There are a few things you need to consider when renting a car in Iceland, such as what time of year you’re going to be traveling, where you plan to go, your budget, and who you are traveling with.

What time of year are you planning to visit Iceland?

Like I explain in my Iceland Self-Drive Guide, when it comes to travel in Iceland there are effectively only two seasons: Summer and Winter. Depending on the year, the summer in this context is more or less from the middle of May to the middle of September and the rest of the year we can just lump together into the winter season.

Traveling in rental car in Iceland in Summer

If you’re traveling to Iceland in the summer, there are a lot fewer things you need to worry about when it comes to the weather and conditions. It’s unlikely that you will encounter snow and icy roads and if you’re sticking to the main roads, any car should do.

The distances in Iceland are deceiving and most people end up spending more time in the car than they anticipate so I always recommend to my guests to make sure they rent a car that allows them to travel somewhat comfortably. So basically not the smallest cars, unless you’re small and don’t need a lot of space, of course.

Traveling in a rental car in Iceland in winter

In winter, things get a bit more complicated. The Icelandic weather is notoriously unpredictable so it’s impossible to know what it will be like at any given moment. In general, though, you can expect rain and windstorms all through the winter season and then in the dead of winter, from about November to March (and some years well into April), you can always expect snow and icy conditions.

Whether or not you’ll experience those is a different matter altogether.

During the darkest and coldest winter months, I would advise you against booking the smallest cars just in case you’ll encounter snow. A Toyota Yaris or Aygo or the Hyundai i10, all popular with car rental companies, are just not great options in snow. They also feel kind of unstable in the strongest wind gusts and you don’t want to add to already demanding conditions by having to worry about whether the car is falling apart. It probably isn’t but it just feels that way sometimes in the wind.

If there’s a lot of snow, I personally prefer a 4WD (or AWD) SUV or a jeep because they’re a little higher and the four-wheel-drive is really helpful in those conditions. These types of cars are quite a lot more expensive to rent than the smaller cars, especially in winter when they’re in higher demand, so I understand the hesitation of renting one if you’re not sure you will need it.

What you can do is book a smaller car from someplace like Rentalcars.com and take advantage of their generous cancellation policy. That way you could follow the forecast and the conditions in Iceland and cancel your reservation and book a bigger car if needed. Or you can upgrade when you pick up the car. Car rental companies will often offer upgrades if they have availability and if the conditions call for it. They also offer upgrades when the conditions don’t call for it because they’d like to get more money out of each guest so just keep that in mind too.

The issues you might run into with this plan is that a) the prices are often higher if you book on short notice (although this depends on the booking status of the company) and b) if it’s a smaller company they may not have any bigger cars available on the day. This applies in particular around Christmas and the New Year and around the Chinese New Year as both of these periods are quite busy in Iceland.

Where in Iceland do you plan to go?

Visting the Icelandic highlands in summer

In the summer, you have the option to visit some of Iceland’s highlands like Landmannalaugar or driving over Sprengisandur. If that’s part of your plan, you will need to rent a car that is allowed on those roads. Most of the time, you will need a 4WD SUV or a full-on jeep and you can get a huge fine if you are caught driving on F-roads (mountain/highland roads) in a car that is not approved for that.

If you plan to visit areas like Þórsmörk, a Toyota Rav4 or Dacia Duster is not enough to get you there as there are unbridged rivers on the way that you need specially outfitted vehicles to cross. If you plan to visit Þórsmörk, I would recommend you park the car in Hvolsvöllur and take the bus from there, as the rivers there are dangerous if you don’t know what you’re doing.

In winter, most of the highland roads are closed and you can’t visit those areas without doing a super-jeep tour.

Staying on the main tourist trails in winter

If you’re visiting in winter and you plan to drive to the Golden Circle, the South Coast to Vík or the Snæfellsnes peninsula – most days you probably won’t need a 4WD/AWD but you might feel more comfortable and secure driving one. Those routes are usually well serviced but you can of course always find yourself in a snowstorm or icy conditions in which case a 4WD/AWD is helpful.

In some cases, people experience false security when they drive 4WD and make poor decisions but no matter the car, you always have to be careful and drive in accordance with the conditions.

Going the full circle in winter or spending some time further afield

If you plan to visit areas like the North, The Westfjords, the East Fjords or even the South East (around Vatnajökull where all the ice caves are) in winter, these regions tend to get a lot more snow than we get here in Reykjavík and the surrounding areas. You will also have to drive through mountain passes, some of which are high and narrow and accumulate a lot of snow, and I would personally not drive those roads in a small car in winter.

Plenty of locals would but they also know the roads and are familiar with the conditions, unlike most visitors.

I would almost go as far as saying that if you plan to visit these areas from November to March you should rent a 4WD car.

What kind of budget are you working with?

I know money is always an issue because Iceland is not by any standards a cheap destination. Therefore, the temptation to rent the cheapest car you find is big.

I’ve talked about this a lot before but I always recommend my guests to book from reputable car rental companies that have high service standards and that offer good cars on good tires. If you rent through Rentalcars.com, read through the comments and reviews of the companies before you book and if you see a lot of red flags, don’t book with that company even though they’re the cheapest.

Budget, Avis, Europcar, Hertz and Enterprise all seem to be quite solid based on my own experience, what I hear from my colleagues here in Iceland and from our guests.
If renting an appropriate car for the conditions is too tough on your budget, it’s better to do tours than skimp on safety.

Getting the best car for your travel party

It goes without saying that you will need a bigger car if you’re traveling with a family or group than if you were traveling solo. You both have to consider the luggage space but also how spacious the car is on the inside.

If you’re tall or wide, or you have adults who need to sit in the backseat with you, I would rule out the smallest cars right out of the bat. Estate cars are good if you have kids and a lot of luggage and if you’re planning on renting an SUV they usually come in different sizes The Kia Sorrento, for example, is bigger than the Dacia Duster (which is the most popular rental SUV in Iceland).

We drive a Toyota Rav4 and although it doesn’t have the biggest space for luggage (ours is a hybrid so the battery takes up some space but it’s still big enough to fit our luggage when we travel within Iceland) it’s quite spacious in the back and can easily fit adults with longer legs. When we drove all over Europe this spring we got a Ford Kuga which was both comfortable and had enough space for all three of our bags. I find that car rental websites are usually quite conservative in their estimate of how much luggage the cars will fit but just to be on the safe side, I always try to google the models just to see what they are like.