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7 Big Mistakes To Avoid When Renting a Car in Iceland

If you are considering renting a car in Iceland, we say good for you! Iceland is a beautiful country but MANY people make crucial mistakes which can lead to danger or a bad experience. There is plenty of information on the web about renting a car in Iceland but most of it focuses on what you should do! But this guide is different. This is going to tell you what you should AVOID doing when renting a car in Iceland. 

Believe it or not, renting a car in Iceland isn’t as scary or dangerous as you may think! It can be a bit crazier to drive in Iceland compared to other European countries due to the weather alone, but we promise it isn’t all that bad as long as you are prepared. 

We have rented a car in Iceland countless times at this point covering thousands and thousands of miles on various Iceland road trips and have made countless mistakes. This [unfortunatly] has given us first-hand knowledge on what you should NOT DO when renting a car in Iceland. This is NOT meant to scare you, but to prepare you so that you can have a safe and wonderful time! Iceland is a stunning country full of natural wonder and driving yourself around is one of the best ways to see what Iceland has to offer! Before you embark on renting a car in Iceland, there are a few things you need to know to have a safe and enjoyable time in the country.

woman outside after she was renting a car in Iceland

7 Big Mistakes To Avoid When Renting a Car in Iceland

Mistake #1: Completely Writing Off Renting A Car In Iceland

One of the biggest mistakes people make when planning their trips is completely writing off renting a car in Iceland. This is a HUGE MISTAKE when because renting a car in Iceland will provide you with so much freedom and planning an Iceland Road Trip is a wonderful way to see the country. If you are reading this and you are on the fence about an Iceland car rental, we highly recommend reconsidering! 

We personally love renting a car as often as possible! From Ital and Peru to Alaska and Ireland, we have rented cars all around the world and love the freedom they provide. We are photographers and hikers and love getting deep into the landscape and renting a car in Iceland allows us to do just that.

There are some incredible tours in Iceland but in reality, public transport isn’t a huge thing in Iceland! As a result, driving in Iceland is a popular option. Again, if you still don’t want to drive, you can go on day tours or multi-day tours in Iceland. Even if you aren’t used to driving, Iceland is the perfect place to give it a go. Be slow. Be safe. Be careful. And you should be just fine! 

don't put off renting a car in Iceland

Mistake #2: Assuming An Iceland Car Rental Will Be Too Expensive 

If you are afraid that renting a car in Iceland will be too expensive, you are not alone! We have rented cars all around the world and many times they are beyond expensive for just a basic car. We aren’t going to lie to you, Iceland is an expensive country, but with proper research and budgeting, there is a car for every budget! When we have visited Iceland, we have spent around $1200 for a 4×4 car rental for two weeks on two different trips. We have also rented 2×2 vehicles which are often half the price or even less! 

We suggest checking out AutoEurope.com to find the best and most affordable rate when renting a car in Iceland. This is what we personally use and it allows you to compare rates across a variety of popular car rental websites including Hertz, Sixt, Europcar, Alamo, Dollar, Enterprise and more. This way, you can see a bunch of different prices without skipping around through a bunch of different websites.

Assuming that renting a car in Iceland will be too expensive is a common mistake people make and a big reason why people avoid booking an Iceland car hire. The prices of renting a car in Iceland are just naturally higher than many other countries and chances are you can find a pretty good deal. Make sure to check out Keflavik Airport and Downtown Reykjavik for the best deals on car rentals in Iceland! 

When you book well in advance, do your research, and perhaps even travel during the off-season, you will find that car hires in Iceland are more affordable than you may originally think! 

sunset next to an iceland car rental

Mistake #3: Spending Too Much Money On A GPS

You are probably already investing a good deal of money on your trip so why spend even more money on renting a car in Iceland if you don’t have to? Another huge mistake people make when renting a car in Iceland is spending big bucks for a GPS from the car rental company and then barely using it. We have spoken with many travelers who did this and ended up not using the GPS at all. In fact, we have actually done this ourselves and the GPS stayed in a box in the back seat because we never used it at all! 

Instead, we recommend utilizing your phone plan’s global roaming policy or getting an affordable hotspot for your phone. If you do not have an international plan, we recommend downloading Google Maps offline. This way, you can still go everywhere you need to go without paying a cent! You can still utilize your phone as a GPS device without ever paying for a phone plan if you don’t want to or if it isn’t included.

Phone service in Iceland is incredibly good and the Icelandic government has ensured that it is as such for safety in potential emergency situations. Everyone is always shocked and surprised how well their phone service works in Iceland and we encourage you to be openminded! 

Now, this mistake is based on age and will depend on who you are. If you aren’t into all the apps and downloading maps is confusing to you, maybe using a traditional GPS is worth the money for you and you should upgrade and go for it when renting a car in Iceland. But for everyone else, especially those of you with phone plans like T-Mobile or Sprint that offer free global roaming, you will be able to use your GPS like normal and this will be a big waste of money when booking your Iceland car rental. 

woman using phone for photos next to iceland car hire

Mistake #4: Forgoing Insurance On Your Iceland Car Rental 

Okay, we will be the first to fess up that in the past we didn’t normally get car insurance. This is a HUGE MISTAKE, especially when renting a car in Iceland with crazy windstorms and slippery roads. The fact is that sometimes things happen OR sometimes car rental companies try and screw you over by pretending like you “made a mark” on the car when you really did not. Either way, protecting yourself and your Iceland car rental is essential. 

There are two main ways to do this. First and our favorite way and the one we recommend is putting the Iceland car rental on a travel credit card with insurance. IMPORTANT!!!!!! Please keep in mind that MANY credit cards DO NOT COVER car insurance in Iceland. These are the 5 Credit Cards We Travel With but we recommend the Chase Sapphire Reserve when renting a car in Iceland. As long as you put your Iceland car rental on Chase Sapphire Reserve card, you will be covered for collision and theft when driving in Iceland up to $75,000. This means if you crack your windshield or get in a fender bender you are covered. All you must do is put the car on your Chase Sapphire Reserve and decline car rental coverage offered through the agency. 

We love using a travel credit card because it offers SO many benefits plus you get 3x the points on travel so essentially you are earning a free future trip when you put your Iceland trip on Chase Sapphire Reserve. It is very comforting to know we don’t have to pay any foreign transaction fees, get access to lounges, and get car insurance all covered in our credit card! We know that each and every time we rent a car in Iceland or any other country, we will be covered and this is very reassuring. Remember that MANY travel credit cards do NOT offer coverage in Iceland so please keep this in mind when booking your Iceland car rental. 

We understand that not everyone renting a car in Iceland wants to apply for a new credit card and that is okay! There are still options for you and we highly recommend you choose one or the other so that you are covered someway! We highly, highly recommend buying at least basic car insurance from your car rental agency in Iceland. When you are making your booking, you can do a little research and see what this covers.

Pay attention to your deductible as sometimes they are as high as a few thousand dollars before the insurance kicks in! When booking your Iceland car rental, ask your agency about insurance options as well as what is covered and how much you must pay before insurance kicks in. This is huge and very important! 

Before we traveled with a credit card that covered car rental insurance, we would book our car insurance through Auto Europe. This way, you are booking your car rental in Iceland and your Iceland car insurance all in one place. This makes it a simple and easy process and cuts down on the time spent. Our one piece of advice is to please choose insurance of some kind to protect yourself when renting a car in Iceland! You don’t want to be out tens of thousands in a potential situation! We see it all the time in groups for Iceland travel on Facebook. The wind accidentally rips off the door to a rental car and the tourists are out $20K because they didn’t choose insurance. Heed this warning and book accordingly! 

get insurance when renting a car in Iceland for driving on snowy road

Mistake #5: Assuming That All Car Rentals In Iceland Will Have Automatic Transmission

This one is mainly for our fellow Americans! USA citizens, we feel you! We are used to the majority of rental cars being automatic. This is NOT the case in Iceland and is a huge mistake people make when renting a car in Iceland. In fact, the majority of Iceland car rentals are actually manual transmission. In addition, automatic car rentals in Iceland are more expensive and more scarce so if you want one, we recommend booking early! 

Many travelers, ourselves included, cannot drive manual transmission cars. If you wait until the last second, automatic transmission cars in Iceland may be out of stock and you will be left high and dry. Attempting to learn a manual transmission car while driving in Iceland is a HORRIBLE idea and will be very unsafe. The weather conditions can change in a moment and the roads may become dangerous. DO NOT try and learn manual if you haven’t ever done it before just to get a good deal on your Iceland car rental. If you aren’t well-versed in driving a manual car then you will want to avoid this when renting a car in Iceland.

How can you do this? We recommend by booking your Iceland car rental as early as possible before your trip. You want to ensure that there are enough rental cars with an automatic transmission that are in stock before your trip. When renting a car in Iceland, make sure you check the box for automatic vs manual transmission when making your booking online! We have booked last minute trips to Iceland with only 8 days advance notice and we were still able to find automatic rental car options. The key is to compare on a ton of different websites or through booking engines like Auto Europe to find the best deal on automatic vehicles! 

driving manual in an iceland car rental on the ring road


Mistake #6: Thinking That Booking Your Car Rental In Iceland Instead Of Online Will Save You Money 

Many people make the mistake of thinking that if you want to rent your car in Iceland once you are in the country you will save money. This is not the case! Do not wait until you are in the country to book and pay for your Iceland car rental. It is much cheaper to rent a car from the United States or your home country than it is to wait until you are already on the ground in Iceland. 

We feel that this is an “old school” way of thinking and if you think this way that is totally fine! We are just here to remind you that things change and waiting until the last moment to book when you arrive is NOT the best course of action anymore. We want to help provide tips so that you aren’t left in a lurch when you land in Iceland. 

Most major rental agencies in Iceland and Europe as a whole are now affiliated with big USA car rental agencies such as Hertz, Enterprise, Sixt and more. As a result, going directly to a car rental agency in Iceland does not exactly mean you are going to get a better deal. Plus, waiting until the last minute will mean limited options and rates when renting a car in Iceland. 

Like booking airfare, you should shop around when looking for the best deal on an Iceland car rental. Car rental rates and fees change all the time and you want to make sure you are getting the most for your money! The best way to ensure you are getting the best deal is to research the going rate at a variety of major car rental companies using sites such as Auto Europe. 

Once you research and find the best price, we recommend going directly to Auto Europe because Auto Europe acts as a consolidator for car rentals in Iceland and Europe as a whole. Believe it or not, Auto Europe often either meets or beats the best rate offered by any rental company if you were to go direct. We love using Auto Europe when booking our car rentals in Iceland [and many other places in Europe] so this gives you the best deals! 

road in iceland with green hills

Mistake #7: Booking Your Iceland Car Rental With Mileage Limits

How do we know this is a big mistake people make when renting a car in Iceland? Oh, just because we made this mistake ourselves….multiple times! Now, there is nothing inherently wrong with a mileage limit on an Iceland car hire, but the issue lies when you don’t know about it and want something else or when you exceed it without knowing and incur huge charges. 

Mileage limits on a rental car in Iceland simply mean that you are not allowed to drive more than that per day. So if you are staying for 5 days and have a mileage limit of 200km per day, you can not exceed 1000km total during your stay without incurring a fee from your Iceland car rental agency. Now, you can drive 10km one day and 350km the next, but overall, you must stay under the limit set by the car rental agency when you are making your booking. 

It is essential to compare Iceland car rental options to ensure that you know if there is/is not a mileage limit and to avoid booking a car with one if you don’t want to have to deal with it. If you do end up booking a car with a mileage limit, you are going to want to plan out your entire Iceland road trip and then head to Google Maps and see how many miles you are looking at. Some Iceland car rental agencies have low limits while others have higher limits. The fees for going over the mileage limit is quite steep so it is best to do your research and go in with open eyes depending on what you want to do during your trip. 

people camping in their car rental in iceland by a waterfall

We hope that by reading these mistakes, you will avoid them when renting a car in Iceland. Choosing an Iceland car rental for your trip will transform your vacation. You will have such an incredible time seeing Iceland at your own pace and not on a tour [although there are some great options!] Renting a car in Iceland truly isn’t scary or confusing if you follow these simple tips and avoid making some of these common mistakes! We are happy to answer any questions in the comments below! 

7 mistakes to avoid when renting a car in iceland


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