How to Choose the Right Rental Car in Iceland
What car should you rent in Iceland? Compare 2WD vs 4x4, road conditions, seasons, fuel costs, and the best rental options for 2026.
Choosing the right rental car in Iceland can make or break your trip. From smooth city streets to rugged mountain tracks, Iceland’s roads vary dramatically. The best car for your journey depends on where you’re going, when you’re visiting, how many people you’re traveling with, and how adventurous your plans are. This expert guide walks you through everything you need to know to confidently choose the ideal car rental in Iceland in 2026.
Should You Rent a 2WD or 4WD in Iceland?
There is a reason this is the most common question travelers to Iceland ask when it comes to renting a car. While 2WD cars are cheaper and fuel-efficient, they’re limited to paved and well-maintained gravel roads. 4WD vehicles offer better traction, safety, and access, especially in winter or remote areas. The right choice depends entirely on your itinerary and season.
Your Step-by-Step Guide to Picking the Right Rental
Iceland isn’t a one-car-fits-all destination. A compact 2WD might be perfect for Reykjavík and the Golden Circle in summer, while a 4x4 is essential for the Highlands or winter travel. Understanding Iceland’s road types, weather conditions, and legal requirements will help you avoid costly mistakes and enjoy a safe, stress-free trip.
To pick the right rental car, consider four key factors:
- Where you plan to drive
- When you’re visiting
- What is your group size and luggage
- Your travel style and comfort expectations
Let’s break each one down.
Based on Your Itinerary
Your route is the single most important factor when choosing a rental car.
Reykjavík & Golden Circle
If your plans focus on Reykjavík, the Golden Circle, and nearby attractions, a 2WD economy or compact car is usually sufficient in summer. Roads are paved and well-maintained, and driving is straightforward.
The Ring Road (Route 1)
Driving the full Ring Road is possible with both 2WD and 4WD in summer. However, a 4WD offers better comfort and safety, especially if you plan detours onto gravel roads or travel in shoulder seasons.
The Westfjords
The Westfjords feature steep mountain passes, gravel roads, and unpredictable weather. A 4x4 is strongly recommended to handle rough terrain and sudden changes in road conditions.
F-roads / Icelandic Highlands
F-roads are mountain roads that legally require a 4x4 vehicle. Renting a 2WD for these routes is not allowed and voids insurance. If the Highlands are on your itinerary, a proper 4WD is mandatory.
Based on the Season (Winter vs. Summer)
Seasonal conditions play a huge role in car choice.
Summer
From June to August, most roads are open and accessible. A 2WD works well for main routes, while a 4WD provides flexibility for gravel roads and Highlands access.
Winter
Snow, ice, strong winds, and limited daylight make winter driving challenging. From November to March, a 4x4 with winter tires is the safest and most practical choice.
Shoulder Season (Spring/Autumn)
Road conditions can vary daily. A 4WD is recommended for added stability, especially in early spring or late autumn when snow and ice are still common.
Based on Your Group Size & Luggage
Group size directly affects comfort and safety.
Number of Passengers
Small cars work for 1–2 people, but 3–5 travelers will be more comfortable in an SUV or 4x4, especially on longer drives.
Luggage Capacity
Backpackers can travel light, but large suitcases take up space quickly. SUVs offer significantly more trunk space, especially when traveling with photography gear or winter clothing.
Interior Space & Comfort
Long driving days are common in Iceland. More interior space means a more relaxed and enjoyable road trip.
Based on Your Traveler Profile
Your travel style also matters when choosing the right vehicle.
Families & Groups
Families benefit from spacious SUVs or 4x4s with extra safety features, luggage room, and comfort for long drives. The Dacia Jogger is a popular option for larger groups searching for a fuel-efficient vehicle.
Couples & Solo Travelers
Couples and solo travelers can choose anything from compact cars to mid-size SUVs depending on itinerary and season.
Adventure Seekers
Hikers, explorers, and photography enthusiasts should opt for a 4x4 with good clearance to reach remote locations safely.
What Are the Most Popular 4x4 Rental Options in Iceland?
Some 4x4 models consistently stand out for Icelandic conditions.
Dacia Duster: The Most Popular for F-Roads
As an affordable, capable, and fuel-efficient choice, we recommend you rent a Dacia Duster. The Duster is one of Iceland’s most popular 4x4 rentals. It handles gravel roads and mild F-roads well, making it ideal for budget-conscious travelers.
Suzuki Vitara
The Suzuki Vitara automatic offers more comfort, automatic transmission, and excellent all-wheel drive performance. It’s a great balance between city driving and adventure travel.
Toyota Rav4
Reliable, spacious, and powerful, the Toyota Rav4 rental is perfect for families and longer road trips. It performs well in winter and offers excellent comfort.
Dacia Duster or Suzuki Vitara in Iceland?
Choose the Dacia Duster if you want a budget-friendly 4x4 for mixed road conditions and need larger trunk space. Choose the Suzuki Vitara for more comfort and smoother handling.
Manual vs Automatic Transmission
Manual cars are cheaper and widely available, but automatics are becoming increasingly popular. If you’re driving long distances, in winter, or aren’t comfortable with manual gear shifting, automatic transmission is worth the extra cost.
Common Car Rental Types in Iceland
Here are some of the go-to rental car types for exploring Iceland.
Economy & Compact Cars
Best for city driving and short summer trips on paved roads. Popular choices include the Hyundai i10 and the Hyundai i20.
SUVs & 4x4 Vehicles
The most versatile option for Iceland. Suitable for gravel roads, winter driving, highland roads, and remote areas.
Electric & Hybrid Cars
Available mainly around Reykjavík and the Golden Circle. With limited charging infrastructure outside major routes, we recommend checking the charging stations when planning your trip. Some of the most popular options include the Mitsubishi Eclipse Cross 4x4 hybrid and the Toyota Yaris.
Campers & Motorhomes
Perfect for travelers combining transport and accommodation, best used in summer. Renting a 4x4 with a rooftop tent is a great option for travelers who want to explore remote areas while saving on accommodation costs.
Passenger Vans & Minibuses
Ideal for groups, offering space and comfort, though fuel costs are higher.
Fuel Costs in Iceland
As of 2026, fuel prices in Iceland average around 200–230 ISK per liter.
A 7-day Ring Road trip typically costs:
- 2WD: €250–300 in fuel
- 4x4: €320–380 (depending on model and conditions)
Due to the new 2026 kilometer tax in Iceland, fuel prices have decreased, but fuel remains one of the main trip expenses. Budget-conscious travelers may want to consider fuel-efficient rental options such as the Toyota RAV4 and the Skoda Octavia.
Car Rental Insurance in Iceland
Due to Iceland’s challenging road conditions and unpredictable weather—including strong winds, sand, and volcanic ash—choosing the right coverage can save you from unexpected costs.
Recommended coverage includes:
- Gravel Protection (GP)
- Sand & Ash Protection (SAAP)
- Super Collision Damage Waiver (SCDW)
These are especially important for 4x4 travel and remote routes that can bring many unique challenges to your journey.
To ensure you are fully protected, we recommend opting for a comprehensive insurance package. For more details, check out our in-depth guide to Iceland’s car rental insurance, covering everything you need to know and common mistakes to avoid.
Common Mistakes to Avoid Before Renting a Car
Before booking your rental car and planning your trip to Iceland, there are a few things you need to know and some common pitfalls you may want to avoid.
Renting a 2WD for the Highlands
This is illegal and voids insurance. It could also be very dangerous. If you want to enjoy the unique experience of F-roads driving, make sure to rent a capable 4x4 vehicle.
Skipping Car Rental Insurance
Even cautious drivers face gravel and wind damage. Since Iceland is known for its unpredictable weather conditions, it's always best to be covered.
Ignoring Weather Conditions
Weather can change quickly in Iceland, especially in winter. To help you plan your trip and stay prepared, we created a guide on Iceland weather by month. Regardless of the season you’re visiting, always check forecasts and official updates.
Underestimating Luggage Space
Outdoor gear and winter clothing require more space than expected. Ensure you choose a vehicle with enough trunk space for your luggage.
What is the Best Car to Rent for Winter?
A 4x4 with winter tires is essential. Some recommended 4x4 options are the Dacia Duster, Suzuki Vitara, Toyota RAV4, and similar AWD SUVs. With Icerental 4x4, winter tires are included on all rentals from November 1st to April 15th.
If you plan on driving in Iceland during the winter, remember to drive slower, respect road closures, and plan shorter driving days.
Final Words: Choosing the Right Car for Your Iceland Trip
The best car to rent in Iceland depends on your route, season, group size, and comfort needs. When in doubt, choosing a 4x4 gives you more freedom, safety, and peace of mind, especially in a country where nature always has the final say. Be sure to familiarize yourself with the essential driving laws in Iceland before hitting the roads.
