Planning a self-drive in Iceland raises a few recurring questions: do you really need a rental car, how much does a car rental in Iceland cost, and how can you keep your budget under control without sacrificing peace of mind? This guide answers those questions in clear, practical terms. You will find up-to-date price ranges, real-world budgeting examples, a decision checklist to know if you need a car, and insider tips that actually reduce total trip cost.

Zero Car’s philosophy is simple pricing with zero excess, unlimited mileage, and roadside assistance included with no deductible. That means fewer surprise add-ons and an easier time comparing apples to apples when you shop around.

Do you need a rental car in Iceland?

A rental car is not mandatory for every trip, but it is the most flexible way to see the country on your schedule. Use this quick decision checklist.

• You want to explore beyond Reykjavik. The Golden Circle, South Coast waterfalls, Snæfellsnes Peninsula, and the Ring Road are easier and often cheaper with your own wheels, especially for two or more travelers sharing costs.
  
   
• You prefer sunrise shoots, late-night northern lights, or empty-parking-lot moments. Tours run on fixed timetables. A car lets you time around weather windows and crowds.
  
   
• You are visiting for five days or more. Short city stays can work with day tours and airport shuttles. A week or more favors a rental car because per-day tour costs add up fast.
  
   
• You are comfortable with basic rural driving. Iceland’s main roads are well maintained. If you plan Highlands F-roads in summer, you must choose a suitable 4x4 and plan more carefully. For first-timers, the Ring Road and day trips on paved roads are straightforward when you check conditions daily.

If most boxes above are “yes,” a rental car will likely improve your trip and reduce per-person costs. If your plan is two days in Reykjavik with one guided Golden Circle tour, you can skip the car until you are ready for a road trip.

For more help choosing a provider, see how to choose the perfect Iceland car rental company on our blog for a simple, fair comparison framework that avoids common traps.

 

How much is a rental car in Iceland

Daily rates depend on season, vehicle class, and what is included in the price. For 2025, typical price ranges look like this:

• Small cars such as Toyota Aygo or Kia Rio frequently run about $40 to $90 per day.
  
   
• Mid-size cars and popular crossovers such as Toyota Corolla or Dacia Duster often land around $70 to $140 per day.
  
   
• 4x4 and larger SUVs such as Toyota RAV4 or Land Cruiser range roughly $100 to $220 per day.
  
   
• Electric vehicles are commonly $80 to $180 per day

Those figures are for the car itself. The big variable is what is included. Many companies advertise a low base rate, then add multiple insurance products and extras at pickup. Zero Car includes full coverage with zero excess, unlimited mileage, 24/7 roadside assistance with no deductible, and no deposit required in the base price. When you compare providers, compare the total you will pay to drive away, not just the headline rate.

We have a full guide on How much does it cost to rent a car in Iceland in case you want to go for a full dive on the topic.

Seasonal patterns to expect

• June to August is the peak season in the north. Inventory is tight and prices are highest.
  
   
• May and September are sweet-spot shoulder months, with friendlier prices and long daylight.
  
   
• October to April sees lower base rates but plan for winter tires, shorter days, and possible weather holds. Many travelers still save money overall due to cheaper car and accommodation prices.
   

If you want deeper model-by-model advice, read our Iceland car rental guide: best cars for every traveler and trip for tailored picks from budget city hatches to Highland-ready 4x4s and EVs.

 

What affects your total car budget

Insurance and protection

If insurance is not included, add-ons like Collision Damage Waiver upgrades, Gravel Protection, and Sand and Ash Protection can add $20 to $50 per day each with some providers. At Zero, full coverage with zero excess, plus roadside assistance with no deductible, is included in the price, which keeps your total predictable. For a plain-English primer on pricing, protection, self-drive tips, and F-roads, see our car rental Iceland FAQ.

Fuel

Sad news - Iceland has some of the highest fuel prices in Europe. Recent 2025 data shows petrol around ISK ~300 to 325 per liter depending on the station and date. To keep budgeting simple, plan on roughly ISK 300+ per liter for estimates.

EV charging is widely available on the main routes, and many travelers like the predictable cost and easy overnight top-ups at accommodations that offer charging. If you opt for an EV, consider planning lunch stops where you can add a quick DC fast charge.A great app to see all the charging locations for EV cars and convenient prices in Iceland is eONE.

Tolls

There is one notable toll road for most visitors, the Vaðlaheiðargöng tunnel near Akureyri on the Ring Road. If you pay online within the window, cars under 3.5 tons cost ISK 2,152 per trip. If unpaid, an invoice goes to the vehicle’s registered owner with higher charges. Budget the lower online price when you plan. (Vaðlaheiðargöng)

Parking

Reykjavik uses a simple zone system. As a benchmark, P1 is 630 ISK per hour, while P2–P4 are 230 ISK per hour with different hours and caps by zone. Many sights outside the capital have small parking fees that maintain facilities. (Reykjavik).

Extras that add up

Additional drivers, child seats, roof boxes, and after-hours counters can all change your total. Zero’s self-service pickup and drop-off at Keflavík International Airport and our Reykjavik office remove queue time and late-arrival stress. Even with keyboxes, there is always staff at the KEF office to help if you have questions or need assistance.

Example budgets you can actually use

The numbers below keep assumptions conservative. Adjust the daily rate up or down based on your season.

Scenario A: 7 days on the Ring Road, two travelers, small car

• Car: 7 days at $70 = $490 (shoulder season small car, all-inclusive)
  
   
• Fuel: 1,332 km Ring Road at 6.0 L/100 km = 80 L. At ISK 300/L ≈ ISK 24,000 (about $175–$190 depending on rate). 
• Tolls and parking: one tunnel pass + occasional parking ≈ ISK 6,000–8,000 total.
  
   

Total vehicle budget: roughly $700–$750 for the week, or $350–$375 per person.
 

Scenario B: 7 days with a compact SUV (Duster-type), three travelers

• Car: 7 days at $110 = $770
  
   
• Fuel: 1,332 km at 7.0 L/100 km = 93 L. At ISK 300/L ≈ ISK 28,000 (about $200–$220).
  
   
• Tolls and parking: ISK 6,000–9,000.
  
   
• Total vehicle budget: about $1,000–$1,050, or $335 per person.
  
   

Scenario C: 10 winter days in the west and south, family of four in a mid-size 4x4

• Car: 10 days at $140 = $1,400
  
   
• Fuel: 1,000 km at 8.0 L/100 km = 80 L. At ISK 300/L ≈ ISK 24,000 (about $175–$190).
  
   
• Parking and tunnel: ISK 5,000–8,000.
  
   
• Total vehicle budget: around $1,600 for the trip, or $400 per person.

These examples assume an all-inclusive provider so you are not adding daily insurance extras at the counter. If your quote excludes protection, add those costs to make a fair comparison.

Do you need a 4x4 or is a small car enough

• Summer on paved routes such as Golden Circle, South Coast to Vík, Snæfellsnes loop, and most of the Ring Road is comfortable in small and mid-size cars.
  
   
• Family space or winter stability often points to crossovers and mid-size SUVs.
  
   
• Highlands F-roads are summer-only mountain tracks that require a four-wheel-drive vehicle by law and experience with gravel, fords, and variable surfaces. A standard 2WD is not permitted on F-roads. If you plan F-roads, choose the correct 4x4 and check road and river conditions every day.
  
   

Most rental insurance does not cover river crossings and water ingress. Even in a 4x4, treat unbridged fords with caution or join a guided super-jeep tour to reach those locations safely. 

For an at-a-glance picker with pros and cons by route and season, bookmark our best cars for every traveler and trip guide.
 

Practical tips to reduce your total cost

Book early in peak months. Iceland is a small market and last-minute summer bookings are expensive. In shoulder months, early booking still helps you lock the class you want.

Pick up at KEF Airport. Airport pickup saves time and transfer costs. Zero’s secure keybox system means no lines. If you need help, staff are always at our KEF office to assist with keyboxes and questions.

Compare the whole price. Instead of shopping for the lowest base rate, compare the total including insurance, mileage, roadside assistance, extra driver, and deposit requirements. A fair all-inclusive rate is often cheaper than a low sticker price with paid add-ons.

Drive smoothly. Iceland rewards steady speeds and gentle acceleration. Your fuel will go further, which matters when petrol prices are above ISK 300 per liter. 

Plan your route with parking in mind. In Reykjavik’s P1 zone, budget 630 ISK per hour, and 230 ISK per hour in P2–P4 during posted hours. Outside the capital, many lots are free or ask a modest fee that helps maintain trails. 

Use the tunnel smartly. If you pass through Vaðlaheiðargöng, pay online within the window to get the lower price. 

Travel off-peak. May and September often offer ideal conditions and better availability across cars and hotels.

Why Zero Car often costs less in real life

On paper, any car can look cheap until you add everything you actually need. Zero Car builds the essentials into the price so you can plan confidently.

• Full insurance with zero excess is included, so you are never juggling add-ons or facing a deductible surprise.
  
   
• Roadside assistance is included with no deductible, which is rare in the market but standard with us.
  
   
• Unlimited mileage applies to every booking.
  
   
• No deposit and no hidden fees keep your credit card free for the fun stuff.
  
   
• Seamless self-service pickup and drop-off 24/7 with keyboxes at KEF and Reykjavik, plus friendly staff on hand at KEF if you want help at any hour.
  
   
• A diverse fleet, from budget hatches to family 4x4s and EVs, makes it easy to match the right car to the season and your route.
   

If you want the long version of why this model reduces stress and total trip costs, read why renting a car in Iceland with Zero is the best decision.
 

Putting it all together

• You need a rental car in Iceland if you want flexibility, sunrise and aurora chasing, or multi-day exploration outside the capital.
  
   
• A fair 2025 daily price for most travelers will fall somewhere between $70 and $150 depending on class and season, with small cars below that and larger 4x4s above it, and with the exact ranges shown earlier
  
   
• Your total budget depends on inclusions, fuel around ISK 300+ per liter, occasional parking, and a single toll tunnel if you visit the north.
  
   
• The simplest way to save is to book early, travel in shoulder months, pick the right class for your route, and choose an all-inclusive provider so you are not paying per-day add-ons.
  
   

When you are ready, compare cars and dates and look at the total you will pay to drive away. That is the number that matters.