Everything you need to know about driving in Iceland

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Iceland is a unique country. When we first booked our flights and started planning our trip to Iceland, we imagined it would be similar to many other European countries, with cobblestone streets, old traditional charm, and high-speed rail which makes it easy to travel between cities. However, Iceland is different than the rest of Europe. It is much different. There are no rail lines which means you will need to rent a car and road trip around Iceland. An Iceland self-drive is a great way to see the country, but with that said, there are a few important things to know about driving in Iceland before you embark on your Iceland road trip adventure! 

Typical road you would drive in Iceland
A typical road you would drive in Iceland.

Renting a car in Iceland 

Reserving and picking up a rental car in Iceland is easy. Keflavik Airport is not a large airport, but it has many of the major car companies you find throughout the world, including Hertz, Enterprise, Budget, Europcar, and Sixt. If you don’t have a preferred rental car company, you can always compare prices and options online. We frequently use AutoEurope when renting a car in Europe to compare rates and options available. 

renting a car in Iceland
Our rental car for our Iceland road trip.

When renting a car in Iceland, you may want to consider getting the insurance package offered by the rental car company. We often pass on this upgraded charge because our credit card comes with incredible travel insurance, but in Iceland having the extra coverage will give you peace of mind when driving around this beautiful country.

Iceland is an island with active volcanoes and roads that may be in need of repair. While driving in Iceland, you can quickly go from smooth asphalt to gravel roads without venturing off the beaten path. And with most rental car agreements, you are liable and must pay for any ding on your car from gravel thrown up from your tires on those questionable roads.  If you aren’t sure of your route and what exactly the road conditions will look like, we recommend getting the insurance the car company provides. If not, it could be more costly when you return the car after your Iceland road trip.

Varying road conditions in Iceland gravel to paved surface
Roads in Iceland can often transition from gravel to paved surfaces.

Picking up your rental car for a self-drive in Iceland

As I mentioned earlier, Keflavik Airport is relatively small, especially when you consider that it is the primary airport in Iceland. The rental car companies are all conveniently located just outside of customs before you exit the airport. Most of the rental cars are also on site at the airport (although some of them are off site). If you are lucky and get one of the cars on site, there is no need to shuttle to a different location to pick up your rental. You can walk directly out of the airport, across the small parking lot, and get into your rental car to begin your adventure. It is one of the easiest international airports to get in and out of, and fortunately, it’s also very close to the Blue Lagoon.

A road sign outside the Blue Lagoon pointing to Keflavik Airport
We took this picture on the road at the entrance to the Blue Lagoon, only 20 km to Keflavik Airport.

READ OUR TIPS FOR VISITING THE BLUE LAGOON HERE.

Returning your rental car

Although you most likely won’t have to leave the airport to pick up your rental car in Iceland, you will likely have to return it to an off-site facility. Rental car companies in Iceland offer shuttle services to the airport. Make sure you give yourself enough time before your flight for the drop off, rental car inspection, and shuttle service to the airport along with the typical customs processes you must go through at the airport. 

Additionally, don’t even think about keeping the car for any additional time, not even an hour. This was our “driving in Iceland expensive mistake #1”. Our return flight was delayed a few hours, so we decided to hold onto our rental car and spend the extra time enjoying Iceland instead of sitting in an airport terminal. Unfortunately, those 2 extra hours we kept the rental car cost us more than we originally paid to rent the car for 4 days in Iceland. Moral of the story: return your rental car on time. 

Buying gasoline, fuel, or petrol in Iceland

Another big mistake we made while driving in Iceland happened at gas stations or petrol stations. Although we typically use our credit card for everything when traveling, we weren’t able to do so at gas stations in Iceland. Most gas stations in Iceland have modern pay-at-the-pump technology, however even a credit card with a chip is unlikely to work unless your credit card has a pin number. We ended up using our debit card because we didn’t know our credit card’s pin number at the time. So the charge was automatically drafted from our bank account.  

Gas station in Iceland
A typical gas station you’ll find when driving in Iceland.

When you get gas in Iceland, you will be asked at the pump how much gas you want to put in. And, it’s written in Krona, the currency in Iceland. If you aren’t familiar with the conversion, you may be tempted to just hit the option that says “full tank”. That means you will be temporarily charged what the gas company thinks will be the cost for a full tank of gas. Then you will be charged the actual cost for the amount of fuel you pumped. In other words, it will appear that you were double charged. In a few days, that first, temporary charge will drop off and all will be well. But if you use a debit card then you will see the money removed twice.

In the United States, gas stations will place a “HOLD” on your account for gas funds but the money is never physically removed from your account. In Iceland, the hold is a physical removal of funds in your account. You could drain your account real fast with a debit card. 

Driving in Iceland 

The country of Iceland is beautiful! You will quickly discover that on your trip. But, there are a few things to keep in mind about driving in Iceland to stay safe and avoid annoying locals and other tourists with whom you will be sharing the road.

Road conditions

Most of the roads in Iceland are well maintained and in good shape, although many are just two lanes. Many Icelanders seems to treat the speed limit like more of a suggestion than a law. That means, you will encounter many drivers on these 2-lane roads driving really fast. So, do not stop on the side of the road to take pictures, regardless of how beautiful the scenery. The roads don’t typically have shoulders or areas where you can pull off, so you put yourself in serious danger by having your car on or barely off the narrow roads. Whenever possible, pull off in driveways, on smaller side roads, or as far off the main road as possible. But please do not disrupt or destroy the natural vegetation by driving or parking on it either.

Bridges

Due to the number of active volcanoes, it’s hard to maintain the bridges over rivers in Iceland. When driving in Iceland, you will come across many one-lane bridges. You’ll need to monitor the traffic on the bridge to know when it’s your turn and safe to cross.

When driving in Iceland, you will often come across one-lane bridges
A one-lane bridge we came across while driving in Iceland.

Signage

Street signage in Iceland is not much different than you will find elsewhere. Many of the signs use easily understandable pictures rather than words, but those that have words are typically written in English (with the exception of those long, Icelandic city names and landmarks). Major tourist sites, like Iceland’s many majestic waterfalls, are well marked and have plenty of signage directing you to the right place. 

Icelandic town road sign
A typical road sign indicating the distance and direction to a place in Iceland.

Desolation

Much of Iceland is barren and desolate. The barrenness of the country is one of the most fascinating facts about Iceland. You might drive for an hour or two without seeing a single building, not even a gas station. 

At times, you might feel like you are driving on another planet. Lava fields as far as the eye can see look otherworldly. Make sure you have a full tank or plenty of gas to get to the next town. (And use the restroom when you get to each town!) Although you won’t see many towns or even homes as you drive around Iceland, you will encounter some of Iceland’s coolest residents hanging out in the road – sheep. Sheep roam the wide open lands in Iceland, often finding their way onto the narrow roadways. Another reason to follow the posted speed limit.

Girl walking on an empty road in Iceland
Stopped for a photo op on an empty road in Iceland.

WONDERING WHAT TO PACK FOR AN ICELAND ROAD TRIP? HERE’S A COMPLETE PACKING LIST FOR SUMMER IN ICELAND.

Speed limit

Like most of the world, but unlike the United States, the speed limit is listed in kilometers in Iceland. The speed limit may seem low as you drive down so many desolate roads, so you might be tempted to drive faster than the limit. Regardless of whether you are driving in Iceland or any other country, always obey the speed limit. It is simply a matter of respect for the laws of the country you are visiting. If you are driving the speed limit in Iceland, you will inevitably be passed by people driving much faster. We assumed these speed racers were locals who knew the roads well. Still, we set our cruise control and maintained the posted speed because we didn’t want to be those entitled jerks who break the laws laid out in another country. 

Final thoughts on driving in Iceland

Because of the openness of the country, a car is a very popular option for transportation in Iceland. A road trip in Iceland is truly the best way to see the country. If you are thinking about renting a car or a camper van, you won’t regret your decision. You’ll have the opportunity to explore one of the most fascinating countries in the world, and see some incredible sites. If you don’t want to do a self-drive there are plenty of guided tours you can book that will take you to many of the most popular locations in Iceland. 

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