Your Ultimate Guide to Car Rental in Reykjavík, IS: Compare, Book & Drive With Confidence

Imagine stepping outside your hotel in Reykjavík to a city buzzing gently under a sky painted with pastel dawn hues. The traffic lights blink amber as scooters zip past, locals alternate between casual slowness and purpose, and somewhere nearby, the comforting rumble of a diesel engine promises freedom. With your keys in hand to a rental car, you’re no longer bound by bus schedules or expensive taxis—you’re the master of your own Icelandic itinerary. Reykjavík isn't just a destination; it’s your launchpad to vast fjords, volcanic landscapes, and glaciers. The anticipation is tangible. Whether it’s a spontaneous late-night drive or a planned day trip to Þingvellir, renting a car here opens doors to authentic adventures beyond the city limits.

Why Rent a Car in Reykjavík, IS?

When I first climbed the cathedral tower in Reykjavík, the city’s compact beauty struck me—but I quickly realised that stepping outside its urban bubble brings Iceland’s grandeur alive. Renting a car gives you the freedom to chase the Northern Lights on your own time, dip into natural hot springs off-the-beaten-path, or explore sights like the Blue Lagoon without the time restrictions of tours.

Public transport here is reliable but limited by schedules, especially late at night. With a rental car, you can set out at dawn or drive into the small hours after a concert or festival in downtown Reykjavík. It’s also perfect for spontaneous day trips; the Golden Circle’s famous geysers and national parks are easily accessible by car, and you can linger as long as you want without rushing back for a bus.

Moreover, Reykjavík’s roads are well-maintained, driving conditions outside winter are straightforward, and signage in English makes navigation easier for first-timers. Imagine sipping coffee in a quaint town on your way to a scenic fjord without hurrying or missing stops. Renting a car here truly transforms your Icelandic experience, offering both convenience and adventure.

Step-by-Step Pick-Up Guide

1. Book online in advance. Compare car rental Reykjavík, IS options via trusted platforms to lock in the best rates and vehicle choices.
2. Prepare your documents. Carry your valid driving licence, passport, credit card for the payment hold, and International Driving Permit if required.
3. Arrive at the pick-up location. Whether at the airport or city centre office, follow signage carefully and ask staff for directions if needed.
4. Present your documents and pay the deposit. Rental companies typically place a hold on your credit card for insurance excess and fuel security.
5. Inspect the vehicle carefully. Check for scratches, dents, and verify the fuel gauge. Take photos for your peace of mind.
6. Set up navigation and extras. Request a GPS unit or pair your phone to the vehicle’s Bluetooth for guidance and music on the road.
7. Review the return procedure. Confirm where and when to drop off the car, especially if returning outside business hours.
8. Drive off confidently. Remember to fasten your seatbelt, adjust mirrors, and start your Icelandic driving adventure!

Major Rental Companies Compared

These main rental companies covering Reykjavik offer a range of vehicles from compact cars to rugged SUVs perfect for Iceland’s terrain. Blue Car is notable for its strong local presence and car variety, while Sadcars stands out for no out-of-hours fees, ideal for flexible travellers. Hertz and Enterprise bring international reliability and extra benefits like loyalty points and additional drivers. Comparing car rental Reykjavík, IS options allows you to tailor your choice between cost, convenience, and perks.

Local Driving Rules & Zones

Speed limits are generally 50 km/h in urban areas, 80 km/h on gravel roads, and up to 90–100 km/h on paved rural roads. Always watch for changes, especially near towns or schools.

Low-emission badges are currently limited, but some parking areas and zones in Reykjavík offer discounts for electric and hybrid vehicles identifiable by stickers.

Alcohol limits in Iceland are strict: the blood alcohol content (BAC) limit is 0.02%, effectively zero tolerance. I saw locals opt for taxis or rideshares after a night out, and I recommend you do the same.

Winter driving requires extra caution, studded tyres, and possibly snow chains. While the summer months are forgiving, wintertime driving in Iceland demands more respect for weather and conditions.

Money-Saving Hacks

• Book early: Rental cars in Reykjavík often rise in price during summer and holidays. Secure your car well in advance to save.
• Choose economy cars: Smaller vehicles are cheaper on fuel and rental costs. Their nimbleness suits city centre car rental Reykjavík, IS best.
• Avoid airport-only pick-up: Off-airport locations sometimes offer reduced fees. Shuttle services can be a cost-effective transfer.
• Decline unnecessary extras: GPS and child seats can be rented cheaper locally or used apps; insurance cover should be checked via your credit card providers.
• Refuel yourself: Avoid pre-paid fuel deals which tend to overcharge. Fill up at local stations like Olís 24 h for best prices.

Parking & Congestion Charges

1. Know street colours: Blue zones are short-term with parking meters; green zones are reserved for residents; red zones prohibit parking.
2. Use parking apps: Apps like Parka Reykjavík allow pay-by-phone convenience and notify you of expiry times.
3. Expect garage fees: Central garages charge ISK 400–800 per hour; overnight security is included, so it’s worth it logically.
4. Sunday parking: Most city centre on-street parking is free on Sundays, a boon for weekend explorers.
5. Watch for signs carefully: Areas with time restrictions or permit requirements are common—avoid fines by double-checking signage.

Road-Trip Ideas Within 100 km

• Þingvellir National Park: 47-minute drive; UNESCO site where continents meet and Iceland’s parliament was founded.
• Blue Lagoon: 49-minute drive; famed geothermal spa with milky-blue waters and luxury treatments.
• Reykjanes Peninsula: 55-minute drive; rugged coastal landscapes, lighthouses, and geothermal fields to explore.

Hidden Pitfalls

• One-way fees: Iceland’s one-way rentals often incur extra fees. Confirm your drop-off point and fees upfront.
• Toll devices: Some routes require toll payments via electronic systems. Rental companies may charge administrative fees if you use these.
• Fuel policies: Beware of full-to-full policies; always fill the tank as instructed to avoid steep refuelling charges.

Common Mistakes Drivers Make

1. Ignoring weather forecasts. Always check conditions before heading out; Icelandic weather shifts quickly.
2. Underestimating distances. Distances may look short, but road conditions and speed limits affect travel times.
3. Not using headlights during the day. It’s mandatory to drive with headlights on, even in daylight.
4. Distracted driving. Avoid using phones while driving; keep focus on narrow and winding roads.
5. Skipping rental car inspection. Always document existing damage to avoid disputes.
6. Overpacking the vehicle. This reduces fuel efficiency and handling, especially on mountain roads.
7. Driving on unpaved roads in unsuitable vehicles. Stick with 4x4s if venturing off asphalt to protect car and wallet.
8. Failing to follow signage. Road signs can warn of gravel, wildlife or roadwork; heed them carefully.

Frequently Asked Questions

Do I need an International Driving Permit (IDP) to rent a car in Reykjavík?

An IDP is recommended if your driving licence is not in English or Icelandic, but drivers from most EU countries and English-speaking nations can use their domestic licence.

Is car rental in Reykjavík expensive?

Prices vary by season, vehicle type, and booking timing. Economy cars start around ISK 9,500 per day, while SUVs can be double that. Booking early and comparing car rental Reykjavík, IS providers helps save.

Can I drive rental cars on gravel roads?

Many rural roads here are gravel; only take vehicles suited for these surfaces, typically 4x4s. Otherwise, you risk damage and voided insurance.

Are GPS or Wi-Fi devices included?

Some companies offer GPS for free or a small extra cost. Wi-Fi devices are less common, but many drivers use mobile hotspot plans on their phones.

Ready to Hit the Road?

Driving in Reykjavík, IS lets you uncover Iceland’s treasures at your own pace. I still smile when recalling my first drive out of the city, windows down, with a soundtrack of distant waterfalls and volcanic ridges. Whether you crave city exploration, nature escapades, or a mix of both, renting a car here is your ticket to freedom.

I’d love to hear about your car rental experiences in Iceland or any questions you have. Drop a comment below or sign up for our newsletter to get insider tips for your next adventure.

About The Author

Tomás Rivera

Tomás dissects cities through their design—airports, plazas, museums, and public buildings. His insightful articles help readers understand how a city’s layout reflects its culture and identity.