Car Rental in Iceland for Australian Travelers

Planning a mesmerizing road trip around Iceland can be exhilarating for travelers from Australia. As an Australian traveler, you might be wondering:

Can I drive in Iceland with my Australian license?
What vehicle types are most suitable for Icelandic terrain?
Do I need specific insurance for car rentals in Iceland?
What are the rates for daily car rentals?
Are there unique traffic regulations in Iceland to be aware of?

This guide provides practical answers to your most pressing questions, equipping Australian travelers with the knowledge needed to navigate Icelandic routes with ease and confidence.

Can Australian Citizens Drive in Iceland?

Yes, Australian travelers can legally drive in Iceland with the proper documentation. Age restrictions and additional document requirements may vary by rental company.

Form of ID:
A valid passport is required.
Driving licence:
Accepted driving licence include:
• Original driving licence + International Driving Permit (IDP)
or
• EU/EEA Driving License.
Notes: Please note that an International Driving Permit (IDP) is only a translation. You must present your original driving licence with the original IDP at the counter. EU/EEA driving licenses are valid for car rental across the EU/EEA, as well as in Switzerland and the United Kingdom.
Accepted cards:
Physical credit cards in the full name of the main driver are required. Accepted credit cards include Visa, Master, and AMEX.
Age requirements:
The general driving age is 20-99 years. Young drivers aged 20-24 may incur an additional fee of EUR 10 per day (approximately US$ 11.79 per day).

Ready to Rent?

Requirements may vary between rental companies. Always confirm details when booking.

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Which Car Rental Companies Are Best?

Choose from trusted global chains or innovative local alternatives. Evaluate options based on your needs and preferences for a seamless experience.

Global Chain Companies

Local Brands

Europcar
global
8.5
Locations:
83
Prices:
$$
Key Advantages
- Wide range of vehicles
- Flexible pick-up and drop-off locations
- Loyalty program for frequent renters
- Excellent customer service
Best for
Leisure travelers and eco-conscious renters
Hertz
global
8.5
Locations:
52
Prices:
$$$
Key Advantages
- Largest fleet in USA
- Premium vehicle selection
- Gold Plus Rewards loyalty program
- Express rental counters
Best for
Business travelers and premium vehicle needs
Budget
global
8.5
Locations:
36
Prices:
$
Key Advantages
- Competitive pricing
- Convenient locations
- Excellent customer service
- Loyalty rewards program
Best for
Cost-conscious travelers and families
SIXT
global
8.5
Locations:
19
Prices:
$$
Key Advantages
- Wide selection of premium and luxury cars
- Flexible rental terms
- Easy online booking
- Excellent customer service
Best for
Travelers seeking premium vehicles and flexible rental options
Alamo
global
8.5
Locations:
13
Prices:
$$
Key Advantages
- Great value for money
- Quick and easy booking process
- Excellent customer service
- Wide range of vehicle options
Best for
Leisure travelers and families

Icerental 4x4
local
8.5
Locations:
2
Prices:
$$
Key Advantages
- Specialized in 4x4 and SUV rentals
- Knowledgeable staff on winter conditions
- Competitive pricing for long-term rentals
- Flexible pick-up and drop-off options
Best for
Adventure seekers and winter travel
FAIRCAR
local
8.5
Locations:
6
Prices:
$$
Key Advantages
- Competitive pricing
- Personalized customer service
- Convenient pickup and drop-off locations
- Wide range of vehicle options
Best for
Budget-conscious travelers and local rentals
ACE Rent A Car
local
8.5
Locations:
4
Prices:
$$
Key Advantages
- Competitive pricing
- Customer-friendly service
- Flexible rental options
- Special deals for long-term rentals
Best for
Budget-conscious travelers and families
SAGA Car Rental
local
8.5
Locations:
1
Prices:
$
Key Advantages
- Personalized customer service
- Convenient local locations
- Competitive pricing
- No hidden fees
Best for
Budget-conscious travelers and local rentals
Lava
local
8.5
Locations:
1
Prices:
$-$$
Key Advantages
- Personalized customer service
- Convenient pickup and drop-off locations
- Competitive pricing
- Local knowledge and recommendations
Best for
Budget-conscious travelers and local excursions

Recommendations for Australian Travelers

Choose Global Chains If:

You prefer international brand reliability
You require widespread service coverage
Round-the-clock customer support is essential
You value established reputations

Choose Local Brands If:

You wish to explore unique Icelandic options
You are focused on cost-efficient choices
You are comfortable with localized services
You want to experience personalized customer service

How to Choose the Right Car?

Choosing the right rental car can make your journey more comfortable, safe, and enjoyable. Think about your travel group, the destinations on your route, and the type of driving you'll be doing. With QEEQ, you can compare multiple car types and policies to find the one that best suits your journey.

Seating and Luggage
Consider your travel group size and luggage needs
- Economy cars (2-4 people, 1-2 suitcases)
  Perfect for city driving and short trips
- Compact cars (4-5 people, 2-3 suitcases)
  Good balance of space and fuel efficiency
- Mid-size cars (5 people, 3-4 suitcases)
  Comfortable for longer distances
- Full-size/SUV (5-7 people, 4+ suitcases)
  Ideal for families and group travel
Transmission Type
Choose between automatic and manual transmission
- Automatic transmission
  Easier for city driving and traffic, more common in Iceland
- Manual transmission
  Often cheaper, better fuel economy, more control
- Consider your comfort level with Icelandic road conditions and manual cars
Insurance Included
Check what insurance coverage comes with your rental
- Basic liability
  Covers damage to other vehicles and property, usually included
- Collision Damage Waiver (CDW)
  Covers damage to your rental car, often optional
- Theft protection
  Protects against car theft, may be included or additional
- Personal insurance
  Check if your Australian insurance or travel insurance covers rentals
Cancellation Policy
Understand booking flexibility and fees
- Free cancellation
  Usually available up to 24-48 hours before pickup
- Prepaid vs. Pay-at-counter
  Prepaid often cheaper but less flexible
- Change fees
  Cost to modify dates, locations, or car type
- Travel insurance
  Consider coverage for trip cancellations or delays
Mileage Policy
Check distance restrictions and additional charges
- Unlimited mileage
  Best for long road trips and exploring Iceland's vast landscapes
- Limited mileage
  Cheaper daily rate but extra charges for excess miles
- Consider your planned route distance and potential detours
- Factor in mileage costs when comparing total rental prices
Fuel Policy
Understand fuel requirements and costs
- Full-to-Full
  Return with same fuel level, most economical option
- Full-to-Empty
  Pay upfront for full tank, convenient but often more expensive
- Same-to-Same
  Return with same level as pickup, fair pricing
- Pre-purchase fuel options
  Compare costs with local gas station prices

Quick Decision Guide

City Travel
Compact/Economy car with automatic transmission, full-to-full fuel policy
Reykjavik, Akureyri
Road Trip
Mid-size/Full-size car with unlimited mileage, flexible cancellation
Ring Road, Golden Circle
Vacation
SUV with comprehensive insurance, prepaid fuel option
South Coast, Westfjords

Compare with Confidence on QEEQ

Don't settle for the first option you find. QEEQ makes it easy to compare car types, policies, and total costs from multiple providers. See all fees upfront, read real customer reviews, and choose the perfect car for your adventure.

Compare all car rental deals
No hidden fees
Real customer reviews

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Popular Destinations in Iceland

Iceland offers breathtaking landscapes, unique road trips, and hidden gems perfect for exploration. Plan ahead to enjoy the beauty of this destination efficiently.

What Insurance Do I Need?

Driving in Iceland requires at least basic insurance coverage, but additional options are advisable due to unique driving conditions, such as gravel roads and unpredictable weather. Make sure to understand your coverage to avoid unexpected costs.

Types of Insurance Coverage

Collision Damage Waiver (CDW)
Covers damage to the rental car in case of collision or accidental damages, excluding certain conditions like off-road driving.
AUD 23-38/day
Essential
Theft Protection (TP)
Protects you against financial loss in case the rental vehicle is stolen.
AUD 8-13/day
Essential
Super Collision Damage Waiver (SCDW)
Reduces the excess amount payable in case of damage to the car.
AUD 15-20/day
Optional
Gravel Protection (GP)
Covers damages caused by gravel or stones to the body of the car, which is common in Iceland.
AUD 12-18/day
Recommended
Sand and Ash Damage Waiver (SADW)
Covers damages caused by sandstorms or volcanic ash, which are potential hazards in Iceland.
AUD 10-15/day
Recommended
Personal Accident Insurance (PAI)
Provides coverage for medical expenses for you and your passengers in case of an accident.
AUD 7-12/day
Optional

QEEQ's Complete Protection Solutions

Perfect for travelers who want comprehensive protection without the complexity. One price covers everything, and AXA's trusted network ensures reliable claims processing throughout Iceland. Get comprehensive coverage online for about 50% less than counter rates.

Coverage Feature

QEEQ Full Coverage

Basic Rental Company

Collision Damage Waiver

Fully Covered

US$0.00 - US$4,950.77

Theft Protection

Fully Covered

US$0.00 - US$4,365.26

Personal Accident Insurance

Fully Covered

Not Covered

Tire, Window, Mirror Damage

Fully Covered

Not Covered

Roadside Assistance

Fully Covered

Not Covered

Know more About QEEQ Full Coverage

How to Save Money on Car Rentals in Iceland?

Iceland offers unique landscapes best explored by car, but rental costs can be high. Knowing how to book can significantly reduce expenses, especially for travelers from Australia.

Booking Tips for lower Prices

Book Well in Advance
Reserve your car several months before your trip to lock in lower rates and ensure availability during peak travel seasons.
Save up to 40%
Use Comparison Platforms
Check prices on comparison websites like RentalCars or QEEQ to find competitive rates across multiple providers.
Save up to 25%
Opt for a Full-to-Full Fuel Policy
Choose a rental option where you pick up the car with a full tank and return it full to avoid inflated fuel charges.
Save around $30-50 AUD
Consider Smaller Cars
Smaller, fuel-efficient cars often come with lower rental rates and reduced fuel consumption, which is ideal for Iceland's road conditions.
Save up to 20% on rental costs
Evaluate Insurance Options
Check if your travel insurance covers car rentals to avoid paying for overpriced insurance at the rental desk.
Save up to $100 AUD
Avoid Airport Rentals
Renting a car in Reykjavik instead of the airport can often result in better prices due to lower location fees.
Save around $50 AUD

QEEQ's Money-Saving Features

Diamond Membership
Save up to 20% on every booking - free trial available below.
View Details
Price Drop Protector
If your booked car price drops, QEEQ automatically rebooks it at the lower rate and refunds the difference to you.
View Details
One-Dollar Freeze
Lock in today's price with just $1 upfront and pay the rest later.
View Details
Flexible Payments
Pay with credit/debit cards or even cryptocurrency via BitPay.
View Details

What Should You Pay Attention To?

Important considerations and potential issues to watch for when renting a car in Iceland.

Driving Conditions
Iceland's unique road conditions require extra caution.
- Gravel roads can be slippery and challenging.
- F-roads are only accessible with 4x4 vehicles.
- Weather can change rapidly; check forecasts.
- Off-road driving is illegal and heavily fined.
- Watch out for sheep crossing rural roads.
Insurance Options
Ensure you understand the insurance policies offered.
- Sand and ash protection is recommended.
- Windshield damage is common; verify coverage.
- Third-party liability is mandatory.
- Check collision damage waiver (CDW) conditions.
- Verify if your travel insurance covers rentals.
Seasonal Considerations
Plan your rental based on the time of year.
- Winter requires studded tires or chains.
- Daylight hours are limited in winter.
- Summer roads are busier with tourists.
- Highland roads are open only in summer.
- Winter storms can close roads unexpectedly.
Fuel Costs
Understand Iceland's fuel pricing and policies.
- Fuel is more expensive in remote areas.
- Most stations are self-service; credit cards required.
- Some stations offer discounts with loyalty cards.
- Plan refueling stops in rural regions.
- Note the type of fuel required for your vehicle.
Pickup and Return
Ensure smooth transitions at the rental location.
- Check operating hours of rental offices.
- Plan for delays at Keflavik Airport during peak times.
- Inspect the vehicle for damage before accepting it.
- Return the car with the agreed fuel level.
- Keep all rental documents for reference.
Rental Contract
Review the rental agreement carefully.
- Understand mileage limits and associated fees.
- Check for geographic restrictions in the contract.
- Note the terms for damage assessment and fees.
- Ensure the driver’s license requirements are met.
- Confirm cancellation and modification policies.

Remember

Being prepared and knowing what to expect can save you hundreds of dollars and prevent stressful situations. Take time to understand all terms and inspect your rental thoroughly.

Comparing Traffic Rules Between Australia and Iceland

Australia and Iceland have different traffic regulations, particularly in alcohol limits, road signage, and winter driving preparation, while sharing similarities in seatbelt laws and mobile phone restrictions.

Winter Driving Conditions
IS
Winter tires mandatory during colder months
AU
No specific winter tire requirements
Blood Alcohol Limit
IS
0.05% BAC
AU
0.02% BAC
Road Signage
IS
Uses international symbols and Icelandic language
AU
Uses English and international symbols
Driving Side
IS
Drive on the right-hand side
AU
Drive on the left-hand side
Mobile Phone Use
IS
Hands-free only
AU
Hands-free only
Seatbelt Laws
IS
Mandatory for all occupants
AU
Mandatory for all occupants
Parking Rules
IS
Follow local signs, avoid restricted zones
AU
Follow local signs, avoid restricted zones
Remember
- • Always check the weather forecast before driving in Iceland to prepare for possible severe conditions.
- • Carry an international driving permit if required alongside your Australian license.
- • Be cautious of narrow roads and one-lane bridges, common in Iceland.
- • Familiarize yourself with local parking regulations to avoid fines.

Voices of our customers

Frequently Asked Questions

Common questions for travelers from Australia renting a car in Iceland

What type of car do I actually need for Iceland – a 2WD or a 4x4?

This depends entirely on your itinerary and the time of year. A 2WD is fine for summer travel on the Ring Road and paved roads, while a 4x4 is essential for F-roads and strongly recommended for winter due to snow and ice.

How far in advance should I book my rental car for Iceland?

Book as early as possible, ideally 4-6 months in advance, especially for peak season (June-August) or holidays, as rental cars (especially automatics and 4x4s) are limited in Iceland.

Is my Australian driver's license valid in Iceland, or do I need an International Driving Permit (IDP)?

Your valid, unexpired Australian driver's license is sufficient, provided it is in English and has a photo. An IDP is not mandatory but can be useful as an additional translation.

Where is the best place to book a rental car for Iceland to get a good deal?

Use a price comparison platform like QEEQ, which compares prices, vehicle types, and policies from multiple local and international suppliers in one place.

Should I rent a manual or an automatic car in Iceland?

Automatics are easier for most Australians and highly recommended for Iceland's unfamiliar conditions. Automatics are in high demand, so book early.

What are the minimum age requirements for renting a car in Iceland?

Usually, you must be at least 20 for standard cars and 23 for larger 4x4s or campervans. Drivers under 25 often pay a 'Young Driver Surcharge.' Always check the rental company's policy on QEEQ.

Is renting a campervan better than a car and hotels in Iceland?

A campervan offers flexibility and can save on accommodation, but they're more expensive to rent, less fuel-efficient, and you must park overnight in designated campsites.

Can I book a one-way rental in Iceland, such as pick up in Reykjavik and drop off in Akureyri?

Yes, many companies offer one-way rentals, but they come with a significant fee. A round-trip rental from Keflavik Airport is usually more economical.

What documents will I need when booking a rental car online for Iceland?

You'll need your personal details and a valid credit card for booking. The main documentation check occurs at vehicle pick-up.

Does it matter if I choose a local Icelandic company or a big international brand?

Both have advantages. International brands may be more streamlined, while local companies often have newer fleets and include more insurance. QEEQ lets you compare both by price and reviews.

What's a realistic total cost for a rental car in Iceland?

Prices vary by season, car type, and booking time. Expect AUD $700 for a small 2WD to AUD $2000+ for a large 4x4 in summer. Factor in fuel and insurance.

Can you explain CDW, SCDW, GP, and SAAP in simple terms, and which are essential?

CDW (basic damage cover), SCDW (reduces your excess), GP (gravel damage cover), and SAAP (sand/ash protection). SCDW, GP, and SAAP are highly recommended.

Does my Australian credit card’s complimentary travel insurance cover car rental in Iceland?

Most Australian credit cards exclude certain vehicles and damages common in Iceland, so don't rely on them. Purchase comprehensive insurance directly from the rental provider.

What are the common 'hidden fees' to watch for with car rentals in Iceland?

Look for Young Driver Surcharges, additional driver fees, one-way fees, airport surcharges, GPS rental, and high refueling charges if the tank isn't full on return.

How much is the security deposit or 'hold' placed on my credit card?

Usually equal to the insurance excess (AUD $2,000-$4,000 with basic insurance). With premium insurance, the hold is reduced or waived. You must use a physical credit card.

How expensive is fuel (petrol/diesel) in Iceland compared to Australia?

Fuel is very expensive—about AUD $3.50–$4.00 per litre (2024). Diesel is a bit cheaper. Budget carefully as you'll need multiple full tanks for the Ring Road.

Are there any road tolls in Iceland?

Only the Vaðlaheiðargöng tunnel near Akureyri. Pay online at tunnel.is within 3 hours or face a fine and rental company admin fee.

Is it cheaper to pre-pay for a full tank of fuel?

No, pre-paying is usually a bad deal as you pay for a full tank regardless of usage. Choose 'Full-to-Full'—pick up and return the car with a full tank.

What's the difference between Third-Party Liability and a Collision Damage Waiver (CDW)?

Third-Party Liability covers damage you cause to others; CDW covers damage to your own rental vehicle.

Is 'zero-excess' or 'platinum' insurance worth the high daily cost?

For peace of mind, yes. It typically bundles all essential protections and reduces your excess to zero, which is valuable given Iceland's unique risks.

As an Aussie used to RHD, what are the top 3 tips for adapting to LHD in Iceland?

Chant 'Stay Right' to remember lane position, master roundabouts (enter right, counter-clockwise), and have your passenger help with navigation and positioning.

What's a step-by-step process for inspecting a rental car at pickup to avoid being blamed for pre-existing damage?

Take your time, video and photo every scratch/dent, check all tyres/windscreens/roof/interior, ensure all damage is noted in paperwork before signing.

What documents must I present at the rental desk?

Bring your Australian driver's license, physical credit card, passport, and rental confirmation (digital or printed).

Is it better to pick up the car at Keflavik Airport or in Reykjavik?

Keflavik Airport pick-up is more convenient and often cheaper overall, as transfers to Reykjavik are costly.

What are the general speed limits in Iceland?

90 km/h on paved highways, 80 km/h on gravel roads (drive slower for safety), and 50 km/h (sometimes 30 km/h) in urban areas. Strictly enforced by cameras.

How do roundabouts work in Iceland?

Multi-lane roundabouts give right of way to the inner lane when exiting. If you're in the outer lane, yield to cars on your left exiting from the inner lane.

Are headlights required to be on at all times in Iceland?

Yes, by law dipped headlights must be on 24/7, year-round, regardless of weather or time. Check they're on before driving.

What are the rules for parking in Reykjavik?

Parking is zoned (P1–P4) with different rates, paid at meters or via apps. Parking is free overnight and Sundays. Fines are issued quickly for illegal parking.

What should I check inside the car before driving off?

Check fuel gauge, warning lights, wipers, windscreen fluid, spare tyre/jack, and confirm if the car uses petrol or diesel.

What happens if I get a speeding or parking fine?

Fines go to the rental company, who pays and charges your credit card plus an admin fee. It's cheaper to obey the rules.

What exactly are 'F-roads' and do I need a 4x4 to drive on them?

F-roads are rough mountain tracks in the Highlands, open only in summer. 4x4 is legally required; 2WD is banned and not insured on these roads.

How do I handle driving on gravel roads safely?

Drive much slower than the limit, keep a large distance from other cars, steer smoothly, and avoid sudden braking or sharp turns to prevent skidding.

What is the protocol for crossing single-lane bridges?

The car that arrives first has right of way. Approach slowly, be prepared to stop, and yield if another car arrives first.

The wind is notoriously strong in Iceland. How do I prevent my car door from being damaged?

Always brace the door with two hands when opening, park facing into the wind if possible, and never let the wind catch the door.

What is Sand and Ash Protection (SAAP) and is it necessary?

SAAP covers damage from sand and ash storms, which can strip paint and glass. It's essential, especially on the South Coast.

Any tips for driving in winter with snow and ice in Iceland?

Rental cars have studded winter tyres. Drive slowly, double your following distance, be gentle with controls, and check road.is daily for closures.

How should I react to sheep on the road?

Slow down immediately, as sheep are unpredictable and roam freely. Wait for them to clear. Hitting one means paying the farmer for damages.

Am I allowed to cross rivers in my rental car?

No. River crossing damage is excluded from all insurance. Attempting it risks total loss and huge liability. Avoid unless you're an expert and accept the risk.

What emergency equipment should I ensure is in my rental?

Check for a spare tyre, jack, warning triangle, ice scraper (in winter), and ideally jumper cables. Keep your phone charged and consider a power bank.

What is the emergency number in Iceland?

Dial 112 for police, fire, or ambulance. Download the '112 Iceland' app for location-based emergency texts.

What is the standard fuel policy for returning the car?

Most rentals are 'Full-to-Full': return the car with a full tank to avoid inflated refueling charges.

Should I wash the car before returning it?

Usually not unless it's excessively dirty. Some budget companies require the car to be clean for inspection—if it's filthy, a quick rinse may help.

What's the best way to document the car's condition upon return?

Take detailed photos and video in the return parking bay, just like at pick-up, even if staff have already checked it.

Where can I refuel near Keflavik Airport before my flight?

There are petrol stations (Orkan, N1) in Keflavik and Njarðvík, just 5 minutes from the airport rental returns.

What happens if I return the car late?

Most companies allow a short grace period, but after that, you'll be charged for an extra day at a high rate. Call ahead if you'll be late.

How do I handle a dispute over a damage claim after returning to Australia?

Provide your before-and-after photos/videos to the rental company. If unresolved, initiate a chargeback with your credit card provider using your evidence.

How long does it take to get the security deposit hold released from my credit card?

The hold is usually released immediately after a successful return, but may take 5-10 business days to show as available credit.

Is it possible to return the car outside of office hours?

Yes, most KEF airport companies offer 24/7 key dropboxes. Your responsibility continues until official inspection, so take thorough return photos/videos.

What should I do if I receive a traffic fine in the mail weeks after my trip?

This likely means your card was not charged. Pay the fine as instructed. Ignoring it can cause issues if you revisit Iceland or Europe.

What final checks should I do before leaving the rental car for the last time?

Check the glove box, door pockets, under seats, and boot for personal items. Retrieving forgotten items after drop-off is very difficult.

Still have questions？

Contact QEEQ via online chat or hotline for specific advice. Contact Support

Car Rental in Iceland for Australian Travelers

Planning a mesmerizing road trip around Iceland can be exhilarating for travelers from Australia. As an Australian traveler, you might be wondering:

Can Australian Citizens Drive in Iceland?

Ready to Rent?

Which Car Rental Companies Are Best?

Recommendations for Australian Travelers

How to Choose the Right Car?

Quick Decision Guide

Compare with Confidence on QEEQ

Popular Destinations in Iceland

What Insurance Do I Need?

Types of Insurance Coverage

QEEQ's Complete Protection Solutions

How to Save Money on Car Rentals in Iceland?

Booking Tips for lower Prices

QEEQ's Money-Saving Features

What Should You Pay Attention To?

Remember

Comparing Traffic Rules Between Australia and Iceland

Remember

Frequently Asked Questions

Other Popular Destinations