How much does it cost to rent a car in Iceland? A complete guide for 2025

If you're planning a self-drive adventure in Iceland, one of the first questions that pops into your mind is: how much does it cost to rent a car in Iceland? Whether you’re exploring the Golden Circle or braving the Highlands, understanding rental costs is essential for budgeting your trip. In this guide, we’ll break down everything from vehicle types to insurance fees, seasonal pricing, and insider tips for saving money—so you’ll know exactly what to expect.

Car rental prices in Iceland: the basics

• Rental car prices in Iceland can vary significantly depending on the time of year, the type of vehicle, and the rental company you choose. In general, you can expect the following price ranges in 2025:
• Small cars (e.g. Toyota Aygo, Kia Rio): $40–$90 per day
• Mid-size cars (e.g. Dacia Duster, Toyota Corolla): $70–$140 per day
• 4x4/SUVs (e.g. Toyota RAV4, Land Cruiser): $100–$220 per day
• Electric vehicles (EVs): $80–$180 per day

Prices fluctuate based on demand. High season (June–August) sees the steepest prices, while shoulder seasons (May, September) offer more reasonable deals.

What’s included in the price?

Some car rental companies advertise low daily rates but tack on surprise fees later. At Zero Car Rental, we believe in transparency. Every rental includes:

• Full insurance with zero excess
• Unlimited mileage
• 24/7 roadside assistance with no deductible!
• No security deposit required
• Airport pickup with keybox access

This all-included model simplifies pricing and reduces unexpected charges—ideal for travellers who value peace of mind.

Factors that affect the cost of renting a car in Iceland

Understanding what drives rental prices helps you plan better. Here are the main cost factors:

Seasonality: Summer rates can be double or even triple what you’d pay in spring or autumn. Demand surges between June and August as thousands of tourists flock to Iceland, creating a competitive environment for rental cars. Shoulder seasons like May and September offer the best balance of good weather and reasonable pricing. Winter months (October–April), while cheaper, may require specific vehicles like 4x4s for safety. Booking as early as possible, especially for summer, not only secures a better price but also guarantees availability—essential for popular models.

Car type: The type of vehicle you choose plays a major role in determining your rental cost. Small, fuel-efficient cars are usually the most budget-friendly, perfect for solo travelers or couples staying on paved roads. In contrast, 4x4s and campervans are more expensive due to their ability to handle Iceland’s rugged terrain and unpredictable weather. These vehicles also come with higher insurance costs and fuel consumption. SUVs like the Toyota Land Cruiser or Dacia Duster are in high demand for their versatility, particularly for accessing the Highlands and F-roads during summer.

Rental duration: Many rental companies offer lower daily rates for longer bookings. If you’re planning a week-long or two-week itinerary, you’ll often find tiered pricing that rewards extended rentals. Some companies drop the daily rate by 10–20% after five or more consecutive days. Long-term rentals (14+ days) may come with even deeper discounts, making them ideal for extended stays or Ring Road explorations. Remember, some promotions are only visible when selecting longer durations directly on the booking platform.

Pickup and drop-off location: While most tourists collect their car directly from Keflavík International Airport, some may prefer to pick up or drop off in Reykjavik or other towns. Some rental companies charge additional fees for city-center drop-offs, one-way rentals, or remote location pickups. These fees can range from $30 to over $100 depending on distance and logistics. Choosing airport pickup can save both time and money—especially if the company offers a contactless keybox service, like Zero Car Rental does.

Extras and insurance: Extra services can stack up quickly if you're not careful. Additional drivers may incur a daily fee. GPS units, portable Wi-Fi routers, child safety seats, and winter tires are common add-ons—though some companies include these by default. Most notably, insurance upgrades can dramatically inflate your total cost. That’s why choosing an all-inclusive provider like Zero, where full insurance, roadside assistance, and essentials are built into the price, can be more economical in the end—even if the base rate appears higher at first glance.

Insurance: the hidden cost most travellers forget

Car insurance in Iceland is complex—and pricey. Many companies offer only basic coverage with high deductibles. Add-ons like:

• Gravel Protection (GP)
• Sand and Ash Protection (SAAP)
• Super Collision Damage Waiver (SCDW)

...can push your total cost up by $20–$50/day - EACH! - And these vary greatly between car rentals.

 At Zero Car Rental, all our cars come with full coverage and zero excess, so you never pay a króna extra, no matter what.

How much will a week of car rental in Iceland cost?

If you booked with a provider that didn’t include insurance, you could easily add $200–$400 extra in coverage and deposit fees.

But a a very popular route - This Perfect 6 Day self drive - can be seen with different cars here - just input your preferred dates and extras:

• Toyota Aygo
• Dacia Duster (Manual)
• Toyota RAV4
• Toyota Land Cruiser
• Kia EV3

Fuel costs and savings tips

Fuel prices in Iceland are among the highest in Europe. As of early 2025, petrol costs around ISK 325/liter (approx. $9.30/gallon). Diesel is slightly cheaper.

To reduce fuel expenses:

1. Choose a fuel-efficient car or EV.
2. Use fuel discount cards provided by some rental companies.
3. Plan routes to avoid unnecessary detours.
4. To check up-to-date fuel prices and find the cheapest station near you, visit Gasvaktin.is—a handy website that shows live prices across the country.

Zero Car Rental includes fuel discounts with all bookings and offers a wide selection of hybrids and EVs.

Can you save money on Iceland car rentals? Yes—here’s how

• Book early: Iceland’s inventory is limited. Last-minute bookings cost more.
• Avoid the upsell: Many extras are unnecessary or overpriced.
• Compare total cost, not just the base rate: A cheap base rate plus lots of add-ons may cost more than an all-inclusive rental.
• Look for direct booking discounts: Some rental companies offer promo codes on their own websites.

Why Zero Car Rental stands out

With Zero, what you see is what you pay. Our model was built to eliminate confusion, upsells, and fine print.

Here’s what makes us different:

• Full insurance always included—with zero excess
• Roadside assistance included in every rental with no deductible
• No deposits, no hidden fees
• Airport and downtown Reykjavik pickup via secure keybox—no waiting in line

It’s the stress-free way to experience Iceland by car. Learn more at Zero Car Rental.

Conclusion: Cost clarity means better planning

So, how much does it cost to rent a car in Iceland? Expect to spend between $500–$1,500 for a week, depending on the car and season. But the real cost depends on transparency. Companies that include insurance, mileage, and assistance in the price offer the best value—even if the base rate is a little higher.

Plan ahead, compare fairly, and choose a provider that won’t surprise you later. Your road trip across Iceland’s jaw-dropping landscapes deserves nothing less.