tires” option. This will show you only rental cars where winter tires are included in the price.

Vacation in Iceland: Should You Rent a Car or Not?

Iceland has public transportation, but the schedule is very limited. Moreover, the buses connect cities and towns and therefore don’t go to the natural attractions—which are exactly why you’re visiting Iceland in the first place. Excursions are organized to those sights, but that limits your flexibility.

In short: the best way to explore Iceland is to rent a car and drive yourself. That way, you’ll get the most out of the indescribable natural beauty: craters, volcanoes, lava, hot springs, waterfalls, fjords, mountains, glaciers, (ice) caves, and caverns. Marvel at the purity of the ever-changing landscapes and the fantastic views. With a rental car, you’ll truly experience Iceland and can plan your own route entirely on your own terms.