Iceland Car Rental FAQ

Both exist. Full-to-full is the standard and usually the cheapest: you get a full tank and return it full. Prepaid means you buy a tank up front and return the car empty, but you rarely return it truly empty, so you tend to overpay. Ask for full-to-full unless you have a reason not to.

Do not guess. Check the sticker inside the fuel-filler flap and the details on your rental agreement, and if in doubt ask at pickup. Many Icelandic rentals are diesel. Misfuelling is expensive and it is on you, not the insurer, so confirm before your first fill-up.

The main chains are N1, Olís, Orkan, OB and Costco. Most pumps are self-service and need a card with a PIN or a prepaid fuel card, so carry one that works at automated pumps. Stations thin out in the Highlands and the east, so fill up before you leave the Ring Road.

Fuel is expensive by European standards and moves with the market, so any single figure goes stale fast. Rather than quote a number, check our live fuel price index for the current average — and budget generously, because distances between stops are long.

Yes. At pickup the company places a pre-authorisation hold on the main driver’s credit card. The amount varies by car and by how much insurance you buy — it is roughly the size of your insurance excess. There is no fixed figure across companies, so check the amount on your agreement.

Usually yes — a credit card in the main driver’s name, because the deposit is held on it. Many companies do not accept debit cards or prepaid cards for that hold. Confirm your card is acceptable before you book, especially if you only travel with a debit card.

It varies by company and vehicle. Typically you can rent a small car from around 20, with a higher minimum (often 23–25) for larger 4x4s and campers, and a young-driver surcharge may apply. Check the exact age and any fee with your rental company before booking.

Yes, but every driver must be named on the rental agreement and show their licence at pickup. An unregistered driver behind the wheel voids your insurance if anything happens. A small daily fee per extra driver is common — some deals include one free.

A full, valid licence you have held for the required period. EU/EEA licences are accepted as they are. If your licence is not written in the Latin alphabet, bring an International Driving Permit (IDP) alongside your home licence. Some companies ask for an IDP more broadly, so check yours.

The excess (deductible) is the amount you still pay towards a claim before the insurance covers the rest. It is usually what the deposit hold is sized to. Buying a higher tier of cover lowers the excess. The exact figures are on your rental agreement — read them before you drive.

Both, but automatics are a smaller share of the fleet and book out first, especially in summer. If you can only drive an automatic, reserve early rather than hoping one is free on the day.

Most Icelandic rentals include unlimited kilometres, which suits the long distances here. A few cheaper deals cap the daily distance, so confirm "unlimited km" on your agreement before you book a big loop like the Ring Road.

Icelandic law requires an approved child restraint for young children, and rental companies rent seats. Stock is limited, so reserve the seat when you book rather than at the desk. Confirm the exact age and height rule with your company, or bring your own seat.

Usually not — portable wifi, GPS units and extra drivers are add-ons priced per day, and snow chains are not standard kit. Decide what you actually need and add it when you book; a phone with offline maps often replaces a rented GPS.

The right. Overtake on the left, give way to traffic already in a roundabout, and remember single-lane bridges and blind rises are common on rural roads — slow down and yield early.

Yes. Iceland requires headlights on at all times, day and night, all year. Rental cars usually have automatic lights, but check yours are actually on rather than in daytime-running mode.

Unless a sign says otherwise: 50 km/h in built-up areas, 80 km/h on gravel rural roads, and 90 km/h on paved rural roads. Speed cameras are common and fines are steep, so watch the surface change — the limit drops the moment tarmac turns to gravel.

No. Off-road driving is illegal in Iceland under the Nature Conservation Act — that means staying on marked roads and tracks, never across moss, sand or riverbanks. Fines are steep and the damage to fragile ground lasts for decades. There is no grey area here.

No. F-roads are mountain roads that require a 4WD by law. Taking a 2WD onto one voids your rental insurance and risks a fine, leaving you personally liable for any damage. If your plan includes any F-road, book a 4WD from the start.

Standard collision cover usually does not include gravel damage — chipped windscreens, sandblasted paint, cut tyres. Gravel protection is a separate add-on. If any part of your route leaves the tarmac, add it when you book; it costs far less than one cracked windscreen.

Winter tyres are required in Iceland roughly from 1 November to mid-April, and rentals in that window include them at no extra cost. Studded tyres are only permitted inside that same window. You do not arrange this yourself — the rental company fits the legal tyres for the season.

Only in a vehicle rated for it, such as a proper Highland 4x4, and only after scouting depth and flow. Even then, water damage from a crossing is not covered by any insurance tier — it is entirely on you. Most rentals are never suitable for fords.

Almost none. The main one is the Vaðlaheiði tunnel near Akureyri: 2,216 ISK for a single trip in a car under 3.5 tonnes, paid online within 24 hours before or after your drive at veggjald.is. The older Hvalfjörður tunnel near Reykjavík is now free.

Often, yes. Picking the car up and dropping it off in different places can carry a fee. Many companies let you return to Keflavík Airport or Reykjavík without charge but bill other splits. If your trip is one-way, check the fee before booking.

No — and you will not need to. Iceland is an island with no road borders, and no passenger ferry you would take a rental car on. Cross-border rules simply do not apply to an Iceland rental.

You will usually be charged for an extra day, or part of one, once past the grace period. Weather and closures can delay you, so build in a buffer and tell the company early if you are running behind rather than turning up hours late.

On a full-to-full policy, yes — return it full or pay a refuelling charge, often at a rate above the pump price. Fill up near the drop-off point and keep the receipt in case the fuel level is queried.