Renting a Car in Iceland: Planning an Iceland Road Trip

Last Updated on January 9, 2023

Planning an Iceland road trip? Here is my detailed guide on renting a car in Iceland as well as traffic rules and driving tips.

Marooned just outside the Arctic Circle, Iceland is a Nordic island nation that’s just a hop away from mainland Europe and North America – and yet so wild, rugged and pristine.

Volcanically and geologically active, it is a land of extremities. Its coastlines are fringed with ragged fjords, its interior is speckled with lava fields, bubbling mud pools, erupting geysers, active volcanoes and topped with larger-than-life glaciers. Intense, dramatic and colossal: this country is strikingly beautiful and packed with an endless list of natural attractions.

There’s no better way to explore Iceland than by driving the Iceland Ring Road, a.k.a. Route 1, that circles the entire island. Spanning 828 miles (1332 km), this route is one of world’s top road trips. Weave your way through rolling hills where Icelandic horses roam, past jagged cliffs with gushing waterfalls, and snake alongside sapphire blue rivers. Every turn of the road reveals new landscapes that will keep the entire journey exciting.

Renting a Car in Iceland: All You Need to Know

Planning An Iceland Road Trip

To start planning your Iceland road trip, I’d recommend picking a few highlights and loosely planning your journey around them. It’s best to map out your stops ahead of time, taking into consideration driving times and breaks for meals. There is so much to see along the Iceland Ring Road that you won’t be driving more than 2 hours without stopping for a waterfall or two. 

There will always be fun surprises along the way, so avoid rushing through anywhere. Be careful if you’re visiting in winter (best time to see Northern Lights in Iceland!) as some roads are closed and many of them can be icy and slippery.

Driving in Iceland

Renting a car is undoubtedly the best way to explore Iceland Ring Road. There are bus tours that ply the route, but having your own wheels lets you travel independently, at your own pace. You’ll enjoy the freedom and flexibility of stopping whenever and wherever you want.

It’s also really easy to drive in Iceland, as roads are clearly marked and sign posts are easy to follow (even though they are in Icelandic). The country is practically designed for road trips: roads are well-paved, and there are regular rest stops and gas stations for refueling. I recommend getting a local SIM card or using data roaming to have access to GPS and other travel info (like campsite addresses etc). 

Those seeking a real adventure and looking to wild camp should rent a 4×4 vehicle. But note that off-road driving is strictly forbidden in Iceland. If the road does not have a number, do not drive on it even if there are tire tracks. It will damage nature for decades and you’ll get a serious fine. 

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The Challenges of Driving in Iceland

One thing to note, you will need to be confident driving a stick shift. Most camper vans or cars in Iceland have the manual transmission, so make sure you are comfortable driving one before arriving.

There are two potential hazards you need to be aware of when driving in Iceland: sheep and strong wind. In fall and summer, sheep are allowed to roam free (they are only kept in fenced areas in winter), and may sometimes dash across the road unexpectedly. Always be on the alert for suicidal sheep!

As for the wind, the winds in Iceland are so strong that they can easily blow open your car doors and bend the frames. Always make sure to hold the car door when it’s opened. 

How to Rent a Campervan in Iceland

We rented a camper van from SAD cars and absolutely got hooked to van life. Traveling in a camper van allowed us to explore the back roads and sleep in spectacular settings, while saving money on accommodation and food (that’s at least $100/night).

We also had the flexibility to just pull over and cook or sleep whenever we wanted. I loved how self-sustaining we were with the camper van as we had everything we needed (from food to bed).

Our camper van was a brand new, 2016 model Dacia Dokker with custom built interiors. The van was small yet comfortable, and easy to drive around. You really don’t want to be driving big and bulky motor homes on the narrow mountain roads in Iceland. 

What to Expect in a Campervan

Despite its small size, our camper was equipped with all we needed, including a mattress (that doubled as a seating area), a portable gas stove, dishes, cutlery, pot, pan and water container. The camper also had stand alone heaters which are connected to the diesel fuel tank.

All of the above were included in the price of the rental, which was 95 euros/night. The only additional cost was hiring a car seat for Kaleya, which was only 5 euros a day; and bedding for two people for 75 euros. The bedding included a bed sheet, two duvets and two pillows. We could have also brought our own sleeping bags to avoid that cost, but the bedding was really comfortable.

How to Get Insurance for Your Iceland Road Trip

In Iceland, all car rentals include the obligatory Third Party Liability Insurance (TPL) under Icelandic law – this covers third party damage or loss in an accident.

I highly recommend getting travel insurance as well as it covers risks of COVID-19, personal loss, theft, and medical on top of damages that may incur on your camper van or vehicle in Iceland. With the harsh conditions and extreme weather, your camper can easily suffer from damages.

Safety Wing is the most popular travel insurance company for COVID19-coverage. I use their Nomad Insurance plan, which covers COVID-19 as any other illness as long as it was not contracted before your coverage start date. Refer to my travel insurance guide for more details.

What to See Along the Iceland Ring Road

Read a detailed breakdown of my 7-day Iceland Ring Road itinerary. There’s SO much to see along the Iceland Ring Road that you will find yourself stopping every hour or so to see a waterfall, hike in a volcanic lava field or admire glaciers. 

Here are some of the highlights of the Iceland Ring Road that you shouldn’t miss:

• Geysers at Haukadalur — Watch water sprouting into the sky at this original spot where the word ‘geyser’ was coined.

• Gulfoss — If you only have the time to visit one waterfall, make it this one.

• Svínafellsjökull Glacier — This is one of the many glacier tongues found in southern Iceland, but it’s the most accessible and biggest one.

• Jökulsárlón Glacier Lagoon — Watch chunks of glacier ice floating on the lagoon, backdropped by snow-peaked mountains.

• Whale Watching in Akureyri — Look out for humpback whales in one of the world’s best places to see whales.

• Myvatn Nature Baths — The natural geothermal baths of Iceland are world famous, but they’re also quite pricey. This one is a cheaper than Blue Lagoon and also less crowded.

When is the Best Time to Drive in Iceland

Summer (June to August) is the best season to travel Iceland mainly for the weather. In summer, temperatures rise to a balmy 50-60°F (10-15°C) and the midnight sun promises 24 hours of daylight from the beginning of June to end of July. The weather also isn’t as unpredictable as it is in fall and most roads are passable.

This also means that it’s the busiest period for tourism. I was really surprised to see crowds and heavy traffic, especially around the popular areas like the Golden Circle. When we visited in fall 2011, there weren’t even half as many tourists. Iceland has become a hugely popular tourist destinations in recent years, and the island is struggling to keep up with the drastic increase in tourism.

I would actually recommend traveling Iceland in fall (September and October) for the lower prices and less crowd. Winter (November to February) can get extremely cold, but it is also the best time to see the Northern Lights. It is usually fairly easy to spot the Aurora Borealis in Iceland, even in downtown Reykjavik. Temperatures dip to -4°F (-20°C) so be sure to dress appropriately.

How Much Time to Drive the Iceland Ring Road

Keep in mind that you’ll need a minimum of 7 days to drive the Iceland Ring Road. There is SO much to see along the way, from spectacular waterfalls to glaciers, lakes and canyons, that anything less than seven days would be too much of a rush.

While the entire road is 828 miles (1332km) long, we ended up driving just under 1250 miles (2000km) in total as we took a few detours to see certain sights. Weather can also be unpredictable on the island, especially in fall or winter, as sudden snowstorms are common and can make some roads impassable.

One week was enough to see most of the sights on the Iceland Ring Road, but I would have preferred 10 days to have shorter driving days. There are also many cool adventure activities you can do along the way, which we skipped this time round as Kaleya wouldn’t be able to do most of that. We’ve done many of those activities on our previous trip, including snorkeling in Silfra, ice-climbing on Sólheimajökull Glacier, and white-water rafting.

Where to Stay in Iceland 

When driving in Iceland, I recommend staying at Icelandic summerhouses, as they’re usually spacious, beautiful and more affordable than hotels. We stayed at a few on our previous trip to Iceland and really enjoyed the space. Many of these cottages have spectacular settings and are fully equipped with kitchens and even jacuzzi. 

For those on a budget, traveling in a campervan can be a great way to save money, have some flexibility, and sleep in spectacular settings. However, there has been a huge increase in tourists camping in recent years and locals are really unhappy about the waste and human excretion left behind by tourists. The Icelandic government thus changed the law in November 2015, making it illegal to camp in most parts of Iceland, other than at a proper campsite.

You can find all campsites in Iceland: click to see the summer campsites and the year-round campsites on an interactive map (click on ‘List’ to see details of each campsite). Parking at these campsites usually costs 2000 -3500 ISK ($20 – 35) per vehicle per night. The campsites in Iceland tend to be well equipped with 24-hour WC and showers, electrical outlets, free WiFi, nice dining and cooking areas and even BBQ spots.

Where to Eat in Iceland

Food is expensive in Iceland: even at a gas station cafe, a burger costs around $10 and a soup is around the same price. If you’re looking for a proper fish or lamb meal in a nice restaurant, expect to fork out at least $30. A cup of coffee usually costs at least $5 and a hot dog would be around $5 as well.

On the Iceland Ring Road, restaurants aren’t so easy to come by unless you head into town. You’ll find hot dogs, soups and pre-made sandwiches in gas stations. To save money, we bought yogurt and fruit from the supermarket, and cooked our own pasta and grilled sausages.

I recommend stocking up on groceries in Reykjavik before you leave for your road trip. There are a few supermarket chains in Iceland: Kronan, Netto and Bónus (with a giant cartoon pig as its logo) which is the cheapest. Once you leave southern Iceland, it might be hard to find big supermarket chains until you reach Egilsstaðir in the east. 

Where to Refuel in Iceland

There’s no shortage of gas stations everywhere you go in Iceland. Fill up whenever you can, especially in winter, as you never know when you’ll find the next gas station.

All of the stations we went to accepted foreign credit cards, and you usually pay straight at the pump without having to go inside the station. We had a discount tag for Orkan from SAD cars so we tend to use them exclusively. We pumped at N1 once, but their automatic credit card machine charged me more than the price we had to pay. 

Gas is pricey in Iceland at $2 USD per liter ($7.50 per gallon). It cost around $70 for a full tank of gas and we pumped around five times. In total, we spent around US$350 on gas for the Ring Road trip.

What to Pack for the Road Trip

The smaller your camper or vehicle is, the less you will want to pack. Obviously warm gear is essential. If you can’t see yourself using it daily, you probably don’t need. My mantra has always been: Less is more. Check out our Iceland packing list.

As we were traveling on a small campervan, we had to stick with the essentials to make sure we weren’t crowding ourselves in. You won’t be needing clean clothes for every day of the trip since it’s usually too cold to change out in the open, plus you’re camping.

For photography enthusiasts, be sure to consider the amount of photography or video gear you plan to bring, especially if you’re traveling in a normal vehicle and not a camper van. If you’re traveling in fall or winter, make sure you bring a tripod to capture the Northern Lights in Iceland.

How to Keep Yourself Clean on an Iceland Road Trip

So where do you take showers since you’re camping in Iceland?

There are actually plenty of public swimming pools in Iceland, almost in every town, where you can take a shower and have a dip in the heated pools for anything between 600 to 900 ISK ($5.60 – 8.65). We visited quite a few, since they were all great for kids.

Arguably the most beautiful one was the Hofsós pool, Sundlaugin á Hofsósi, designed by the same architect responsible for the famous Blue Lagoon. Check this website to find all the public swimming pools in Iceland.

Hot Springs in Iceland

There are also a few geothermal hot pots and hot springs (which we missed) dotted all around Iceland that are free to use and found in nature. Check out this site for a full list. These hot tubs and pools have been a tradition in Iceland since the Viking age. They are still super popular with locals and seem to be hangout spots where they socialize.

You can also shower at the campsites if they’re open. The prices run about the same and you’ll need coins (you pay for how long you use it). Don’t forget to bring your towel on the trip! Swimming pools and campsites rent towels for around 600 – 800 ISK, the same price as the entrance ticket.

I hope these tips will help you plan the perfect Iceland road trip! Let me know if you have any other questions about renting a car in Iceland and I’ll be more than happy to answer your questions below.

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